Requirement of conditions for passing an order u/s 25-A(1).

Satyanarayana Rao, J.-Under section 660(1)of the Income-tax Act the Appellate Tribunal referred to this Court the following question:

“Whether in the circumstances of the case the finding of the Appellate Tribunal that there has been no partition within the meaning of section 25-A is right”.

The applicant who is the assessee is the karta of a Hindu undivided family which consisted of himself and his two minors sons, Chockalingam and Meyyappan. During the assessment year 1940-41, the assessee applied under section 25-A of the Income-tax Act for an order recording a partition which had taken place among the members of the family. The family was assessed till that date as an undivided family. In December, 1941, another son was born; but the partition claimed was long before that date and even before the period of gestation. According to the applicant the partition was on 22nd February, 1940, which was reduced to writing on the 5th April, 1940, as evidenced by the partition deed of that date. The property of the family which was the subject-matter of partition consisted of businesses, houses and other immoveable properties, jewels and shares. There were four businesses which were exclusively owned by the family and one in partnership with others. The sole businesses were Ipoh M.S.M.M., Sithiawan M.S.M.M., Rangoon M.S.M.M. and Karaikudi M.S.M.M., and the joint business was at Singapore M.S.M.M. On the 22nd February, 1940, the assessee wrote a letter to his agent at Ipoh directing him to make certain entries in the accounts to evidence the partition of the businesses. The sons being minors, the father, it was claimed, exercised his right under Hindu law of bringing about a division between himself and his sons and also between the sons inter se. The partition deed of 5th April, 1940, shows that the Rangoon business was allotted exclusively to the father, and that the other businesses at Ipoh and Sithiawan and the combined business at Singapore were divided equally between the three sharers. The Karaikudi business was also taken entirely by the father. The share allotted to each member was described in three Schedules, Schedule A representing the share of the father, Schedule B representing the property allotted to Chockalingam and Schedule C to Meyyappan. Items 1 to 12 and 16 are houses and house-sites in which each of the members was allotted a third share. Items 13, 14 and 15 of Schedule A were exclusively allotted to the father as well as the shares in Karaikudi Sri Minakshi Sundareswarar Electric Power Corporation, Ltd., and other shares in other companies. The family owned undivided shares in certain villages and they were also distributed between the sharers. The jewels, silver articles and vessels were not physically divided; but each member was declared entitled to a third share.

The partition was not recognised by the Income-tax authorities, including the Appellate Tribunal. The ultimate finding of the Appellate Tribunal was that though the businesses were divided, the division was unequal and that as regards the immoveable properties and moveable properties, there being no physical division as contemplated by section 25-A the partition could not be recognised. The Appellate Tribunal has recorded a finding that the partition of the businesses, was altogether null and void, as the father’s over-riding power recognised under Hindu law of bringing about a division between himself and his sons could be effected only if the division actually made was fair and equal. As in the present case the division was wholly unequal, it is void and is of no legal effect. The inequality of the division of the businesses is based upon the fact that the father took for himself three rubber estates and houses at Ipoh whose book value was 5, 13,000 dollars, at a valuation of 1 lakh dollars which was adjusted in the account books between the various sharers. These assets, it was found, were under-valued, and the father practically obtained f