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Family
Partition of Hindu Undivided Family
By CA A. K. Jain
Family partition of Hindu
Undivided Family which is as per amended provisions of Hindu Succession Act,
1989 is recognised u/s 171 of I-T Act - Revenue cannot deny recognition : ITAT.
CHENNAI, JULY 01, 2007 :
BRIEFLY stated facts of the case are that the Assessee is a Hindu
Undivided Family consisting of Shri P.C. Ramakrishna, his wife and his two
daughters. There was an oral total partition of H.U.F. on 16.9.1994 between
Sri P.C. Ramakrishna, his wife and two daughters. Under this oral partition,
the two daughters were allotted Rs.12,50,000/- each and these amounts were
adjusted against a sum of Rs. 12,50,000/- advanced to each of them earlier as
loan by H.U.F. In the said partition, all other properties of H.U.F. were
allotted to Sri P.C. Ramakrishna. This oral partition took place on 16.9.1994
which was subsequently confirmed by a Deed of Declaration confirming the
partition.
This partition was filed
before the AO under sec. 171 of the Act seeking recognition of the partition
as provided under the Act. The petition was proceeded by the AO who vide his
order dated 17.3.1998 held that partition is a sham one and the mere
contrivance to divest the family funds to reduce the incidence of tax and
accordingly he declined to grant recognition to the partition in exercise of
his powers u/s. 171 of the Act.
Aggrieved, the Assessee
preferred an appeal before the C.I.T(Appeals). The C.I.T.(Appeals) held that
the provisions of sec.171 of the Act cannot confer any right to a partition
which is not available to any person under the Hindu Law; that according under
the Hindu Law, there should be a partition between two or more coparceners and
therefore, it cannot be a partition where the H.U.F. consists of only one
coparcener. Finally, he held that even after introduction of amendment in
Tamil Nadu in 1989, the daughters cannot claim partition in the joint family
property of the HUF and accordingly, he confirmed the action of the AO.
Aggrieved, the assessee moved Tribunal in second appeal.
The Tribunal summarized
its detailed observations as follows :-
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Considering the provisions of Hindu Succession Act, 1956 as amended by Hindu
Succession (A.P.Amendment) Act, 1986, introduction of sec.29A which was
confirmed by the Hon'ble Apex Court in the case of S. Sai Reddy ([1991] 3 SCC
647) and also the amendment of Hindu Succession 1956 by the Hindu Succession (T.N.Amendment)
Act 1989, which are the provisions similar to the Hindu Succession (
A.P.Amendment) Act, we are of the considered opinion that the difference
between daughter and son of the Mitakshara Hindu Family is removed and the
daughter is conferred the coparcenary rights in the joint family property by
birth in the same manner and to the same extent as the son.
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Daughter is entitled to
claim partition and her share in the joint family property i.e. H.U.F.
property, is without dispute. In the present case, Sri P.C. Ramakrishna, H.U.F.
apart from P.C. Ramakrishna, Karta, two daughters along with his wife are the
members of H.U.F. After the amendment of Hindu Succession (T.N.Amendment) Act,
1989 vide clause (i) and (ii), the daughter in H.U.F. shall by birth become a
coparcener in her own right in the same manners as the son and have the same
rights in the coparcenary property as she would have had if she had been a
son, inclusive of the right to claim by survivorship and shall be subject to
liabilities and disabilities in respect thereto as the son. She is entitled to
partition of a Joint Hindu Family coparcenary property and in such partition,
Hindu Family coparcenary property shall be so divided to a daughter so as to
allot the same share as is allottable to a son.
The amendment brought out
w.e.f. 25th March, 1989 has removed the distinction as regards to a son or a
daughter in respect thereto coparcenary property of Joint Hindu family as
governed by Mitakshara law and daughters are clearly treated as coparceners.
In the present case, there are two daughters to the Karta. Hence, there are
three coparceners in the Joint Hindu Family and the daughters have been
allotted a sum of Rs. 12,50,000/- each.
Hence, we find no
infirmity in the partition of the Joint Hindu Family which is in accordance
with the Hindu Succession (T.N.Amendment) Act, 1989. In view of this, we hold
that the partition is as per the amended provisions of Hindu Succession (
T.N.Amendment) Act, 1989. Hence, there is no reason to refuse Registration to
family partition of Joint Hindu Family property.
Accordingly, the partition
of H.U.F. is recognized under sec.171 of the Act and the AO is directed to
pass a consequential order recognizing the partition of the H.U.F.
And the final word : The
assessee's appeal was allowed.
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