V.K. Singhal, J. - (1.) THE Income-tax Appellate Tribunal has referred the following question of law arising out of its order dated November 17, 1980, in respect of the assessment years 1974-75 and 1975-76 under Section 27(1) of the Wealth-tax Act, 1957 (hereinafter called "the Act") : "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in holding that the agricultural lands and accumulated income received at the time of partition of Hindu undivided family were the individual properties of Shri Sohanlal Kukar and not of Hindu undivided family consisting of Shri Sohanlal Kukar, his wife and minor daughters ?"
(2.) THE brief facts of the case are that the Hindu undivided family (bigger) consisted of Sohanlal Kukar, karta, Smt. Inder Kukar, wife, Sunil Mohan Kukar and Ramesh Raman Kukar, sons and Miss Sudha and Rainu Kukar, daughters, possessed certain agricultural properties. A partial partition with reference to the agricultural lands was made on December 13, 1963. According to the partial partition, the land was divided and the income arising from these agricultural lands was kept in the joint account in the books of Tilokchand Sohanlal Kukar, THE accumulated balances in this account as on April 12, 1967, were at Rs. 72,067. This amount was divided amongst various members on April 12, 1967. THE Hindu undivided family had other assets also in the form of capital in the firm, Sohanlal Kukar and Sons, where he was a partner. THE capital in the firm, Sohanlal and Sons, on April 12, 1968, was Rs. 79,260. A complete partition of the capital in Sohanlal and Sons was effected on April 12, 1968. THE amount was divided amongst various members as under : JUDGEMENT_1001_ITR211_1995Html1.htm With regard to the assessee, Sohanlal, the question has arisen whether the amount received on distribution of the accumulated income arising from agricultural land of Rs. 38,067 and capital of Rs. 15,815 received on partition of capital in Sohanlal and Sons on April 12, 1968, and further accretion thereto belonged to Shri Sohanlal Kukar as an individual or to a smaller Hindu undivided family consisting of Shri Sohanlal Kukar, his wife, Smt. Inder Kukar, and daughters. The claim of the assessee was that these properties belong to the Hindu undivided family and not to him individually. The Wealth-tax Officer held that these properties belong to Sohanlal Kukar individually. Relying upon Article 340 of Mulla's Hindu Law, it was held that it has to be considered to be his individual property. Article 340 of Mulla's Hindu Law reads as under : "The effect of a partition is to dissolve the coparcenary, with the result that the separating members henceforth hold their respective shares as their separate property and the share of each member will pass on his death to his heirs. But if a member while separating from his other coparceners, continues joint with his own male issue, the share allotted to him on partition will in his hands retain the character of a coparcenary property as regards the male issue." The Wealth-tax Officer also came to the conclusion that the wife of the assessee was given her share in the agricultural land on partition of the Hindu undivided family and thus she stood separated. An appeal was preferred before the Appellate Assistant Commissioner who following the decision of the apex court in the case of Narendranath (N. V.) v. CWT [1969] 74 ITR 190 set aside the order of the Wealth-tax Officer. The Revenue challenged the matter before the Income-tax Appellate Tribunal and the decision in the case of Narendranath (N. V.) [1969] 74 ITR 190 was held not applicable to the facts of this case, and therefore, the order of the Wealth-tax Officer was restored.
(3.) THE arguments of learned counsel have been heard. In the present matter, it is an admitted position between the parties that there was a partition of agricultural land from which the income has arisen which was initially kept in a joint account but was distributed on April 12, 1967. So far as the agricultural land and the income therefrom is concerned, it has been divided between the coparceners/members and the said property or income has not been again thrown in the common fund of the family. THE wife and the minor daughters had formed a Hindu undivided family so far as the income from sources other than the partitioned assets are concerned, but in respect of the partitioned assets all of them have become absolute owners as individual and that character continues. THE accumulated balance from agricultural income and business of the firm, Sohanlal Kukar and Sons was divided between all the members and, therefore, the amount/property which has been received by the members on such partition would retain its character as individual property. THEre may be other assets of the Hindu undivided family which have not been partitioned, the income therefrom shall continue to be Hindu undivided family income in spite of this partial partition of the assets, namely, agricultural land, or income accrued therefrom and capital of the Hindu undivided family of the firm, Sohanlal and Sons. THE assets which have once been given to an individual on partition retains its character as such. In these circumstances, we are of the opinion that the Income-tax Appellate Tribunal was justified in holding that the agricultural lands and accumulated income received at the time of partition of the Hindu undivided family were the individual properties of Shri Sohanlal Kukar and not of the Hindu undivided family consisting of Shri Sohanlal Kukar, his wife and minor daughters. Consequently, the reference is answered in favour of the Revenue and against the assessee.;