Jeevan Reddy, J.
1. The question referred for our decision in this case under s. 27(3) of the W.T. Act, is :
'Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is justified in canceling the wealth-tax assessments for the years 1958-59, 1959-60 and 1960-61 ?'
2. It arises in the following circumstances :
Sri T. Nagapotha Rao and his three sons, Sitarama Rao, Raja and Satyanarayana Murthy, constituted an HUF. Sitarama Rao pre-deceased his father in 1947 and Nagapotha Rao died in 1950. Some time after the death of Sitarama Rao, the eldest son, disputes arose between his widow, Smt. Raja Syamala, and other members of the family and, even during the lifetime of Nagapotha Rao, the father, Smt. Raja Syamala had issued notices to other members of the family asking for a partition, and for rendering of an account in respect of her share. On April 7, 1954. Smt. Raja Syamala filed a suit for partition, being O.S.No.47 of 1954 on the file of the learned Subordinate Judge, Tenali. A preliminary degree was passed in terms of a compromise entered into between the parties, Whereunder, pending the passing of the final degree, certain properties were tentative allotted to different members for their enjoyment. The final degree was passed on March 16, 1961, when all the properties were divided by metes and bounds between the several members of the family.
3. The HUF was an assessee under the I.T. Act. For the assessment year 1959-60, the assessee claimed that there was a partition on April 1, 1956, Whereunder the several members were allotted distinct properties for their enjoyment and that, therefore, an order under s. 25A of the I.T. Act, 1922, should be made declaring that there was a disruption of the HUF as on April 1, 1956, the date on which the compromise-memo was filed into court leading to the preliminary decree. This was rejected by the ITO as well as by the AAC and the Income-tax Appellate Tribunal, whereupon the matter was brought to this court in R. C. No. 27/1970. (Tatavarthi Raja & Satyanarayana Murthy v. CIT) : (See p. 451 (Appx.) infra) : A Bench of this court held that under s. 25A of the Indian I.T. Act, 1922, a mere division in status is not enough to claim its benefit and that, unless the properties are divided in definite portions, i.e., by metes and bounds, an order under that section cannot be made. It was observed that what happened on April 1, 1956, was also not a case of partial partition, but only a tentative arrangement. The Bench observed that, inasmuch as the final decree was passed only on March 16, 1961, whereunder definite properties were allotted to the share of each of the members, the partition can be said to have taken place only on that date.
4. The W.T. Act came into force with effect from April 1, 1957, and the relevant valuation date is March 31, 1957. For the three assessment years concerned herein, viz., 1958-59, 1959-60 and 1960-61, the assessee-family filed W.T. returns in the status of HUF showing that it comprised of two minor coparceners, and their mother. In other words, Smt. Raja Syamala, widow of Sitarama Rao, was not shown as a member of the HUF. The WTO, however, held that the properties allotted to Smt. Raja Syamala will have to be included in, and assessed as the properties of the HUF, since, according to him, the partition took effect only in 1962. (It is not necessary to refer to the other aspects of the assessment order). The assessee filed an appeal before the AAC, contending that the WTO was in error in holding that the HUF consists of four members and that he ought to have held that it comprises only of three members. (It is again not necessary to refer to the other contentions urged before the AAC with reference to the valuation of the properties, etc.). So far as the contention relevant herein is concerned, the AAC rejected the assessee's contention, whereupon the matter was carried in second appeal to the Income-tax Appellate Tribunal. Before the Tribunal, for the firs time, the assessee urged that there was a severance in status between he several members of the family as far back as October 7, 1954, when the widow of Nagapotha Rao filed a written statement of behalf of herself and her two minor sons, agreeing to the division of all the family properties into Raja, filed a written statement agreeing to the division of properties into four equal shares, after he attained majority and that this was also done prior to April 1, 1957. It was, further that one of the minor sons, Raja, filed a written statement agreeing to the division of properties into four equal shares, after he attained majority and that this was also done prior to April 1, 1957. It was, therefore, contended that there was on HUF in existence, according to law, on the date the W.T. Act came into force and, therefore, there can be no assessment on the HUF. This ground appealed to the Tribunal. It observed that, since the new ground urged before it went to the very root of the matter, viz., whether the assessee was in existence at all on the relevant valuation date, it was fair and proper to allow the said ground to be urged. Accordingly, it allowed the appeal, quashed the assessments made for the said three years, and remitted the matter to the WTO to decide afresh the questions as to who the assessee is, and what assets formed part of its net wealth The assessee was permitted to produce all evidence it wants in that behalf, and the Department was also left free to make use of any material which it may have. The Department asked for a reference, which was refused, whereupon the department approached this court, which directed the Tribunal to refer the aforementioned question for opinion of this court, and it was accordingly done.
5. Section 20 of the W.T. Act reads as follows :
'20. (1) Where, at the time of making an assessment, it is brought to the notice of the Wealth-tax Officer that a partition has taken place among the members of a Hindu undivided family, and the Wealth-tax Officer, after inquiry, is satisfied that the joint family property has been partitioned as a whole among the various members or groups of members in definite portions, he shall record an order to that effect and shall make assessments on the net wealth of the undivided family as such for the assessment year or years, including the year relevant to the previous year in which the partition has taken place if the partition has taken place on the last day of the previous year and each member or group of members shall be liable jointly and severally for the tax assessed on the net wealth of the joint family as such.
(2) Where the Wealth-tax Officer is not so satisfied, he may, by order, declare that such family shall be deemed for the purposes of this Act of continue to be a Hindu undivided family liable to be assessed as such.'
6. According to this section, where it is contended, at the time of making an assessment that a partition has taken place among the members of an HUF, the WTO shall enquire into the same and if he is satisfied that the joint family property has been partitioned as a whole among the various members or groups of members, in definite partition, he shall record an order to that effect and shall make assessments accordingly. If the partition has taken place on the last day of the previous year, the shall make the assessment on the HUF, and all the members shall be jointly and severally liable for the tax assessed on the net wealth of the joint family as such. If, however, he is not so satisfied, he shall declare that the family continues to be an HUF, liable to be assessed as such. Partition of joint family property 'in definite portions' was construed by Sir John Beaumont C.J. OM Gordhandas T. Mangaldas v. CIT : 11ITR183(Bom) as indicating' a physical division in which a member takes a particular house in which he can go and live, or a piece of land which he can cultivate, or which he can sell or mortgage, or takes particular ornaments which he can wear or dispose of, and that the expression 'definite partitions' is not appropriate to describe an undivided share in property where all a particular member can claim is a proportion of the income, and a division of the corpus, but where he cannot claim any definite portion of the property. The learned Chief Justice observed further (p. 196) :
''Portion' seems to me the apt word for division of property, and, 'share' for division of interest, and it is significant that 'partition' is used in section 25A. No doubt the expression 'division in definite portions' will have to be construed with regard to the nature of the property concerned.'
7. This decision was quoted with approval by the Supreme Court in Joint Family of Udayan Chinubhai v. CIT : 63ITR416(SC) . It is thus clear that s. 20 of the W.T. Act substantially corresponds to s. 171 of the I.T. Act, 1961, and s. 25A of the Indian I.T. Act, 1922. It is necessary, however, to point out one material point of distinction between s. 25A of the Indian I.T. Act, 1922, and s. 20 of the W.T. Act. The words 'hither to assessed as undivided' which occur in s. 25A of the Indian I.T. Act, 1922, as well as in s. 171 of the I.T. Act, 1961, do not occur in s. 20 of the W.T. Act, and that this is a material omission we shall point out later.
8. The contention of Sri N. Rajeswara Rao, the learned counsel for the assessee, is that, if an HUF is assessed as such under the W.T. Act once and then it claims that there has been a division in the family, then the requirements of s. 20(1) have to be satisfied, but the section has no application to a case where the HUF has ceased to exist according to personal law, even before the coming into force of the Act. His contention is that, according to Hindu law, a division in status comes about with the mere issuance of a notice, or the institution of a suit for partition, or even by a definite expression of the intention to separate and that on the happening of any such event, the HUF or the coparcenary, as the case may be, ceases to exist. In this case, it is contended, the HUF ceased to exist on any one of the dates mentioned above, viz., October 7, 1950. when Smt. Raja Syamala issued a registered notice claiming partition, April 7, 1954, when she filed the suit for partition; October 27, 1954 when the he widow of Nagapotha Rao filed a written statement agreeing to the division of the property into four equal shares; and again when one of the sons, Raja, filed a written statement to the same effect on attaining majority. All these dates, it is contended, are prior to the relevant valuation date and to the commencement of the Act. It is argued that there was no HUF in existence, in law, on the date the W.T. Act came into force and, therefore, there was no such entity as a 'Hindu undivided family' comprising of four members (widow of Nagapotha Rao, her tow minor sons, and Smt. Raja Syamala), and hence no assessment could have been made upon such an HUF for the three relevant assessment years. Strong reliance is placed by the learned counsel upon the decision of a Bench of the Calcutta High Court in Srilal Bagri v. CWT : 77ITR901(Cal) , which, undoubtedly and fully, supports the learned counsel's contention.
9. On the other hand, it is contended by Shri M. that, for the purpose of s. 2, it is immaterial whether the partition put forward before the WTO has taken place before the commencement of the Act or after the commencement of the Act. In either case, he contended, the requirements of s. 20(1) must be satisfied; and if not, the HUF must be deemed to continue for the purpose of the Act. Reliance was placed upon a decision of the Bench of the Gujarat High Court in Goswami Brijratanlalji Maharaj v. CWT : 79ITR373(Guj) , which, in turn, clearly supports the learned counsel's contention, dissenting from the view taken by the Calcutta High Court in the aforementioned case.
10. Having regard to the language of sub-s. (1) of s. 20, we are of the opinion that no distinction can be made between a case where the partition is alleged to have taken place before the commencement of the Act, and where the petition is said to have taken place after the commencement of the Act.
11. Sub-section (1) of s. 20 says 'where, at the time of making an assessment, it is brought to the notice of the Wealth-tax Officer that a partition has taken place among the members of a Hindu undivided family, and the Wealth-tax Officer, after inquiry, is satisfied that the joint family property has been partitioned as a whole among the various members or groups of members in definite partitions, he shall record an order to that effect...' The section does not make any distinction between a partition said to have taken place prior to April 1, 1957, and after the said date. On principle also, we are unable to discern any such distinction. Obviously, the idea behind s. 20 of the W.T. Act and s. 171 of the I.T. Act, 1961. is this : for a given assessment year, either the HUF must be assessed or its members individually, Unless the joint family properties are divided into definite portions, and allotted to each individual member, it cannot be said that a particular member can be assessed with respect to particular properties, or income, as the case may be. A mere division in status does not indicate which member is entitled to which of the properties. If it is contended that a mere division in status is sufficient for the purpose of putting an end to the HUF, even for the purpose of the I.T. Act and W.T. Act, the result situation would be that, while the HUF cannot be assessed on the ground that no HUF is in existence, the members also cannot be assessed, because, until the properties are undivided into definite portions, it cannot be said which member is entitled to which property, or income, as the case may be. IT is for this reason that these Acts insist upon a partition in definite portions. Section 20(1) further insists that the joint family properties must have been partitioned as a whole.
12. Another point to be noticed in this behalf is that both these Acts provide a position which is at variance with the personal law. Mr. N. Rajeshwara Rao admits that, if an HUF is assessed once under the W.T. Act and thereafter it is claimed that a partition has taken place, that contention has to be examined exclusively with reference to s. 20 of the W.T. Act and thereafter it is claimed that a partition has taken place, that contention has to be examined exclusively with reference to s. 20 of the W.T. Act, and not with reference to the personal law. But, he seeks to draw a distinction in a case where a division is said to have taken place before the commencement of the Act. He says that, in such a case, it is the personal law that prevails, and not the provisions of the W.T. Act. In our opinion, this contention is not only not warranted by the language of s. 20(1), but is coloured by the decisions rendered under the Indian I.T. Act, 1922.
13. Sub-section (1) of s. 25A read as follows :
'Where, at the time of making an assessment under section 23, it is claimed by or on behalf of any member of a Hindu family hitherto assessed as undivided that a partition has taken place among the members of such family, the Income-tax Officer shall make such inquiry there into as he may think fit,.....'
14. The same words are again used in sub-s. (3). In view of the said words in sub-ss. (1) and (3) of s. 25A, there was scope for arguing that, for s. 25A to apply, it must be a family which was hitherto assessed under the Act as an HUF. But, the words 'hitherto assessed as undivided' are not to be found in s. 20 of the W.T. Act; and this omission could not have been but deliberate because the same words are again found repeated in s. 171 of the I.T. Act, 1961. Another circumstance peculiar to this case, which must be kept in mind, is that the returns were filed by the HUF in the status of an HUF, and the only difference between the assessee and the Department was, whether it comprised of three members or four. In other words, the only dispute was, whether Smt. Raja Syamala must also be treated as a member of the HUF or not. It was only before the Tribunal that it was contended for the first time that there was a division in status between the parties, long prior to the coming into force of the Act and that, therefore, the very HUF as an entity ceased to exist long prior to the coming into force of the Act and, hence, no assessment can be made thereon.
15. The view taken by us is also the view taken by a Bench of the Gujarat High Court (Goswami Brijratanlalji Maharaj v. CWT : 79ITR373(Guj) . The learned judges of the Gujarat High Court laid stress upon sub-s. (2) of s. 20, which says that, if the WTO is not satisfied that the joint family properties have been divided as a whole in definite portions, 'he may, by order, declare that such family shall be deemed for the purposes of this Act to continue to be a Hindu undivided family liable to be assessed as such', and observed (p. 389 of 79 ITR) that, according to this sub-section, 'in spite of the partition in the sense of severance of joint status having taken place amongst the members of the Hindu undivided family, if the Wealth-tax Officer, is not satisfied that there has been a partition by metes and bounds, even though there has been a severance of status, the family shall be deemed for the purposes of the Wealth-tax Act to continue to be a Hindu undivided family'. They observed further (p. 389) : 'The words 'continue to be' in section 20(2) have, in our opinion, reference to the contention raised before the Wealth-tax Officer in the course of the assessment proceedings, and has no reference to the question whether there was a previous assessment or not.'
16. Now coming to the decision of the Calcutta High Court (Srilal Bagri v. CWT - : 77ITR901(Cal) , upon which strong reliance has been placed by Mr. Rajeswara Rao, its ratio can be deduced as follows : Section 20 is only a 'machinery section' and not a charging section. The charging section is s. 3, which declares that, for every assessment year commencing on and from the first day of April, 1957, a tax, referred to as 'wealth-tax', shall be charged in respect of the net wealth, on the corresponding valuation date, of every individual, HUF and company, at the rate or rates specified in Sch. I; that, after the unequivocal expression of the intention to separate, the individual member of the erstwhile HUF will have no interest in the 'coparcenary property of the Hindu undivided family of which he is a member', that the family is disrupted and the coparcenary comes to an end the moment such unequivocal expression of the intention to separate takes place and that the difference in language between s. 20 of the W.T. Act and s. 25A of the Indian I.T. Act, 1922, is not very much material. With great respect to he learned judges, we are unable to see how the fact that s. 20 is not the charging section is material in the matter of interpretation of s. 20. Similarly, the position obtaining under personal law cannot be treated as a relevant circumstance because, so far as this Act is concerned, it is the provisions of this Act alone which are material, and these provisions do not make a distinction between a case where the HUF has been assessed as such under the Act hitherto and a case where the matter is coming up for the first time for consideration under the Act. We have also pointed out hereinbefore that the omission of the words 'hitherto assessed as undivided' in s. 20 of the W.T. Act cannot be deemed to be accidental, for, the same words are found repeated in s. 171 of the I.T. Act, 1961, which was enacted subsequent to the W.T. Act. Further, as rightly pointed out by the Gujarat High Court (Goswami Brijratanlalji Maharaj v. CWT : 79ITR373(Guj) , unless the joint family property as a whole has been divided into definite portions, the WTO is entitled to declare that such family shall be deemed, for the purposes of the Act, to continue to be an HUF, liable to be assessed as such. Thus, in view of the language of s. 20 and the object behind it - as also on principle - no distinction can be made between a case where the partition is said to have taken place after the commencement of the Act, and a case where the partition is said to have taken place before the commencement of the Act.
17. Now, coming back to the fact of this case, the division into definite shares has taken place only on the date of the final decree, i.e., March 16, 1961. The allocation of certain items of property to each of the members under the memo of compromise, was only a tentative arrangement, and not a partition into definite shares, as held by this court earlier in R.C. No. 27/1970 (reported as Appendix at p. 451 infra). The assessment years concerned herein are all anterior to March 16, 1961, and hence, for the purpose of the Act, the HUF must be deemed to continue to exist, and is liable to be assessed as such, for the assessment years concerned herein. In this view, it must be held that the setting aside of the assessments already made and the remand of the matter by the Income-tax Appellate Tribunal would not serve any purpose and that the Tribunal was in error in quashing the said assessments merely because a new factual ground was urged for the first time before it.
18. Accordingly, our answer to the question referred shall be in the negative and in favour of the Department. In the circumstances of the case, we direct that the parties shall bear their own costs in this reference.
19. Sri. N. Rajeswara Rao, the counsel for the assessee, makes an oral request for grant of leave to appeal to the Supreme Court. We find this there is a difference of opinion on the questions involved in this R.C. between the High Courts in this country. This is a fit case which has to be considered by the Supreme Court. We have agreed with the Gujarat High Court and dissented from the view taken by the Calcutta High Court. There is no decision of the Supreme Court on the point and the law concerned is a Central Law. Accordingly, a certificate shall issue under art. 133(1)(b) of the Constitution of India.