{"id":328466,"date":"2024-08-11T11:00:12","date_gmt":"2024-08-11T05:30:12","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=328466"},"modified":"2024-08-11T13:47:00","modified_gmt":"2024-08-11T08:17:00","slug":"when-sc-expressed-disapproval-on-tribunals-improper-way-of-drawing-up-statement-of-case-for-partial-partition","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2024\/08\/11\/when-sc-expressed-disapproval-on-tribunals-improper-way-of-drawing-up-statement-of-case-for-partial-partition\/","title":{"rendered":"NRJ Series | When Supreme Court expressed disapproval on Tribunal\u2019s improper way of drawing up statement of case for partial partition [(1953) 2 SCC 213]"},"content":{"rendered":"
\n

Supreme Court:<\/span> In an appeal filed against the judgment dated 11-5-1950 passed by the Allahabad High Court (‘the High Court’), the five-Judges Bench of Patanjali Shastri, CJ.*<\/span> and B.K. Mukherjea, Chandrasekhara Aiyar, Vivian Bose and Ghulam Hasan, JJ., stated that there was no clear finding as to how the partition of the brocade business was actually affected. The Supreme Court stated that whether the partition was affected by a division in shares, each branch holding its share in severalty and the business being carried on as before on a partnership basis, or whether by an actual distribution and allotment of specific assets and liabilities among the branches resulting in the disruption and closing of that business. It was regrettable that the Income Tax Appellate Tribunal, Allahabad Bench (‘the Tribunal’), did not draw up a proper statement of the case setting out clearly the facts as found by it, to enable the Court to determine the questions of law referred to them on a correct view of the true facts.<\/p>\n

The Supreme Court stated that it was not satisfied that the statements in the case were sufficient to determine the question raised. Thus, referred the matter back to the Tribunal to submit a clearer statement of the facts as found by them.<\/p>\n

Background<\/p>\n

In the present case, the assessee was a Hindu Undivided Family (‘the family’) consisting of four branches representing the four sons of Appellant 1. Besides owning considerable properties in Banaras, the family carried on business in moneylending and Banaras brocade under the name and style of Messrs Sohan Pathak and Sons. In the assessment to excess profits tax for the year 1944-45, the assessee claimed that there was a partial partition among the family members on 16-7-1943, whereby the Banaras brocade business was divided among the family members in equal shares. The family members had formed two partnerships under the names of Sohan Pathak Girdhar Pathak and G.M. Pathak and Company, though the family continued to remain joint in status.<\/p>\n

The assessee contended that the Banaras brocade business was not carried on by the family after the partial partition and thus, the Excess Profits Tax Officer could not tax the family under Section 10-A<\/a> of the Excess Profits Tax Act, 1940<\/a> (‘the Act’) in respect of the profits derived by the two partnerships, as the businesses carried on by them were distinct and newly started businesses. The assessee also relied on the fact that the Income Tax Officer allowed the assessee’s claim to relief under Section 25(3)<\/a> of the Income Tax Act, 1922<\/a> on the footing of the discontinuance of the family brocade business after the partial partition. The Excess Profits Tax Officer rejected the contention and finding that the main purpose of the partial partition was to reduce the liability of the family to excess profits tax, made adjustments under Section 10-A of the Act by adding to the profits made by the joint Hindu family till the date of the partition, the profits made by the two firms during the rest of the chargeable accounting period.<\/p>\n

The assessee objected to the present assessment, and after appearing unsuccessfully to the Assistant Commissioner of Excise Profits Tax, preferred an appeal to the Tribunal, who confirmed the order and finding of the Excise Profits Tax Officer. Subsequently, the High Court also agreed with the conclusions of the Tribunal.<\/p>\n

Analysis, Law, and Decision<\/p>\n

The Supreme Court stated that while it was true that in one place in the statement of the case the Tribunal speaks of the old family brocade business as continuing without a break after the partial partition. Further, reference was made in another place to the assets of that business had been equally divided among the four branches forming the family. Thus, there was no clear finding as to how the partition of the brocade business was affected.<\/p>\n

The Supreme Court stated that whether by a division in shares, each branch holding its share in severalty and the business being carried on as before on a partnership basis, or whether by an actual distribution and allotment of specific assets and liabilities among the branches resulting in the disruption and closing of that business. It was regrettable that the Tribunal did not draw up a proper statement of the case setting out clearly the facts as found by it, to enable the Court to determine the questions of law referred to them on a correct view of the true facts. The Judges in the Court below found great difficulty in ascertaining from the statement of the case the facts as found by the Tribunal, and expressed their strong disapproval of the way the statement of the case was drawn up. Such criticism was also well founded.<\/p>\n

The Supreme Court stated that it was to be hoped that the Tribunal would, in future, bring to bear on this part of their work a better appreciation of their statutory duty than what had been disclosed in these proceedings. The Supreme Court stated that it was not satisfied that the statements in the case were sufficient to determine the question raised. Thus, referred the matter back to the Tribunal to submit a clearer statement of the facts as found by them within two months of the receipt of this order.<\/p>\n

[Sohan Pathak and Sons v. CIT, (1953) 2 SCC 213<\/a>, decided on 12-01-1953<\/span>]<\/p>\n

*Judgment authored by- Chief Justice Patanjali Shastri<\/span><\/strong><\/p>\n\n

Advocates who appeared in this case :<\/p>\n

For the Appellants:<\/span> G.S. Pathak, Senior Advocate (G.C. Mathur, Advocate, with him);<\/p>\n

For the Respondent:<\/span> M.C. Setalvad, Attorney General of India (G.N. Joshi, Advocate, with him).<\/p>\n

*Note- Partial Partition<\/p>\n

In Kalloomal Tapeswari Prasad (HUF) v. CIT<\/span>, (1982) 1 SCC 447<\/a>, the Supreme Court held that:<\/p>\n

Under Hindu law partition may be either total or partial. A partial partition may be as regards persons who are members of the family or as regards properties which belong to it. Where there has been a partition, it is presumed that it was a total one both as to the parties and property but when there is a partition between brothers, there is no presumption that there has been partition between one of them and his descendants. It is, however, open to a party who alleges that the partition has been partial either as to persons or as to property to establish it. The decision on that question depends on proof of what the parties intended — whether they intended the partition to be partial either as to persons or as to properties or as to both. When there is partial partition as to property, the family ceases to be undivided so far as properties in respect of which such partition has taken place but continues to be undivided with regard to the remaining family property. After such partial partition, the rights of inheritance and alienation differ accordingly as the property in question belongs to the members in their divided or undivided capacity. Partition can be brought about (1) by a father during his lifetime between himself and his sons by dividing properties equally amongst them, (2) by agreement, or (3) by a suit or arbitration.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

This report covers the Supreme Court’s Never Reported Judgment dating back to the year 1953 on partial partition.<\/p>\n","protected":false},"author":67520,"featured_media":328475,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[5,58675],"tags":[71951,45616,4611,58925,69606,71950,5363,42792],"class_list":["post-328466","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-casesreported","category-scc-never-reported-judgments-supreme-court","tag-division-in-shares","tag-family-business","tag-hindu-undivided-family","tag-never-reported-judgment","tag-partial-partition","tag-statement-of-case","tag-supreme-court","tag-tribunal"],"yoast_head":"\nSupreme Court's Never Reported Judgment on partial partition| SCC Times<\/title>\n<meta name=\"description\" content=\"Supreme Court stated that it was not satisfied that the 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access to accounts for due diligence [(1952) 2 SCC 316]","author":"Simranjeet","date":"December 10, 2023","format":false,"excerpt":"This report covers the Supreme Court\u2019s Never Reported Judgment dating back to the year 1952 on rescinding partition on ground of fraud.","rel":"","context":"In "Cases Reported"","block_context":{"text":"Cases Reported","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casesreported\/"},"img":{"alt_text":"rescind partition on ground of fraud","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/12\/rescind-partition-on-ground-of-fraud.webp?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/12\/rescind-partition-on-ground-of-fraud.webp?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/12\/rescind-partition-on-ground-of-fraud.webp?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/12\/rescind-partition-on-ground-of-fraud.webp?resize=700%2C400&ssl=1 2x"},"classes":[]},{"id":299561,"url":"https:\/\/www.scconline.com\/blog\/post\/2023\/08\/18\/partition-may-also-be-effected-under-a-settlement-or-oral-understanding-sc-legal-news\/","url_meta":{"origin":328466,"position":3},"title":"Partition of Property may also be effected under a settlement or an oral understanding: Supreme Court","author":"Editor","date":"August 18, 2023","format":false,"excerpt":"\u201cThere is no prohibition to effect a partition otherwise than through an instrument in writing by duly complying with the requirement of law.\u201d","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"partition of property","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/08\/partition-of-property.webp?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/08\/partition-of-property.webp?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/08\/partition-of-property.webp?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/08\/partition-of-property.webp?resize=700%2C400&ssl=1 2x"},"classes":[]},{"id":242570,"url":"https:\/\/www.scconline.com\/blog\/post\/2021\/01\/22\/daughters-the-new-equals\/","url_meta":{"origin":328466,"position":4},"title":"Daughters: The New Equals?","author":"Bhumika Indulia","date":"January 22, 2021","format":false,"excerpt":"by Niyati Karia and Urvi Jinsiwale*","rel":"","context":"In "Op Eds"","block_context":{"text":"Op Eds","link":"https:\/\/www.scconline.com\/blog\/post\/category\/op-ed\/legal-analysis\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/01\/doughter-1.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/01\/doughter-1.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/01\/doughter-1.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/01\/doughter-1.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/01\/doughter-1.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":270196,"url":"https:\/\/www.scconline.com\/blog\/post\/2022\/07\/15\/supreme-court-puts-an-end-to-about-a-century-old-land-dispute-under-u-p-consolidation-of-holdings-act\/","url_meta":{"origin":328466,"position":5},"title":"Supreme Court puts an end to about a century-old land dispute under U.P. Consolidation of Holdings Act","author":"Editor","date":"July 15, 2022","format":false,"excerpt":"Supreme Court: While deciding about a century-old land dispute, the Division Bench of Hemant Gupta and V. Ramasubramanian*, JJ., upheld the impugned decision of the Allahabad High Court. The Court held that since all the three brothers were alive when the Civil Court passed the partition decree, the Consolidation authorities\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/07\/MicrosoftTeams-image-5.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/07\/MicrosoftTeams-image-5.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/07\/MicrosoftTeams-image-5.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/07\/MicrosoftTeams-image-5.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/07\/MicrosoftTeams-image-5.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]}],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/328466","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/users\/67520"}],"replies":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/comments?post=328466"}],"version-history":[{"count":0,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/328466\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media\/328475"}],"wp:attachment":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media?parent=328466"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/categories?post=328466"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/tags?post=328466"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}