Law:

Section:

Section 171 of the Income-tax Act, 1961 [Corresponding to section 25A of the Indian Income-tax Act, 1922] - Hindu undivided family - Assessment after partition - Assessment year 1948-49 - Whether partition of a business held by HUF can be brought about by mere specification of shares in accounts and making entries therein to show that business is held in severalty on in specified shares and it is not necessary that there should be physical division of business - Held, yes - Whether, for an agreement to partition assets of a Hindu family, no document is necessary and further section 25A does not prohibit members of an undivided Hindu family from entering into a partnership in respect of a portion of joint property which they have partitioned among themselves - Held, yes Sections 184 to 186 of the Income-tax Act, 1961 [Corresponding to section 26A of the Indian Income-tax Act, 1922] - Firm - Registration of - Assessment year 1948-49 - HUF closed books of account of running business and net assets were divided among all members of family - Personal accounts were opened for each member and credited with their respective share of capital of family by debiting to capital account - Some members formed partnership and executed partnership deed - Whether application for registration of firm could not be refused - Held, yes FACTS The Hindu undivided family, owning house property and business, carried on business till 29-6-1946, when the books of the business were closed, and the net assets were divided among all the members of the family. Next day, a new business was started with the four major sons as partners of the firm. A deed of partnership was executed by the four sons on 3-9-1946, indicating therein that the partnership was formed with retrospective effect from 30-6-1946. A second deed of partnership was drawn on 30-10-1946, by which the benefits of the partnership were extended to the minor son. For the assessment year 1948-49, the Hindu undivided family filed a return showing an income of Rs. 2,612 claiming that the cloth business no longer belonged to the joint family but belonged to a partnership. An application for registration of the firm was also made to…

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