Law:

Section:

Section 171 of the Income-tax Act, 1961 (Corresponding to section 25A of the Indian Income-tax Act, 1922) - Hindu undivided family - Assessment after partition - Assessment year 1959-60 - Whether, a memorandum recording factum of partition, evidencing previous oral partition does not create any new jural relationship amongst parties and, hence, it is not hit by section 17(1) of Indian Registration Act, 1908 - Held, yes - Whether, therefore, such a memorandum of partition was admissible in law even without registration under 1908 Act - Held, yes FACTS The assessee-HUF effected an oral partition on 1-4-1957, and the regular memorandum evidencing oral partition was drawn up on 1-5-1957. The memorandum indicated that both movable and immovable properties were divided. The share capital in two firms was also partitioned. It filed an application under section 25A of the 1922 Act and an order was sought to the effect that the joint family property had been partitioned among the various members in definite portions as required under section 25A, sub-section (1). The Income-tax Officer rejected this claim holding that the memorandum was compulsorily registerable and that the properties which initially belonged to the karta should have been transferred by another registered document to the other members. The order of the Income-tax Officer was confirmed in appeal by the Appellate Assistant Commissioner. On second appeal, the Tribunal affirmed the order of the Appellate Assistant Commissioner. On reference: HELD Law is well settled that a partition of the joint family properties can be effected by an oral agreement, irrespective of the value of the property. In the instant case, the disruption of the joint family with partition by metes and bounds in respect of properties covered by the memorandum dated 1-5-1957, took place on 1-4-1957. Since, then, the joint ownership was converted into individual ownership and the memorandum was merely evidence of that fact. The memorandum by itself did not create any new jural relationship amongst the parties. It merely recorded the factum of partition which had already taken place. It is not hit by section 17(1) of the Indian…

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