Overriding title over partnership income kept maintenance payments out of the assessee's taxable income.

A maintenance payment directed under a divorce decree and subsequent agreement was treated as diverted at source by an overriding title rather than as an application of the assessee's income. The documents showed that the partnership remuneration and profits were earmarked as security for the daughters' maintenance, and the partners undertook to pay the sums directly. On that construction, the amounts never became the assessee's own income but were received only as a collector for the beneficiaries, so they were not taxable in his hands.

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Issues: Whether the amount payable to the assessee's unmarried daughter under the divorce decree and subsequent agreement was diverted by an overriding title so as not to form part of the assessee's taxable income.

Analysis: The decisive test was whether the amount sought to be deducted never reached the assessee as his income, as distinct from a mere application of income to discharge a personal obligation. The decree and the tripartite agreement showed an intention to secure the daughters' maintenance out of the remuneration and profits payable from the partnership, and the partners themselves undertook to pay the sums directly. On a true construction of the documents, the source of payment was earmarked as security for the maintenance obligation, creating an overriding right in favour of the daughters. The credited amounts, to the extent of that charge, were therefore received by the assessee only as collector for the beneficiaries and not as his own income.

Conclusion: The amount paid to the unmarried daughter was diverted at source by an overriding title and was not assessable as the assessee's income.

Final Conclusion: The reference was answered in favour of the assessee and the maintenance payment was held not taxable in his hands.

Ratio Decidendi: Where a decree or agreement creates an overriding charge or superior title in favour of another person over a defined source of income, the amount so diverted never becomes the assessee's income and is not taxable in his hands.

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