JUDGMENT B.P. Jeevan Reddy, C.J.
1. The Income-tax Appellate Tribunal, Delhi, has stated the following two questions under Section 256(2) of the Income-tax Act, 1961 :
"(i) Whether the assessee's claim for a partial partition of the immovable properties under consideration was legally acceptable under Section 171 of the Income-tax Act, 1961 ?
(ii) Whether the Tribunal was in law justified in directing exclusion of the income from the properties under consideration from the assessment of the assessed Hindu-undivided family ?"
2. The questions referred in all the references are identical. The assessee is also the same in all the references. It would, therefore, be sufficient if we refer to the facts in Income-tax Reference No. 199 of 1979.
3. The assessee is a Hindu undivided family, Onkar Saran and Brothers. For the assessment year 1970-71, the assessee claimed that there has been a partial partition amongst the members of the Hindu undivided family and requested the Income-tax Officer to recognise and record the same. The claim of partial partition was made with respect to the interest the Hindu undivided family held in certain immovable properties known as Kothiwal Nagar properties. The partial partition was said to have taken place on October 2, 1968.
4. Kothiwal estate originally belonged to three brothers Nand Lal Saran, Brij Pal Saran and Brijraj Saran. They held the said properties as tenants-in-common. Brij Pal Saran died issueless bequeathing his 1/3rd share to the three sons of Nand Lal Saran and the only son of Brijraj Saran. There was no division or partition of the said properties among the two branches of Nand Lal Saran and Brijraj Saran. The income received from the said properties was being shown and treated as belonging to the aforesaid Hindu undivided families of Nand Lal Saran and Brijraj Saran. The assessee herein represents Brijraj Saran group.
5. The assessee's case was that a partial partition took place on October 2, 1968, orally and that, later on, one of the members of this Hindu undivided family, Gopal Saran, instituted a suit in the Civil Court, Moradabad, for a declaration that he was the owner and in possession of 5/44ths share in the said properties and its income. The suit was decreed oh November 7, 1969. The Income-tax Officer rejected the claim for partial partition by his order dated June 21, 1971. An appeal to the Appellate Assistant Commissioner also failed. On further appeal, however, the Tribunal set aside the Income-tax Officer's order and remanded the matter to the Income-tax Officer for a fresh inquiry into and disposal of the said question in the light of the directions given by it in its order. The questions whether the properties comprising Kothiwal estate were capable of partition by metes and bounds and whether such partition was essential for the purpose of Section 171 were left open. In pursuance of the order of remand, the Income-tax Officer examined the question and, by his order dated March 25, 1974, rejected the petitioner's claim for partial partition again. He held that a division by metes and bounds was essential and since the said properties had not been so divided, the plea of partial partition cannot be accepted in the light of the Explanation to Section 171. On appeal, the Appellate Assistant Commissioner agreed with the assessee and held that there was a valid partial partition which ought to be recognised and recorded under Section 171. He was of the opinion that a physical division of the properties was not possible in the circumstances. Thereupon, the Department preferred an appeal before the Income-tax Appellate Tribunal questioning the order of the Appellate Assistant Commissioner. The Department's case was that the properties comprising Kothiwal estate were capable of physical division. The Tribunal, on examination of the materials placed before it, recorded the following findings :
After the death of Brij Pal Saran in 1922, the Kothiwal estate was owned by Nand Lal Saran group and Brijraj Saran group as tenants-in-common. The income derived from the said estate was being disclosed by the two groups in their respective returns filed in the status of Hindu undivided family. The partial partition which constituted the basis for the suit filed by Gopal Saran in 1969 in the Moradabad courts establishes that the assessee Hindu undivided family (Onkar Saran and Brothers) had only 5/11th share in shops Nos. 1 to 22, godowns Nos. 1 to 22 and flats Nos. 5 to 13 and a 5/12th share in shops Nos. 23 to 30 and the vacant land, all of which together formed Kothiwal estate. Since the assessee-Hindu undivided family owned only an undivided share in the said estate, a partition by metes and bounds of the said estate among the members of this Hindu undivided family is not possible. The division can be effected only by specifying the shares of the respective members. A physical division by metes and bounds contemplated by the Explanation to Section 171 is intended only to apply to those properties which can be conveniently divided and not to those which cannot be conveniently so divided. The Tribunal, accordingly, directed the Income-tax Officer to accept the claim of partial partition.
Thereupon, the Revenue obtained the reference of the said two questions under Section 256(2).
6. According to Section 171 of the Act, a partial partition taking place on or before December 31, 1978, can be recognised and recorded. Sub-section (2) provides that :
"Where, at the time of making an assessment under Section 143 or Section 144, it is claimed by or on behalf of any member of a Hindu family assessed as undivided that a partition, whether total or partial, has taken place among the members of such family, the Assessing Officer shall make an inquiry there into after giving notice of the inquiry to all the members of the family."
7. Sub-section (3) provides for recording a finding as a result of such an inquiry and Sub-section (4) provides for the consequences of such finding. The Explanation appended to Section 171 defines the expressions "partition" and "partial partition" in Clauses (a) and (b). It reads as follows : "(a) 'partition' means-
(i) where the property admits of a physical division, a physical division of the property, but a physical division of the income without a physical division of the property producing the income shall not be deemed to be a partition ; or
(ii) where the property does not admit of a physical division, then such division as the property admits of, but a mere severance of status shall not be deemed to be a partition ;
(b) 'partial partition' means, a partition which is partial as regards the persons constituting the Hindu undivided family, or the properties belonging to the Hindu undivided family or both."
8. A reading of the Explanation shows that where the property admits of a physical division, it should be physically divided and any claim of division without a physical division of such property will not be deemed to be a partition. Where, however, the property does not admit of a physical division, then such division as the property admits of amounts to a partition, but a mere severance of status or a mere declaration shall not be deemed to be a partition. A partial partition may be with respect to some of the persons constituting a Hindu undivided family or some of the properties owned by a Hindu undivided family or both. Now, the entire argument of the Revenue is based upon the definition of the expression "partition". Sri Markandey Katju, learned standing counsel for the Revenue, contends that the estate is capable of physical division. The Tribunal has not found that it is incapable of physical division. A partition without physical division can be recognised only where the property is not capable of physical division. The Tribunal was, therefore, in error in recognising the partition without recording a finding that the partition without recording a finding that the property concerned was not capable of physical division. He, therefore, wants us to disapprove the Tribunal's reasoning or at any rate to call upon the Tribunal to record a finding on the question whether the property concerned admits of a physical division or not. In our opinion, however, the course suggested by Sri Katju is not really called for on the facts and in the circumstances of this case. While examining the question whether the property admits of physical division, the Income-tax Officer need not look beyond the Hindu undivided family concerned. He is expected to look at the property owned by the Hindu undivided family and determine whether it admits of a physical division. In this case, the assessee-Hindu undivided family owned only an undivided interest in Kothiwal estate. If so, the members of the assessee-Hindu undivided family could not have divided the said interest by metes and bounds. A partition of the said property by metes and bounds may be possible if all the co-owners join together. Such a partition can be effected by agreement or through a suit to which all the co-owners are parties. But, the members of the assessee-Hindu undivided family alone cannot bring about such a partition by metes and bounds since the very Hindu undivided family owns only an undivided interest in the estate. We may reiterate that while determining the question whether the property admits of a physical division or not, one has to look to the property held by the Hindu undivided family concerned and not beyond. Since, in this case, the assessee-Hindu undivided family owns only an undivided interest, the only division that was possible in the circumstances was by specifying and separating the shares of the members of the assessee-Hindu undivided family and the division of income accordingly. Since that has been done in this case, the partial partition ought to have been recognised.
9. Sri Markandey Katju placed reliance upon the decisions of the Supreme Court reported in Kalloomal Tapeswari Prasad (HUF) v. CIT [1982] 133 ITR 690 ; AIR 1982 SC 760 and Joint Family of Udayan Chinubhai v. CIT [1967] 63 ITR 416 ; AIR 1967 SC 762. On a perusal of the decision in Kalloomal Tapeswari Prasad (HUF) v. CIT [1982] 133 ITR 690, we find that the said decision merely reiterates the principles underlying Section 171 but does not deal with the kind of situation arising before us. The same must be said of the other decision too of the Supreme Court relied upon by Sri Katju. We must say that the argument advanced by the Revenue cannot be said to be a reasonable understanding of the Explanation. It may be a case of overkill.
10. For the above reasons; the two questions referred to us are answered in the affirmative, i.e., in favour of the assessee and against the Revenue. There shall be no order as to costs.