JUDGEMENT
S.K. Chander, Accountant Member -
(1.)THESE appeals by the assessee are directed against the two orders of the Commissioner of Wealth-tax (Appeals) relating to assessment years 1979-80 and 1984-85 respectively made on 7-8-1987 and 9-9-1987. However, a common ground projected in these appeals is that the Commissioner of Wealth-tax was not justified in upholding the finding of the Wealth-tax Officer to the effect that amount of Rs. 2,50,000 kept aside by the appellant for the marriage expenses of Archana Singal by taking out the same from the nucleus of the joint family was to be considered as pan of the appellant's taxable wealth. Before we come to determine this issue, we consider it necessary to have in focus the facts which are relevant for the determination of the issue. THESE are as under.
(2.)There is a Hindu undivided family of which Shri B.B. Singal is the karta. Its two coparceners being sons of Shri B.B. Singal, are Sanjay Singal and Neeraj Singal. The other members of this joint family are Smt. Usha Singal w/o Shri B.B. Singal and Kumari Archana Singal, daughter of Shri B.B. Singal. The HUF is being assessed to income-tax and wealth-tax from earlier years. In the assessment year 1979-80 which is the first year in appeal before us, the valuation date for wealth-tax purposes was 31-3-1979. Similarly, the valuation date for the assessment year 1984-85 was 31-3-1984.
On 25th day of February of the year 1979, there was a partial partition as evidenced by deed of partial partition appearing at pages 1 to 3 of the assessee's paper book. The HUF owned both movable and immovable assets, approximately of the value of Rs. 21 lacs for the assessment year 1979-80 and the value of such assets was about Rs. 18 lacs in the next year under appeal. In this partial partition, Shri B.B. Singal acted as natural guardian of his minor son Neeraj Singal. The deed provided that after obtaining the consent of all the members of the HUF and after giving his consent on behalf of his minor son, the karta has decided to partition the shares of M/s Bhushan Industrial Co. (P.) Ltd. to the extent mentioned in clause II of the deed. Clause III records that necessary steps are being taken separately to get the share certificate accordingly amended. Clause IV which is relevant for the purposes of disposal of these appeals, provides as under:-
IV. That the karta, keeping in view the liability of the HUF assets for marriage of Kumari Archana, daughter of Shri B.B. Singal, after obtaining consent of all the members of the HUF, decided to set apart a capital of Rs. 2,50,000 for the purpose. Accordingly the account of the family appearing in the name of Shri Brij Bhushan Singal in the books of M/s India Metals, Chandigarh was debited by the said amount of Rs. 2,50,000 by corresponding credit to "Archana Marriage Reserve A/c". The said sum of Rs. 2,50,000 in this way, went out of the nucleus of the joint family funds and that the same came to be owned by quite a different entity.
Thereafter, it is provided in clause VII of this deed as under:-
VII. The HUF will cease to have any interest in the shares which have been partitioned by virtue of this deed, with effect from 25-2-1979 and/or in the sum of Rs. 2,50,000 or any accretion thereto hereinafter which have been set apart to meet marriage expenses of Kumari Archana.
(3.)IT is common ground that this partial partition has not been recognised in the income-tax proceedings of the HUF in view of the provisions of Sub-section (9) of Section 171. However, the assessee made a claim for taking cognizance of and giving effect to the terms contained in the instrument titled "Deed of Partial Partition" from which we have abstracted the relevant clauses supra. The Wealth-tax Officer in the course of assessment proceedings for the first year, made enquiries about this claim and the assessee in his letter dated 7-1-1984 explained the position and also submitted a photostat copy of the deed. The Wealth-tax Officer has recorded in the impugned assessment order made on 30-1-1984 that, "it also set apart a capital of Rs. 2,50,000 for the marriage expenses of Miss Archana Singal, minor daughter of Sh. B.B. Singal". The Wealth-tax Officer took note of the fact that the assessee conceded before him that this claim had not been accepted in the income-tax proceedings. He also observed that the Income-tax Officer who framed the assessment for the year 1979-80 had not recorded any finding regarding this point as was evident from the income-tax file of the assessee. Hence the HUF will continue as such and all the assets including those claimed as partitioned will continue to be the property of Shri B.B. Singal bigger HUF. According to the Wealth-tax Officer, the partial partition, "being after 31-12-1978, the same cannot be accepted as per the Finance Act, 1980". The sum of Rs. 2,50,000 kept aside by the assessee for the marriage expenses of Miss Archana Singal by taking it out of the nucleus of the joint family, according to the Wealth-tax Officer, "would, in fact, become part and parcel of the assets of the HUF". He accordingly added this amount to the net wealth of the assessee. While completing the assessment for the next year under appeal, he included in the net wealth of the assessee under the head "marriage reserve for Archana Singal", the sum of Rs. 2,50,000 as part of the net wealth of the assessee. These assessments were challenged in appeal before the Commissioner of Wealth-tax (Appeals) who made the orders after insertion of Sub-section (9) of Section 171 of the Income-tax Act, 1961 by Finance (No. 2) Act, 1980 and confirmed the view taken by the Wealth-tax Officer. Hence the present proceedings.