Partial partition of partnership interest shifts share income from the Hindu undivided family to the divided members.

A partial partition of a Hindu undivided family's interest in a partnership can be evidenced by entries in the family books dividing the capital into equal shares and crediting the members accordingly; division by metes and bounds is not necessary for such an asset. The absence of matching entries in the firm's books does not negate the partition, because the sons do not become partners merely by reason of the family partition and the karta's continued participation is no longer in a representative capacity. Once the interest is divided, the resulting share income is assessable in the hands of the divided members, not the undivided family.

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Issues: Whether the share of profits from the partnership was assessable in the hands of the Hindu undivided family or in the hands of the divided members after a partial partition of the family asset represented by the firm interest.

Analysis: A partial partition of the family's interest in the firm had been effected by dividing the capital into three equal shares in the family accounts and crediting each member accordingly. For an asset of this kind, division by metes and bounds was not necessary; appropriate entries in the books of account were sufficient evidence of partition. The absence of corresponding entries in the firm's books did not negate the partition, because the sons did not become partners in the firm merely by reason of the family partition, and the karta's continued appearance in the firm was no longer in representative capacity of the joint family. Once the asset stood divided, the income from it could not continue to be treated as income of the undivided family.

Conclusion: The share income was not assessable in the hands of the Hindu undivided family and was assessable in the hands of the divided members; the answer was against the department and in favour of the assessee.

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