Allocation of income: maintenance allowances charged on the estate are not assessable as the payer's income.

Whether maintenance allowances fixed by decree and charged on the estate constitute assessable income of the payer; the legal principle applied is that where a court decree diverts revenue by creating a charge on the estate and directs specific payments before amounts become available to the payer, those sums are allocated away and do not become the payer's income. Applying this rule to the facts, the maintenance allowances were estate charges paid for the widows and therefore never became the assessee's income, so they are not assessable to the payer.

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Issues: Whether amounts paid as maintenance allowance to the widows (Rs. 19,587 in M.J.C. 69/1940 and Rs. 21,000 plus a portion of Rs. 2,00,000 in M.J.C. 78/1940) are in the circumstances of these cases assessable income of the payer under the Indian Income-tax Act.

Analysis: The Court examined whether sums diverted by court decree and charged on the estate to be paid to the widows became income in the hands of the Raja. The legal framework considered includes the charging provisions of the Income-tax Act and authorities holding that income which is allocated by decree to another person does not reach the individual as his income. Where a decree directs specific payments out of the estate before the amount becomes available to the payer, such sums constitute an allocation of revenue away from the payer and are not income in his hands. Applying these principles to the facts - maintenance allowances fixed by decree, constituted a charge on the estate and paid for and on account of the widows - the amounts never became the assessee's income and therefore were properly deductible/not assessable to the payer.

Conclusion: The amounts paid as maintenance allowance are not assessable income of the payer; the assessee's contention is accepted and the reference is answered in the negative.

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