Diversion of income by overriding title excludes amounts diverted at source, unlike application of income after receipt.

Diversion of income by overriding title applies where a legal obligation diverts income at source before it reaches the assessee, so the amount is not included in the assessee's income. If income is first received and later paid to another person in discharge of an obligation, it is only application of income, and the amount remains taxable in the hands of the recipient of the income.

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