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“diversion by overriding title”

Judicial DoctrinesSitaldas TirathdasSitaldas Tirathdas25 judgments

The decision most relied on for diversion by overriding title is Siddheshwar Sahakari Sakhar Karkhana Limited v. CIT (270 ITR 1), cited in 166 judgments on BharatTax.

Leading authorities on diversion by overriding title

Siddheshwar Sahakari Sakhar Karkhana Limited v. CIT
270 ITR 1 · 2004 · Supreme Court
166
citing judgments

Amounts collected by an assessee as an agent or for a predefined purpose are diverted by an overriding title and do not form part of the assessee's income. Such amounts, even if refundable on contingencies, are not considered uncertain and create a ripening obligation.

Somaiya Organo Chemicals Ltd. v. CIT
216 ITR 291 · 1995 · High Court
27
citing judgments

Amounts transferred to a separate fund for building storage facilities under a statutory obligation are diverted at source by overriding title and do not form part of the assessee's income.

Moti Lal Chhadami Lal Jain v. Commissioner of Income Tax, Delhi and Ors.
190 ITR 1 · 1991 · Supreme Court
24
citing judgments

Income diverted at source by an overriding title, such as for R&R plans of mining areas, is not taxable as the assessee's income.

CIT v. New Morrisson Sugar Mills Ltd.
269 ITR 398 · 2004 · Supreme Court
22
citing judgments

Amounts set apart towards a molasses reserve fund are considered a diversion of income by overriding title and are therefore excludible from the assessee's total income.

CIT v. Travancore Sugars & Chemicals Ltd.
88 ITR 1 · 1973 · Supreme Court
21
citing judgments

The Supreme Court's decision in CIT v. Travancore Sugars & Chemicals Ltd. is cited for the principle of diversion of income by overriding title, distinguishing it from issues related to the deductibility of certain taxes like education cess.

Raja Bejoy Singh Budhuria v. CIT
1 ITR 135 · 1933 · Supreme Court
17
citing judgments

Income is diverted by overriding title before it reaches the assessee if the nature of the obligation means the amount cannot be considered part of the assessee's income.

Provat Kumar Mitter v. CIT
41 ITR 624 · 1961 · Supreme Court
17
citing judgments

Receipts stand diverted by an overriding title where an obligation to pay an amount is attached to the very source of income, rather than being a mere application of income.

CIT v. Mulla & Mulla & Craigie Blunt & Caroe
190 ITR 198 · 1991 · High Court
16
citing judgments

Income diverted at source by an overriding title, such as a legal obligation to pay erstwhile partners for work done, is not taxable in the hands of the firm.

Judgments citing diversion by overriding title

Deloitte Haskins and Sells LLP, Mumbai vs. Assistant Commissioner of Income Tax, Circle 16(2), Mumbai

In the result, appeal of the assessee is partly allowed

ITA 351/MUM/2024[2017-18]Status: DisposedITAT Mumbai30 Dec 2025AY 2017-18

Bench: Shri Amit Shukla & Shri Girish Agrawal

For Appellant: Shri P.J. Pardiwala, Sr. AdvocateFor Respondent: Shri Krishna Kumar Sr. DR
Section 143(3)Section 37(1)Section 40

that the payment made to the retiring partners AY 2013-14, 2015-16 to 2017-18 Deloitte Haskins And Sells LLP is a diversion by overriding title and therefore cannot be taxed in the hands of the assessee. We notice in this regard that

Deloitte Haskins and Sells LLP, Mumbai vs. Assistant Commissioner of Income Tax, Circle 16(2), Mumbai

In the result, appeal of the assessee is partly allowed

ITA 350/MUM/2024[2013-14]Status: DisposedITAT Mumbai30 Dec 2025AY 2013-14

Bench: Shri Amit Shukla & Shri Girish Agrawal

For Appellant: Shri P.J. Pardiwala, Sr. AdvocateFor Respondent: Shri Krishna Kumar Sr. DR
Section 143(3)Section 37(1)Section 40

that the payment made to the retiring partners AY 2013-14, 2015-16 to 2017-18 Deloitte Haskins And Sells LLP is a diversion by overriding title and therefore cannot be taxed in the hands of the assessee. We notice in this regard that

Deloitte Haskins and Sells LLP, Mumbai vs. Assistant Commissioner of Income-Tax, Mumbai

In the result, appeal of the assessee is partly allowed

ITA 320/MUM/2024[2015-16]Status: DisposedITAT Mumbai30 Dec 2025AY 2015-16

Bench: Shri Amit Shukla & Shri Girish Agrawal

For Appellant: Shri P.J. Pardiwala, Sr. AdvocateFor Respondent: Shri Krishna Kumar Sr. DR
Section 143(3)Section 37(1)Section 40

that the payment made to the retiring partners AY 2013-14, 2015-16 to 2017-18 Deloitte Haskins And Sells LLP is a diversion by overriding title and therefore cannot be taxed in the hands of the assessee. We notice in this regard that

Deloitte Haskins and Sells LLP, Mumbai vs. Assistant Commissioner of Income-Tax, Mumbai

ITA 319/MUM/2024[2016-17]Status: DisposedITAT Mumbai30 Dec 2025AY 2016-17

Bench: Shri Amit Shukla & Shri Girish Agrawal

For Appellant: Shri P.J. Pardiwala, Sr. AdvocateFor Respondent: Shri Krishna Kumar Sr. DR
Section 143(3)Section 40

partners 17 ITA Nos.319, 320, 350 and 351/Mum/2024 AY 2013-14, 2015-16 to 2017-18 Deloitte Haskins And Sells LLP is a diversion by overriding title and therefore cannot be taxed in the hands of the assessee. We notice in this regard that

ITO, Ward-1(1), Hyderabad vs. Arka Properties Private Limited, Hyderabad

In the result, appeal of the Revenue is dismissed

ITA 58/HYD/2024[2015-16]Status: DisposedITAT Hyderabad17 Apr 2025AY 2015-16

Bench: Shri Vijay Pal Rao, Vice-A N D Shri Manjunatha, G.आ.अपी.सं /Ita No.58/Hyd/2024 (िनधा"रण वष"/Assessment Year: 2015-16) Income Tax Officer Vs. Arka Properties (P) Ltd Ward 1 (1) Hyderabad Hyderabad Pan:Aafca7411H (Appellant) (Respondent) राज" व "ारा/Revenue By:: Smt. M. Narmada, Cit(Dr) िनधा""रती "ारा/Assessee By: Advocate H Srinivasulu, सुनवाई की तारीख/Date Of Hearing: 27/03/2025 घोषणा की तारीख/Pronouncement: 17/04/2025 आदेश/Order Per Vijay Pal Raothis Appeal By The Revenue Is Directed Against The Order Dated, 23/11/2023 Of The Learned Cit (A)-Nfac Delhi, For The A.Y. 2015-16. 2. There Is A Delay Of 1 Day By The Revenue In Filing The Appeal Before The Tribunal & The Revenue Has Filed An Affidavit Explaining The Cause Of Delay. We Have Heard The Learned Dr As Well As The Learned Ar On The Condonation Of Delay. The Learned Ar Has Not Objected For Condonation Of Delay Of One Day In Filing

For Appellant: Advocate H SrinivasuluFor Respondent: : Smt. M. Narmada, CIT(DR)
Section 148Section 45

when it was directly applied by the Bank towards the recovery/repayment of loan. The learned AR has then referred to the principle of diversion by overriding title and submitted that when the charge is created on the land in favour of the bank which is duly reported under the Company ... well as in the case of National Cooperative Development Corporate, reported in 119 Taxmann.com 137 (S.C) and submitted that the principle of diversion of overriding title is applied, if a portion of income arising out of corpus held by the assessee is applied for the purpose of meeting some expenditure

Bosch Global Software Technologies Private Limited, Bengaluru vs. Assistant Commissioner of Income Tax, Circle-2(1)(1), Bangalore

In the result, the appeal of the assessee is hereby partly allowed for statistical purposes

ITA 1696/BANG/2024[2016-17]Status: DisposedITAT Bangalore16 Apr 2025AY 2016-17

Bench: Shri Waseem Ahmed & Shri Keshav Dubeyassessment Year: 2016-17

For Appellant: and Smt. Pratibha R – AdvocateFor Respondent: Smt. Nandini Das, CIT
Section 10ASection 32(1)(iia)

Laws. In other words State Taxes is prior charge on the income of the assessee that is to say that it is diversion by overriding title at stage of earning profit itself. 9. However, the foreign tax credit can be claimed u/s 90/91 of the Income

Mussoorie Dehradun Development Authority, Mdda, Transport Nagar Dehradun vs. Assistant Commissioner of Income Tax, National Faceless Assessment Centre

In the result, both appeals of the assessee are dismissed as above

ITA 96/DDN/2023[2018-19]Status: DisposedITAT Dehradun21 Feb 2025AY 2018-19

Bench: Shri Vikas Awasthy & Shri Avdhesh Kumar Mishra

Section 43B

circumstances of the case and in law, the authorities below erred in holding that the claim of the appellant that there was diversion by overriding title in respect of infrastructure contribution is untenable." 18.However, by filing these appeals before this Court, the assessee has developed its case, and included thesubstantial

Mussoorie Dehradun Development Authority, Mdda, Transport Nagar Dehradun vs. Assistant Commissioner of Income Tax, Income Tax Department Dehradun

In the result, both appeals of the assessee are dismissed as above

ITA 95/DDN/2023[2017-18]Status: DisposedITAT Dehradun21 Feb 2025AY 2017-18

Bench: Shri Vikas Awasthy & Shri Avdhesh Kumar Mishra

Section 43B

circumstances of the case and in law, the authorities below erred in holding that the claim of the appellant that there was diversion by overriding title in respect of infrastructure contribution is untenable." 18.However, by filing these appeals before this Court, the assessee has developed its case, and included thesubstantial

Deloitte Haskins and Sells LLP, Mumbai vs. Assistant Commissioner of Income-Tax-16(2), Mumbai

ITA 292/MUM/2024[2014-15]Status: DisposedITAT Mumbai04 Feb 2025AY 2014-15

Bench: Shri Saktijit Dey & Ms Padmavathy S, Am

For Appellant: Shri Niraj Sheth, ARFor Respondent: Shri Krishna Kumar, Sr. DR
Section 37(1)Section 40

amount payable (185 & 186 of PB). The ld. AR therefore argued that the payment made to the retiring partners is a diversion by overriding title and therefore cannot be taxed in the hands of the assessee. We notice in this regard that

Deloitte Haskins and Sells LLP, Mumbai vs. Assistant Commissioner of Income-Tax - 11(2), Mumbai

ITA 291/MUM/2024[2010-11]Status: DisposedITAT Mumbai04 Feb 2025AY 2010-11

Bench: Shri Saktijit Dey & Ms Padmavathy S, Am

For Appellant: Shri Niraj Sheth, ARFor Respondent: Shri Krishna Kumar, Sr. DR
Section 37(1)Section 40

amount payable (185 & 186 of PB). The ld. AR therefore argued that the payment made to the retiring partners is a diversion by overriding title and therefore cannot be taxed in the hands of the assessee. We notice in this regard that

Deloitte Haskins and Sells LLP, Mumbai vs. Joint Range- 11(2), Mumbai

ITA 289/MUM/2024[2011-12]Status: DisposedITAT Mumbai04 Feb 2025AY 2011-12

Bench: Shri Saktijit Dey & Ms Padmavathy S, Am

For Appellant: Shri Niraj Sheth, ARFor Respondent: Shri Krishna Kumar, Sr. DR
Section 37(1)Section 40

amount payable (185 & 186 of PB). The ld. AR therefore argued that the payment made to the retiring partners is a diversion by overriding title and therefore cannot be taxed in the hands of the assessee. We notice in this regard that

DCIT, Circle- 21(1), New Delhi vs. Ramprastha Properties Pvt. Ltd., New Delhi

In the result, the revenue appeal stands dismissed

ITA 683/DEL/2018[2014-15]Status: DisposedITAT Delhi30 May 2024AY 2014-15

Bench: Shri G.S.Pannu, Hon’Ble & Sh. Anubhav Sharma

expenditure being amount payable to investor companies ignoring the fact that the amount is only the application of income already accrued and not diversion by overriding title. 2. On the facts and under the circumstances of the case, Ld. CIT(A) has erred in law in deleting the disallowance

Dy Comm of Income Tax-14(1)(2), Mumbai vs. M/S Reliance Infrastructure Ltd., Mumbai

In the result, both the appeals of the Revenue are dismissed

ITA 234/MUM/2023[2020-21]Status: DisposedITAT Mumbai16 May 2023AY 2020-21
Section 143(1)Section 199(3)

taxable. The AAR categorically held that income so received by AEML is taxable in the hands of the assessee on principle of diversion by overriding title. The CIT M/s. Reliance Infrastructure Ltd. of AEML had also filed the report with the AAR that the income does not belong to AEML

Dy Comm of Income Tax-14(1)(2), Mumbai vs. M/S Reliance Infrastructure Ltd., Mumbai

In the result, both the appeals of the Revenue are dismissed

ITA 233/MUM/2023[2020-21]Status: DisposedITAT Mumbai16 May 2023AY 2020-21
Section 143(1)Section 199(3)

taxable. The AAR categorically held that income so received by AEML is taxable in the hands of the assessee on principle of diversion by overriding title. The CIT M/s. Reliance Infrastructure Ltd. of AEML had also filed the report with the AAR that the income does not belong to AEML

Yum! Restaurants Marketing Pvt. Ltd., Haryana vs. ITO, Ward- 27(4), New Delhi

In the result, appeal of the assessee is allowed for statistical purposes

ITA 3945/DEL/2019[2015-16]Status: DisposedITAT Delhi09 Feb 2023AY 2015-16

Bench: Shri Challa Nagendra Prasad & Shri Pradip Kumar Kediaआ.अ.सं/.I.T.A No.3945/Del/2019 िनधा"रणवष"/Assessment Year: 2015-16 बनाम Yum Restaurants Marketing Ito Vs. Pvt. Ltd. Ward-27(4), 12Th Floor, Tower-D, New Delhi. Global Business Park, M.G. Road, Gurgaon, Haryana. Pan No. Aaacy1884D अपीलाथ" Appellant ""यथ"/Respondent

outset, Learned A.R. submitted that though assessee has raised various grounds, but, the grounds of applicability of Doctrine of Mutuality and without prejudice, diversion by overriding title stands rejected in assessee’s own case by the Hon’ble Supreme Court vide order reported in 424 ITR 630 (SC). He, therefore

M/S. Century Bangalore City Centre Private Limited, Bangalore vs. The Deputy Commissioner of Income Tax, Central Circle- 1(3), Bangalore

In the result, the appeals of the assessee are partly allowed

ITA 357/BANG/2020[2014-15]Status: DisposedITAT Bangalore21 Jun 2022AY 2014-15

Bench: Shri N.V. Vasudevanand Ms. Padmavathy S

For Appellant: Shri. R. Ramakrishnan, CAFor Respondent: Shri. Praveen Karanth, CIT(DR)(ITAT), Bengaluru
Section 131Section 132Section 153C

same to the land lords The interest amount was paid to the land lords not as a result of "Diversion By overriding Title" but as a mere application of income received by the appellant The additions made by the AO in the impugned assessment year on this count is therefore

M/S. Century Bangalore City Centre Private Limited, Bangalore vs. The Deputy Commissioner of Income Tax, Central Circle- 1(3), Bangalore

In the result, the appeals of the assessee are partly allowed

ITA 356/BANG/2020[2013-14]Status: DisposedITAT Bangalore21 Jun 2022AY 2013-14

Bench: Shri N.V. Vasudevanand Ms. Padmavathy S

For Appellant: Shri. R. Ramakrishnan, CAFor Respondent: Shri. Praveen Karanth, CIT(DR)(ITAT), Bengaluru
Section 131Section 132Section 153C

same to the land lords The interest amount was paid to the land lords not as a result of "Diversion By overriding Title" but as a mere application of income received by the appellant The additions made by the AO in the impugned assessment year on this count is therefore

M/S. Century Bangalore City Centre Private Limited, Bangalore vs. The Deputy Commissioner of Income Tax, Central Circle- 1(3), Bangalore

In the result, the appeals of the assessee are partly allowed

ITA 355/BANG/2020[2012-13]Status: DisposedITAT Bangalore21 Jun 2022AY 2012-13

Bench: Shri N.V. Vasudevanand Ms. Padmavathy S

For Appellant: Shri. R. Ramakrishnan, CAFor Respondent: Shri. Praveen Karanth, CIT(DR)(ITAT), Bengaluru
Section 131Section 132Section 153C

same to the land lords The interest amount was paid to the land lords not as a result of "Diversion By overriding Title" but as a mere application of income received by the appellant The additions made by the AO in the impugned assessment year on this count is therefore

M/S. Century Bangalore City Centre Private Limited, Bangalore vs. The Deputy Commissioner of Income Tax, Central Circle- 1(3), Bangalore

In the result, the appeals of the assessee are partly allowed

ITA 354/BANG/2020[2011-12]Status: DisposedITAT Bangalore21 Jun 2022AY 2011-12

Bench: Shri N.V. Vasudevanand Ms. Padmavathy S

For Appellant: Shri. R. Ramakrishnan, CAFor Respondent: Shri. Praveen Karanth, CIT(DR)(ITAT), Bengaluru
Section 131Section 132Section 153C

same to the land lords The interest amount was paid to the land lords not as a result of "Diversion By overriding Title" but as a mere application of income received by the appellant The additions made by the AO in the impugned assessment year on this count is therefore

M/S. Century Bangalore City Centre Private Limited, Bangalore vs. The Deputy Commissioner of Income Tax, Central Circle- 1(3), Bangalore

In the result, the appeals of the assessee are partly allowed

ITA 353/BANG/2020[2010-11]Status: DisposedITAT Bangalore21 Jun 2022AY 2010-11

Bench: Shri N.V. Vasudevanand Ms. Padmavathy S

For Appellant: Shri. R. Ramakrishnan, CAFor Respondent: Shri. Praveen Karanth, CIT(DR)(ITAT), Bengaluru
Section 131Section 132Section 153C

same to the land lords The interest amount was paid to the land lords not as a result of "Diversion By overriding Title" but as a mere application of income received by the appellant The additions made by the AO in the impugned assessment year on this count is therefore