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TMI Blog1961 (1) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred from his khata to those of his wife and daughters. The dispositions, therefore, were, in law and in fact, portions of the income of Rangachari, after the income had accrued to him and tax was payable by him at the point of accrual. Thus it cannot be said that the profits were diverted by an overriding title before they accrued to Rangachari. Appeals dismissed. - C.A. 142 OF 1960 - - - Dated:- 10-1-1961 - Judge(s) : J. L. KAPUR., M. HIDAYATULLAH., J. C. SHAH JUDGMENT The judgment of the court was delivered by HIDAYATULLAH J.--These are two appeals by the legal representa tives of one A. R. Rangachari, who died during the pendency, in the High Court at Madras, of proceedings in a reference under section 66(1) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary a similar portion of his share of profits from the firm ", the deed goes on to say : " Now this indenture witnesseth as follows : 1. The settlor hereby assigns unto the beneficiary all the rights of the settlor in respect of one-fourth of his share of profits in the firm (but not the losses) payable to him during a period of eight years commencing from the date hereof to be taken and enjoyed by the beneficiary in absolute and exclusive right. 2. The settlor shall not have any manner of right or interest in the said one-fourth share hereby settled and the right to receive from the firm one-fourth of the settlor's share during the said period of eight years shall exclusively vest in the beneficiary. 3. The beneficiary shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere was no adequate consideration for the transfer. With regard to the wife and married daughter, he held that section 16(1)(c) was not applicable, because what had been transferred was income first accruing to the assessee, while section 16(1)(c) contemplated income which accrued to a person, to whom the transfer was made. The same reasons (except the first) were given for rejecting the assessee's contentions in respect of the other assessment year. It is not necessary to refer in detail to the decisions of the Appellate Assistant Commissioner, the Tribunal and the High Court. The High Court in an elaborate judgment pointed out that section 16(1)(c) did not apply to these proceedings and that the third proviso was, therefore, not attrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofits " payable to him " certain amounts in specified shares were to be paid to his wife and two daughters. No doubt, the assessee in those deeds created a right in favour of the disponees to get the amounts direct from the firm, of which he was a partner. The tenor of the documents shows that the profits were first to accrue to him and were then applied for payments to the disponees. Learned counsel for the appellants contended that what had been assigned was an actionable claim, to wit, the right to profits, and, therefore, the profits were diverted, before they accrued to the disponer. This, in our opinion, is neither in accordance with the law of partnership nor with the facts as we have found on the record. Under the law of partnershi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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