ORDER
M.V.R. Prasad, Accountant Member
1. This is an appeal filed by the L/R of deceased assessee. It is directed against the order of the Commissioner (Appeals), Vijayawada, dated 16-1-1996 for the assessment year 1991-92.
2. The deceased assessee was the Karta of the Hindu undivided family consisting of himself and his three sons. The properties of the family were partitioned on 25-2-1991. In the statement accompanying the return, the assessee appended a note, which read as under :-
Note : There is no income to the family with effect from 25-2-1991. Hence the file may be removed from the rolls of Income-tax.
Full partition effect in the family on 25-2-1991 with regard to immovable property through Court order issued by the Additional Subordinate Judge, Tirupati I.A. No. 267 of 1991. O.S. No. 201 of 1989, and with regard immovable property, i.e. book capital through book adjustment entries among the members of the family. A questionnaire in Form No. 171 is filed separately.
The claim of family partition among the members of the family and pass necessary order under Section 171 accepting the partition claim.
It was claimed that at the time of partition, the assessee-HUF made the following provisions-
(a) Rs. 40,000 – For investment in LIC’s Jeevan Akshay for
claiming deduction under Section 80CCA
(b) Rs. 10,000 – For investment in certain mutual funds for
claiming deductions under Section 80CCB
(c) Rs. 25,000 – For purchasing NSCs for claiming rebate under
Section 88.
These provisions were reflected in the balance sheet drawn up on 24-2-1991, viz. just before the properties of the family were partitioned on 25-2-1991. These provisions were created not by transferring the amounts from any income and expenditure account, but by transfer from the capital accounts of the HUF. A copy of the capital account of the HUF before the partition of the HUF is also filed before me. It may be seen at page 21 of the appellant’s paper-book. It was claimed that the specified investments for which provisions have been made, were made after 25-2-1991, but before the close of the accounting year, viz. 31-3-1992. As the investments in question have been made within the financial year relevant to the assessment year 1991-92, though admittedly, after the alleged partition of the HUF on 25-2-1991, it was claimed that the assessee was entitled to the reliefs under Sections 80CCA, 80CCB and rebate under Section 88 of the Act. The Assessing Officer rejected the claim of the assessee-HUF that the family had been partitioned on 25-2-1991, and accordingly, he completed the assessment under Section 143(3). On appeal, the Commissioner (Appeals) vide his order dated 21-3-1994 allowed the claim of the assessee that the HUF is totally partitioned. While giving effect to the said order of the Commissioner (Appeals), the Assessing Officer disallowed the claims of assessee for reliefs under Section 80CCA of Rs. 40,000, under Section 80CCB of Rs. 10,000 and rebate under Section 80 on NSCs purchased of Rs. 25,000. Assessee filed a petition under Section 154 seeking rectification, but the Assessing Officer rejected the said petition of the assessee, on the ground that the relevant investments were made by the assessee after the partition, though before the end of the financial year on 31-3-1991. The Assessing Officer mentioned that the income has been computed only up to 24-2-1991, i.e. upto the date of the partition, and consequently no expenditure incurred or investment made after the date of partition would be eligible to be considered.
3. When the matter was carried in appeal again, the Commissioner (Appeals) held as under :-
5. I have considered the arguments of the appellant. I have given a clear finding that the HUF got disrupted on 25-2-1991. Hence, it was no more in existence after that date. When it was not in existence, there was no question of any subsequent payment to LIC, NSC, etc. being relatable to the HUF. The claim of the appellant that he had made a provision will not make it eligible for deduction since it is the actual payment which is important but not a mere provision. Hence, in the interest of equity and justice, I hold that since the payments have been made on approved investments/securities during this year, the smaller HUFs/individuals of the erstwhile coparceners will be eligible to claim the deduction in respect of the payments which are relatable to each of the smaller HUFs/individuals during this year.
4. Before me, the learned counsel for the assessee invited attention to Section 3 of the Income-tax Act, which defined the previous year as the financial year immediately preceding the assessment year. He also invited my attention to the provisions of Section 80CCA, Section 80CCB and Section 88 in terms of which the requirement is that the relevant investments should be made in the previous year. For example, in terms of Section 80CCA, the payment to an annuity plan has to be made within the previous year. Under Section 80CCB, the units of a mutual fund have to be acquired in the previous year. Similarly, for availing the rebate under Section 88, subscription to National Savings Certificates has to be made again in the previous year. The only other condition to be satisfied is that for eligibility to rebate under Section 88, the amounts paid or deposited should be out of income chargeable to tax. As it is not doubted that the latter condition is satisfied and as all the investments in question were made within the previous year, i.e. the year ending on 31-3-1991, it is claimed that the revenue authorities erred in denying the reliefs under Sections 80CCA and 80CCB and rebate under Section 88 to the HUF. My attention is also invited to certain case law on the principles of interpretation, and the relevant portion of the written submissions of the assessee in this regard, read as under :-
In the construction of a taxing Act we have nothing to go by as to the intention of the Legislature except what they have said. We are not at liberty to speculate as to what they might have done if certain possible applications of the provisions of the Act have been present to their minds. The duty of the Court is simply to read the language of the Legislature and find out whether the particular case falls within the statute, and if it does give effect to it; and if the case does not fall within the statute, it is their duty to let the defendant go free.
(Kin v. V. Atkinson, 3 CLR 632, 639 (per Griffith, CJ.), see also CIT Madhya Pradesh, Nagpur v. Kisan Co-operative Rice Mills Ltd., 1975 MPLJ 717 : 1975 Jab. LJ 873 (DB) – Bindra’s Interpretation of Statutes)
….
5. The learned Departmental Representative on the other hand, relied on the orders of the Revenue authorities.
6. I am of the view that the orders of the Revenue authorities deserve to be upheld. Admittedly, the contributions to Jeevan Akshaya and Mutual Funds and NSCs were not made before 25-2-1991, when the entire HUF was totally partitioned. That was the claim of the assessee in the statement accompanying the return, and the relevant portion of the claim has been extracted hereiriabove. This claim has been accepted by the Department. The investments in question were made only after 25-2-1991, but some-time before 31-3 -1991. When the total partition is effected, a HUF in terms of Section 171 of the Act ceases its existence. This is also the ratio of the decision of the Apex Court in the case of Joint Family of Udayan Chinubhai v. CIT [1967] 63 ITR 416, wherein it has been held as under :-
Held (1) that L, U, K and A constituted a group between them and C, there was partition in definite portions. The order passed by the Income-tax Officer, Bombay, under Section 25A(1) was a valid order which he was competent to make. Thereafter, the original Hindu undivided family had no existence in fact or in point of law, personal or income-tax; and it was not open to the Income-tax Officer, Ahmedabad, to ignore the order either for the year in which the partition of the joint family was recorded, or for any subsequent year, and to assess the income in the hands of L, U, K and A as if the original Hindu undivided family continued to exist.
There is a legal cessation of the HUF on the date partition was effected. The investments made after such cessation cannot be considered as having been effected by the HUF. For that matter, no action can be attributed to a ceased legal entity. Simply because the financial year ending on 31st March, 1991 is the previous year in terms of Section 3 of the Act, it does not follow that the significance of the partition of the HUF on 25-2-1991 as claimed by the assessee and accepted by the Department, has to be ignored. As mentioned by the Assessing Officer, what can be computed is only the income or expenditure up to the date of partition of the HUF, viz. 25-1-1991, though the previous year extends up to 31-3-1991.
7. The Commissioner (Appeals) was fair and reasonable in directing that the investments made after the date of partition should be considered in the hands of the respective coparceners. After these directions, I see no reason for any legitimate grievance on the part of the assessee. There is no dispute on the principles for interpretation of statutory provisions, laid down by the Courts, in the case law relied upon by the learned counsel for the assessee. But, these principles have to be considered, in relation to the Scheme of the Act in respect of partition of the HUF, as laid down in Section 171 of the Act.
8. In the result, for the foregoing reasons, I uphold the orders of the Revenue authorities and reject the contentions of the appellant in this appeal.
9. In the result, appeal is dismissed.