Skip to content


Parshotam Lal Sood and Brothers Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMadhya Pradesh High Court
Decided On
Case NumberMiscellaneous Civil Case No. 27 of 1981
Judge
Reported in[1984]147ITR739(MP)
ActsIncome Tax Act, 1961 - Sections 171
AppellantParshotam Lal Sood and Brothers
RespondentCommissioner of Income-tax
Appellant AdvocateB.L. Nema, Adv.
Respondent AdvocateB.K. Rawat, Adv.
Excerpt:
- - in view of this finding of fact recorded in the present case, it is clearly sub-clause (i)of clause (a) of the explanation to section 171 of the act, which is attracted and, in the absence of a physical division of the property itself, the assessee's claim of partition of this house property cannot be accepted......debt due to the huf against the deposit with m/s. saling ram & co., jabalpur. in respect of the houseproperty, it was claimed that the annual income from the property had been divided but there was no physical division of the property to effect actual partition. it was claimed that no physical division of the immovable property was possible because such a division would mean complete loss of utility of that property. that property was in the occupation of the hungarian embassy as a tenant and the rent alone was divided among the three coparceners. a letter of a government-approved valuer addressed to one of the coparceners was filed, which stated that this house property was incapable of physical division in three equal parts.3. the ito accepted the partial partion in respect of the.....
Judgment:

J.S. Verma, J.

1. This is a reference under Section 256(1) of the. I.T. Act, 1961, to answer the following question, namely :

' Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the assessee's claim for partial partition of the property situated at 18, Golf Links, New Delhi, was neither covered under Clause (a)(i) nor under Clause (a)(ii) of the Explanation to Section 171 '

2. The material facts are these. The assessee is a HUF, in which the three brothers, namely, Parshotam Lal Sood, Pritamlal Sood and Brij Bhushan Lal Sood, are coparceners. The HUF owns three immovable properties, of which one is a house property at 18, Golf Links, New Delhi. It also has a deposit of Rs. 3,07,294 with M/s. Saling Ram & Co., Jabalpur. The relevant assessment year is 1974-75 for which the accounting year ended on March 31, 1974. It was claimed in the assessment proceedings that: a partial partition had been effected in respect of the aforesaid house property situated at 18, Golf Links, New Delhi, and also of a sum of Rs. 3,00,000 out of the aforesaid deposit of Rs. 3,07,294. All the three coparceners confirmed having received 1/3rd share in the aforesaid house property and Rs. 1,00,000 each out of the debt due to the HUF against the deposit with M/s. Saling Ram & Co., Jabalpur. In respect of the houseproperty, it was claimed that the annual income from the property had been divided but there was no physical division of the property to effect actual partition. It was claimed that no physical division of the immovable property was possible because such a division would mean complete loss of utility of that property. That property was in the occupation of the Hungarian Embassy as a tenant and the rent alone was divided among the three coparceners. A letter of a Government-approved valuer addressed to one of the coparceners was filed, which stated that this house property was incapable of physical division in three equal parts.

3. The ITO accepted the partial partion in respect of the amount of Rs. 3,00,000 out of the amount of the aforesaid deposit with M/s. Saling Ram & Co., Jabalpur, but the claim of partial partition in respect of the aforesaid immovable property was rejected on the ground that the property admits of a physical division, but a physical division of the same had not been made. The AAC and thereafter the Tribunal have affirmed this view on further appeals made to them. Hence, this reference at the instance of the assessee.

4. The contention of Shri B.L. Nema, learned counsel for the assessee, is that the house property does not admit of a physical division, as shown by producing the opinion of the Government approved valuer and, therefore, by virtue of Sub-clause (ii) of Clause (a) of the Explanation to Section 171 of the I.T. Act, 1961, it must be held that there was a partial partition also of the aforesaid house property, situated at 18, Golf Links, New Delhi. It is argued that the actual physical division of the said house property would finish the utility thereof, which means that it is incapable of a physical division.

5. The Tribunal, in rejecting the assessee's contention relied on the decision of the Allahabad High Court in Kalloomal Tapeshwari Prasad v. CIT [1973] TLR 697, on this point. This decision of the Allahabad High Court on this point has been affirmed by the Supreme Court in Kalloomal Tapeswari Prasad (HUF) v. CIT : [1982]133ITR690(SC) . It has been held there that where the properties admitted of a physical division into the required number of shares, the case fell within Sub-clause (i) of Clause (a) of the Explanation to Section 171, so that a physical division of the income without a physical division of the property producing income, cannot amount to a partition for the purpose of Section 171 of the Act. In the present case, there is a clear finding of fact that the aforesaid house property admits of a physical division, which has admittedly not been made. The letter of the Government-approved valuer has not been accepted as sufficient to indicate that a physical division of the property is not possible. In view of this finding of fact recorded in the present case, it is clearly Sub-clause (i)of Clause (a) of the Explanation to Section 171 of the Act, which is attracted and, in the absence of a physical division of the property itself, the assessee's claim of partition of this house property cannot be accepted. The Tribunal was, therefore, right in the view taken by it.

6. Accordingly, our answer to the question referred is as under:

That the Appellate Tribunal was right in law in holding that the assessee's claim for a partial partition of the property situated at 18, Golf Links, New Delhi, was neither covered under Clause (a)(i) nor under Clause (a)(ii) of the Explanation to Section 171.

7. The reference is answered accordingly. Parties shall bear their own costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //