Partial partition requires physical division of income-producing property; mere division of business profits is not enough.

A mere right to appropriate business profits, without physical division of the income-producing capital assets, did not amount to a distinct property capable of partial partition; the family business assets remained intact, so the claimed arrangement failed the statutory concept of partition. Where the Hindu undivided family continued to exist and the right to share profits was jointly held, service of notice on one member was sufficient for revisional proceedings. On both issues, the reasoning favoured the Revenue and the alleged partial partition was not accepted under the Act.

---

---

Issues: (i) Whether notice served on one member of a Hindu undivided family was sufficient for revisional proceedings under section 263 where a partial partition of the right to share profits was alleged; (ii) Whether a mere right to appropriate business profits, without division of the capital assets, could constitute a distinct property capable of partial partition under section 171.

Issue (i): Whether notice served on one member of a Hindu undivided family was sufficient for revisional proceedings under section 263 where a partial partition of the right to share profits was alleged.

Analysis: The alleged partition was only partial and the Hindu undivided family continued to exist. Even on the assessee's own case, the right to share profits was held jointly. In such a situation, service of notice on any one member was sufficient under the scheme of section 282(2) of the Act. The authorities relied upon by the assessee concerned total partition and the position after the family had ceased to exist, and were not applicable.

Conclusion: The issue was decided against the assessee and in favour of the Revenue.

Issue (ii): Whether a mere right to appropriate business profits, without division of the capital assets, could constitute a distinct property capable of partial partition under section 171.

Analysis: A mere right to receive profits, divorced from the burden of losses and without physical division of the income-producing capital, was not treated as a distinct property for the purposes of partial partition. Under the Explanation to section 171, physical division of property producing income is required where the property admits of such division, and a mere division of income is not enough. The capital assets of the business remained intact, so the arrangement could not amount to a partial partition of the property itself.

Conclusion: The issue was decided against the assessee and in favour of the Revenue.

Final Conclusion: The substantive questions were resolved in favour of the Revenue, and the claimed partial partition of the business profits was held not to satisfy the statutory concept of partition under the Act.

Ratio Decidendi: For purposes of section 171, a mere division of business income without physical division of the income-producing property does not amount to partition or partial partition, and notice on one member may suffice where the Hindu undivided family continues to exist and the interest remains jointly held.

---