Law:

Section:

Section 171 of the Income-tax Act, 1961 - Hindu undivided family - Assessment after partition - Assessment years 1967-68, 1968-69 and 1969-70 - Whether a HUF is a separate distinct entity for purpose of Act - Held, yes - Whether, therefore, if that entity as such had not received any income it is inconceivable that any income of any other person, though that person was an erstwhile member of HUF, could be assessed as income of that HUF - Held, yes FACTS The tavazhi of the assessee used to be assessed as a Hindu undivided family in relation to the income from forest hands. Thereafter, the members of the tavazhi executed a registered agreement dividing the forest lands. By that agreement specific shares had been allotted to each member of the tavazhi of the assessee though there had been no division of the properties. The division was, only a division in status and not a division of properties in definite portions. On the basis of that division in status, for the assessment years 1967-68, 1968-69 and 1969-70 the assessee claimed that since the tavazhi of the family had become partitioned with effect from the date of the agreement, 21-2-1963, and such a division having taken place long before the relevant accounting period of the earliest of the years, 1967-68, there was no income whatever derived by the Hindu undivided family, viz., the tavazhi, and, therefore, no assessment should be made on the Hindu undivided family. However, the ITO assessed the assessee as head of a tavazhi of a Hindu undivided family in relation to the income of that Hindu undivided family for the assessment years 1967-68, 1968-69 and 1969-70. The Single Judge held that the provision in section 171 would not apply to a case where the alleged division took place, though only in status, before the commencement of the accounting period for the concerned assessment year and the Hindu undivided family having receive no income whatever during, or during any part of, the accounting period there was no question of that family being assessed in relation to any income. On appeal: HELD A Hindu undivided family can exist without deriving any income. In fact, a Hindu Undivided family can exist without…

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