Law:

Section:

Section 171 of the Income-tax Act, 1961-Hindu undivided family-Assessment after partition-M, a member of assessee-HUF, allegedly separated from it on 30-4-1971 after receiving his share-ITO refused to recognise partial partition on the ground that certain assets of HUF were not included while making partition and assessed m's income in assessee's hands-Tribunal found m had separated from HUF after taking his share of capital in the entire business assets and movables-Whether tribunal correct in holding that there was partial partition in assessee-HUF under section 171 and consequently excluding m's income from taxable income of assessee-Held, on facts, yes Facts The assessee-HUF, consisted of two brothers, V and M, and their widowed mother. On 30-4-1971, M separated from the family after receiving a sum of Rs. 81,518 as his share in the business assets/movables of the HUF. The ITO, however, rejected the assessee's claim of partial partition on the ground that certain assets belonging to the assessee-HUF had not been included while making the partition. The ITO also included a sum of Rs. 15,636, being the income earned by M, in the income of the assessee-HUF for the assessment year 1972-73 on the reasoning that M continued to be a member of the HUF. On appeal, the AAC upheld the ITO's order, holding that there was no documentary evidence to show that M had separated from the HUF. On second appeal, the Tribunal, having found on the basis of the entries in the assessee's account books that M had separated from the HUF after taking a sum of Rs. 81,519, representing his share of capital in the entire business assets and the movables of the HUF, held that there was a partition in the assessee- HUF under section 171. It also deleted the addition of Rs. 15,636 from the assessment of the assessee, in view of the acceptance of the assessee's claim of partial partition. On reference: Held On reading Explanation (b) to section 171 (as it stood before 1-4-1980), it is clear that there can be a partial partition either with regard to the persons constituting the HUF or the properties belonging to the HUF. It was not necessary for the assessee to establish that there was any…

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