Case Law Details
Sri. A.P. Oree Vs ITO (Madras High Court)
Any partition between the members of the joint family cannot terminate the status of HUF unless it is shown that the joint family property was physically divided in accordance with the agreement or decree of the court.
It is the contention of the Income Tax Department that the income was taxable in the hands of a Estate of late A.R.Pandurangan as HUF in the light of Explanation to section 171 of the Income Tax Act, 1961.
On the other hand, it is the contention of the petitioner on merits, not only the issue is squarely covered against Income Tax Department vide Income Tax Appellate Tribunal order dated 27.11.2015 of in ITA No. 2702/Mds/2014 in the case of the petitioner’s brother, namely Shri. A.P.Began but also in view of the language of section 171 of the Income Tax Act, 1961.
Under the Hindu law, members of a joint family may agree to partition of the joint family property by private settlement, agreement, arbitration or through court’s decree. Members of the family may also agree to share the income from the property according to their respective share. In all such eventualities joint status of family may be disrupted but such disruption of family status is not recognised by the legislature for purposes of income tax. Section 171 of the Act and the Explanation to it, prescribes a special meaning to partition which is different from the general principles of Hindu law. It contains a deeming provision under which partition of the property of HUF is accepted only if there has been actual physical division of the property, in the absence of any such proof, the HUF shall be deemed to continue for the purpose of assessment of tax. Any agreement between the members of the joint family effecting partition, or a decree of the court for partition cannot terminate the status of HUF unless it is shown that the joint family property was physically divided in accordance with the agreement or decree of the court.
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