Law:

Section:

Section 4 of the Income-tax Act, 1961 - Income - Diversion of at source by overriding title or application of income - Assessment years 1963-64 to 1971-72 - One 'N' died in 1932 leaving behind two widows, L and S - State Ruler allowed adoption of assessee by L and directed that two widows be paid certain amount of allowance every month - Whether maintenance allowance payable to widows was under a legal obligation or overriding title and as such did not form part of assessee's total income - Held, yes Section 4 of the Income-tax Act, 1961 - Individual - Assessable as - Assessment years 1963-64 to 1971-72 - Tribunal found that estate of deceased was an impartible estate which devolved on assessee by rule of primogeniture - Whether assessee i.e. holder of impartible estate would be deemed to be individual owner of all properties comprised in estate, and therefore, income from impartible estate belonged solely and absolutely to assessee - Held, yes - Whether, in such a situation, assessee was liable to be taxed on income of estate as an individual and not as representative of HUF - Held, yes FACTS One N died in 1932 leaving behind two widows L and S. Thereafter the then Ruler of the Holkar State sanctioned the adoption of the assessee by L. The Ruler also directed that L be paid an allowance at the rate of Rs. 500 per month. By a subsequent order, a monthly allowance of Rs. 500 was also directed to be paid to S. These allowances were subsequently increased to Rs. 600 per month by an order dated 16-6-1948, passed by the Ruler. In the appeals filed by the assessee arising out of the assessment orders for the assessment years 1963-64 to 1971-72, the question that came up for consideration before the Tribunal was whether the amount of monthly allowance which was paid by the assessee to the widows as aforesaid, was under a legal obligation or overriding title and, as such, did not form part of the assessee's total income. The Tribunal's answer was in affirmative. It further held that the status of the assessee should be individual as against the status of an HUF adopted by the ITO. On reference : HELD Following the decision in the case of ITAT v. Sardar Virendrasingh…

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