TMI Blog1957 (9) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... ember, 1945, the relevant provision of which, for the purposes of this reference, is that the goodwill of the business belonged exclusively to the father. This partnership continued till the 20th of August, 1948, which date falls in the assessment year 1949-50 when Boman retired, leaving Ruttonshaw and Darab as the two partners with shares of 10 and 6 annas respectively. A partnership deed was executed on the 6th of October, 1948, and the relevant provisions of the partnership deed are : Clause 11 : The goodwill of the firm shall always be the property of the said Ruttonshaw Dhunjibhoy Shroff. Clause 12 : On the death of Ruttonshaw Dhunjibhoy Shroff his nominee or nominees appointed by him in writing signed by him and attested b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Shroff and Company. The shares in the net profits of myself and Darab in the said firm of Shroff and Company are in the ratio of 1 :6. As agreed between me and my partner, Darab, from and after my death my wife, Dinbai, during her lifetime shall receive one-fourth in the net profits of the said firm and the remaining three fourths of the net profits shall belong to my son, Darab. From and after Dinbai's death my son, Darab, shall be entitled to the entire profits of the said firm. The goodwill of the firm which belongs to me shall belong fully to my son, Darab; and my wife, Dinbai, or anyone else shall not have any share in the same. 7. In case the said business of Shroff and Company is for any reason stopped or goes out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ormed part of the income of the assessee at all; but it was diverted out of that income by an overriding title, and, therefore, it is not liable to be included in the profits of Shroff and Company which are taxable in the hands of the assessee. Although Mr. Kolah referred to a number of decided cases on this question, the ratio applicable to a case of this nature was laid down by their Lordships of the Privy Council in Raja Bejoy Singh Dudhuria v. Commissioner of Income Tax, Bengal, and that ratio, which has been adopted by a number of subsequent decisions of different High Courts in India, may shortly be stated to be that if part of an income is diverted by an overriding title to someone other than the assessee, it never reaches the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, it appears that he entered into an agreement with Darab prior to the making of the will. This is clear from clause 6 of the will which I have reproduced above, which state : As agreed between me and my partner, Darab......... It is not suggested that there was no such agreement, precedent to the making of the will, and the nature of the agreement must be gathered from the real nature of what was sought to be done. It was that the goodwill that belonged to Ruttonshaw was to belong fully to Darab and Darab agreed in his turn that so long as Dinbai lived, she shall receive from Darab one-fourth of the net profits of the said firm. That this one-fourth was in exchange for what Darab got from Ruttonshaw, namely, his ten-anna share, as well ..... X X X X Extracts X X X X X X X X Extracts X X X X
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