COMMISSIONER OF INCOME TAX Vs. DHARAM PRAKASH

JUDGEMENT

(1.) The Tribunal has referred the following question of law under Section 256(1) of the IT Act, 1961, hereinafter referred to as the Act, for opinion to this Court :

(2.) During the course of assessment proceedings for the asst. yr. 1977-78, the assessee, Dharam Prakash HUF, claimed that a partial partition took place on 1st April, 1976 in respect of its l/3rd share in the capital of the firm M/s Singhasini Engineering Works. The HUF consisted of the Karta, Shri Dharam Prakash, his wife, Smt. Kamini Srivastava, his three daughters and his minor son Rohitesh. The partial partition was said to have taken place between Dharam Prakash smaller HUF consisting of himself on the one hand and his three daughters and his wife and minor son on the other hand. A memo of partial partition was also executed on 2nd April, 1979. The ITO observed that since a minor son is not in a position to give consent and the wife is not a coparcener competent to claim partition under the Hindu law, no partial partition could be effected amongst the Karta, his wife and his minor son. He also held that one of the parties to the partial partition, namely, the smaller HUF consisting of the Karta and his three daughters was illegal ab initio. He accordingly, rejected the claim of partial partition.

(3.) The assessee came up in appeal before the AAC. The AAC did not agree that the consent given by the Karta on behalf of his minor son in his capacity as his natural guardian was valid. He also held that the partial partition was not proper since the minor was required to bear l/3rd share in the profit and loss of the assessee's share in the firm which meant that the minor was also required to bear the losses.