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1 - 10 of 12 (0.23 seconds)P.C. Mullick vs The Commissioner Of Income-Tax on 1 February, 1938
17. Reference was also made by Mr. Joshi to the decision of their Lordships of the Privy Council in P. C. Mullick v. Commissioner of Income-tax [1938] 6 ITR 206 (PC). The question that arose in this case was whether the amounts paid for shradh of the testator and for costs of taking out probate of his will were deductible from the assessable income. In this case the testator had died and by his will he appointed the appellants his executors. He directed them to pay Rs. 10,000 out of income of his property on the occasion of his addya shradh for expenses in connection therewith to the person who was entitled to perform the shradh. He had also directed them to pay out of the income of his property the costs of taking out probate of his will. During the year of account the executors had paid Rs. 5,537 for expenses in connection with the addya shradh and a sum of Rs. 1,25,000 for probate duty. Affirming the decision of the Calcutta High Court, their Lordships held that the payments made for the shradh expenses and the costs of probate could not be excluded in computing the chargeable income. These were payments made out of the income of the estate coming to the hands of the appellants as executors and in pursuance of an obligation imposed by the testator.
K. A. Ramachar And Another vs Commissioner Of Income Tax, Madras on 10 January, 1961
19. Reference was then made by Mr. Joshi to a decision of the Supreme Court in K. A. Ramachar v. Commissioner of Income-tax . The question that arose for consideration was whether the share of profit that arose to the settler and which was settled by a deed of settlement in favour of his wife and children should be included in the settlor's total income. The assessee who was a partner in the firm executed three irrevocable deeds of settlement of September 22, 1947, in favour of his wife, a married daughter and a minor daughter, assigning to each of them one-fourth of his share of the profits in the firm payable to him during a period of eight years from the date of settlement to best enjoyed by them absolutely and exclusively. They were also entitled directly to receive and collect from the firm their share under the settlements. In a account books of the firm the profits due to the assessee were credited to the assessee's account and one-fourth thereof was transferred to the accounts of each of the three beneficiaries. The assessee claimed that those amounts could not be included in his total income for purposes of assessment to income-tax. The Supreme Court held that on the facts the tenor of the deeds of settlement showed that the profits were first to accrue to the assessee and were then applied for payment to the beneficiaries. It was pointed out that under the law of partnership it was the partner and the partner alone who was entitled to the profits. A stranger, even if he were an assignee, did not have and could not have any direct claim to the profits. By the deeds in question, the assignee merely allowed a payments to his wife and daughters to constitute a valid dischargeable in favour of the firm, but what was paid was, in law, a portion of his income. The dispositions in law and in fact were portions of the assessee's income after it had accrued to him and tax was payable by him at the accrual. The amounts had, therefore, to be included in the assessee's total income. An examination of the deeds of settlements showed that the disponer had started that from the profits payable to him certain amounts in specified shares were to be paid to his wife and two daughters. Undoubtedly, by the deeds a right was created in favour of the dispossess to get the amounts direct from the firm, of which he was a partner, but the tenor of the documents showed that the profits were first to accrue to him and were applied for payments to the disponees. A contentions in this case was urged on behalf of the assessee that what was assigned in favour of the wife and children was an actionable claim, but that contentions was rejected by the Supreme Court as such a contention and the facts found. Thus, each one of the cases relied upon on behalf of the revenue is distinguishable on facts and they do not afford assistance for deciding the matter in question. Actually, upon the test laid down in those cases, at no point of time income ever accrued to the assessee after execution of the deed gift.
Provat Kumar Mitter vs Commissioner Of Income Tax,West Bengal on 8 December, 1960
The other case referred to in this volume is the case of Provat Kumar Mitter v. Commissioner of Income-tax . The assessee in this case was the registered holders of 500 ordinary shares in a limited company. By a deed of settlements he assigned to his wife the right, title and interest to all dividends and sums of money which might be declared or which may be due and payable in respect of those shares for the term of her natural life and covenanted to deliver and endorse over to her any dividends warrant or other documents of title to such dividends or sums money and instructed the company to pay such dividends and sums of money to her. It was held that the deed of assignment was, in its true nature, only a contract by the assessee to transfer, or make over, to his wife in future all dividends that may be declared in respect of the shares. As a company can pay dividends only to the registered holder of the shares, the income continued to accrue to the assessee and was assessable in the hands of the assessee as his income, even though it was ultimately payable to his wife under the terms of the deed. It was clearly a case of application of income after it had accrued and not a case of diversion of any sum of money before it had become the income of the assessee. It may be noted that the shares in respect of which the dividends were transferred to the wife were never transferred to the wife and they continued to be in the name of the assessee.
The Commissioner Of Income-Tax, Bombay ... vs Shri Sitaldas Tirathdas on 24 November, 1960
18. Reference was made to two decisions of the Supreme Court both reported in [1961] 41 ITR. The first was the case of the Commissioner of the Income-tax v. Sitaldas Tirathdas . The question which arose in this case was whether the assessee was entitled to deduct from his income the amounts paid by him as maintenance to his wife and children under a decree passed by a court with consent of the parties in a suit. By a consent decree no charge was created on any property of the assessee. It was held that this was a case in which the safe and children of the assessee, who continued to be members of his family, received a portion of the assessee's income after he had received it as his own, and was, therefore, one of application of a portion of the income to discharge an obligation and not one in which by an overriding charge the assessee became only a collector of another's income. The assessee was not, therefore, entitled to the deduction claimed by him. The test has been laid down by Hidayatullah J. in the case referred to above and if regard be had to the deed of gift there is no doubt that the present is a case in which 7 1/2% of the managing agency commission sought to be taxed in the hands of the assessee never reached him as his income. As after the execution of the deed of the gift the right to receive the income was vested in the married daughters, there was no question of application of the income by the assessee after it accrued or arose to him. The income was diverted before it ever reached the assessee at any time and, therefore, as we have indicated earlier, it was not assessable in his hands.
Section 3 in The Transfer Of Property Act, 1882 [Entire Act]
The Commissioner Of Income-Tax vs D.R. Naik on 20 March, 1939
"(1) income received from property charged under a court's decree with maintenance allowance to a dependent and spent on the maintenance : Raja Bejoy Singh Dudhuria's case [1933] 1 ITR 135 (PC) and Commissioner of Income-tax v. D. R. Naik [1939] 7 ITR 362 (Bom).;
Commissioner Of Income-Tax, Calcutta, ... vs Imperial Chemical Industries (India) ... on 20 February, 1969
In Commissioner of Income-tax v. Imperial Chemical Industries (India) (P). Ltd. the Supreme Court has laid down that an obligation to apply the income in a particular way before it is received by the assessee or before it has accrued or arisen to the assessee result in the diversion of income. An obligation to apply income which has accrued or arisen or has been received amounts merely to the apportionment of income and the income so applied is not deductible. The true test for the application of the rule of diversion of income by an overriding title is whether the amount sought to be deducted in truth never reached the assessee as his income.
M. K. Brothers (P) Ltd vs C.I.T. Kanpur on 29 August, 1972
7. We do not intend to multiply authorities but it will be useful to refer to the decision of the Allahabad High Court wherein certain principle are clearly enunciated. That is the case of M. K. Brothers Private Ltd. v. Commissioner of Income-tax [1967] 63 ITR 28, 36, 37, 39 (All). It is there laid down that :
The Commissioner Of Income-Tax Bombay vs Manilal Dhanji, Bombay on 31 January, 1962
(2) income from trust property which under the trust deed was to be spent on the maintenance of the assessee and his wife : Commissioner of Income-tax v. Manilal Dhanji ;