TaxTMI 
TaxTMI 
TaxTMI 
2005 (4) TMI 16
X X X X Extracts X X X X
X X X X Extracts X X X X
....indu undivided family had entered into an agreement on May 26, 1982, to sell a property owned by it and known as "Castle Grant" for a total consideration of Rs. 65 lakhs. After the death of the karta, namely, Dharam Pal Singh, who died on September 2, 1982, a sale deed was executed by his son on March 5, 1983, as karta of the Hindu undivided family. A sum of Rs. 20,000 by way of brokerage was paid and the net sale proceeds were shown at Rs. 64,80,000 before the Assessing Officer. The assessee claimed that for the purpose of computing the capital gains in the hands of the assessee-Hindu undivided family, only 2/3rds of the sale consideration of Rs. 64,80,000 amounting to Rs. 43,20,000 should be taken into account. The assessee pleaded that after the death of Sri Dharam Pal Singh, the karta of the family, his share should be excluded in view of the provisions of section 6 of the Hindu Succession Act. This plea was rejected by the Assessing Officer, but was accepted in the appeal, filed by the assessee. The Commissioner of Income-tax (Appeals) held that after the death of Dharam Pal Singh, the karta of the Hindu undivided family, the Hindu undivided family's property stood reduced to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r to some of the relevant features of the Hindu undivided family and to consider the effect of the provisions of section 6 of the Hindu Succession Act on such family. Under the Hindu law an undivided Hindu family is ordinarily joint not only in estate but in food and worship, but it is not necessary that the joint family should own joint family property. There can be a joint family without joint family property. A Hindu coparcener is a narrower body than the joint family. Only males acquire by birth an interest in the joint and coparcenary property and can be members of a coparcenary or coparceners. A male member of a joint family and his sons, grandsons and great grandsons constitute a coparcenary. A coparcener acquires a right in the coparcenery property by birth but his right can be definitely ascertained only when a partition takes place. When the family is joint, the extent of share of a coparcener cannot be definitely ascertained since it is always capable of fluctuating. It increases by the death of a coparcener and decreases on the birth of a coparcener. A joint family, however, may consist of female members. It may consist of a male member, his wife, his mother and unmarri....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng out the fiction, to assume and supply a missing link which is really what was meant by Lord Asquith in his famous passage in East End Dwellings Co. Ltd. v. Finsbury Borough Council [1952] AC 109 at page 132. He said: 'If you are bidden to treat an imaginary state of affairs as real, you must also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it; and if the statute says that you must imagine a certain state of affairs, it cannot be interpreted to mean that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs.' In order to ascertain the share of heirs in the property of a deceased coparcener it is necessary in the very nature of things, and as the very first step, to ascertain the share of the deceased in the coparcenary property. For, by doing that alone can one determine the extent of the claimant's share. Explanation 1 to section 6 resorts to the simple expedient, undoubtedly fictional, that the interest of a Hindu Mitakshara coparcener 'shall be deemed to be' the share in the property....
X X X X Extracts X X X X
X X X X Extracts X X X X
....low: "Whether a partition had actually taken place between the plaintiffs husband and his sons is beside the point for the purposes of Explanation 1. That Explanation compels the assumption of a fiction that in fact 'a partition of the property had taken place', the point of time of the partition being the one immediately before the death of the person in whose property the heirs claim a share." The real controversy in the above case before the Supreme Court was about the extent of the share of the widow in the coparcenary property. It was not concerned as to whether a partition takes place immediately after the death of a member of a coparcenary of the coparcenary property. Therefore, this case cannot be treated as an authority for the proposition that a partition takes place in the joint Hindu family, as soon as a male coparcener dies. In the case in hand, the question involved is whether there is necessarily a disruption of a joint Hindu family immediately after the death of a coparcener. The above case was examined by the Supreme Court in a subsequent judgment in State of Maharashtra v. Narayan Rao Sham Rao Deshmukh [1987] 163 ITR 31, wherein it has been observed that its jud....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uced certain additional conditions of its own to give effect to the partition under section 171 of the Act. A transaction can be recorded as a partition under section 171 only if, where the property admits of a physical division, a physical division of the property has taken place. In such a case mere physical division of the income without a physical division of the property producing the income cannot be treated as a partition. Even where the property does not admit of a physical division, then such division as the property admits of, should take place to satisfy the test of partition under section 171. Mere proof of severance of status under Hindu law is not sufficient to treat such a transaction as a "partition" within the meaning of section 171 of the Act. Meaning thereby, a transaction may be treated as severance of status under Hindu law but not a partition under the Income-tax Act as physical division of the property is necessary under the Act. In the case in hand, there is no iota of evidence, nor is there any such plea that after the death of the original karta a severance or partition by metes and bounds had taken place in the joint Hindu family properties. On the contra....