Law:

Section:

Section 185 of the Income-tax Act, 1961 [Corresponding to section 26A of Indian Income-tax Act, 1922] – Firm – Position prior to 1-4-1993 – Assessment years 1959-60 and 1960-61 – Whether where a partial partition was effected in respect of a business of joint Hindu family and a partnership was formed by members of HUF in respect of that business, ascertainment of capital was not a necessary requirement of law to effect partial partition - Held, yes – Whether, therefore, when Tribunal had otherwise believed genuineness of instrument of partnership, firm was entitled to registration under section 26A of 1922 Act – Held, yes FACTS The income from business carried on by the HUF was being assessed in hands of HUF until assessment year 1958-59. On 23-10-1957, the HUF claimed to have effected a partial partition in respect of the said business, and to have formed a partnership. The newly formed firm, by an application under section 26A of the 1922 Act, applied for registration of the firm for the year 1959-60 and for continuance of the registration for the year 1960-61. The ITO rejected the claim of partial partition and refused registration holding that the members of a HUF could not super-impose any other status in respect of a business carried on by it without destroying that status and by their very nature the status of a HUF was totally different from the status of partnership. The AAC allowed the assessee's claim, but the Tribunal reversed the order of the AAC and restored that of the ITO. It found that there was no ascertainment of capital account on 23-10-1957, and, therefore, no partial partition was effected on that day and held that though a partnership firm was formed on 23-10-1957, there could not be a valid formation of the partnership between the member of HUF in respect of said business. On reference: HELD It is undoubted law that factum of disruption of joint status is the crux to determine whether there was "partition" of the joint Hindu family. Partition can be total or partial. The partition between coparceners may be partial either in respect of the property or in respect of the persons making it. Where there is evidence to show that the parties…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492