Commissioner Of Income Tax vs Sunil J. Kinariwala

The Supreme Court held that under Section 256(1) of the Income Tax Act, 1961, the income arising from the assignment of 50% of the assessee's 10% share in the partnership firm to the Sunil Jivanlal Kinariwala Trust is not part of the assessee's total income due to the overriding title of the Trust. The Court affirmed the High Court's decision, which relied on precedents such as Commissioner of Income Tax, Madras v. Bhagyalakshmi and Co. and Murlidhar Himatsingka v. Commissioner of Income Tax, establishing that the income was diverted at source and thus not assessable to the assessee. The appeal by the Revenue was dismissed, upholding the exclusion of the income from the assessee's total income.