ORDER Dixit C. J.- 1. This reference by the Income-tax Appellate Tribunal, Bombay, has been made pursuant to an order by this Court on an application of the assessee, M/s Kerodilal Premchand of Akaltara, under section 66 (2) of the Indian Income-tax Act, 1922, for an order directing the Tribunal to state the case of the assessee and to refer to this Court the following question of law arising out of the Tribunal's order dated 25th April 1961, namely,- "Whether on the facts and circumstances of the case the Tribunal was justified in refusing the petitioner-firm's application under section 26-A for registration?" 2. The material facts are that Kerodilal and his three sons, as members of a Hindu undivided family, were till 2nd November 1956 carrying on joint family business in grain, Kirana etc., at Akaltara. On this date the joint family business was converted into a partnership business and entries were made in the books, dividing the book balance~ in the names of Kerodilal and his sons, who become partners in the firm. On 22nd November 1956 a deed of partnership was executed by Kerodilal and his three sons. That deed inter alia stated that Kerodilal and his three sons, who were doing business as members of a Hindu undivided family, decided by an oral agreement to effect a partition between them as from 2nd November 1956; that after this separation they decided to form themselves into a partnership firm for continuing the business which was formerly carried on by them as joint family business; that the shares of each of the four partners would be four annas in a rupee; and that the liabilities and assets of the Hindu undivided family's business "shall be transferred to this firm and the capital of the firm and partners shall be the amount as standing in the books of account on Diwali, 1956," that is, 2nd November 1956. 3. Thereafter the divided coparceners presented before the Income-tax officer, Bilaspur, an application under section 25-A of the Act for recognising the partition of their family. They also, as members of the firm formed after partition converting the joint family business into a partnership business applied under section 26-A for registration for the assessment year 1958-59, the relevant account year being Samvat 2018, that is, from 3rd November 1956 to 25th October 1957. They also, as members of the firm formed after partition converting the joint family business into a partnership business applied under section 26-A for registration for the assessment year 1958-59, the relevant account year being Samvat 2018, that is, from 3rd November 1956 to 25th October 1957. The Income-tax Officer rejected the application under section 25-A on the ground that there was no complete partition of the entire family property. He rejected for the same reason the assessee's application under section 26•A of the Act. Before him the assessee urged that though there was no complete partition of the entire family property, there was in any case a partition of the joint family business. The Income-tax Officer negatived this contention by observing that "this is not a case of partial partition but of complete partition wherein the assets have not been actually divided, though the family has disrupted." The reasoning on which the Income-tax Officer rejected the application for registration, as felt by the Tribunal itself, is not very clear. So far as we have been able to gather from the order of the Income-tax Officer, it ran thus: that the members of the Hindu undivided family intended to effect a complete' partition and not a partial partition; and that there was no complete partition as, though the actual capital of the business amounting to Rs. 1,12,451 was divided' equally amongst the four coparceners of the joint family by making entries in their account book•, there was no division by metes and bounds of two items of immovable property which were included in the business capital. 4. The assessee then preferred an appeal before the Appellate Assistant Commissioner, who took the view that there was disruption of the joint status of the family; that there was a partial partition of the business assets of the family; and that this partial partition in regard to business capital was complete and was effected by making appropriate entries with regal d to the division of book balances in the names of the coparceners to whom the shares had been allotted, and the Income-tax Officer was, therefore, bound to recognise the partial partition and register the firm on the basis of the deed dated 22nd November 1956. 5. The Department then went up in appeal before the Tribunal against the decision of the Appellate Assistant Commissioner. That appeal was allowed. 5. The Department then went up in appeal before the Tribunal against the decision of the Appellate Assistant Commissioner. That appeal was allowed. The reasoning on which the Tribunal allowed the appeal is far from clear. The Tribunal also proceeded on the lines of the reasoning given by the Income-tax Officer. It held that the members of the Hindu undivided family intended to effect a complete partition, and that as no such complete partition was effected the assessee's plea that there was a partial partition in respect of the joint family business could not be accepted. The Tribunal observed that- "Now, partition of Hindu undivided family is a matter of intention and it is not merely a matter of inference to be drawn from certain facts. All along, the members of the Hindu undivided family were thinking .in terms of complete partition of the whole, of the Hindu undivided family property including the business and immovable property. It was only on the basis of this that it was claimed that the erstwhile Hindu undivided family asset changed its nature i, e. what was once owned by the family came to be owned by from persons in equal shares. From the facts already set out, it is quite clear that what these four persons purported to divide was not divided by them, as a matter of fact, and hence the subject-matter of the partnership could not be what they intended it to be. The subject-matter of the partnership, if the entries made in the account books are to be believed, was something different from what the assessee now seeks to establish as partnership business. Before there could be partnership in law, there must be agreement amongst the persons as to the subject-matter of the relation that they were bringing into existence in respect of it. The parties certainly failed to achieve this." The Tribunal also observed that the assessee had not proved that a piece of land and a house included in the balance sheet of the business account were immovable property held as business assets. When the assessee's application under section 66 (1) was rejected by the Tribunal, it moved this Court under section 66 (2) of the Act. 6. When the assessee's application under section 66 (1) was rejected by the Tribunal, it moved this Court under section 66 (2) of the Act. 6. In our order dated the 25th March 1964 passed on the assessee's application under section 66 (2), we observed that the Tribunal's order dated the 25th April 1961 did n0t at all reveal the facts and circumstances on the basis of which it came to the conclusion that the coparceners, who later on claimed to have become the partners of the assessee-firm, did not partition amongst themselves the joint family business assets, and that the said order did not at all set out the facts. We also expressed the hope that in the statement of the case called from the Tribunal there would be a complete statement of the facts and circumstances found by the Tribunal and the material relied upon by it in support of its findings. The members of the Tribunal, who have now stated the case, have expressed their inability to amplify the order dated the 25th April 1961 disposing of the Department's appeal, which had been heard by their predecessor-in-office. In these circumstances, we have no other alternative but to answer this reference on such material as we can ourselves find on record and which the Tribunal has not expressly or impliedly rejected 7. Now, Annexure-B, appended to the statement of the case, clearly shows that on 2nd November 1956 the joint family business was converted in to a partnership business, and the capital of the joint family business was distributed amongst the member-partners' accounts by appropriate entries in the account books,; and a sun of Rs. 28, 112-10-6 was credited to the capital account of each of the partners in the business. There is also no doubt that a deed of partnership was drawn up by Kerodilal and his three Sons on 22nd November 1956 according to which the share of each partner was four annas in a rupee and the liabilities and assets of the business of the Hindus undivided family were transferred to the partnership firm and the amount as standing in the books of account on Diwali (that is, 2nd November 1956) became the capital of the firm and. the partners. the partners. These two documents unmistakably show that there was a partition of joint family business and there was there after continuance of that business as partnership business by Kerodilal and his sons. The Tribunal has not found that the division effected on 2nd November 1956, or the partnership agreement dated 22nd November 1956, was not genuine. It did not even reject the application for registration on the ground that there was no instrument of partnership specifying the individual shares of the partners, or that the application for registration was not in conformity with the rule, or that the profits and losses of the business relating to the accounting year had not been divided or credited, as the case may be, in accordance with the terms of the instrument, or that the partnership did not actually exist in conformity with the terms and conditions of the instrument of partnership in the accounting year. Both the Income-tax Officer 2nd the Tribunal refused to accord registration solely on the ground that the members of the Hindu undivided family intended to effect a total partition of the entire family property; that they did not do this; and that, therefore, the partial partition of joint family business, the assets of which included two items of immovable property which had not been divided by metes and bounds, could not be recognised. This reasoning is wholly erroneous It is now settled law that there is nothing in the Indian Income-tax Act, 1922, to prohibit the members of a Hindu undivided family, while remaining joint, from entering in to a partnership in respect of a business, being a portion of the joint property, which they have partitioned amongst themselves and that merely for the reason that the joint family as such continues to exist, the registration of such a partnership cannot be refused [see Sundar Singh-Majithia Vs. C. I. T., C. P. and U. P., (1942) 10 ITR 457. There is no warrant what so-ever or the proposition laid down by the Tribunal that once the members of a joint family decide to effect a complete partition, then they are precluded from dividing some property of the joint family by way of partial partition and continuing to remain joint in regard to the undivided property. There is no warrant what so-ever or the proposition laid down by the Tribunal that once the members of a joint family decide to effect a complete partition, then they are precluded from dividing some property of the joint family by way of partial partition and continuing to remain joint in regard to the undivided property. The Tribunal was, therefore, wrong in concluding that the partition of the joint family business, as evidenced by Annexnre-B and the partition deed, could not be acted upon as the members of the family intended to effect a complete partition of the entire property which was not done. 8. The aforesaid two documents, taken together with the balance-sheet Annexure-A to the statement of the case), clearly show that the assets and liabilities of the Hindu undivided family business were divided between the coparceners and in this division each of them was credited with a sum of Rs.28,112-10-6 which he brought into the partnership firm as his capital. The assets of the family business no doubt included a piece of land and a building. In their very nature, these items of immovable property, as assets of the joint family business, could not be divided by metes and bounds between the members of the family while valuing the assets and liabilities of the family business for the purpose of division among the members. The Tribunal's view that the piece of land and the house shown in the balance-sheet was not a business asset is merely a surmise and conjecture drawn from the fact that in the balance-sheet other immovable property belonging to the joint family had not been shown. We must confess our utter inability to understand this reasoning. If in the balance-sheet relating to the joint family business an item of property, which is not an asset of business, is not shown, it does not follow that a certain item of immovable property which formed an asset of the business shown in the balance sheet as such was not so. The Tribunal was not justified in looking for in the balance-sheet a division of the entire joint family property when that balance-sheet related only to the assets and liabilities of the joint family business. 9. The Tribunal was not justified in looking for in the balance-sheet a division of the entire joint family property when that balance-sheet related only to the assets and liabilities of the joint family business. 9. In our opinion, on the material on record which has not been rejected by the Tribunal, there can be no doubt that on 2nd November 1956 there was a division of the joint family business amongst Kerodilal and his three sons and on that date they agreed to carryon the business in partnership, and the Tribunal was not justified in refusing to recognise this conversion of the joint family business into partnership business on the ground that there was no complete partition of the entire family property. The assessee firm's application for registration should not; therefore, have been refused when the Tribunal did not find any ground other than the absence of compete partition for rejection of the application for registration. 10. For the foregoing reasons, our answer to the question posed is that in the facts and circumstances of the case the Tribunal was not justified in refusing the assessee-firm's application under section 26-A for registration. The assessee shall have costs of this reference. Counsel's fee is fixed at Rs. 150.