U. T. SHAH, J. M.: Order only point involved in this appeal pertains to inclusion of capital gains of Rs. 34,425 in total income of assessee. 2 . assessee is HUF. assessment year is 1979-80 and relevant previous year ended on 31st March, 1979. 3. On Shri Chinubhai Motilal Shah had his wife, three daughters and four sons including Shri Dilipbhai Chunibhai Shah, who is Karta of present assessee HUF. Shri Chunibhai had purchased one property at Pachavati, Elishbridge, Ahmedabad for his residence out of his own earnings. Shri Chinubhai died intestate on 20th May, 1965. wife, daughters and sons of late Shri Chinubhai had divided certain properties keeping in mind provisions of Hindu Succession Act, 1956, vide notes/memorandum dt. 1st Nov., 1970. Pachavati property remained with four sons of late Shri Chinubhai in name of "Shri Chunibhai Motilal HUF". 3.1 On 27th March, 1973, four sons of late Shri Chinubhai executed deed captioned "Memoradum/Notes of Partial Partition" whereby 1/4th share in Pachavati property (both land and super-structure) was allotted to each of four sons of late Shri Chinubhai. relevant portion of said deed reads as under : "However, we parties of all four parts have mutually decided to divide by partial partition, said bungalow bearing Municipal Census No. A/1235/H and plot of land on which it is situated and have actually divided same on Falgun Vadi 7th day of Samvat Year 2029, Monday-the date 26th March 1973. Therefore, form said date, we have ceased to treat said bungalow and plot land, as joint property, and have declared that from said date, we parties of all to four parts have each undivided 1/4th share in said bungalow, and we have divided same accordingly. That means, said bungalow and its plot land become joint property of coownership of parties of all four parts, form date 26th March 1973; and we have declared from said date that each of us parties of all four parts, has clear 1/4th share therein, and we have effected partition in that manner. That means, 1/4th share of each of us praties of four parts, has been of full independent ownership of us each of partition by metes and bounds of said property viz., bungalow, has been reserved by us for being effected at our convenience. We have executed this writing in order to maintain notes/memorandum of paritionat as above, today and this writing is agreed to and approved by us parties of all four parts." 3.2 Right from asst. yr. 1974-75 to 1978-79 each of four sons had shown 1/4th share of S.O. property income of said Pachavati property in their respective HUF returns and were accordingly assessed by ITO. 3.3 Even for year under appeal, they had shown 1/4th share of S. O. Property income in their respective HUF returns, for period 1st April 1978 to 30th June, 1978. 3.4 On 7th July, 1978, four sons of late Shri Chinubhai executed deed captioned "Partition Deed of Property" wherein they had estimated value of entire Panchavati property at Rs. 3,00,000 and their respective share therein at Rs. 75,000 each. S/Shri Jitendra and Surendra took over shares of S/Shri Bharatbhai and Dilipbhai in said property in lieu of payment of Rs. 1,50,000. Shri Bharatbhai Chinubhai HUF got Rs. 75,000 and Shri Diliphai Chinubhai Shah HUF (the present assessee) got Rs. 75,000. 4. On aforesaid facts, in its return originally filed by assessee, 1/4th share of S. O. property income form 1st April, 1978 to 30th June 1978 was shown at Rs. 157. assessee had also attached note wherein it had claimed benefit under s. 54 of Act, in following manner : "Regarding Panchavati Property : "A house property bearing Municipal No. 1235-H situated at Panchvati Ambavadi, Ellisbridge was purchased by Shri Chinubhai Motilal HUF before C. Y . 1960. property is used for self residence. After death of Shri Chinubhai this property is partitioned between 4 brothers. Shri Jitendrabhai, Shri Surendrabhai, Shri Diliphbai (Myseef) and Shri Bharatbhai. In asst. yr. 1979- 80 deed of distribution of property was made in July 1978 on stamp paper of Rs. 6,000 between 4 brothers. value of said property was fixed at Rs. 3,00,000. I have relinquished right in said property and received Rs. 75,000 towards my 1/4th share in property from Shri Surendrabhai. I have constructed property for self residence in asst. yr. 1977-78 and invested about Rs. 92,000. Thus benefit of s. 54 of IT Act regarding exempt of capital gain (long term) from tax would be available." 5. Therefore, revised return was filed wherein assessee had shown capital gains of Rs. 34,425 in respect of Pachavati property which was worked out as under : "Working of Capital Gain (Long Term) on transfer of house property situated at Pachavati, Ambavadi, Ahmedabad-6, on 7th July, 1978. OWNERS Description of Property 4 Brothers Municipal No. (A/1235)/H . Survey No. 126 plot area 1331 sq. yds. Final Plot . No. 648 with super structure. (1) Ground Floor 370 sq. yds. Jitendrabhai (2) First Floor 152 sq. yds. Surendrabhai (3) . Diliphabi (4) . Bharatbhai said property was purchased by Shri Chinubhai Motial HUF before C. Y . 1960 for self residence. Shri Chinubhai Expired on 20th Feb., 1965. Thereafter partition took place on 26th March 1973, between 4 brothers of Chunibhai Motilal HUF and said property was divided between 4 brothers having 1/4th share in said property. Income from said property is shown in personal assessment of each brother. Price of House property as on 7th July, 1978 Rs. . 3,00,000 Less : cost of Stamp paper used for distribution of Rs. property 6,000 Rs. . 2,94,000 Less : Cost of property adopted fair market value of 1st Jan. 1964 as under : Final Plot No. 667 sq. yds. 1961 sold by Balagarui Bansidhar to Bank of India on 4th Jan., 1974 for Rs. 2,25,000 with super structure as per certificate of Sub Rs. Registrar, Ahmedabad dt. 17th Oct., 1981 Price of C. Y. 1964 1,56,300 on above base would be Rs.117.43 per sq. yd. Applying above rate of price to Plot No. 648 of 1331 sq. yds. x Rs. 117.43 Rs. . 1,37,700 Rs. 1/4th of above 34,425" 6 . By letter dt. 12th Feb., 1982 of its tax Consultant, assessee claimed that in aforesaid transaction no capital gains arose. With view to complete our order, we reproduce below contents of said letter : "The assessment proceedings of our above named client for asst. yr. 1979-80 were conducted in November, 1981. During year under assessment, our client received Rs. 75,000 from his brother Shri Surendra Chinubhai towards relinquishing his right in house property of Panchavati, Ambavadi, Ellisbridge, in July 1978. This transaction considered being transfer- long term capital gains. Rs. 34,425 as worked out under s. 45 and thereby revised return of income is submitted on 6th Nov., 1985, declaring total income Rs. 58,097. whole submission is not according to provisions of IT Act. above said distribution of capital asset between members of association of persons is covered under s. 47(ii) of IT Act and it would not amount to transfer as per this provision of law. Thus assessing our client on capital gain Rs. 34,425 by applying s. 45 of IT Act, would amount to misapplying provisions of IT Act and assessment would not be legal. In view of this, we request you to consider above facts at time of finalising assessment of year 1979-80 and addition of long term capital again in revised total income be deleted. Hoping to be excused for inconvenience caused to you." 7 . ITO, therefore, framed assessment under s. 143(3) of Act, on 9th Nov., 1981, wherein she included capital gains of Rs. 34,425, as disclosed by assessee in its revised return, in total income of assessee. 8. In appeal, before AAC, assessee once again urged that in view of provisions of s. 47 (ii) of Act, provisions of s. 45 r/w s. 2(47) of Act, were not attracted and therefore, ITO was not justified in including capital gains of Rs. 34,425 in total income of assessee. AAC, however, upheld section of ITO in following manner : "3. I have considered contentions put forth above in light of copy of assessment order. From submissions put forth, it is seen that appellant has relinquished his right in above mentioned property. Since s. 2(47) of Act includes relinquishment in definition of transfer and as per s. 45, any profits or gains arising from transfer of capital assets is chargeable to income-tax under head Capital-gains" and as terms of s. 47 (ii) are not applicable in light of facts furnished, ITO was justified in assessing said amount as long term capital gains". 9. Being aggrieved by order of AAC, assessee has come up in appeal before Tribunal. ld. counsel for assessee vehemently argued that on facts and circumstances obtaining in instant case, IT authorities were not justified in including capital gains of Rs. 34,425 in total income of assessee, as by virtue of provisions of s. 47(ii) of Act, provisions of s. 45 of Act, were not applicable in assessee s case. According to ld. counsel for assessee, deed executed on 27th March, 1973 has no relevance in deciding point at issue. But we should consider regular partition deed executed on 7th July, 1978 whereby property in question was partitioned by metes and bounds. Inviting our attention to decision of Hon ble Madras High Court in case of M. K. Stremann vs. CIT (1961) 41 ITR 297 (Mad) more particularly, item (iii) appearing at p. 298 of report ld. counsel for assessee submitted that by executing deed dt. 7th July, 1978, no transfer was involved and therefore, provisions of s. 45 of Act, cannot be attracted in instant case. By deed dt. 27th March, 1973 there was severance in status in respect of Pachavati property inasmuch as property hitherto held by coparcenary was held thereafter by separated members as tenants-in-common. Subsequent partition on 7th July, 1978 between divided member of family does not amount either to transfer of assets from that body of tenant-in-common to each of such tenets-in-common. Thereafter, inviting our attention to decision of Hon ble Supreme Court in case of M. K. Stremann (supra) regarding three stages of division of coparcenary property. Relying on decision of Hon ble Gujarat High Court in case of CIT vs. Keshavlal Lalubhai Patel, (1965) 55 ITR 637 (SC) he highlighted fact that at p. 641 of report, Hon ble Supreme Court has approved certain observations made by Hon ble Gujarat High Court in case of CIT vs. Vajulal Chunilal (HUF) (1979) 10 CTR (Guj) 79 : (1979) 120 ITR 21 (Guj) ld. counsel for assessee submitted that partial partition wherein one coparcener takes over assets and pays off other coparcener would be valid partition. According to ld. counsel for assessee, in instant case, same thing had harped inasmuch as S/Shri Jitendra and Surendra took over entire Panchavati property and paid off S/Shri Bharatbhai and Dilipbhai. Relying on yet another decision of Hon ble Gujarat High Court in case of CIT vs. Govindlal Mathurbhai Oza (1981) 22 CTR (Guj) 165 : (1982) 138 ITR 711 (Guj) ld. counsel for assessee submitted that partition of HUF consists in ascertaining and defining shares of coparceners in joint property and actual division of property by metes and bounds is not necessary to constitute partition. division of properties by metes and bounds may take place subsequently. Recapitulating facts obtaining in instant case, ld. counsel for assessee submitted that by deed dt. 27th March 1973, shares of coparceners in Panchavati property were ascertained and defined and actual division of said property by metes and bounds was reserved to future date. actual division of said property by metes and bounds took place on 7th July 1978 when S/Shri Jitendra and Surendra took over Panchavati property by paying of Rs. 75,000 each to S/Shri Bharatbhai and Dilipbhai, He, therefore, very strongly argued that capital gains of Rs. 34,425 included in total income of assessee should be deleted. 10. ld. Representative for Department, on other hand, strongly relied on order of IT authorities and justified their action. Inviting our attention to deed dt. 27th March, 1973 (the relevant portion of which is reproduced above) he highlighted that fact that partition of Pachavati property was made on that day in view of clear understanding between parties to said deed. Not only that, right form asst. yr. 1974-75 till asst. yr. 1978-79, each of four sons of late Shri Chinubhai had shown 1/4th shares of S.O. property income in respect of Panchavati property in their respective HUF returns and were accordingly assessed by ITO. He also highlighted facts that even for year under appeal also, 1/4th shares of S. O. property income was shown by assessee for period 1st April, 1978 to 30th June, 1978 i.e. till date of execution of second deed viz., 7th July, 1978. In other words, he wanted to impress upon us that there cannot be two partitions in respect of same property, one in 1973 and other in 1978 as claimed by assessee. 11. We have carefully considered rival submissions of parties and we do not find any merit in stand taken on behalf of assessee. It is pertinent to note that late Shri Chinubhai had died intestate on 20th Feb., 1965. Therefore, by virtue of provisions of Hindu Succession Act, 1956 all properties owned by late Shri Chinubhai would be divided equally amongst his legal heirs viz., wife, daughters and sons. However, it appears that on 1st Nov., 1970, wife, daughters and sons of Shri Chinubhai executed deed (copy of which is not brought on record), whereby they made family arrangement regarding properties left by late Shri Chinubhai keeping in mind provisions of Hindu Succession Act, 1956. From deed dt. 27th March, 1973, it appears that four sons of late Shri Chinubhai had treated Pachavati property as joint property of "the HUF of Shri Chinubhai Motilal" till such date. In deed dt. 27th March, 1973 (the relevant portion of which is reproduced above), four sons of late Shri Chinubhai and partitioned their interest in Pachavti property, each one of them taking 1/4th share therein. Not only that in assessment years subsequent to 27th March 1973, each one of sons of late Shri Chinubhai had shown 1/4th share of S.O. property income in respect of Panchavati property in their respective HUF returns. All these will clearly show that partition in respect of Panchavati property was in fact, effected by deed dt. 27th March, 1973. Thereafter, since assessee and Shri Bharatbhai were not interested in having share in said Pachavati property, S/Shri Jitendra and Surendra as parties of First and Second part and S/Shir Bharatbhai and Dilipbhai as parties of Third part executed deed on 7th July, 1978 called by them as "Partition deed of Property", whereby they estimated value of said Panchavati property at Rs. 3,00,000. Therefore, value of share of each one of them in said property was Rs. 75,000. Since by deed dated 27th March, 1973 they had already partitioned their interest in said property, S/Shri Jitendra and Surendra paid Rs. 1,50,000 to S/Shri Bharatbhai and Dilipbhai in consideration of relinquishing their right, title and interest in said property. This sum of Rs. 1,50,000 was equally divided between S/Shri Bharatbhai and Dilipbhai. This would clearly show that assessee HUF got Rs. 75,000 for relinquishing its right, title and interest in Pachavati property which was earmarked by deed dt. 27th March, 1973. 11. Keeping facts and circumstances obtaining in instant case, we are of view that no help can be derived by assessee from decision of Hon ble Madras High Court in case of M. K. Stremann (supra). In that decision Hon ble High Court envisages case where each of tenants-in- common would take away his share in coparcenary property. In instant case, only assessee and Shri Bharatbhai relinquished their right title and interest in Panchavati property, which S/Shri Jitendra and Surendra took away from them for consideration. In this view of matter, even decision in case of Keshavlal Lallubhai Patel (supra) has no bearing on facts and circumstances obtaining in instant case. In our view decision in case of Vijulal Chunilal (HUF) (supra) would help stand taken on behalf of Revenue than to assesee. We make this observation as S/Shri Jitndra and Surendra took over entire Panchavati property by paying off S/Shri Bharatbhai and Dilipbhai in respect of their shares in said property. It is pertinent to note that HUF of Chinubhai Motilal was never assessed as such under IT Act, 1961 and therefore, decision in case of Govindlal Mathurbhai Oza (supra) would not be of any help to assessee. In our considered opinion, by deed dt. 27th March, 1973, Panchavati property was partitioned in accordance with Hindu Law, whereby each of parties got 1/4th share in said property. Since it was not physically possible to divide said property, another deed was executed on 7th July, 1978 whereby shares fallen to assessee and Shri Bharatbhai were sold to Shri Jitendra and Shri Surendra for consideration of Rs. 1,50,000. assessee HUF got Rs. 75,000 and HUF of Bharatbhai got balance of Rs. 75,000. In this view of matter, in our opinion provisions of s. 47(ii) of Act, would not be of any assistance to assessee. relevant portion of said section reads as under : "47. Nothing contained in s. 45 shall apply to following transfers : (ii) any distribution of capital assets on dissolution of firm, body of individuals or other association of persons." Here also, we are of considered view that if it was possible to divide said Pachavati property into four shares, and if each of sons of late Shri Chinubhai gets his 1/4th share then provisions of s. 45 of Act, would not be applied as no transfer was involved in such transaction. However, in instant case, there is no dissolution of BOI or other AOP as only assessee and Shri Bharatbhai had walked out from Panchvati Property by taking Rs. 75,000 each while S/Shri Jitendra and Surendra continued to own said property equally. For all these reasons, we have no hesitation in upholding action of IT authorities. 12. In result, appeal is dismissed. *** DILIP CHINUBHAI SHAH v. INCOME TAX OFFICER