Law:

Section:

Section 171 of the Income-tax Act, 1961 - Hindu undivided family - Assessment after partition - Assessee-HUF consisted of karta K, his wife, one major son A and five minor sons - Under A deed of partial partition dated 1-11-1971, K relinquished his share and got separated - However, K's wile remained joint with sons - Thereafter, A became karta of assessee and filed assessee's returns under his signature - During 1976-77 K formed a partnership firm with A as karta of assessee - Whether said partial partition was legally tenable - Held, yes Section 184 of the Income-tax Act, 1961 - Firm - Registration Entitlement to - Whether in view of facts under head 'Hindu undivided family - Assessment after partition' above mentioned firm was entitled to registration - Held, yes FACTS The assessee-HUF consisted of the karta K, his wife, one major son A and five minor sons. K under a partial partition deed dated 1-11-1971 relinquished his share and got separated from the assessee. Thereafter, A became the karta of the assessee and filed returns of the assessee under his signature after 1971. During 1976-77 K formed a partnership firm with A as the karta of the assessee. The ITO was of the view that the said partial partition was unusual and illegal as the wife of the karta K got separated from him and went along with the sons. Further, he refused the registration to the said firm on the ground that it was not a genuine firm. On appeal, the Tribunal upheld the ITO's order. On reference the assessee submitted that under the Hindu law there was no longer bar even if the wife remained with her sons instead of remaining with her husband and her residence alone would not be a deciding factor to come to a conclusion that the said partial partition was not genuine or legal. HELD In view of the clear position under the Hindu taw regarding partial partition, the Tribunal was not justified in holding that the said partial partition of the assessee was not legally tenable. Consequently, the Tribunal was also not justified in denying registration to the said firm. CASE REVIEW Sundararaj (E.A.E.T.) v. CIT [1974] 95 ITR 454 (Mad.) and Mukhi Mulchand Sitaldas v. CIT[1978] 115 ITR 227 (MP)…

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