TMI Blog1991 (4) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) Whether, on the facts and in the circumstances of the case, the payments in question constituted in law application of income or diversion of income at source by on overriding title ? (2) Whether, on the facts and in the circumstances of the case, the payments in question constituted expenditure on capital account or was it a revenue expenditure ?" The assessee is an individual. The assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le. According to him, it was not a case of application of income at all. This plea was, however, rejected by the Income-tax Officer whereupon the assessee carried the matter in appeal which was dismissed. The assessee then carried the matter in further appeal to the Tribunal. The Tribunal agreed with the assessee that it was a case of diversion by virtue of an overriding title. Thereupon, the Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at an amount diverted by virtue of a partnership agreement or sub-partnership agreement is tantamount to diversion by overriding title. While it is not necessary to refer to all the decisions in this behalf, it would be sufficient if we refer to the decision of the Madras High Court in CIT v. Arumugham Pillai (S.) [1969] 73 ITR 382. The assessee in that case was a partner in a firm 'S'. He was als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Murlidhar Himatsingka v. CIT [1966] 62 ITR 323. For the above reasons, question No. 1 is answered in the following words: "The payments in question constitute a case of diversion of income at source by an overriding title." So far as question No. 2 is concerned, it need not be answered in view of our answer to question No. 1. Reference is answered accordingly. No order as to costs. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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