TMI Blog1987 (1) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... Bros. When he died, he left the assessee, three sons and a daughter. The assessee was made a partner of the reconstituted firm under a deed dated October 29, 1970, with Geetadevi Mohunta and Rajmohan Mohunta as the other partners. The deed recited that on account of the demise of the assessee's husband, the original firm stood dissolved and his share in the partnership devolved upon his legal heirs, namely, the assessee and her three sons and daughter. Clause 6 of the partnership deed stated that the capital requirements of the firm would be met by the assessee and the said Geetadevi and that the credit balance in the capital account of the assessee's late husband which had devolved upon his legal heirs would be the capital of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assistant Commissioner. Mr. Jetly, learned counsel for the Revenue, has drawn our attention to the judgments of the Supreme Court in CIT v. Sitaldas Tirathdas [1961] 41 ITR 367 and in K. 4. Ramachar v. CIT [1961] 42 ITR 25. In the former judgment, it was held that where by reason of an obligation income was diverted before it reached the assessee, there was a case for deduction. In the latter, it was held that under the law of partnership it was only the partner who was entitled to the profits and the dispositions under an obligation incurred by the partner were of the income after it accrued to him and, hence, the entire income had to be assessed as part of his total income. These judgments were considered in the judgment of the Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the assessee. In his submission, therefore, there was no creation of an overriding title. The share income in the firm accrued to the assessee and was thereafter applied in discharge of her obligation towards her two minor sons. We find ourselves unable to accept the submission now that we have seen the judgment in Murlidhar Himatsingka's case [1966] 62 ITR 323 (SC). There does not, in principle, appear to be any distinction between the facts thereof and the facts before us, for, it is very important to note that the Supreme Court did not decide on the basis that there was something special about a sub-partnership or that, by reason of the sub-partnership, the sub-partners obtained a right to make a claim to the partners income upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was held that the memoranda of partition expressly divided the capital standing in the name of the karta among the members of the joint family with the result that though the capital stood in the assessee's name in the firms' account books, it was severally owned by the erstwhile members of the joint family in definite shares with a further agreement that the assessee was to receive the profits for and on behalf of the contracting parties severally. After considering various judgments, this court observed that the crucial question which had to be determined was whether the income was to be treated as a diversion by an overriding charge or as its application. The test was not whether the assessee collected the income. The test was whose ..... X X X X Extracts X X X X X X X X Extracts X X X X
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