V. Dongzathang, Accountant Member -
(1.) THIS appeal by the assessee against the order of the AAC is relevant for the assessment year 1979-80. The narrow issue before us is whether Section 20A of the Wealth-tax Act, 1957 ('the Act'), which had been inserted by the Finance (No. 2) Act, 1980, with effect from 1-4-1980 would be applicable to the assessment year 1979-80.
(2.) The facts of the case are that the assessee, a HUF, effected a partial partition of the HUF property on 25-1-1979 effective from 1-1-1979. At the time of filing of the return for the assessment year 1979-80, the assessee excluded the properties partitioned in the said partial partition dated 25-1-1979. The WTO, however, ignored the claim of the assessee on the ground that according to the new provisions of Section 171(9) of the Income-tax Act, 1961 ('the 1961 Act') inserted by the Finance (No. 2) Act, 1980, with effect from 1-4-1980, the immovable property belonging to the HUF will be assessed as it was assessed in the wealth-tax assessment of the assessee for the assessment year 1978-79. This is because similar amendment was made in the Act. The assessee was aggrieved and went in appeal before the AAC who, however, rejected the claim of the assessee as follows :
This clause also envisages that any finding recorded under sub-Section (3) to that effect (regarding partial partition) whether before or after 18-6-1980, being the date of introduction of the Finance (No. 2) Bill, 1980, shall be null and void. This means that if a partial partition stands effected by a HUF after 31-12-1978, it will not have recognition under the Income-tax Act for the assessment purposes. In view of the new provisions of the Income-tax Act/Wealth-tax Act in this regard, contention of the learned counsel that by amendment of Section 28 these new provisions have been given effect from 1-4-1980 and, therefore, are applicable to the assessment year 1980-81 and onwards and, thus, not applicable for the assessment year 1979-80, is not correct. Because the Legislature, in my opinion, did not put assessment year 1979-80 in such clarificatory notes only as, partial partition effected by any HUF up to 31-12-1978 were to fall in the year relevant to the assessment year 1979-80. Thus, I agree with the WTO that the partial partition of the immovable properties effected by the appellant after 31-12-1978 was, therefore, not to be recognised for income-tax and wealth-tax purposes. This being the case I, therefore, hold that under such circumstances, the WTO was justified in including the value of immovable properties belonging to the appellant-HUF in respect of which it effected partial partition as on 25-1-1979, in the hands of the appellant-HUF for assessment purposes for the assessment year under consideration.
Shri O.P. Sapra, the learned counsel for the assessee, repeated the same arguments as advanced before the lower authorities. Shri S. Ramaswamy, the learned departmental representative, supported the orders of the lower authorities.
(3.) AFTER careful consideration of the rival submissions, we are of the view that the amended Section 20A inserted by the Finance (No. 2) Act, 1980, with effect from 1-4-1980 would not be applicable to the assessment year 1979-80. Section 20A reads as follows :
Where 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) such family shall continue to be liable to be assessed under this Act as if no such partial partition had taken place ;
(b) each member or group of members of such family immediately before such partial partition and the family shall be jointly and severally liable for any tax, penalty, interest, fine or other sum payable under this Act by the family in respect of any period, whether before or after such partial partition ;
(c) the several liability of any member or group of members aforesaid shall be computed according to the portion of the joint family property allotted to him or it at such partial partition,
and the provisions of this Act shall apply accordingly.
Explanation : For the purposes of this Section, 'partial partition' shall have the meaning assigned to it in Clause (b) of the Explanation to Section 171 of the Income-tax Act.;