TaxTMI 
TaxTMI 
2008 (3) TMI 281
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....s of the case the Income-tax Appellate Tribunal was correct in law in holding that the business income pertaining to the sales and manufacture of rice and other grain etc. was assessable in the hands of the bigger HUF and not in the hands of the smaller HUF? 2. Whether on the facts and in the circumstances of the case Income-tax Appellate Tribunal was correct in law in holding that the business of sale and manufacture of rice and other grains etc. was carried on by the bigger HUF only as a result of family arrangement and that the Department was not justified in interfering with the same?" In ITR No. 106 of 1986, though, two questions have been referred, the first question is similar to question no. 1 as stated above, the question no. 2 i....
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....r partial partition in the family on 21.10.1968 when capital of Rs. 1,93,402/- was divided between Harjeet Singh (Karta) and his two wives Smt. Suraj Kumar and Smt. Dharmendra Kaur and three minor sons Harmendra Singh, Ravindra Singh and Pratap Singh. The Commissioner (Appeal) held that the correct status of the assessee was that of HUF. Thereafter, for 1971-72 and 1972-73, the business income of assessee was taxed in the status of smaller HUF. In the assessment year 1973-74, the assessee filed return showing income from house property and business income in the status of bigger HUF and contended that as per the family arrangement, the business was carried on by all the members jointly with the help of the assets which belong to the family ....
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....mbers of the family. (3) On the completion of the inquiry, the Assessing Officer shall record a finding as to whether there has been a total or partial partition of the joint family property, and, if there has been such a partition, the date on which it has taken place. (4) Where a finding of total or partial partition has been recorded by the Assessing Officer under this section, and the partition took place during the previous year,- (a)the total income of the joint family in respect of the period up to the date of partition shall be assessed as if no partition had taken place; and (b)each member or group of members shall, in addition to any tax for which he or it may be separately liable and notwithstanding anything contained in clau....
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....espect of any such period. (9) Notwithstanding anything contained in the foregoing provisions of this section, whether a partial partition has taken place after the 31st day of December, 1978, among the members of a Hindu undivided family hitherto assessed as undivided,- (a) no claim that such partial partition has taken place shall be inquired into under sub-section (2) and no finding shall be recorded under sub-section (3) that such partial partition had taken place and any finding recorded under sub-section (3) to that effect whether before or after the 18th day of June, 1980, being the date of introduction of the Finance (No.2) Bill, 1980, shall be null and void; (b) such family shall continue to be liable to be assessed under this A....
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....ce, it would not give any benefit for the purpose of Income Tax Act and the property would be assessed in the hands of such assessee where it was being assessed before the alleged partition. In Kalloomal Tapeswari Prasad (HUF) Vs. C.I.T. 1982 (133) ITR 690, the Apex Court held that a claim made that a partition, total or partial, has taken place, but disallowed by the Income Tax Officer, the HUF will have to be assessed as such notwithstanding the fact that a partition had in fact taken place as per Hindu Law. A finding of fact to that effect that partition had taken place has to be recorded under Section 171 by ITO. The Apex Court further held that unless a finding is recorded under Section 171 that a partition partial or total has taken ....