VIMALBHAI NAGINDAS SHAH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN this case, at the instance of the assessee, the following three questions have been referred to us for our opinion :

(2.) THE assessee before us is an HUF which, up to June 5, 1969, consisted of four members, namely, Vimalbhai Nagindas, the Karta, his wife, Taramati, and his two sons, Gautambhai and Vikram. This joint Hindu family was the owner of a property situated in Saraspur in Ahmedabad city. It was a residential house and it bore two survey numbers 2407 and 2409. Survey No. 2407 consisted of 90 square yards and survey No. 2409 consisted of 109 square yards. The propositus for the purposes of this reference may be stated to be one Nagindas and Nagindas had three sons, Chinubhai, Anubhai and Vimalbhai. A partition had taken place on March 6, 1937, and as a result of that partition amongst the members of the HUF consisting of the three sons of Nagindas, the property at Saraspur came to Vimalbhai's share and Vimalbhai's share in the ancestral property bid become the property of the HUF consisting of Vimalbhai, his wife and his two sons. On December 12, 1967, Vimalbhai, in his capacity as the Karta of the HUF, that is, the assessee before us, agreed to sell the Saraspur property to one Arvind Nathalal and the agreed sale price was Rs. 80,000. On June 5, 1969, a deed of partial partition was executed and the parties to the deed of partial partition were Vimalbhai, his wife, Taramati, and Gautam on the one hand and in one group and they were the parties of the first part, and Vikram, the other son, was the second party to that deed of partial partition. As a result of this partial partition, a sum of Rs. 20,000 was given to Vikram as his share in the Saraspur property and that amount was given by the group consisting of Vimalbhai, Taramati and Gautam, and the entire property was then, under the deed of partial partition, to belong to the group consisting of Vimalbhai, Taramati and Gautam. The Saraspur property was thus allotted jointly to the three members mentioned above. On the same day, that is, on, June 5, 1969, a sale deed was executed by Vimalbhai, Taramati and Gautam jointly in favour of Arvind Nathalal. It appears that Arvind Nathalal was not in a position to pay the balance of the Purchase price then due and a mortgage was executed by Arvind Nathalal in favour of Vimalbhai, Taramati and Gautam jointly. In view of the deed of partial partition which was executed earlier on the same day, Vikram, the other son, was not a party either to the deed of sale in favour of the Arvind Nathalal, nor a mortgagee in the deed of mortgage executed, by Arvind Nathalal for the security of the unpaid purchase price.

(3.) IN order to appreciate the controversy in this case, it is necessary to refer to the deed of partial partition dated June 5, 1969. The deed is executed, as we have stated above, between two parties. It commences by saying that it is the deed of partial partition for Rs. 20,000 in respect of the building situated at Saraspur and the parties of the first part were Vimalbhai, Taramati and Gautam and the party of the second part was Vikrambhai. In the deed of partition, the property at Saraspur was valued at Rs. 80,000, and it was mentioned that as a result of the partial partition, the property at Saraspur had gone to the joint shares of Vimalbhai, Taramati and Gautam, the three persons who were comprising the party of the first part, and the share on partition being the one fourth part, went to Vikram and Vikram was to be given a sum of Rs. 20,000 by the group of persons consisting of Vimalbhai, Taramati and Gautam because that was the cash equivalent of Vikram's one fourth share in the Saraspur property. Then the deed proceeds :