Partial partition of HUF assets leaves partnership income taxable in the individual's hands, not as an association of persons.

After a partial partition of Hindu undivided family business assets accepted under Section 171, the assessee could not be assessed as an association of persons for his share of partnership profits. The revenue accepted that the partition had taken place, and the HUF continued only as a partner in the firm. On those facts, the Tribunal treated the income as assessable in the individual's hands alone, not in the status of an association of persons.

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Issues: Whether, after a partial partition of the Hindu undivided family business assets and acceptance of such partition under Section 171, the assessee could be assessed as an association of persons instead of as an individual in respect of his share of partnership profits.

Analysis: The facts showed that the karta of the erstwhile Hindu undivided family had undergone a partial partition of the business assets, which had been accepted by the revenue under Section 171. Even after the partial partition, the Hindu undivided family continued as partner in the firm. On these facts, the Tribunal held that the assessee could not be treated as an association of persons and that only the individual share was assessable in his hands.

Conclusion: The assessee could not be assessed in the status of an association of persons and was liable to be assessed as an individual for his share of the partnership income.

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