Law:

Section:

Section 171(1) of the Income-tax Act, 1961 - Hindu undivided family - Assessment after partition - S carried on business of plying buses - After death of S, in a case Supreme Court held that business was that of joint family of which S was karta - However, in a civil suit filed a preliminary decree of partition of said HUF was passed on 27-3-1950 - Whether assessment could be made on HUF in respect of income derived from business in plying of motor buses for assessment years 1962-63 to 1968-69 - Held, on facts, no Words and phrases - 'Hitherto assessed' as occurring under section 171(1) of the Income-tax Act. 1961 Facts S carried on business of plying buses. After his death, his second wife D claimed that the business was the individual business of S and that under a will executed by S, she was entitled to carry on the business in her own right. On a contrary claim set up by the first wife of S and also his brothers, the Supreme Court held that the business was that of the joint family of which S was the karta and that D had no interest whatsoever in the business. However, in a civil suit filed in the Court of the subordinate judge for partition of HUP, there was a preliminary decree on 27-3-1950. For the assessment years 1962-63 to 1968-69 proceedings were initiated for assessment of the income from plying of the buses in the hands of the joint family and the assessments were completed accordingly. The assessee urged before the Tribunal that the joint family became extinct on the filing of a suit in 1947 or, in any event on 27-3-1950 when the subordinate judge passed a preliminary decree for partition and, thus, no assessment could be made against a joint family which was not in existence in the previous years relevant for the assessment years 1962-63 to 1968-69. The Tribunal accepted the above contention and quashed the assessments made on the joint family as not maintainable. On reference, the revenue contended that though there was a preliminary decree in March 1950, but for the purposes of tax law, the joint family must be deemed to be in existence as no joint family properties were partitioned in definite portions and no order was recorded under section…

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