Unregistered partition memorandum can validate a joint family separation where physical division is prohibited by law.

A memorandum recording a genuine partition of joint Hindu family lands was treated as effective despite being unregistered, because actual division by metes and bounds was legally prohibited under the fragmentation law. A partition of immovable joint family property may arise by agreement, and a later memorandum evidencing an already completed arrangement does not fail merely for want of registration. On the facts, the clear intention to separate and distribute sale proceeds in defined shares meant the revenue could not ignore the partition solely on registration grounds, and capital gains could not be assessed on the basis that the family continued to own the lands as an undivided unit.

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Issues: Whether the alleged partial partition of the joint Hindu family lands, evidenced by a memorandum but not registered because actual fragmentation was prohibited by law, was required to be accepted for the purpose of assessing capital gains.

Analysis: The memorandum recorded a real intention to partition the lands and distribute the sale proceeds among the coparceners, but actual division by metes and bounds was prevented by the prohibition contained in section 8AA of the Bombay Prevention of Fragmentation and Consolidation of Holdings Act, 1947. In these circumstances, the absence of registration could not by itself invalidate the partition arrangement. A partition of immovable joint family property may be effected by agreement, and a memorandum recording an already-formed partition does not fail merely because it is unregistered. The facts showed a clear intention to separate and to share the proceeds in defined shares, and the revenue authorities were therefore not justified in treating the partition as ineffective solely for want of registration.

Conclusion: The partial partition was to be accepted and the capital gains could not be taxed solely on the footing that the joint family continued to own the lands as an undivided unit.

Ratio Decidendi: Where a joint Hindu family has clearly agreed to partition immovable property but actual physical division is legally prohibited, a memorandum evidencing that partition is valid even if unregistered, and the partition cannot be ignored merely for want of registration.

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