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INTRODUCTION
SECTION 4, the charging section in the Income-Tax Act, has lead to a major controversy
over the concept of application of income and its diversion by overriding title.
There is a plethora of decisions on the subject and, as early as 1961, the Supreme Court had laid
down the principles in C.I.T. v. Sitaldas Tirathdas1. Despite this, such issues as whether income
that is transferred by overriding title escapes the clutches of tax, or whether it is a case of
receiving the income and applying it for a particular purpose, keep surfacing. The law is, by and
large, settled, treating the income which is received and applied for any purpose as taxable in the
hands of the recipient. Recently, the Supreme Court had to deal with a situation of overriding
title versus application of income in the C.I.T. v. Sunil J Kinariwala 2 case.
1
2
Whether, on the facts and in the circumstances of the case, 50 per cent out of the assessee 's ten
per cent, right, title and interest in the partnership firm of Messrs. Kinariwala R.J.K. Industries
belongs to Sunil Jivanlal Kinariwala Trust and the income arising therefrom belongs to the said
trust by overriding title?