1991 (4) TMI 57

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....ection 256(2) of the Income-tax Act, 1961, the Tribunal stated the following two questions : "(1) Whether, on the facts and in the circumstances of the case, the payments in question constituted in law application of income or diversion of income at source by on overriding title ? (2) Whether, on the facts and in the circumstances of the case, the payments in question constituted expenditure....

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....eated as his income since that income is being diverted to the said lenders under an overriding title. According to him, it was not a case of application of income at all. This plea was, however, rejected by the Income-tax Officer whereupon the assessee carried the matter in appeal which was dismissed. The assessee then carried the matter in further appeal to the Tribunal. The Tribunal agreed with....

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....e of their own title and interest, created no doubt by the agreements aforesaid. It has been held that an amount diverted by virtue of a partnership agreement or sub-partnership agreement is tantamount to diversion by overriding title. While it is not necessary to refer to all the decisions in this behalf, it would be sufficient if we refer to the decision of the Madras High Court in CIT v. Arumug....