Our family partitioned by agreement and a civil court passed a partition decree. Can the department still assess us as a Hindu undivided family?
Yes, unless the property was actually divided. The Supreme Court held that the Explanation to section 171 gives partition a special meaning: where property admits of physical division there must be a physical division, and where it does not there must be such division as it admits of, a mere severance of status not being enough. A partition by agreement or by a court's decree therefore does not disrupt the family's status for tax unless it was followed by actual division by metes and bounds. The appeals were allowed and the writ petition dismissed.
Decided by the Supreme Court (Supreme Court of India - K.N. Singh, K.J. Shetty and Kuldip Singh, JJ (judgment by K.N. Singh, J)) on 1990-09-14, reported as AIR 1991 SC 2035; 1991 Supp (2) SCC 737; (1991) 187 ITR 696; (1990) 53 Taxman 78. It bears on section 171 of the Income Tax Act 1961, in Assessment & Scrutiny matters.
This is the decision to reach for when a family has done everything the general law requires and the department still assesses it as a Hindu undivided family. It explains why that is not an anomaly: under Hindu law joint status can be disrupted by settlement, agreement, arbitration or decree, and the members may simply share the income, but section 171 does not recognise any of that, having been given a special meaning to safeguard the Revenue. It is also specific about court decrees - a decree is ordinarily good evidence of partition, but under section 171 a preliminary decree is not enough and there must be actual division under a final decree. It follows Kaloomal Tapeshwar Prasad and confines the Court's earlier decision under the Kerala agricultural income-tax law to that statute.
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The respondent was assessed for assessment years 1967-68, 1968-69 and 1969-70 as the head of a Hindu undivided family. She contended before the Income-tax Officer that the tavazhi had been divided by a partition agreement, that its joint status had been disrupted by a civil court decree in a partition suit, that the properties had been divided into 14 shares, and that the family could no longer be assessed. Until then, and up to the year before, assessments had been made on the family. The Income-tax Officer rejected the claim: the preliminary decree of the civil court had not become final and no physical or actual partition had taken place, so the status of the family continued for tax. She moved the High Court. A single judge quashed the assessments, holding that section 171 does not apply where the division was effected before the accounting period began and the family received no income in it. A Division Bench affirmed, reasoning that a Hindu undivided family is an entity distinct from its members and that if it received no income the members' income could not be assessed as its income. The Revenue appealed on a certificate under Article 133.
The appeals were allowed, the High Court's order set aside and the writ petition dismissed, with no order as to costs. Under section 171 a family once assessed as a Hindu undivided family is deemed to continue as such for the purposes of the Act except where partition is proved to have been effected in accordance with the section; where partition is claimed at the time of assessment the Income-tax Officer must enquire after notice to all the members and record findings, and on a finding of partition compute individual liability according to the shares allotted. The Explanation defines partition as physical division where the property admits of it - division of income without division of the property producing it not being enough - and, where it does not, such division as the property admits of, a mere severance of status not being enough. Here it was not in dispute that there had been no physical division by metes and bounds, so the officer was justified in holding the family's status undisrupted and the income still impressed with its character. The High Court's contrary view was contrary to Kaloomal Tapeshwar Prasad and could not be sustained.
The Court's reasoning turns on the gap the Explanation deliberately creates between the general law and the tax law. Under Hindu law members may partition by private settlement, agreement, arbitration or decree, and may agree to share the income according to their shares; any of these may disrupt joint status. The legislature has not recognised that for income tax. Section 171 contains a deeming provision, and the Explanation assigns partition a special meaning, framed to safeguard the interest of the Revenue: division of income without division of the property producing it is expressly excluded, and severance of status is expressly excluded. It follows that the factum of partition for assessment cannot be judged by the general principles, even where a decree of court exists. A decree in a partition suit is ordinarily good evidence of partition, but under section 171 a preliminary decree is not enough; there must be actual physical division pursuant to a final decree, by metes and bounds. The burden lies on the assessee, who must prove that the agreement or decree was followed by such division. The Court applied Kaloomal Tapeshwar Prasad, where it had held that although Hindu law does not require division by metes and bounds in every case, the income-tax law imposes its own conditions, and that without such proof the property continues to belong to the family and its income to be included in the family's total income. The Court distinguished its earlier decision in Poomuli Manekkal Parameswaran Namboodiripad, which construed section 29 of the Kerala Agricultural Income Tax Act, a provision containing nothing like the Explanation to section 171.
A decree of the Court for partition cannot terminate the status of HUF unless it is shown that the joint family property was physically divided in accordance with the agreement or decree of the Court.
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Handle my notice → Ask a CA on WhatsAppYes, unless the property was actually divided. The Supreme Court held that the Explanation to section 171 gives partition a special meaning: where property admits of physical division there must be a physical division, and where it does not there must be such division as it admits of, a mere severance of status not being enough. A partition by agreement or by a court's decree therefore does not disrupt the family's status for tax unless it was followed by actual division by metes and bounds. The appeals were allowed and the writ petition dismissed. This was decided by the Supreme Court (Supreme Court of India - K.N. Singh, K.J. Shetty and Kuldip Singh, JJ (judgment by K.N. Singh, J)) and bears on section 171 of the Income Tax Act 1961. It is reported as AIR 1991 SC 2035; 1991 Supp (2) SCC 737; (1991) 187 ITR 696; (1990) 53 Taxman 78. This is the decision to reach for when a family has done everything the general law requires and the department still assesses it as a Hindu undivided family. It explains why that is not an anomaly: under Hindu law joint status can be disrupted by settlement, agreement, arbitration or decree, and the members may simply share the income, but section 171 does not recognise any of that, having been given a special meaning to safeguard the Revenue. It is also specific about court decrees - a decree is ordinarily good evidence of partition, but under section 171 a preliminary decree is not enough and there must be actual division under a final decree. It follows Kaloomal Tapeshwar Prasad and confines the Court's earlier decision under the Kerala agricultural income-tax law to that statute. If it applies to you, the first step is this: Do not stop at the deed or the decree: get the property actually divided by metes and bounds, and put the evidence of that division before the assessing officer.
The respondent was assessed for assessment years 1967-68, 1968-69 and 1969-70 as the head of a Hindu undivided family. She contended before the Income-tax Officer that the tavazhi had been divided by a partition agreement, that its joint status had been disrupted by a civil court decree in a partition suit, that the properties had been divided into 14 shares, and that the family could no longer be assessed. Until then, and up to the year before, assessments had been made on the family. The Income-tax Officer rejected the claim: the preliminary decree of the civil court had not become final and no physical or actual partition had taken place, so the status of the family continued for tax. She moved the High Court. A single judge quashed the assessments, holding that section 171 does not apply where the division was effected before the accounting period began and the family received no income in it. A Division Bench affirmed, reasoning that a Hindu undivided family is an entity distinct from its members and that if it received no income the members' income could not be assessed as its income. The Revenue appealed on a certificate under Article 133. The matter was decided on 1990-09-14 by the Supreme Court (Supreme Court of India - K.N. Singh, K.J. Shetty and Kuldip Singh, JJ (judgment by K.N. Singh, J)). On those facts the Supreme Court held as follows. The appeals were allowed, the High Court's order set aside and the writ petition dismissed, with no order as to costs. Under section 171 a family once assessed as a Hindu undivided family is deemed to continue as such for the purposes of the Act except where partition is proved to have been effected in accordance with the section; where partition is claimed at the time of assessment the Income-tax Officer must enquire after notice to all the members and record findings, and on a finding of partition compute individual liability according to the shares allotted. The Explanation defines partition as physical division where the property admits of it - division of income without division of the property producing it not being enough - and, where it does not, such division as the property admits of, a mere severance of status not being enough. Here it was not in dispute that there had been no physical division by metes and bounds, so the officer was justified in holding the family's status undisrupted and the income still impressed with its character. The High Court's contrary view was contrary to Kaloomal Tapeshwar Prasad and could not be sustained.
The Court's reasoning turns on the gap the Explanation deliberately creates between the general law and the tax law. Under Hindu law members may partition by private settlement, agreement, arbitration or decree, and may agree to share the income according to their shares; any of these may disrupt joint status. The legislature has not recognised that for income tax. Section 171 contains a deeming provision, and the Explanation assigns partition a special meaning, framed to safeguard the interest of the Revenue: division of income without division of the property producing it is expressly excluded, and severance of status is expressly excluded. It follows that the factum of partition for assessment cannot be judged by the general principles, even where a decree of court exists. A decree in a partition suit is ordinarily good evidence of partition, but under section 171 a preliminary decree is not enough; there must be actual physical division pursuant to a final decree, by metes and bounds. The burden lies on the assessee, who must prove that the agreement or decree was followed by such division. The Court applied Kaloomal Tapeshwar Prasad, where it had held that although Hindu law does not require division by metes and bounds in every case, the income-tax law imposes its own conditions, and that without such proof the property continues to belong to the family and its income to be included in the family's total income. The Court distinguished its earlier decision in Poomuli Manekkal Parameswaran Namboodiripad, which construed section 29 of the Kerala Agricultural Income Tax Act, a provision containing nothing like the Explanation to section 171. In the words reproduced by the source cited on this page: "A decree of the Court for partition cannot terminate the status of HUF unless it is shown that the joint family property was physically divided in accordance with the agreement or decree of the Court."
It was decided by the Supreme Court on 1990-09-14 and is reported as AIR 1991 SC 2035; 1991 Supp (2) SCC 737; (1991) 187 ITR 696; (1990) 53 Taxman 78. Binding on every court and authority in India. A Supreme Court decision binds every assessing officer, every Commissioner (Appeals), every bench of the Income Tax Appellate Tribunal and every High Court in India. An officer who declines to follow it is acting contrary to law, and that refusal is itself a ground of appeal. On section 171, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the department, and it appears in this library for that reason — you need to know what the Assessing Officer will cite against you. The appeals were allowed, the High Court's order set aside and the writ petition dismissed, with no order as to costs. Under section 171 a family once assessed as a Hindu undivided family is deemed to continue as such for the purposes of the Act except where partition is proved to have been effected in accordance with the section; where partition is claimed at the time of assessment the Income-tax Officer must enquire after notice to all the members and record findings, and on a finding of partition compute individual liability according to the shares allotted. The Explanation defines partition as physical division where the property admits of it - division of income without division of the property producing it not being enough - and, where it does not, such division as the property admits of, a mere severance of status not being enough. Here it was not in dispute that there had been no physical division by metes and bounds, so the officer was justified in holding the family's status undisrupted and the income still impressed with its character. The High Court's contrary view was contrary to Kaloomal Tapeshwar Prasad and could not be sustained. It arises in Assessment & Scrutiny matters, on section 171 of the Income Tax Act 1961, and was decided by Supreme Court of India - K.N. Singh, K.J. Shetty and Kuldip Singh, JJ (judgment by K.N. Singh, J). Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Where the property cannot be physically divided, effect such division as it does admit of, and show it - severance of status alone will not do, nor will dividing only the income. Raise the claim at the time of assessment and ask for the enquiry section 171 requires, with notice to all members, and for findings to be recorded on the question of partition. Expect to carry the burden: the assessee claiming partition must prove disruption in the terms of the Explanation, not merely under the general Hindu law.
Still good law. A citator search returns 41 later decisions citing the judgment, and the Supreme Court itself has applied it. In Addl. CIT v Maharani Raj Laxmi Devi (11 February 1997) the Court reiterated the view taken in this case and in Kalloomal Tapeswari Prasad, holding that a finding under section 171 is required before a partition can be recognised for income tax purposes whatever the position under Hindu law, and rejected the High Court's distinction between statutory and voluntary partition. It is applied at Tribunal level - B.R. Talwar v ITO (ITAT Chandigarh, 28 January 2005) - and the Delhi High Court cited it in Captain Rajesh Sethi v Col. P.C. Sethi (1 November 2023) for the proposition that a Hindu undivided family continues until partition. Nothing overruling or doubting it was found. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The batch line listed sections 171(9), 143 and 2(31); the judgment turns on section 171 and its Explanation, and I have taken the sections from the judgment. The dates given for the partition agreement differ within the harvested text, appearing as 3 July 1958 in one place and 21 February 1963 in another, and the transcription is poor in places, splitting section 171 as 17 1. The judgment does not deal with what would follow if the property had been incapable of physical division. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeals were allowed, the High Court's order set aside and the writ petition dismissed, with no order as to costs. Under section 171 a family once assessed as a Hindu undivided family is deemed to continue as such for the purposes of the Act except where partition is proved to have been effected in accordance with the section; where partition is claimed at the time of assessment the Income-tax Officer must enquire after notice to all the members and record findings, and on a finding of partition compute individual liability according to the shares allotted. The Explanation defines partition as physical division where the property admits of it - division of income without division of the property producing it not being enough - and, where it does not, such division as the property admits of, a mere severance of status not being enough. Here it was not in dispute that there had been no physical division by metes and bounds, so the officer was justified in holding the family's status undisrupted and the income still impressed with its character. The High Court's contrary view was contrary to Kaloomal Tapeshwar Prasad and could not be sustained.
TaxSphere, “ITO v Smt N.K. Sarada Thampatty”, https://taxnotice.vittsphere.com/caselaw/case/ito-v-n-k-sarada-thampatty-smt/ (validity last checked 2026-08-29)
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As karta and father I divided some family shares between myself and my minor sons. Can the officer refuse to record the partial partition because the shares are unequal?
The family's only income-producing right is the karta's share in a managing agency, which cannot be split among the members. They divided the commission between themselves. Is that a partition the department must accept?
My father died and I am now the only male member of our family, with my mother and unmarried sisters. Must the family income be assessed on me as an individual?
Our family divided the income but not the properties. Is that a partition the department must accept?
