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Harshadrai Sunderlal (Huf) Vs. Income-tax Officer - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Ahmedabad
Decided On
Judge
Reported in(1983)6ITD743(Ahd.)
AppellantHarshadrai Sunderlal (Huf)
Respondentincome-tax Officer
Excerpt:
.....the partition being the one immediately before the death of the person in whose property the heirs claim a share.the fiction created by explanation 1 has to be given its due and full effect.... in order to ascertain the share of heirs in the property of a deceased coparcener it is necessary in the very nature of things, and as the very first step, to ascertain the share of the deceased in the copercenary property. for, by doing that alone can one determine the extent of the claimant's share. explanation 1 to section 6 resorts to the simple expedient, undoubtedly fictional, that the interest of a hindu mitakshara coparcener 'shall be deemed to be' the share in the property that would have been allotted to him if a partition of that property had taken place immediately before his death......
Judgment:
1. The assessee is a HUF consisting of mother Smt. Nirmalaben Harshadrai and her three minor sons Atulkuraar, Hirendra and Chetan.

The deceased Shri Harshadrai Sunderlal, husband of Smt. Nirmalaben Harshadrai, had received properties on partition from his bigger HUF vide partition deed dated 14-64972, which was duly registered with the Sub-Registrar, Surat, on the same date. The properties which were received by Shri Harshadrai Sunderlal, consisted of some agricultural lands and other movable properties including interest in a firm known as 'Dhanlaxmi Twisting Works'. Shri Harshadrai Sunderlal, died some time prior to 23-1-1976. On his death, the family consisted of, as noted above, the mother Smt. Nirmalaben Harshadrai and three minor sons. On 23-!-1977, a partition deed was executed between the mother and the three minor sons stating, inter alia, as follows : We have decided that part of the agricultural land of the HUF shown in the sketch in Black Colour plot. No. 5, measuring 1,9.10 sq.

yards (1,596.93 sq- metres) to be kept as undivided and the remaining land is divided between us as per plot Nos. 1 to 4 as shown in the sketch.

On the basis of the above partition deed, the assessee-family put in its claim for partial partition, in terms of Section 171 of the Income-tax Act, 1961 ('the Act') in respect of the 4 plots of agricultural lands referred to above. The ITO rejected the above claim of the assessee by pointing out that the mother did not have the right to effect partition. He relied for the above proposition, on the decision of the Madhya Pradesh High Court in CITv. Seth Gopaldas (HUF) [1979] 116 ITR 577.

2. On appeal, the learned A AC confirmed the aforesaid order of the ITO by relying on the decision of the Hon'ble Gujarat High Court in the case of Apoorva Shantilal Shah v. CIT [1982] 135 ITR 158.

3. The above order of the learned AAC has been assailed by the learned counsel before us by pointing out that the aforesaid decision of the Hon'ble Gujarat High Court has since been reversed by the Hon'ble Supreme Court. Besides, the ratio of the decision of the Hon'ble Supreme Court in the case of Gurupad Khandappa Magdum v. Hirabai Khandappa Magdum [1981] 129 ITR 440 has also not been taken note of by the authorities below. If they had taken note of the aforesaid case, they would have found that the partition, in question, was entirely correct and in accordance with Hindu law and as such, there was on occasion to reject it in law. On behalf of the revenue, it is pointed out that the mother had no right of effecting partition between herself and her minor sons and even if she did, she could not take any share for herself on the partition between her minor sons.

4. We have given careful consideration to the facts of the case and the rival submissions. Normally, the partition of a HUF under the traditional Hindu law has been by the act of parties and came about when one of the coparceners declared his intention to become divided.

Such partition could be either total or partial. 'A partial partition' as was explained by their Lordships of the Hon'ble Supreme Court, in Kalloomal Tapeswari Prasad {HUF) v. CIT [1982] 133 ITR 690, 702, 'may be as regards persons who are members of the family or as regards properties which belong to it'. Whatever by the nature of partition, the division of the properties by metes and bounds amongst the various coparceners is not requirement of the Hindu law. The severance of status is good enough to bring about valid partition of a HUF. Since the enactment of Hindu Succession Act, 1956 ('the 1956 Aci:') the partition of a family can be brought about by the operation of law also, as has been explained by their Lordships of the Hon'ble Supreme Court in the case of Gurupad Khandappa Magdum (supra). In that case, one Shri Khandappa died on 27-6-1960, leaving behind him his widow Hirabai, two sons and three unmarried daughters. The family consisting of the above persons owned certain properties, both movable and immovable. Sometime after the death ot Shri Khandappa, his widow Hirabai filed a Special Civil Suit for partition and separate possession of her share in the properties of the HUF which, according to her, was 7/24ths of the entire property. The Joint Civil Judge, Senior Division, Sangii, decreed that she was entitled to l/24th share only in HUF properties being l/6th share in her husband's I/4th share which passed on his death in terms of Section 6 of the 1956 Act read with proviso thereto and Explanation thereof.

5. The matter was carried in appeal, on behalf of both the parties to the suit to the Hon'ble High Court of Bombay, who held that the widow was entitled not only to l/24th share, being her l/6th share in the l/4th part of her husband's share in the HUF property, which passed on his death in terms of Section 6 above referre d to, but that she was also entitled to 1 /4th part in the HUF property, which came to her share at the time of notional partition which took place in a accordance with Explanation 1 to Section 6.

6. Against the above decision of the Hon'ble High Court of Bombay, the matter was carried in appeal to the Hon'ble Supreme Court. After examining the provisions of Section 6, referred to above, and the proviso thereto and Explanation 1 thereof, their Lordships summarized the position as follows : Two things are thus clear : One, that in a partition of the coparcenary property Khandappa would have obtained a l/4th share and two, that the share of the plaintiff in the |th share is l/6th share, that is to say, 1 /24th. So far there is no difficulty. The question which poses a somewhat difficult problem is whether the plaintiff's share in the coparcenary property is only 1 /24th or whether it is l/4th plus l/24th, that is to say, 7/24ths . . . .

The above question was answered by their Lordships by making the following observations : We see no justification for limiting the plaintiff's share to 1/24th by ignoring the l/4th share which she would have obtained had there been a partition during her husband's lifetime between him and his two sons. We think that in overlooking that l/4th share, one unwittingly permits one's imagination to boggle under the oppression, of the reality that there was in fact no partition between the plaintiff's husband and his sons. Whether a partition had actually taken place between the plaintiff's husband and his sons is beside the point for the purposes of Explanation 1. That Explanation compels the assumption of a fiction that in fact 'a partition of the property had taken place', the point of time of the partition being the one immediately before the death of the person in whose property the heirs claim a share.

The fiction created by Explanation 1 has to be given its due and full effect....

In order to ascertain the share of heirs in the property of a deceased coparcener it is necessary in the very nature of things, and as the very first step, to ascertain the share of the deceased in the copercenary property. For, by doing that alone can one determine the extent of the claimant's share. Explanation 1 to Section 6 resorts to the simple expedient, undoubtedly fictional, that the interest of a Hindu Mitakshara coparcener 'shall be deemed to be' the share in the property that would have been allotted to him if a partition of that property had taken place immediately before his death. What is, therefore, required to be assumed is that a partition had in fact taken palce between the deceased and his coparceners immediately before his death. That assumption, once made, is irrevocable. In other words, the assumption having been made once for the purpose of ascertaining the share of the deceased in the coparcenary property, one cannot go back on that assumption and ascertain the share of the heirs without reference to it. The assumption which the statute requires to be made that a partition had in fact taken place must permeate the entire process of ascertainment of the ultimate share of the heirs, through all its stages. To make the assumption at the initial stage for the limited purpose of ascertaining the share of the deceased and then to ignore it for calculating the quantum of the share of the heirs is truly to permit one's imagination to boggle. All the consequences which flow from a real partition have to be logically worked out, which means that the share of the heirs must be ascertained on the basis that they had separated from one another and had received a share in the partition which had taken place during the lifetime of the deceased.

The allotment of this share is not a processual step devised merely for the purpose of working out some other conclusion. It has to be treated and accepted as a concrete reality, something that cannot be recalled just as a share allotted to a coparcener in an actual partition cannot generally be recalled. The inevitable corollary of this position is that the heir will get his or her share in the interest which the deceased had in the corarcenary property at the time of his death, in addition to the share which he or she received or must be deemed to have received in the notional partition.

7. From the above observations of their Lordships of the Hon'ble Supreme Court, it is clear that the effect of the provisions of Explanation 1 to Section 6 is that on the death of one of the coparceners of the HUF, the shares of each of the heirs of the deceased get determined as if a partition of the family had taken place.

8. The effect of a partition of the HUF, whether by the action of the coparceners or by the operation of the law, is the same, namely, that the properties of the erstwhile HUF come thereafter to be held by the various legal heirs as tenants-in-common. In order to bring about the disruption of the HUF under the Hindu law, as has been emphasised by their Lordships of the Hon'ble Supreme Court in Kalloomal Tapeswari Prasad's case (supra), it is not at all necessary that the properties in question, must be divided by metes and bounds before a partition of the family can be said to have been effected.

9. In this respect, the provisions of the Act differ materially from the provisions of the Hindu law. Under Section 171, as has been pointed out by their Lordships in Kalloomal Tapeswari Prasad's case (supra), it is necessary for a claim of partition to succeed that it should be shown that there has been a partition, whether total or partial, by metes and bounds. A mere severance in status is not enough in order to register a finding of partition of the HUF under the Act.

10. Keeping in mind the above principles of Hindu law as modified in their application by the relevant provisions of the Act, let us examine the facts of the present case. Shri Harshadrai Sunderla!, as noted earlier, had received certain properties from his bigger HUF at the time of the partition amongst Shri Harshadrai Sunderlal and his brothers on 14-6-1972. These properties belonged to his smaller HUF consisting of himself, his wife and his three minor sons. The said Shri Harshadrai Sunderial died some time after 14-6-1972 and before 23-1-1976 (the exact date of death is not available on record). In terms of the ratio cf the decision of their Lordships of the Hon'ble Supreme Court in the case of Gurupad Khandappa Magdum {supra), a partition of the family took place immediately before the death of Shri Harshadrai Sunderial. As a result of it, each of the coparceners and the wife of the karta received equal shares. There were five persons entitled to a share on partition at the relevant time, namely, the three minor sons, the deceased karta and his wife, Smt. Nirmalaben Harshadrai. Each of them, therefore, got l/5th share in all the properties of the HUF, whether movable or immovable. l/5th share pertaining to the deceased karta devolved on his legal heirs in accordance with the provisions of the 1956 Act. There were four legal heirs to him, namely, his three minor sons and his wife. Each of them, therefore, became entitled to 1/4th share in the l/5th share of the deceased, i.e., 1/20th of the properties of the HUF. Taking her original l/5th share in the said properties, the share of the widow Smt. Nirmalaben Harshadrai in the properties of the HUF on the date of the death of the karta would be l/5th plus l/20th, i.e., 5/20ths or l/4th. Similar would be the shares of the three minor sons. All the properties of the erstwhile HUF, thus, stood divided in equal shares amongst the widow of the deceased Smt. Nirmalaben Harshadrai and her three minor sons on the death of the karta for the purposes of Hindu law by the operation of the 1956 Act as explained by their Lordships in Gurupad Khandappa Magdum's case (supra).

11. The aforesaid severance of the status, however, would not be of any effect for the purposes of the Act, until a claim was put forward on behalf of the family for partition, either total or partial, in terms of Section 171. Such claim came to be made in the accounting period corresponding to the assessment year 1977-78, presently under consideration. The claim for partition, which was put forward, was not one for total partition but for partial partition only with regard to four parts of the agricultural lands out of five parts into which they had been divided. Once this claim was made on behalf cf the assessee, the 1TO was bound to consider it and pass an order after making proper enquiry. Sub- Section (2) of Section 171, which is relevant for this purpose, reads as follows : Where, at the time of making an assessment under Section 143 or Section 144, it is claimed by or on behalf of any member of a Hindu family assessed as u ndivided that a partition, whether total or partial, has taken place among the members of such family, the Income-tax Officer shall make an enquiry thereinto the said claim after giving notice of the enquiry to all the members of the family.

A careful scrutiny of the above Sub-section will show that the 1TO can initiate inquiry into the claim of partition of a family only when a claim is put forward before him by or on behalf of any member of a HUF assessed, hitherto as undivided, that a partition, whether total or partial, had taken place. The ITO himself cannot take note of the fact that the family stood severed under the Hindu law by the operation of law. He is obliged to go on assessing the family, hitherto assessed as HUF, in the same status until one of the coparceners puts in the claim for partition. If the claim is that a partial partition has taken place, it is not open to the ITO to decree that a complete partition had taken place, even though he might be satisfied that what had come about is the severance of status of the HUF amongst all the coparceners with regard to all the properties of the family. Before he can register a claim under Section 171, he has further to be satisfied that where the property admits of a physical division, such physical division of the property has taken place.

12. In the present case, even though a complete partition had taken place in between the various members of the family at the time of the death of the deceased karta, Shri Harshadrai Sunderlal, the claim of the assessee put forward before the ITO, is not regarding total partition. It is only with regard to partial partition of the agricultural, lands and that too with regard to four parts, out of five into which the agricultural lands have been divided. The ITO has, therefore, to satisfy himself only with regard to this claim as to whether it is genuine or not, and as to whether agricultural lands have been divided by metes and bounds between the various sharers. On the facts of the present case, as noted above, it has to be held that a partition of agricultural lands has taken place by metes awd bounds and each sharer has been allotted a specified share in the agricultural lands. The condition of the division by metes and bounds, thus, stands fulfilled. That being so, the claim of the assessee with regard to partial partition of the agricultural lands cannot be denied on the ground that the partition is not valid. As noted earlier, the actual partition in the family came about by the operation of law. The mother has not effected the partition as presumed by the ITO. Severance was already there. The mother has merely put forward before the ITO the claim on behalf of the HUF consisting of her minor sons as their natural guardian. The partition is not between the three minor sons alone. It was, by the fiction of law, between the deceased father, the mother and three sons. Mother is entitled to share on such a partition.

There can be no objection to it under the Hindu law. The above severance of the status by the operation of law could not be recognised for the purposes of the Act because the assessee-family had not made a claim regarding partition of the properties belonging to it earlier.

Now such a claim has been put in, and once it is put in, it is obligatory on the part of the ITO to pass an order under Section 171, if he is satisfied that the division by metes and bounds in respect of the asset regarding which partition has been claimed has taken place.

The time-lag between the severance of the status of the members of the family and the putting in of the claim of partition under Section 171 is not material and in no way affects the quality of the claim under Section 171. Thus, laking into account the facts of the case and the law, as explained above, we are of the opinion that the assessee's claim regarding partial partition deserves to be accepted. Accordingly, we accept it. In the result, the orders of the authorities below are reversed and the 1TO is directed to treat the claim of partition as valid and correct.


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