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Issues: Whether a partition of Hindu undivided family property, by which one coparcener receives less than what he might otherwise have taken, amounts to a taxable gift or transfer of property within the Gift-tax Act, 1958.
Analysis: A partition of joint Hindu family property does not amount to a transfer in the strict legal sense. Until partition, a coparcener has no definite ascertainable share in the joint property, and therefore cannot be said to have transferred any existing property by accepting a smaller allotment on partition. The expressions in section 2(xxiv) of the Gift-tax Act, 1958, such as disposition, conveyance, assignment, settlement, delivery, payment, or other alienation, contemplate modes of transfer and do not naturally include a partition. Clause (d) of section 2(xxiv) also does not apply, because the transaction must still be one that takes colour from the main concept of transfer, and a partition among coparceners does not involve diminution of an identifiable share already owned by one coparcener in favour of another.
Conclusion: The partition did not constitute a gift or transfer chargeable to gift-tax, and the assessee was not liable to tax on the allotment made under the partition deed.
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