Partial partition of HUF property recognised for wealth-tax purposes; reduced net wealth alone remained chargeable.

Partial partition of HUF immovable property was treated as recognisable for wealth-tax purposes for the assessment years in question because the same factual position had already been accepted in income-tax proceedings and earlier proceedings. The provision then in force was read as not excluding such recognition before the later insertion of section 20A of the Wealth-tax Act, 1957, and, where two reasonable views were possible, the interpretation favourable to the taxpayer was applied. On that basis, only the reduced net wealth of the HUF was chargeable in the family assessment, and the Revenue's appeals failed.

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Issues: Whether a partial partition of Hindu Undivided Family immovable properties could be recognised for wealth-tax purposes for the assessment years in question, and whether only the reduced net wealth of the family was chargeable in the family assessment.

Analysis: The claim of partial partition had already been accepted in the income-tax proceedings, and the corresponding factual position had been affirmed in earlier proceedings. The relevant wealth-tax provision was treated as not excluding recognition of such partition for the years before the later insertion of the specific anti-avoidance provision in section 20A of the Wealth-tax Act, 1957. The reasoning also proceeded on the basis that the fiscal legislation should be interpreted in the manner most favourable to the subject where two reasonable views are possible.

Conclusion: The partial partition was to be recognised for wealth-tax purposes for the years under appeal, and the reduced net wealth alone was chargeable in the hands of the Hindu Undivided Family. The Revenue's appeals were rejected.

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