Unequivocal partition of a specific HUF asset removes it from the family hotchpotch, barring capital gains assessment in the HUF's hands.

An unequivocal partition of a specific HUF asset is complete in Hindu law once the coparceners' shares are defined and one member relinquishes his interest, even without division by metes and bounds. On those facts, the Saraspur property ceased to belong to the four-member HUF after the 5 June 1969 deed. As the property had already gone out of the HUF before sale, capital gains arising from its later transfer could not be assessed in the hands of the erstwhile HUF merely because the family continued in respect of other assets.

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Issues: (i) Whether the deed dated 5 June 1969 brought about a partition of the Saraspur property so that it ceased to belong to the assessee-HUF. (ii) Whether the capital gains arising from the sale of the Saraspur property were assessable in the hands of the assessee-HUF.

Issue (i): Whether the deed dated 5 June 1969 brought about a partition of the Saraspur property so that it ceased to belong to the assessee-HUF.

Analysis: The document, though described as a deed of partial partition, showed that Vikram received cash equivalent of his one-fourth share and gave up all interest in the property in favour of the other members. In Hindu law, partition consists in defining the shares of the coparceners, and actual division by metes and bounds is not necessary. Once the shares are defined and the intention to sever is unequivocal, partition is complete for that property.

Conclusion: The property stood partitioned qua that asset and ceased to be owned by the four-member HUF.

Issue (ii): Whether the capital gains arising from the sale of the Saraspur property were assessable in the hands of the assessee-HUF.

Analysis: After the partition, the Saraspur property had gone out of the hands of the assessee-HUF. The fact that the larger HUF continued in respect of other properties did not permit assessment of capital gains from the separated property in the hands of that HUF. The relevant principle was that a partition of one asset can create separate assessable entities in relation to that asset, even though the family continues otherwise.

Conclusion: The capital gains from the sale of the Saraspur property were not assessable in the hands of the assessee-HUF.

Final Conclusion: The reference was answered in favour of the assessee on the substantive questions decided, and the HUF could not be charged to capital gains on the sale of the partitioned property.

Ratio Decidendi: Where a Hindu undivided family effects an unequivocal partition of a particular property, the asset goes out of the family hotchpotch for that property, and any capital gain arising on its later sale cannot be assessed in the hands of the erstwhile HUF merely because the family continues in respect of other assets.

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