Commissioner of Income Tax vs Wazir Singh

S.S. Sodhi, J.—The short point arising for determination here pertains to the partition of a Hindu undivided family possessed of no assets, but burdened with debts.

The assessee was a Hindu undivided family consisting of Prem Singh, Jagit Singh and Manjit Singh. On April 1, 1973, a partial partition took place whereby Prem Singh was separated from the Hindu undivided family. An order recognising this partial partition was then sought from the Income Tax authorities. This was refused by the Income Tax Officer holding that the existence of property or some asset was a sine qua non for partition, whether partial or total, and in the absence of any asset to be divided amongst the members of the family, the provisions of Section 171 of the Income Tax Act, 1961 (hereinafter referred to as "the Act"), had no role to play.

The Appellate Assistant Commissioner, on appeal, however, took a contrary view and accepted the assessee''s claim for partition. This order was later upheld by the Tribunal. This is the factual background leading to the following question being referred for the opinion of this court :

"Whether, on the facts and in the circumstances of the case the Tribunal was right in law in holding that Prem Singh separated from the assessee-Hindu undivided family vis-a-vis the family''s share interest in the firm, Prabhu Singh Tirlok Singh, with effect from April 1, 1973 ?"

The answer to the question posed is provided by the Explanation to Section 171 of the Act, the relevant part of which reads as under :

"Explanation. -- In this section,-- ...

(b) ''partial partition'' means a partition which is partial as regards the persons constituting the Hindu undivided family, or the properties belonging to the Hindu undivided family, or both."

A plain reading of the provisions of this Explanation would show that there can be a partial partition merely as regards the persons constituting a Hindu undivided family too. In other words, possession of property or assets has not been prescribed therein as an essential pre-requisite for partial partition. This being so, the reference has clearly to be answered in the affirmative, in favour of the assessee and against the Revenue. This reference is disposed of accordingly. There will, however, be no order as to costs.