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Kailash Kumar Dixit (Huf) Vs. Income-tax Officer - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Allahabad
Decided On
Judge
Reported in(1982)1ITD956(All.)
AppellantKailash Kumar Dixit (Huf)
Respondentincome-tax Officer
Excerpt:
.....the assessee-huf, by means of an application dated 31-3-1978, required the ito to recognise the partial partition of the huf which was said to have been effected on 30-6-1976 (i.e., first day of the previous year under consideration) between its members with reference to an amount of rs. 2,01,000 out of the fixed deposits of the huf amounting to rs. 2,61,000 in the allahabad bank, generalganj, kanpur.out of the total value of the 7 fixed deposit receipts amounting to rs. 2,01,000, the value of one of the fixed deposits to the extent of rs. 21,000 was set apart to provide for the marriage and other expenses of the minor daughter, km. vinita dixit. the rest of the deposit amounting to rs. 1,80.000 were divided equally between the karta, his wife and his minor son. the huf consisted of.....
Judgment:
1. These two appeals filed by the assessee arise out of the separate orders, both dated 25-6-1981 of the AAC, Special Range, Kanpur.

2. The assessee-HUF, by means of an application dated 31-3-1978, required the ITO to recognise the partial partition of the HUF which was said to have been effected on 30-6-1976 (i.e., first day of the previous year under consideration) between its members with reference to an amount of Rs. 2,01,000 out of the fixed deposits of the HUF amounting to Rs. 2,61,000 in the Allahabad Bank, Generalganj, Kanpur.

Out of the total value of the 7 fixed deposit receipts amounting to Rs. 2,01,000, the value of one of the fixed deposits to the extent of Rs. 21,000 was set apart to provide for the marriage and other expenses of the minor daughter, Km. Vinita Dixit. The rest of the deposit amounting to Rs. 1,80.000 were divided equally between the karta, his wife and his minor son. The HUF consisted of Shri Kailash Kumar Dixit, the karta, his wife, Smt. Asha Dixjt, his minor son, Vinay Kumar Dixit and his minor daughter. Km. Vinita Dixit. A deed dated 30-6-1976 of partial partition was also executed which was submitted before the ITO The ITO took the view that the partial partition claimed by the assessee was invalid because there were only two coparceners and the son being a minor was not in a position to give his consent. He was also of the view that Shri K.K. Dixit, the father, being himself the karta, such consent was meaningless. Accordingly, he rejected the claim of partial partition.

3. The assessee being aggrieved came up in appeal before the AAC.Firstly the AAC held that although a provision for expenses on marriage could be made in the case of a complete partition of the HUF, it could not be made in the case of a partial partition. He was of the view that the application regarding expenses of marriage was that of the joint family property and, therefore, the portion set apart for the marriage expenses of the minor daughter continued to be a part of the joint family property. Next the learned AAC took the view that since the father was also the natural guardian, the consent given on behalf of the minor son was meaningless since he was also exercising his patria potestas. He, therefore, upheld the rejection of the partial partition.

The ITO had also completed the assessment of the assessee-HUF by treating the entire income of the HUF as if no partial partition has taken place. The said assessment was also, accordingly, confirmed by the AAC in appeal.

4. Against both these orders, the assessee-HUF has come up in appeal before us. In the appeal against the rejection of the claim for partial partition, Ground No. 8 taken up by the assessee was that the deeming effect of Section 171 does not warrant the charge of tax on income from the property which has ceased to be owned by the HUF consequent upon its partition. However, at the time of hearing this issue was not pressed before us and, therefore, it no longer survives for our consideration. In the appeal arising out of the assessment order passed by the ITO, the assessee had taken Ground No. 2 of appeal to the effect that Section 171 does not warrant the charge of tax on unreal income derived from property which, pursuant to the partial partition, ceased to be owned by the HUF. However, at the time of hearing this ground of appeal was also not pressed before us. Therefore, it no longer survives for our consideration.

5. Shri K.K. Dixit, the karta, argued the appeals before us in person.

He pointed out that the partial partition in question was quite genuine and valid and had been arrived at with the consent of all the members of the HUF. He also submitted that the provision for the marriage of the minor daughter was quite valid and that in any case even if as a result of the partial partition a share is given to a person who is not entitled to it, such a partition is not invalid. He submitted that such a partial partition could be voidable at the instance of the member of the family affected by it but not by a stranger, like the ITO, who had no locus standi to hold that such a partial partition was void.

Referring to the order of the ITO, he submitted that the consent given by the karta on behalf of the minor was quite valid. In this connection he referred to the concluding portion of the deed of partial partition.

In support of the above propositions, Shri Dixit placed reliance on the following decisions : AIR 1963 Mys. 5, Chandra Kishore v. Nanak Chandra AIR 1975 Delhi 175 and CIT v. Hoshiari Lal Kalyani [1981] 128 ITR 515 (Cal.). He also referred to the following decisions of the Appellate Tribunal in which such partial partition has been upheld : Panne Lal, HUF v. ITO decided by the Amritsar Bench on 10-9u 1980, ABC v. ITO decided by the Bombay 'B' Bench on 28-5-1980 and Rashmi Kant Durlabhji v. ITO [1982] 8 Taxman 46 (Jp.-Trib.) decided by the Jaipur Bench on 11-8-1981' 6. Shri Sheo Prasad, the learned departmental representative, pointed out that no details of the partial partition were given by the assessee in its application dated 31-7-1978. He also submitted that the deed of partial partition was a nullity as none had signed it on behalf of the minor. He also emphasized that the necessity for the partial partition and existence of a benefit to the minor had to be established. In this connection, he referred to the decision of the Allahabad High Court in Pratap Chandra v. ITO [1975] 100 ITR 551 wherein it was held that the disruption of a HUF cannot be recognised in any proceedings under the Income-tax Act so long as an order to that effect had not been passed.

He also referred to the decision of the Madhya Pradesh High Court in CIT v. Seth Gopal Das HUF [1979] 116 ITR 577 for the proposition that a Hindu father does not have the right to bring about a partial partition of the family properties among his sons as part of his patria potestas without the consent of his sons. He also submitted that the provision for marriage of the minor daughter was not valid. In that connection he relied upon the observations made by the income-tax authorities in their orders. He, therefore, argued that there was no warrant for any interference with the orders of the income-tax authorities. In reply Shri Dixit referred to the decision of the Allahabad High Court in CIT v. Govind Narain [1975] 101 ITR 602 for the proposition that even if a share had been allotted to a person who is not entitled to it on a partition of a HUF, it could be no ground for holding that the partition was illegal or void and that such a partition may be voidable at the instance of the member of the family affected by it but the department had no locus standi to hold that such a partition was void ab initio.

7. We have considered the rival submissions as also the various decisions relied upon on behalf of both the parties. The ITO had made due enquiries in this case. The assessee had also filed the deed of partial partition along with the request for recognition of the partial partition. Therefore, the objection raised on behalf of the revenue that no details of the partial partition were given in the application dated 31-7-1978, is without force. The next objection raised on behalf of the revenue that none had signed on behalf of the minor in the deed of partial partition is also not tenable on facts. The concluding portion of the deed is in the following words : In witness whereof and acceptance of various contents of this Deed (Party No. 1) for himself and on behalf of Party Nos. 3 & 4 in capacity of their Natural Guardian and Party No. 2 for herself affix their signatures on 30-6-1976 hereunder in presence of following witnesses :- Party No. 1 is Shri K.K. Dixit, the karta, Party No. 2 is his wife, Smt. Asha Dixit, Party No. 3 is his minor sons and Party No. 4 is his minor daughter. Thus, it is clear that the karta signed the deed of partial partition and consented to it not only on his own behalf but also on behalf of his minor son and minor daughter. It was not necessary as was also sought to be suggested on behalf of the revenue that the karta should have signed at two places instead of one, once in his own capacity and again in his capacity as the natural guardian of the two minors. Again para 6 of the said deed is in the following terms : That this partial partition being in the best interest of two minors (Party Nos. 3 & 4), their natural guardian (Party No. 1) accords his full consent in this behalf without any objection in this regard.

The above provision also shows that not only the partial partition had been made for the benefit and in the interests of the minor but also that the members of the HUF had consented to the partial partition. The decision in the case of Pratap Chandra (supra) cited on behalf of the revenue would not apply on the facts of the present case because in that case the question decided was that the disruption of the HUF had to be recognised in the income-tax proceedings and that their recognition by a civil court was not conclusive so far as the income-tax proceedings are concerned. So far as the decision in the case of Seth Gopal Das, HUF (supra) is concerned it helps the case of the assessee. All that it decides is that a Hindu father does not have the right to bring about the partial partition of the family properties among his sons as part of his patria potestas without the consent of his sons. In the present case, the consent of the only minor son being there, the exercise of the patria potestas on the part of the father was unexceptionable.

In the case of Govind Narain (supra) the Hon'ble High Court had clearly held that even if a share is allotted to a person who is not entitled to it on partition of a HUF, it cannot be a ground for holding the partition to be illegal or void and that such a partition cannot be challenged by a stranger. The same view has been expressed in the case of Hoshiyari Lal Kalyani (supra) by the Calcutta High Court. The case of provision for the expenses of the marriage of the minor daughter would, therefore, stand on the same footing, if not on a better footing. The said provision was not invalid. This is particularly so because the partial partition in question was partial qua property and the provision is only relatable to that partial partition. It does not forbid a further provision later on in the remaining property. We have also gone through the various decisions of the Tribunal in which reliance has been placed on behalf of the assessee. In the case of the decision of the Bombay Tribunal 'B' Bench, the facts were very much similar arid the partial partition was upheld by holding that the deed of partial partition could be signed by the karta on his own behalf and on behalf of his minor son. A similar view was held in the other two cases also. We are in respectful agreement with the above decisions.

Having regard to the above, we are, therefore, of the view that the assessee had duly established the existence of a valid partial partition which was entitled to be recognised and that the income-tax authorities were in error in holding otherwise. The assessment of the assessee-HUF will, therefore, be modified accordingly.

8. In the result, the appeals filed by the assessee are allowed subject to the observations made by us herein above.


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