Partial partition under income tax law can be recognised even when a Hindu undivided family has no assets.

Section 171 permits recognition of a partial partition of a Hindu undivided family even where no assets are available for division. The Explanation defines partial partition broadly to include partition by reference to the persons constituting the family, the properties belonging to it, or both, and the statutory language does not require existing family property as a precondition. Applying that reading, the court answered the issue in the affirmative and held the assessee's position to be correct.

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Issues: Whether a partial partition of a Hindu undivided family can be recognised under section 171 of the Income-tax Act, 1961 even when the family possesses no assets.

Analysis: The Explanation to section 171 defines "partial partition" to include a partition that is partial as regards the persons constituting the Hindu undivided family, the properties belonging to it, or both. On a plain reading, the provision does not make possession of property or assets a necessary precondition for a partial partition. The statutory language is wide enough to cover a severance of some members even where no asset is available for division.

Conclusion: The question was answered in the affirmative, in favour of the assessee and against the Revenue.

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