LALCHAND KOTHARI Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, at the instance of the assessee, has referred the following question of law for the opinion of the High Court with respect to the assessment years 1975-76 and 1977-78 :

(2.) THE brief facts of the case are that the assessee is a Hindu undivided family consisting of the coparceners Sarvashri Lalchand -- karta of the Hindu undivided family -- and his two sons, Jawahar Lal and Lalit Kumar. On Kartik Wadi 3, Samvat year 2031, a partial partition of the asset relating to jewellery held by the Hindu undivided family was effected and 1/3rd share, out of the jewellery, was given to Mr. Lalit Kumar. THE Hindu undivided family, in the return of the net wealth filed for the assessment years 1975-76 and 1977-78, did not include in their return the remaining jewellery which was not divided between the remaining two coparceners. While making the assessment for these two years, the Wealth-tax Officer, Bikaner Range, Bikaner, included the balance of the jewellery in the net wealth of the Hindu undivided family but excluded the jewellery which was given to Lalit Kumar in the partial partition of the jewellery. According to the Wealth-tax Officer, the remaining jewellery continued to belong to the Hindu undivided family. Dissatisfied with the assessment order passed by the Wealth-tax Officer, the assessee-Hindu undivided family preferred an appeal before the Assistant Commissioner of Wealth-tax (Appeals), Bikaner Range, Bikaner, who, by his order dated November 30, 1979, dismissed the appeal filed by the assessee. Aggrieved by the order dated November 30, 1979, passed by the Assistant Commissioner of Wealth-tax (Appeals), Bikaner Range, Bikaner, the assessee preferred an appeal before the Tribunal. THE Tribunal, by its judgment dated July 24, 1981, dismissed the appeal filed by the assessee by holding that there cannot be a partial partition with respect to the asset of a coparcener. THE Tribunal further held that the jewellery in question has rightly been included by the Wealth-tax Officer in the net wealth of the assessee. THE assessee thereafter moved an application under Section 27(1) of the Wealth-tax Act, 1957 (for short, "the Act"), for referring five questions of law, mentioned in the application, for the opinion of the High Court. THE Tribunal referred the question mentioned in paragraph No. 1 above and refused to refer the other questions for the opinion of this court.

(3.) THE controversy involved in the present case is : whether the partial partition of one of the assets of the Hindu undivided family, i.e., jewellery, in the present case, can be recognised under Section 20 of the Wealth-tax Act ? THE expression used in Section 20 of the Wealth-tax Act is "joint family property has been partitioned as a whole among the various members or groups of members in definite portions". THE words "as a whole" and the words "in definite portions" have been used in the section with a definite purpose and the words "partial partition" have been deliberately omitted in this section while the words "partial partition" have been inserted and recognised in Section 171 of the Income-tax Act. THE language used in Section 20 of the Wealth-tax Act and the scheme of the Act, therefore, clearly show that unless there is a severance of the status of jointness, the provisions of Section 20 of the Wealth-tax Act are not attracted. Section 20 does not contemplate any partial partition and is alien to the Wealth-tax Act. Section 20 of the Act does not recognise any partial partition and no partial partition can, therefore, be recorded. After the incorporation of Section 20A of the Act, partial partition can neither be claimed nor can it be recorded or recognised under the Wealth-tax Act and the family continues to be assessed as if no such partial partition has taken place.