Govindan Nair, C.J:— This is an appeal by the Income-tax Officer, Assessment V, Calicut, against the judgment of Isaac J., allowing O.P No. 4083 of 1970, quashing the assessment orders, exhibits P-2, P-3 and P-4, by which the respondent in this appeal was assessed as head of a tavazhi of a Hindu undivided family in relation to the alleged income of that Hindu undivided family for the assessment years 1967–68, 1968–69 and 1969-70.

2. The question that arises for decision in this appeal is whether an assessment of a Hindu undivided family as such which in reality had received no income at all during a particular accounting period is permissible in view of the legal fiction created by section 171(1) of the Income-tax Act, 1961, for short, “the Act”. The facts are the following: The Nilampur Kovilagam was partitioned on November 12, 1951. The forest lands belonging to the Kovilagam were then not divided but left undivided. The tavazhi of the respondent obtained a 9/112 share in those forest lands. Since then, the tavazhi of the respondent used to be assessed as a Hindu undivided family in relation to the income from such forest lands. A suit, O.S No. 22 of 1961, of the Sub-court, Kozhikode, for partition of the forest lands assigned to the tavazhi of the respondent was instituted. Thereafter, the members of the tavazhi executed a registered agreement dated February 21, 1963, dividing the forest lands. By this agreement, specific shares have been allotted to each member of the tavazhi of the respondent though there has been no division of the properties by metes and bounds. The division was, therefore, only a division in status and not a division of properties in definite portions. On the basis of this division in status, a claim was made that there has been a partition of the tavazhi when the assessment proceedings for the years 1967–68, 1968–69 and 1969–70 were taken out. The claim was that the tavazhi of the family had become partitioned with effect from the date of the agreement, February 21, 1963, and such a division having taken place long before the relevant accounting period of the earliest of the years, 1967–68, there was no income whatever derived by the Hindu undivided family, viz., the tavazhi, and, therefore, no assessment should be made on the Hindu undivided family. By exhibit P-1 order, the claim for recording a partition was rejected. Consequent on exhibit P-1 the assessment orders, exhibits P-2, P-3 and P-4, have been passed for the three years 1967–68, 1968–69 and 1969-70.

3. Isaac J. held that the provision in section 171 of the Act will not apply to a case where the alleged division took place, though only in status, before the commencement of the accounting period for the concerned assessment year. The view that has been taken was that the Hindu undivided family having received no income whatever during, or during any part of, the accounting period there was no question of that family being assessed in relation to any income and this was so notwithstanding the fiction introduced by section 171 of the Act.

4. Section 171 of the Act is in these terms:

“171.(1) A Hindu family hitherto assessed as undivided shall be deemed for the purposes of this Act to continue to be a Hindu undivided family, except where and in so far as a finding of partition has been given under this section in respect of the Hindu undivided family.

(2) 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 Income-tax Officer shall make an inquiry thereinto after giving notice of the inquiry to all the members of the family.

(3) On the completion of the inquiry, the Income-tax Officer shall record a finding as to whether there has been a total or partial partition of the joint family property, and, if there has been such a partition, the date on which it has taken place.

(4) Where a finding of total or partial partition has been recorded by the Income-tax Officer under this section, and the partition took place during the previous year,—

(a) the total income of the joint family in respect of the period up to the date of partition shall be assessed as if no partition had taken place; and

(b) each member or group of members shall, in addition to any tax for which he or it may be separately liable and notwithstanding anything contained in clause (2) of section 10, be jointly and severally liable for the tax on the income so assessed.

(5) Where a finding of total or partial partition has been recorded by the Income-tax Officer under this section, and the partition took place after the expiry of the previous year, the total income of the previous year of the joint family shall be assessed as if no partition had taken place; and the provisions of clause (b) of sub-section (4) shall, so far as may be, apply to the case.

(6) Notwithstanding anything contained in this section, if the Income-tax Officer finds after completion of the assessment of a Hindu undivided family, that the family has already effected a partition, whether total or partial, the Income-tax Officer shall proceed to recover the tax from every person who was a member of the family before the partition, and every such person shall be jointly and severally liable for the tax on the income so assessed.

(7) For the purposes of this section, the several liability of any member or group of members thereunder shall be computed according to the portion of the joint family property allotted to him or it at the partition, whether total or partial.

(8) The provisions of this section shall, so far as may be, apply in relation to the levy and collection of any penalty, interest, fine or other sum in respect of any period up to the date of the partition, whether total or partial, of a Hindu undivided family as they apply in relation to the levy and collection of tax in respect of any such period.

Explanation.— In this section,—

(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.”

5. The Indian Income-tax Act, 1922, contained a similar section, though not identically worded, in section 25A. Section 29 of the Agricultural Income-tax Act, 1950, is also a similar section.

6. Section 25A was introduced in the Indian Income-tax Act, 1922, by Act II of 1928. That section happened to be introduced to get over certain difficulties that were noticed by the Tribunal at the time of the assessment of a Hindu undivided family which had by then got divided. The case went up to the Madras High Court later in Arunachalam Chettiar v. Commissioner of Income-tax AIR 1929 Mad 769 [FB].. The main difficulty that was noticed was that even in cases where a Hindu undivided family had received income during an entire accounting period if at the time of the assessment it had ceased to exist, that Hindu undivided family as such could not be assessed because at the time of the assessment there was no such entity in existence in law. This had the adverse result as far as the revenue was concerned of income for an entire accounting period escaping assessment or if the family got divided during the accounting period of the income of part of the accounting period actually earned or received by the assessee escaping assessment. The members of the family could not be assessed either, on this income of the Hindu undivided family, because it was not their income and section 14(1) of the Indian Income-tax Act, 1922, stood in the way of any asssessment being made “in respect of any sum which he receives as a member of a Hindu undivided family from the income of the Hindu undivided family”. It was to get over this difficulty that by Act II of 1928, section 25A had been introduced into the Indian Income-tax Act, 1922. The reasons for the insertion of the section are stated by Sri R. Rajagopalachari in his Commentaries to the Law of Income Tax in British India, Mysore & Travancore, at page 190, thus:

“If an undivided Hindu family which was assessed in one assessment year as an undivided family became divided before the next assessment year there was no means under the Act as it stood prior to insertion of this new section of assessing the income earned till then of the undivided family as such; for at the time of the new assessment the undivided family which was regarded for purposes of taxation till then as a single unit had ceased to exist, and could not be made an assessee then; and it would be impossible for the income-tax authorities to create a fictitious undivided family and try to serve a single notice upon all the persons who once constituted the whole undivided family; nor would it be just to tax one or some members out of the whole undivided family in respect of all the income earned and spent by the undivided family as a whole and until it ceased to exist. And section 14(1) stood in the way of any individual member being taxed in respect of any income which he got in his capacity as a member of an undivided family…………… The above defect in the Act was felt while the case of Arunachalam Chettiar v. Commissioner of Income-tax was pending before the income-tax authorities. It is true that even before the insertion of this new section income derived by the individual members of the joint family after division and before the assessment year from the properties of the joint family allotted to them on the partition was taxable as was held in the above case. But there was no method or machinery by which the income earned by the joint family as such so long as it existed was taxable in the assessment year after the intervening division.”

7. The Judicial Committee of the Privy Council had occasion to advert to the need for introduction of section 25A in Sundar Singh Majithia v. Commissioner of Income-tax [1942] 10 ITR 457, 464-465 PC. and their Lordships of the Judicial Committee observed thus:

“Section 25A is directed to the difficulty which arose when an undivided family had received income in the year of account but was no longer in existence as such at the time of assessment. The difficulty was the more acute by reason of the provision—an important principle of the Act—contained in section 14(1):

The tax shall not be payable by an assessee in respect of any sum which he receives as a member of a Hindu undivided family.

Section 25A deals with the difficulty in two ways, which are explained by the rule, applicable to families governed by the Mitakshara, that by a mere claim of partition a division of interest may be effected among coparceners so as to disrupt the family and put an end to all right of succession by survivorship. It is trite law that the filing of a suit for partition may have this effect though it may take years before the shares of the various parties are determined or partition made by metes and bounds. Meanwhile the family property will belong to the members as it does in a Dayabhaga family—in effect as tenants-in-common. Section 25A provides that if it be found that the family property has been partitioned in definite portions, assessment may be made, notwithstanding section 14(1), on each individual or group in respect of his or its share of the profits made by the undivided family, while holding all the members jointly and severally liable for the total tax. If, however, though the joint Hindu family has come to an end it be found that its property has not been partitioned in definite portions, then the family is to be deemed to continue—that is, to be an existent Hindu family upon which assessment can be made on its gains of the previous year.”

8. Section 29(1) of the Kerala Agricultural Income-tax Act, 1950, is a similar section. In fact, the only material distinction between sections 29(1) and 25A of the Indian Income-tax Act, 1922, is that the section in the Agricultural Income-tax Act, 1950, as amended by Act 12 of 1964, permitted an assessment being made under that section on a Hindu undivided family though such a Hindu undivided family had not hitherto been assessed as a Hindu undivided family. Barring this difference, in substance there is no difference between section 29(1) of the Agricultural Income-tax Act, 1950, and section 25A of the Indian Income-tax Act, 1922. Though there is difference in the wording between section 171 of the Act and section 25A of the Indian Income-tax Act, 1922, in substance and effect, section 171 of the Act is the same as section 25A of the Indian Income-tax Act, 1922. In all the three cases, a fiction has been introduced. This fiction has been introduced “for the purpose of the Act”. This fiction no doubt enables the assessing authorities to visualize that the Hindu undivided family which had become divided either by division of its properties by metes and bounds or by division in status which is possible in the case of Mitakshara law as a Hindu undivided family as undivided for the purpose of the Act notwithstanding the division and further enables the assessing authorities to assess the income of the Hindu undivided family. That it is the income of the Hindu undivided family that has to be assessed under any of the sections is clear from the section itself, for there are specific directions in the section to assess the income of the Hindu undivided family earned during a part of the accounting period, during which period the Hindu undivided family continued undivided. If under the section what could be assessed is only the income of a Hindu undivided family as such, that is, the real Hindu undivided family without the assistance of any legal fiction, we find it difficult to assume that even without the aid of the section and the fiction an income which was really not the income of a real Hindu undivided family—we use the expression “real” fully realising that when a legal fiction has been introduced the unreal must be taken as real, but understanding the expression “real” as a true fact existing without the aid of the fiction—could be assessed as such. It is no doubt true that it may be possible that by virtue of a fiction it can be proved that the income of the erstwhile members of a Hindu undivided family which they derived after a division in status of the Hindu undivided family should be treated as the income derived by the Hindu undivided family created by the legal fiction. But the question is whether the section has created any such legal fiction. It is by no means clear from the wording of the section that such a fiction was intended or created. Notwithstanding the rule laid down by Lord Asquith in East End Dwellings Co. Ltd. v. Finsbury Borough Council a legal fiction must be limited to the purpose and object for which it had been enacted. Lord Asquith stated:

“If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it. One of these in this case is emancipation from the 1939 level of rents. The statute says that you must imagine a certain state of affairs: it does not say that, having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs.”

9. But it is equally true that a legal fiction artificially created should not be extended beyond its object. This was stated by the Supreme Court long years ago in State of Travancore-Cochin v. Shanmugha Vilas Cashew Nut Factory and in Bengal Immunity Company Ltd. v. State of Bihar [1955] 6 STC 446, [1955] 2 SCR 603, 646 SC. and restated in Commissioner of Income-tax v. Amarchand N. Shroff [1963] 48 ITR SC 59. and in Commissioner Income-tax v. Sakarlal Balabhai [1972] 86 ITR 2 SC..

10. The Full Bench decision of this court in Parameswaran Nambudiripad v. Inspecting Assistant Commissioner of Agricultural Income-tax, as we understand the decision, has laid down that in a case in which a Hindu undivided family was in fact not in existence during any part of an accounting period the family as such had received no income and, therefore, the family could not be assessed as such on any income.

11. We must bear in mind in this connection the fact that a Hindu undivided family can exist without deriving any income. In fact, a Hindu undivided family can exist without any property. By the mere fact of the creation of a Hindu undivided family by a legal fiction, therefore, it will not follow that the family had any income to be assessed. There are no express words in section 171 of the Act nor is there any necessary implication arising from the words of the section that the income which was really the income of the members of the family after the division in status of the family must be treated as or deemed to be the income of the Hindu undivided family which has been created by the legal fiction. All that the section says is that the Hindu undivided family would continue to exist for the purpose of the Act. The purpose of the Act is to assess the income derived by various entities defined as falling within the expression “person”. One of those entities is no doubt a Hindu undivided family. That this is a separate unit of assessment is clear from the provisions of the statute and a Hindu undivided family has been included as an entity falling within the definition of a person in the Act. A Hindu undivided family is, therefore, a separate distinct entity for the purpose of the Act. The charging section only charges the income of such an entity. If that entity as such had not received any income it is inconceivable that any income of any other person, though that person was an erstwhile member of a Hindu undivided family, could be assessed as income of that Hindu undivided family. If that was the result that was sought to be achieved by section 171 of the Act one would have expected much clearer words being used in the section. The only reasonable interpretation that can be placed on the section is that if during an accounting period or any part of it a Hindu undivided family had not been disrupted and that during that period it had received income, that income could be assessed even though at the time of the assessment the Hindu undivided family had ceased to exist. The legal fiction resurrects the entity and makes an assessment on the family as such possible. In other words, the section enables by virtue of the legal fiction to assess an entity which had really ceased to exist treating it as in existence. But such assessment must be of the income earned or received by the real Hindu undivided family. This is what section 171 of the Act has provided. That section contemplates three eventualities; a division during the course of the accounting period, a division after the accounting period but before the assessment, and a division after the order of assessment passed after the accounting period. In the first case, it is stated that the income of the joint Hindu family till the date of the partition shall be assessed and the section further provides that the members of the family would be jointly and severally liable for the tax on the income so assessed. If the partition took place after the accounting period, the entire income for the accounting period will have to be assessed as the income of the Hindu undivided family though at the time of the assessment it was not really in existence. If, on the other hand, the family was in existence at the time of the assessment order and had been in existence for the entire accounting period but got disrupted after the assessment order, the section provides that the tax imposed by the assessment order can be collected from the members of the erstwhile family. It is significant that the section does not refer to the case of division of the Hindu undivided family at a time anterior to the commencement of the accounting period. The section occurs in that part of the statute which we may refer to as the machinery part of the statute. The section as such does not create any charge to tax. It does not impose any liability to tax. It only enables something being done which otherwise could not have been done. The conclusion is irresistible that the scope and ambit of the legal fiction introduced by the section must be read as limited to its purpose, namely, to enable an income which would otherwise have escaped assessment being taxed.

12. We have not been referred to any decision on the subject which has dealt with the aspect that we have dealt with, except the Full Bench decision of this court in Parameswaran Nambudiripad v. Inspecting Assistant Commissioner of Agricultural Income-tax.

13. Learned counsel on behalf of the revenue referred to certain observations made by Shah J. in regard to section 25A of the Indian Income-tax Act, 1922, in his judgment in Additional Income-tax Officer v. A. Thimmayya. The passage relied on is in these terms:

“The scheme of section 25A is, therefore, clear: a Hindu undivided family hitherto assessed in respect of its income will continue to be assessed in that status notwithstanding partition of the property among its members. If a claim is raised at the time of making an assessment that a partition has been effected, the Income-tax Officer must make an inquiry after notice to all the members of the family and make an order that the family property has been partitioned in definite portions, if he is satisfied in that behalf. The Income-tax Officer is by law required still to make the assessment of the income of the Hindu undivided family, as if no partition had taken place and then to apportion the total tax liability and to add to the separate income of the members or groups of members the tax proportionate to the portion of the joint family property allotted to such members or groups of members and to make under section 23 assessment on the members accordingly. If no claim for recording partition is made, or if a claim is made and it is disallowed or the claim is not considered by the Income-tax Officer, the assessment of the Hindu undivided family which has hitherto been assessed as undivided will continue to be made as if the Hindu undivided family has received the income and is liable to be assessed.”

(Underlining is ours).

14. In answer to the above contention counsel for the assessee brought to our notice the observation made by the same learned judge in the decision of the Supreme Court in Kalwa Devadattam v. Union of India, which runs as follows:

“Liability of the Hindu undivided family of Nagappa and his sons, therefore, arose not later than the close of each account year and account period for which the tax was assessed and it is not the case of the plaintiffs that the family estate was partitioned before the liability of the undivided family to pay tax arose. There is no dispute in the suit filed by the plaintiffs against the Union that the business carried on by Nagappa was the business of the joint family. It is on the footing that the business carried on by Nagappa was of the joint family, and the income earned in the conduct of the business and the property was joint family income, that the plaintiffs have filed this suit. Under section 25A of the Income-tax Act, if at the date when the liability to pay tax arose there was in existence a joint family which has subsequently disrupted, the tax will still be assessed on the joint family. The machinery for recovery of the tax, however, differs according as an order recording partition is made or not made.”

(Underlining is ours).

15. We must state that neither in the case in Additional Income-tax Officer v. A. Thimmayya nor in the case in Kalwa Devadattam v. Union of India the specific question that we have considered in this case arose for decision. In both the cases, the Hindu undivided family (the real as against the fictitious) had received during the accounting period income and had incurred the liability to pay income-tax. But due to lack of a machinery provision that income could not be assessed because at the time of the assessment the entity which received the income had ceased to exist. It is this lacuna, we venture to think, that has been sought to be remedied by the introduction of section 25A by Act II of 1928 in the Indian Income-tax Act and the provision in section 171 of the Act. We cannot enlarge the scope and ambit of this purpose and make the income of the individual members of the divided family, though divided only in status, the income of the Hindu undivided family, for, as we said earlier, the statute does not contain any express provision that such income should be treated as the income of the Hindu undivided family nor are we able to reach such a conclusion on the basis that it arises from necessary implications.

16. Counsel on behalf of the revenue drew our attention to another passage from the judgment in Additional Income-tax Officer v. A. Thimmayya, wherein Justice Shah observed that the section had gone further. This is the observation on which reliance had been placed:

“To rectify what was obviously a lacuna, the legislature incorporated section 25A for assessment and enforcement of liability to tax income received by a Hindu undivided family, which was no longer in existence at the date of assessment. But the new section went very much beyond rectifying the defect in the statute which necessitated the amendment.”

17. If we may say so with great respect, this is clear from the section itself for when a division which means a division in definite portions or, in other words, division by metes and bounds had been recorded as envisaged by the section, the Hindu undivided family will not only have to be assessed on the income derived by the Hindu undivided family till the date of such division but assessments will have to be made on its members making them jointly and severally liable for the tax imposed on the Hindu undivided family. This was unnecessary if the object was merely to enable the income of the Hindu undivided family being assessed. The section has, therefore, not only filled up the lacuna but has gone further. This too has a purpose, for, once the properties had been divided in definite portions and by metes and bounds by the members of the family, an assessment made on the Hindu undivided family by virtue of the legal fiction by itself may not enable the tax recovery authorities to proceed against the properties taken by the members which had become their own. It is to obviate this defect that the section empowers a personal liability being imposed on the members for the tax on income derived by the Hindu undivided family. This liability, of course, is limited to the value of the property taken by the sharers. It is not disputed at all that, according to law, the particular tavazhi had ceased to be long before the earliest of the accounting periods with which we are concerned, commenced. In view of this, the machinery provisions of the Act cannot be pressed into service, notwithstanding the wording in section 171 of the Act, for the purpose of taxing the income of the individual members of the family. The legal fiction only enables the assessment to tax of income of the real Hindu undivided family which had ceased to be at the time of the assessment.

18. We are in respectful agreement with the view taken by Isaac J. in the judgment under appeal and accordingly we dismiss this appeal.

19. The point is not at all free from difficulty. As we said earlier, though a number of decisions have been rendered on section 25A of the Indian Income-tax Act, 1922, no case has been brought to our notice which specifically dealt with the aspect that we have considered. We; therefore, direct the parties to bear their respective costs.