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"Although we are assessed to income-tax as an HUF we have never been assessed to wealth-tax. Therefore, provisions of s. 20A of the WT Act not recognising partial partition of HUF "hitherto assessed as undivided" will not apply. Attention is invited to the decisions of the Supreme Court in Roshan Di Hatti vs. CIT (1968) 68 ITR 177 (SC). The Supreme Court held that the term "hitherto assessed as undivided" will mean as assessment made by the ITO meaning "actually assessed". The Supreme Court further held that it will not include a case in which return has been filed and the proceedings for the assessment are pending. In view thereof, for the purpose of wealth-tax, it should be possible to carry out partial partition of the HUF and for that purpose no order recognising the partition would be necessary under s. 20 of the Act. Attention is invited to the decision of the Karnataka High Court in CWT vs. M. L. Ramchandra Setty & Sons (1979) 116 ITR 545 (Kar), where the Karnataka High Court held that s. 20 of the Act cannot be applied in case of a partial partition of the families assets.

Assessee's claim was rejected by the AO on the ground that the assessee has misconceived the provisions of s. 20A of the WT Act regarding the partial partition that effected after 31st Dec., 1978. We distinguished the following cases relied upon by the assessee :

1. Roshan Di Hatti vs. CIT (1968) 68 ITR 177 (SC);

2. CWT vs. M. L. Ramchandra Setty & Sons (1979) 116 ITR 545 (Kar);

3. Addl. CIT vs. V. P. Durgamma (1987) 166 ITR 776 (AP).

He held that the case of Roshan Di Hatti (supra) was pronounced in relation to a period earlier to derecognition of partial partitions. Hence, this decision has no application after the asst. yr. 1980-81. The same is the case with the decision in M. L. Ramchandra Setty & Sons (supra). He held that the assessment under the IT Act is sufficient for denying the assessee's claim of partial partition under s. 20A of the Act. The AO further held that all the cases relied upon by the assessee are old cases and have no relevance after 1st April, 1980. He held that if the assessee was assessed under the IT Act, that is sufficient for the purposes of wealth-tax under s. 20A. He held so on the analogy that the provisions of IT Act and the WT Act are parallel and there cannot be two different status for the IT purposes and for WT purposes. Aggrieved by the above, the assessee appealed before the CWT(A).

"The partition has been effected by book entries in the personal books of accounts. The partial partition is in respect of business assets and liability in favour of 5 persons have been created by book entries. This partition need not be by metes and bounds or the mode in which the property is capable of being divided, since partition has to be considered with reference to the provisions of Hindu law, i.e., Mitakshara law. It is also seen that the parties have acted upon the partition and partitioned members have in their WT return included the amounts received on partition (such assessments of partitioned members have been completed on protective basis). So the partition has to be accepted as a fact. In law s. 20A has no application since as on the date of partition the HUF was not hitherto assessed. Therefore, the AO is directed to exclude the amount claimed as partial partition from the computation of net wealth. Relief to the appellant Rs. 13 lakhs."

(c) the several liability of any member or group of members aforesaid shall be computed according to the portion of the joint family property allotted to him or it at such partial partition, and the provisions of this Act shall apply accordingly.

Explanation. - For the purposes of this section, "partial partition" shall have the meaning assigned to it in cl. (b) of the Explanation to s. 171 of the IT Act."

Before dealing with this section, it is necessary to go through the s. 20 of the WT Act, 1957. Sec. 20 deals with assessment after partition of an HUF. Sec. 20 reads as under :