Partition of self-acquired property is treated as a transfer unless prior blending into joint family property is clearly shown.

Credit entries in favour of an assessee's minor children were treated as a transfer of assets under section 16(3)(a)(iv) because the business assets were described as self-acquired property and were never shown to have been clearly impressed with joint family character. A Hindu law partition presupposes joint family property and does not amount to an inter vivos transfer, but a division of separate property cannot be treated as a true partition unless prior blending or conversion into joint family property is established. On the materials, the entries to the wife, daughters and minor children did not prove a genuine partition of joint family assets.

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Issues: Whether the credit entries in favour of the assessee's minor children represented a transfer of assets within section 16(3)(a)(iv) of the Indian Income-tax Act, or were merely the result of a valid partition of joint family property.

Analysis: The business assets were expressly described in the partition deed as the assessee's self-acquired property, and there was no clear, unequivocal act showing that the assessee had impressed those assets with the character of joint family property. A partition under Hindu law presupposes joint family property and does not involve a transfer inter vivos, but a division of separate property under the guise of partition remains a transfer unless the property had first acquired joint family character. The entries crediting amounts to the wife, daughters and minor children did not establish a real partition of joint family assets, since the materials did not show prior blending or conversion of the business assets into joint family property.

Conclusion: The transaction amounted to a transfer of assets attracting section 16(3)(a)(iv) of the Indian Income-tax Act, and the question was answered against the assessee.

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