GOKAL CHAND MITAL, J. - (1.) A HUF of Shankar Lal, through him as Karta, was a partner in two firms. On March 14, 1974, a deed of partial partition was executed and was made effective from April 1, 1973. On April 1, 1973, Rs. 1,54,679.41 was the credit balance of the HUF in those firms. In view of the partial partition, the amount was equally divided between the four members of the HUF in the books of account of the HUF which was reflected in the books of account of the two firms, and they were to divide the profit and loss from those firms in equal shares. For the asst. yr. 1974-75, an application under s. 171 of the IT Act, 1961 (for short "the Act"), was filed by the HUF to get the partial partition recognised.
(2.) THE ITO rejected the partial partition. On the assessee's appeal, the AAC accepted the partition. The Department failed in the appeal before the Tribunal, and at the instance of the Department, the Tribunal, Amritsar, has referred the following question for opinion : "Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that there was a valid partial partition ?" On a consideration of the matter, we are of the view that the dispute is largely a question of fact in the circumstances of the case and hardly a question of law arises on the findings recorded. It has been found that the assets with the two firms in which the HUF was partner, were divided between the members of the HUF by metes and bounds, and this was not only reflected in the books of account of the HUF but also in the books of account of the firms in which the HUF was partner. The members of the HUF, after partition, agreed to share the profits and losses from the two firms in equal shares. Once actual division of the assets of the HUF has been proved, the partial partition had to be accepted. Learned counsel for the Revenue could not point out how it could be said that there was no physical division of the HUF assets.
(3.) ACCORDINGLY , the referred question is answered in favour of the assessee, that is, in the affirmative. No costs.;