Law:

Section:

Section 171 of the income-tax act, 1961-Hindu undivided family-Assessment after partition-Coparcener relinquished his right in joint family property and was allotted as his share store run by HUF-ITO did not record finding of partial partition but assessed coparcener separately qua income from store in assessment years 1970-71 and 1971-72-ITO, assessing HUF, also included store's income in its hands for assessment year 1971-72 but tribunal excluded the same-whether tribunal right in law-Held, on facts, yes Facts The assessee-HUF, engaged in the business of liquors, consisted of father and his three sons. One of the sons, V, executed a registered relinquishment deed on 21-7-1969, relinquishing his right in the joint family property and was allotted as his share a medical store run by the family. For the assessment years 1970-71 and 1971-72, the income from the store was returned as well as assessed in V's name as individual. However, in the course of assessment proceedings of HUF for the assessment year 1971-72, the ITO held (i) that the store's income could not be excluded from the HUF's income as there was no order regarding partition under section 171; (ii) that the relinquishment deed operated as a partial partition and since no claim for partial partition had been made and no finding recorded, the family should be assessed as joint family and the store's income should be included in its hands. On appeal, the AAC upheld the ITO's order. On further appeal, the Tribunal accepted the claim of partial partition, holding that the karta had endorsed in his return that his son V had gone out of the family and that this, therefore, constituted a claim for partial partition. The Tribunal also negatived the revenue's contention that, unless there was an order under section 171, the income from the store should be included in the joint family. It held that it was unnecessary to send back the case to the ITO for passing a proper order under section 171 in view of its acceptance of the assessee's claim that the property ceased to belong to the family and the income there from was not includible. On reference: Held 1. Section 171, read with its Explanation, deals with two…

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