Law:

Section:

Section 4, read with section 171, of the Income-tax Act, 1961 [Corresponding to section 3, read with section 25A, of the Indian Income-tax Act, 1922] - Income - Chargeable as - Assessment year 1957-58 - Whether where partial partition has been affected among members of family, income from assets so divided can no longer be assessed in hands of joint Hindu family - Held, yes - Whether an item which is not capable of division by metes and bounds such as interest of family in a firm can be divided only by making necessary entries in books of account and that would be satisfactory evidence of partition of such asset - Held, yes FACTS The HUF, consisting of father and his two adult sons, was a partner in a firm represented by the father. The Hindu undivided family had income from property besides the half share of the income from the firm. Up to and including the assessment year 1957-58, assessments were made on the Hindu undivided family. On 5-2-1958, the ITO issued a notice calling upon this family to pay advance tax in respect of the assessment year 1958-59 on the basis of the last completed assessment for 1957-58. The assessee family replied stating that there was a partial partition in the family in so far as the family's interest in the firm was concerned and that it would not be liable to pay advance tax on the share income. The individual members of the family, however, filed estimates under section 18A(3) of the 1922 Act and paid tax on the share of each. The ITO did not accept the partial partition on ground that no intimation of this alleged partial partition was given except in response to the demand for payment of advance tax and that there were no entries in the books of the firm to evidence the alleged partition. The ITO accordingly held that the family itself continued to be the partner in that firm and that the share income had to be assessed in its hands only. On second appeal, the Tribunal held that the income derived from the partnership was not on and after the petition, the income of the Hindu undivided family. It, thus, held that the taxing of income from the partnership in the hands of the HUF was not right. On reference : HELD The…

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