- (1.) THE Income-tax Appellate Tribunal, Allahabad Bench, Allahabad, has under Section 256(1) of the Income-tax Act, 1961, stated a case and referred the following question for the opinion of this court : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in upholding the order of the Appellate Assistant Commissioner directing the Income-tax Officer to allow the claim of partial partition to the assessee ?"
(2.) THE aforesaid question arises out of the Tribunal's order dated September 5, 1981, passed in ITA No. 2006 (Alld.) of 1980 for the assessment year 1976-77. THE assessee, Rajeev Maheshwari (HUF), was a partner in a firm, Commercial Traders. THE Hindu undivided family consists of Rajeev Maheshwari, his wife, Smt. Shakuntala Maheshwari, and a minor son, Yashwant Maheshwari. THE family claimed that there was a partial partition in the family in respect of a sum of Rs. 50,000 which stood to the credit of the family in a firm, Commercial Traders. Out of the said sum of Rs. 50,000, an amount of Rs. 5,000 was allotted to Rajeev Maheshwari and Rs. 45,000 was allotted to Smt. Shakuntala Maheshwari and master Yash-want Maheshwari (HUF). An application was made to the Assessing Officer to record this partial partition which was dismissed. THE Assessing Officer rejected the claim for partial partition for the following reasons : "1. THE family remains joint as far as the remaining assets of the Hindu undivided family are concerned. All the members of the Hindu undivided family are joint on food and worship. 2. THE claim of Shri Dhawan that Smt. Shakuntala Maheshwari acted on behalf of the minor coparcener Master Yashwant is also not correct. THE mother cannot act as a natural guardian during the life time of the father until a special order of the court has been issued. Moreover, Shri Rajeev Maheshwari could not have acted in two capacities, firstly as individual coparcener, and, secondly, as a guardian of his minor son. The claim of a family settlement is also not admissible as a family settlement pre-supposed an existence of a dispute amongst the coparceners. A mere remote possibility of some dispute in future will not be sufficient for making a family settlement as held by the Allahabad High Court in the reported case in Arjun Singh v. Virendra Nath [1971] AIR 1971 All 29. From the facts of the case, it is clear that only motive behind the partition is distribution of taxable income by creation of a new taxable entity and as such there is no evidence of any dispute amongst the coparceners." 3. The aforesaid reasons were negatived by the Assistant Commissioner and then by the Tribunal who without discussing the facts, followed its orders and similar cases of other assessees. I have heard Sri A. N. Mahajan, learned standing counsel for the Commissioner, and Sri P. K. Mishra, advocate, holding brief from Sri Bharat Ji Agarwal, learned counsel for the respondent.
(3.) IN our view, the reasons given by the Assessing Officer for not recognising the partial partition were not tenable and were irrelevant. IN the case of Apoorva Shantilal Shah v. C/T [1983] 141 ITR 558, the Supreme Court held that the karta of a Hindu undivided family was competent to effect a partial partition even though there was no other adult members in the family. IN the case of Sushil Kumar and Sons v. ITO [1998] 234 ITR 98 (All), this court held that a partial partition of the amount invested in a firm could be the subject of partial partition. Then in the case of Ram Nath v. CIT [1996] 217 ITR 661 (All), it was held that the mother and son can take jointly amongst themselves a share of the family property. The question how the property belonging to the minor would be managed was irrelevant and in any case there is no legal impediment in a mother acting as a guardian of a child. Learned counsel for the Commissioner could not point out any illegality in the partition.;