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Issues: Whether, after a preliminary decree for partition and disruption of the Hindu undivided family before the relevant valuation date, the wealth-tax assessment could validly be made on the family under section 20 of the Wealth-tax Act, 1957.
Analysis: Under Hindu law, a clear and unequivocal intention to separate brings about disruption of the joint family status, but the machinery provisions comparable to section 25A of the Indian Income-tax Act, 1922, require more than severance of status. The authorities must be satisfied that the joint family property has been partitioned as a whole into definite portions. A preliminary decree by itself does not establish such partition. Section 20 of the Wealth-tax Act, 1957, is a machinery provision and not a charging section. It applies where the family was joint when the tax liability arose but later disrupted before assessment. It does not authorise assessment of a Hindu undivided family which had already ceased to exist before the relevant valuation date.
Conclusion: The assessment on the Hindu undivided family was invalid and the question was answered in the negative, in favour of the assessee.
Ratio Decidendi: Section 20 of the Wealth-tax Act, 1957 is a machinery provision that cannot create liability against a Hindu undivided family which had already been disrupted before the relevant valuation date; a mere preliminary decree does not amount to partition in definite portions.
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