Partition of HUF property on firm dissolution can vest without registered conveyance where assets are distributed in specie.

On partition of an HUF interest in immovable property following dissolution of a firm, a registered conveyance was not required where the accounts and subsequent conduct showed that the asset had remained with the two HUFs and was distributed in specie. The dissolution deed was treated as recording an earlier dissolution rather than effecting a fresh transfer, so title was taken to vest in the two HUFs for partition purposes without a registered instrument. The partition claim in the Amritsar Cotton Mills property could therefore not be rejected on the ground that title had not passed by registration.

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Issues: Whether the assessee-HUF's half share in the Amritsar Cotton Mills property was validly partitioned under the partition deed dated 17-11-1970, and whether a registered instrument was necessary for the property to vest in the HUFs after dissolution of the firm.

Analysis: The property was found, on the accepted course of accounts and subsequent conduct, to have remained with the two HUFs and not to have become the firm's asset in the sense urged by the revenue. The dissolution deed of 31-8-1973 was treated as recording an earlier dissolution and the distribution of assets in specie, rather than creating a fresh transfer. In a dissolution with distribution in specie, no transfer of immovable property from one entity to another was required, and the absence of a registered conveyance did not defeat the vesting of the property in the two HUFs for the purposes of partition. The partition claim, therefore, could not be rejected on the footing that title had not passed by a registered instrument.

Conclusion: The half share in the Amritsar Cotton Mills property was validly partitioned, and the assessee's claim succeeded.

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