Commissioner Of Income Tax vs Ty.K. Natarajan on 20 April, 1998

Madras High Court
Commissioner Of Income Tax vs Ty.K. Natarajan on 20 April, 1998
Equivalent citations: (1999) 151 CTR Mad 218
Author: N V Balasubramaaman


ORDER

N. V. BALASUBRAMAAMAN, J.

The Tribunal, at the instance of the Revenue, has referred the following question of law for our consideration under s. 256(1) of the IT Act for the asst. yr. 1979-80:

“Whether the Tribunal was correct in law and had valid material to hold that the partial partition made by the assessee on 2nd March, 1979, should be recognised by the ITO under s. 171 of the IT Act, notwithstanding sub-s. (9) of s. 171 which provides that any partial partition that took place after 31st Dec., 1978, should not be recognised by the ITO?”

2. The assessee is a joint family and assessment year with which we are concerned is 1979-80. The assessee claimed that there was a partial partition on 2nd March, 1979 and made an application before ITO that the partial partition should be recognised. The ITO rejected the request of the assessee on the ground that in view of s. 171(9) of the IT Act, the partial partition cannot be recognised. The AAC confirmed the order of the ITO. The Tribunal, however, held that s. 171(9) of the Act which was introduced by Finance (No. 2) Act of 1980 is applicable only for the asst. yr. 1980-81 onwards and did not apply to the asst. yr. 1979-80. The Revenue has challenged order of the Tribunal and the question of law set out earlier has been referred to us.

3. It is seen that s. 171(9) of the Act was introduced by the Finance (No. 2) Act of 1980 w.e.f. 1st April, 1980, though s. 171(2) of the Act states that a partial partition taking place after 31st Dec., 1978, cannot be recognised under s. 171 of the Act.

4. This Court in the case of CWT vs. G. Ramaswamy & Ors. (1989) 78 CTR (Mad) 16 : (1990) 185 ITR 285 (Mad) held the view that the provision of s. 171 of the Act would apply only for the year 1980-81 onwards. The Andhra Pradesh High Court in the case of G. Lakshminarayana vs. ITO (1988) 72 CTR (AP) 160 : (1988) 175 ITR 593 (AP) has also taken the similar view. We do not find any reason to differ from the earlier decision of this Court as well as by the Andhra Pradesh High Court in the case of G. Lakshminarayana (supra). Following the judgment of this Court in the case of CWT vs. G. Ramaswamy & Ors. (supra) we hold that the Tribunal was correct in holding that the provision of s. 171(9) of the Act has no application for the asst. yr. 1979-80 in question and the Tribunal was correct in directing the ITO to accept the claim of the assessee for partial partition and pass orders thereon on merits of the case accordingly. Accordingly, we answer the question of law referred to us, in the affirmative, in favour of the assessee and against the Revenue. The assessee will be entitled to the costs of sum of Rs. 750.

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