TMI Blog1994 (1) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... our of a minor, Navin Kumar, son of her brother-in-law, Shri Pawankumar. The assessee filed a return for the assessment years 1972-73 to 1975-76, claiming that the income attributable to 6 paise share had been diverted by overriding title to a minor Navin, and should, therefore, be excluded from the estimated total income. It is stated that she had also filed the settlement deed along with the returns. The Income-tax Officer, in the original assessment, excluded the share of the minor from the total income of the assessee for all the three assessment years. Subsequently, the internal audit party of the Income-tax Department gave a note, which is as follows : "Seen settlement deed dated October 15, 1971, and referred to Income-tax Officer' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng questions : "(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in holding that the reopening of the assessment under section 147(b) of the Act is valid in law ? (2) Whether the Tribunal is justified in holding that the entire 18 paise share income from Durga Flour Mills is liable to be assessed and charged to tax in the appellant's hands as her own income ? (3) Whether the Tribunal is right in holding that what has been given by the assessee to the donee is only an application of income and not one of diversion by overriding title ?" Before us it was contended on behalf of the assessee that the Appellate Tribunal had relied on the decision of the Supreme Court in the case of R. K. Mal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ker) and Bharat Plywood and Timber Products Ltd. v. CIT [1992] 198 ITR 692 (Ker). On the merits also, it was submitted that there was an assignment of only the profit after it was earned by the assessee, as held by the Supreme Court in K. A. Ramachar v. CIT [1961] 42 ITR 25. In reply, learned counsel for the assessee drew our attention to the decision in CIT v. S. Sivaprakasa Mudaliar [1983] 144 ITR 285 (Mad), and submitted that since an interest in the firm could be converted into joint family property even without the consent of the firm, on the same analogy, an assignment of a share also should be accepted as transferring the interest in the firm itself and not only the income. We have considered the submissions made on both sides an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the minor will have a right to claim a 6 paise share only from the assessee and not from the firm. As pointed out by the Supreme Court in K. A. Ramachar v. CIT [1961] 42 ITR 25, the tenor of the deed of settlement shows that the profits were first to accrue to the assessee and then applied for payment to the donee. It is only the partner, who is entitled to the profits and the donee, as an assessee (?) did not have and could not have any direct link to the profits. It follows that there was no transfer of the interest in the firm itself and hence the 6 paise share of income of the assessee was not diverted by overriding title. The case of conversion of individual property into joint family property is distinguishable as it is not conside ..... X X X X Extracts X X X X X X X X Extracts X X X X
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