COMMNR. OF INCOME TAX, AHMEDABAD vs SUNIL J. KINARIWALA

The Supreme Court addressed the interpretation of Section 256(1) of the Income Tax Act, 1961, concerning the assignment of a partner's share in a firm to a trust. The Court held that the income arising from the assigned share belonged to the trust by overriding title, thus not forming part of the partner's total income for assessment purposes. The judgment of the High Court was upheld, affirming that the transfer constituted a diversion of income at source rather than an application of income, thereby excluding it from the partner's taxable income.