Partial partition of HUF capital recognised under tax law; recipient amounts to be examined separately in individual assessments.

A partial partition of a Hindu undivided family's capital was considered recognisable under section 171(3) of the Income-tax Act where the funds were divided between two groups of brothers. The issue was limited to whether that division of capital constituted a partial partition; the character of the amounts in the hands of the recipients was treated as a separate matter to be examined in their individual assessments, not in the assessment of the larger Hindu undivided family. The partial partition was accepted, the refusal to recognise it was reversed, and the Assessing Officer was directed to allow the claim.

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Issues: Whether the partial partition of the Hindu undivided family's capital of Rs. 20,000 could be recognised under section 171(3) of the Income-tax Act, 1961.

Analysis: The amount of Rs. 20,000 had been divided between the two groups of brothers, and the question in the appeal was confined to whether that division of funds in the larger Hindu undivided family constituted a partial partition. The character of the amounts received in the hands of the recipients was held to be a separate matter to be examined in their respective assessments and not in the assessment of the bigger Hindu undivided family.

Conclusion: The partial partition was accepted and the refusal to recognise it was reversed. The Assessing Officer was directed to allow the claim of partial partition.

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