Overriding obligation on maintenance payments treated as income diverted at source, excluding them from taxable income.

Maintenance allowances paid to specified family members were treated as income diverted at source, not a mere application of income after receipt, because the liability arose from legally enforceable obligations attaching to the property. The court noted that maintenance to the mother and junior widow was supported by personal law, the relevant statutory scheme, and the family arrangement, while maintenance to the sister and daughter was upheld on the basis of a special family custom. On that footing, the amounts constituted an overriding charge and were deductible, so they did not form part of the assessee's taxable income.

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Issues: Whether maintenance allowances paid to specified family members were deductible from the assessee's income as amounts diverted at source under a legal obligation and therefore not part of taxable income.

Analysis: A Hindu heir may be bound to maintain relatives where the obligation arises from personal law, statute, custom, decree, agreement, or another legally enforceable source attaching to the property. The decisive test is whether the amount never reached the assessee as income, or whether it was merely applied after receipt. Maintenance payable to the deceased estate-holder's mother and junior widow was supported by the personal law of maintenance, the statutory scheme under the U.P. Estates Act, 1920, and the U.P. Zamindari Abolition and Land Reforms Act, 1951, and was also reinforced by the family arrangement. Maintenance payable to the sister and daughter was upheld on the finding of a special family custom. On that footing, the obligation attached to the source of income and constituted an overriding charge rather than a mere application of income.

Conclusion: The maintenance payments in question were permissible deductions and did not form part of the assessee's taxable income.

Final Conclusion: The reference was answered in favour of the assessee, holding that the relevant maintenance allowances were deductible as income diverted by overriding obligation before reaching the assessee.

Ratio Decidendi: Where a maintenance liability is legally enforceable and attaches to the source of income by statute, custom, decree, or agreement, the corresponding amount is diverted before accrual and is not taxable income of the recipient.

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