J.V. Gupta, J.
1. This judgment will dispose of Income-tax References Nos. 77 and 78 of 1976, as both of them arise out of the same order of the Tribunal.
2. At the instance of the revenue, the Income-tax Appellate Tribunal, Amritsar Bench, Amritsar, has referred the following two questions of law for the opinion of this court:
'1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in accepting the claim of the assessee for partial partition ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in deleting the addition of Rs. 6,300 made to the income of the assessee-HUF for the assessment year 1970-71 '
3. Shri Narain Das Wadhwa, constituted an HUF along with his son, wife and two unmarried daughters. He died on 19th January, 1964. After his death, his son, Krishan Lal Wadhwa, as karta of the assessee-HUF, constituted by him, his mother and two sisters, was a partner in the firm known as M/s. Paxit Containers. On 15th May, 1969, there was a partial partition in respect of the amount of Rs. 60,000 which stood invest-ed by the assessee-HUF in the said firm. The division of this amount amongst the members of the assessee-HUF was as follows :
1. Shri Krishan Lal Wadhwa 25,000
2. Smt. Sita Devi 25,000
3. Miss Venna Wadhwa 5,000
4. Miss Chandrika Wadhwa 5,000
4. The entries showing the division of the aforesaid amount of Rs. 60,000 were made in the books of M/s. Paxit Containers. Consequent upon the partial partition, Smt. Sita Devi Wadhwa, the mother, Miss Veena Wadhwa and Miss Chandrika Wadhwa, the sisters, withdrew the amounts of Rs. 25,000, Rs. 5000 and Rs. 5,000, respectively, from M/s. Paxit Containers and invested the same somewhere else. Shri Krishan Lal Wadhwa joined the firm of M/s. Paxit Containers as representative of his smaller HUF, consisting of himself, his wife and a minor child. On 10th July, 1970, the assessee-HUF filed an application under Section 171 of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'), requesting the ITO to record a finding as to the partial partition of the joint family property as on 15th May, 1969. In support of this claim each member of the assessee-HUF filed an affidavit. It was also submitted by the assessee in its letters dated 4th June, 1971, and 5th March, 1973, that even though a widowed mother could not claim partition of the joint family property, there was nothing in law to compel the karta of the family to remain joint with his mother and sisters and as such, the partial partition in question, which, in fact, was tantamount to a family arrangement, was valid in the eye of law. The ITO did not accede to this request of the assessee as he was of the view that there must be at least two coparceners for the purpose of effecting a partition of the joint family property and as in the present case, there was only one male coparcener, the partition in question was not valid. He, consequently, rejected the claim of the assessee and by a separate order, added the sum of Rs. 6,300 to the income of the assessee-HUF on account of interest on Rs. 60,000 at 12% per annum for the period from 15th May, 1969 to ,31st March, 1970, relevant to the assessment year 1970-71.
5. On appeal, the AAC accepted the claim of the assessee and deleted the additions of Rs. 60,000 towards the assessable wealth of the HUF and Rs. 6,300 towards the income of the assessee-HUF, referred to above. Against the sai4 order of the AAC, the department went in a second appeal before the Tribunal. The Tribunal held as follows ;
' 10. We have gone through the record and heard the learned representatives of the parties. In our opinion, the orders of the AAC are sound and the same call for no interference.
11. It is true that a widowed mother cannot compel a partition, but if the karta of the family does not want to remain joint with the other members of the family, there is no impediment for him to put an end to the joint status and partition the properties. In that situation, the widowed mother would get her share in the joint property in accordance with law. Now, in the present case, it is not Smt. Sita Devi who is claiming partition. The case of the assessee-HUF is that Shri Krishan Lal Wadhwa, due to the differences between the members of the family, did not want to carry on the business of M/s. Paxit Containers on behalf of the assessee-HUF. It is plain that he could not be compelled to remain joint with his mother, and sisters and there was no such legal obligation on his part to keep the joint family property in tact. Shri Krishan Lal Wadhwa was, therefore, within his rights to withdraw the joint family funds from the firm of M/s. Paxit Containers and divide the same amongst its members. So far as the I.T. Act, is concerned, there does hot appear to be any bar for effecting a partition between one male member and the female members of the HUF. According to the decision of the Supreme Court in the case of N.V. Narendranath v. CWT : 74ITR190(SC) , there need not be at least two male members to form Hindu undivided family as a taxable unit for the purpose of the Wealth-tax Act. The expression ' Hindu undivided family' in the Act is used in the sense in which the Hindu joint family is understood in the personal laws of Hindus. Under the Hindu system of law, a joint family may consist of a single male member and his wife and daughters and there is nothing in the scheme of Wealth-tax Act to suggest that a Hindu undivided family, as an assessee unit, must consist of at least two male members. The position in the Income-tax Act is the same as in the Wealth-tax Act, When, for the purpose of the Income-tax Act, a Hindu undivided family can consist of a single male member and some female members, there is no reason why these members should not be able to disrupt the family and claim their shares in joint family properties. Even, under the Hindu law, where the minor coparcener has a limited right of partition, the adult coparcener can put an end to the joint status by his conduct and declaration where the family consists of only an adult and a minor coparcener (see commentary at page 399 of Hindu Law by Mulla, 14th Edn.). In our opinion, therefore, the law does not compel the karta, who happens to be the only male coparcener of the family, to remain joint and continue to hold property jointly with the other members of the family even though there are differences between the members and they cannot pull on together. When the sole male coparcener has full right to alienate the property, it does not stand to reason that he cannot divide the property among the members of the family for the purposes of maintaining peace and harmony in the family. We, therefore, hold that ShriKrishan Lal Wadhwa validly effected a partial partition in respect of the capital of Rs. 60,000.
12. Even if we presume for the sake of arguments that Shri Krishan Lal Wadhwa was not legally competent to effect a partition in the absence of another male coparcener, the division of the sum of Rs. 60,000 was in the shape of family arrangement which he could validly make under the Hindu law. This family arrangement would also tantamount to partition within the meaning of Section 171 of the Income-tax Act, 1961. After all, partition means only severance of joint status and it is a matter of individual volition. All that is necessary to constitute a partition is a definite and unequivocal intention of a member of a joint family to separate from the family limitation and to enjoy his share in severalty. When the members, of an undivided family agree among themselves with regard to a particular property that it shall thenceforth be the subject-matter of ownership in certain defined shares, then the character of the undivided property and joint enjoyment is taken away from the subject-matter. It is open to the members of the joint family to make a division and severance of interest in respect of a part of the joint estate, while retaining their status as a joint family and holding the rest as the properties of a joint and undivided family. Now, in the present case, there is a clear intention to put an end to the joint status in respect of the capital of Rs. 60,000 invested by the assessee-HUF in the firm of M/s. Paxit Containers. This intention is indicated not only by the entries made in the account books of the said firm, but also by the affidavit given by each member of the family. The fact that Smt. Sita Devi Wadhwa, Miss Veena Wadhwa, and Miss Chandrika Wadhwa withdrew the amounts, received by them on partial partition from M/s. Paxit Containers and invested the same somewhere else goes a long way to show that they intended to put an end to the joint status in respect of Rs. 60,000 and enjoy their shares in severalty. We do not, therefore, find any good reason for not recognising the partial partition. '
Consequently, the appeal of the department was dismissed.
6. As regards question No. 1, the view taken by the Tribunal that a karta could partition the property appears to be unassailable. Admittedly, a coparcener can claim partition of the joint family property. The karta of the HUF does not cease to be a coparcener and, therefore, his right to claim partition is always there. Krishan Lal Wadhwa being the karta of the HUF, which consisted of his two sisters, the mother and himself as the coparcener thereof, could partition the property of the joint Hindu family. In any case, by way of family arrangement, such a partition could always be made. In Ram Charan Das v. Girjanandini Devi : 3SCR841 , it has been observed that the word 'family' in the context of a family arrangement is not to be understood in the narrow sense of being a groupof persons who are recognised in law as having a right of succession, of having a claim to a share in the property in dispute. If the dispute which is settled is one between near relations then the settlement of such a dispute can be considered as a family arrangement. The court leaned strongly in favour of family arrangements to bring about harmony in a family and do justice to its various members and avoid, in anticipation, future disputes which might ruin them all. Again in Maturi Pullaiah v. Maturi Narasimham : AIR1966SC1836 , it was held that although conflict of legal claims in praesenti or futuro is generally a condition for the validity of a family arrangement, it is not necessarily so, and even bona fide disputes, present or possible, which may not involve legal claims, would suffice. Members of a joint Hindu family may, to maintain peace or to bring about harmony in the family, enter into such a family arrangement. If such an arrangement is entered into bona fide and the terms thereof are fair in the circumstances of a particular case, courts are more readily to give assent to such an arrangement than to avoid it. In Kale v. Deputy Director of Consolidation : 3SCR202 , this view was again reiterated as under (p. 815):
' Thus, it would appear from a review of the decisions analysed above that the courts have taken a very liberal and broad view of the validity of the family settlement and have always tried to uphold it and maintain it. The central idea in the approach made by the courts is that if by consent of parties a matter has been settled, it should not be allowed to be reopened by the parties to the agreement on frivolous or untenable grounds. '
7. Considering the present case from both the aspects, that is, as a partition or as a family arrangement we are of the opinion that the Tribunal was right in law in accepting the claim of the assessee as to partial partition. Thus, the answer to question No. 1 is in the affirmative, i.e., in favour of the assessee and against the revenue.
8. As regards question No. 2, in view of our answer to question No. 1, the answer to this question is also that the Tribunal was right in law in deleting the addition of Rs. 6,300 made to the income of the assessee-HUF, for the assessment year 1970-71. Both the references are answered accordingly. However, there will be no order as to costs.
B.S. Dhillon, J.
9. I agree.