1. This is a reference under Section 66(1) of the Indian I.T. Act, 1922 (hereinafter referred to as "the Act"). The Income-tax Appellate Tribunal, Delhi Bench-A, has stated a case and referred the following three questions to this court for its opinion :

"1. Whether, on the facts and in the circumstances of the case, and having regard to the agreement dated March 22, 1943, the hon'ble High Court's order in Suit No. 2 of 1962, dated August 24, 1967, and the judgment dated January 22, 1962, in Suit No. 95 of 1953 of the civil judge, Moradabad, the Tribunal was legally correct in holding that the allowance paid to Rani Amrit Kunwar and Rani Jai Devi were dependent on obligation arising from family custom and usage, from the provisions of Hindu law and from the provisions of the U.P. Zamindari Estate Act ?

2. Whether, on the facts and in the circumstances of the case, and having regard to the documents mentioned in question No. (1) above, the Tribunal was legally correct in holding that the maintenance allowance to Raj Kumari Laxmi Devi and Raj Kumari Inder Mohini were by virtue of a family custom and they also partake of the nature of an overriding allowance ?

3. Whether, on the facts and in the circumstances of the case, the maintenance allowance of Rs. 15,737 to various relations were permissible deductions from the total income of the assessee for the assessment year 1960-61 ? "

2. Briefly stated the facts are that one Raja Raj Kumar was the owner of Sahaspur Bilari Estate in the district of Moradabad. He died on November 3, 1915, leaving behind him two widows: Smt. Amrit Kunwar and Smt. Panna Kunwar, one son. Raja Jagat Kumar, and one daughter, Rajkumari Laxmi Devi. There were also two illegitimate sons, known as Sarin Brothers, left by him. Since Raja Jagat Kumar was a minor, the management of the estate was taken over by the Court of Wards, Uttar Pradesh, Raja Jagat Kumar became major in January, 1933, and the estate was released in his favour. Shortly after, on March 7, 1934, he died in a motor accident leaving behind two widows, Smt. Pritam Kunwar, who is the assessee before us, and Smt. Jai Devi, and one daughter, Rajkumari Indramohini. Again the management of the estate was taken over by the Court of Wards. It appears that certain members of the family used to receive some maintenance allowance from the estate. However, on March 22, 1943, an agreement was executed between the court of wards representing the assessee on the one hand and Smt. Laxmi Devi for self and as guardian of her minor son and Rani Amrit Kunwar on the other. By that agreement the allowance of Rani Amrit Kunwar was increased from Rs. 500 to Rs. 650 and that of Rajkumari Laxmi Devi from Rs. 150 to Rs. 500. Apart from that Rani Amrit Kunwar was given the right of residence in Warwich House, Moradabad, and it was agreed that after her death it would devolve upon Rajkumari Laxmi Devi during her lifetime. The other terms of that agreement are not necessary for the present purpose. It may be noted that the late Raja had extensive zamindari properties in the districts of Moradabad, Bareilly and Budaun and the whole of that property was a settled estate under the U. P. Estates Act, 1920. After the enforcement of the U. P. Zamindari Abolition and Land Reforms Act, U. P. Act No. 1 of 1951, the entire settled estate was taken over by the Government. In 1953, Rani Jai Devi filed a suit for partition claiming the relief that she was entitled to the compensation money equally with the assessee. She further claimed a declaration of her half share in movable and other properties which were not settled. During the pendency of that suit, the civil judge, Moradabad, made an order" on February 16, 1954, directing the continuance of the maintenance allowance to various persons according to the aforesaid agreement. Later on, the Collector, Moradabad, was appointed receiver for taking over possession of the settled and unsettled properties of this estate. That suit was decided on January 27, 1962, and Rani Jai Devi's claim for the partition of half share in the unsettled estate was decreed while in respect of the settled estate it was dismissed. The assessee was held to be the absolute owner of the compensation bonds. Further, Rani Jai Devi was held not bound by the agreement dated March 22, 1943.

3. Soon after the decision in the aforesaid suit, Rajkumari Laxmi Devi filed a suit, being Suit No. 2 of 1962, which was transferred to this court on its original side. That suit was filed against the assessee and Rani Jai Devi for recovery of two months' maintenance allowance, viz., January and February, 1962, and for declaration. That suit was decided by this court on August 24, 1967, and the aforesaid agreement was held binding on the assessee though not on Rani Jai Devi. According to this court, the action of the Court of Wards to enter into an agreement to uphold the rights of the assessee and to set at rest the possibility of assessee (sic). The increase in the maintenance allowance which was made by means of that agreement was upheld and a charge was created on the three house properties for the payment of the maintenance allowance to Rajkumari Laxmi Devi.

4. In the meantime, the assessment for the106 year 1960-61, the previous year ended September 30, 1969, was taken up against the assessee. For that year, the total income disclosed by the assessee was Rs. 13,722 inclusive of her half share in the income from the unsettled estate of Rs. 3,417. The assessee had taken into account the payment of maintenance allowance amounting to Rs. 21,937 out of the settled estate, the details being:

Rs.

1. 1,500 to Rani Amrit Kunwar,

2. 2,475 to Smt. Jai Devi Kunwar,

3. 7,130 to Rajkumari Laxmi Devi,

4. 4,632 to Indra Mohini,

5. 1,800 for educational expenses of Indra Mohini's son.

6. 2,100 to Sarin Brothers, and

7. 2,300 to Sri Jagjit Kumar, s/o. Laxmi Devi.

5. The ITO did not allow the deduction of these payments and computed the total income at Rs. 44,314.

6. On appeal, the AAC confirmed this assessment. On further appeal the Income-tax Appellate Tribunal agreed with the revenue authorities, but allowed the assessee a deduction of the expenses to the extent of 25 per cent. of the income in place of 10 per cent. allowed by the revenue authorities. The Appellate Tribunal stated a case and referred three questions of law to this court which are :

"1. Whether, on the facts and in the circumstances of the case, the assessment order for the year 1960-61 against the assessee. Rani Pritam Kunwar, is void at law as it adopted the total income determined in the assessment order passed against the receiver ?

2. Whether, on the facts and in the circumstances of the case, the maintenance allowance paid out of the income of the estate to certain relations of the assessee were permissible deductions ?

3. Whether, on the facts and in the circumstances of the case, the income was properly assessable in the year under reference though the income was not actually paid by the receiver to the assessee during the previous year ? "

7. Questions Nos. 1 and 3 were answered by this court in favour of the department, whereas question No. 2 was returned unanswered for the reasons that the Appellate Tribunal had failed to decide the source and origin of the payment of the allowance without which it was not possible to return an answer to that question. It may be noted that the stand taken by the assessee was that these allowances were payable on account of either a custom or under the provisions of the Hindu law or under the provisions of the U.P. Estates Act, 1920. The Tribunal had not thought it necessary to mention the origin of these payments since in its opinion these payments had been made by the receiver under the orders of the court which did not create any overriding charge. In the opinion of this court the orders passed in the civil suit did not create any right to receive the maintenance. The right of the members of the family of the late Raja to receive the maintenance might have had its roots elsewhere and unless there was a finding about the origin and source of those payments, it was found that that question could not be answered.

8. On receipt of the record, in conformity with the answers given by this court, the Appellate Tribunal made an order under Section 66(5) of the Act and in doing so gave a hearing to the parties and came to the conclusion that the allowances paid to Rani Amrit Kunwar and Rani Jai Devi were in pursuance of obligations arising from custom and usage as also from provisions of Hindu law and the U.P. Estates Act. The payment to Rajkumari Laxmi Devi also partook of the nature of an overriding title and had to be deducted before the income reached the hands of the assessee. The payment made to Rajkumari Indra Mohini was held to be of the same nature. At the same time, the payments made to the sons of Raj Kumari Indramohini and Raj Kumari Laxmi Devi and to Sarin Brothers were held not justified either with reference to the provisions of the Hindu law or with reference to the U.P. Estates Act. There was no indication of any family custom or usage either to support those payments. Thus, out of the claim of Rs. 21,937, a sum of Rs. 15,737 was accepted for deduction while in regard to the balance of Rs. 6,200 it was not accepted.

9. A threefold submission was made before us on behalf of the revenue by Sri Ashok Gupta, advocate : Firstly, that the Appellate Tribunal did not make any enquiry with reference to the U.P. Estates Act, 1920, and anyhow Section 13 read with Schedule II thereof which indicates the persons who can get maintenance and how much, would exclude Smt. Laxmi Devi and Smt. Indramohini Devi altogether. The second submission was that as for the right to maintenance founded in custom there should be cogent and convincing evidence to prove the existence of such a custom and apart from that the additional amount which became payable as a result of the agreement dated March 22, 1943, would not have its origin in custom. The last submission made was that the present is only a case of application of income and not of diversion of income at source. There was no overriding title created whatsoever. An attempt was made to distinguish the cases which have been referred to by the Appellate Tribunal and reliance was placed on certain decisions which we shall have occasion to refer later on. On the contrary on behalf of the respondent-assessee, Sri R.K. Gulati drew our attention to certain passages from Mullet's Hindu Law and contended that the assessee was under a legal obligation to pay maintenance allowance to various relations mentioned above and certainly there was a charge created in their favour for such payment. Reference was made to Section 71 of the U.P. Zamindari Abolition and Land Reforms Act as well to show that this provision recognises the right of maintenance of the members of the family and gives an option to the recipients to obtain compensation in lieu of their maintenance. That provision does not take away or extinguish the right of maintenance. While referring to the relevant provisions of the U.P. Estates Act, 1920, it was urged that no dispute was raised before the authorities below about the quantum of maintenance paid to the various relations. It was emphasised that payments made to Smt. Jai Devi and Rani Amrit Kunwar would be covered by Schedule II and as regards Smt. Laxmi Devi and Smt. Indramohini Devi, there is a finding of fact recorded by the Appellate Tribunal that they were entitled to maintenance by virtue of a special custom obtaining in this family. It was urged that even according to the general custom these relations would be entitled to get maintenance from the head of the family. Sri Gulati, as well, placed reliance on numerous decisions to which we would advert a little later.

10. It would be seen that in the present reference we are concerned with the widow's obligation to pay maintenance out of the estate inherited by her from her husband to her husband's mother, sister and daughter and to her own co-widow. We have first to be clear about the nature of maintenance and in this behalf we may refer to certain passages from the Principles of Hindu Law by D.F. Mulla, 14th Edn. According to the learned author, a Hindu is under a legal obligation to maintain his wife, his minor sons, his unmarried daughters and his old parents whether he possesses any property or not. This obligation is personal in character and arises from the existence of the relationship between the parties (para. 542). The manager of a joint Mitakshara family is under an obligation to maintain all male members of the family, their wives and their children. This obligation arises from the fact that the manager is in possession of the family property (para. 543). As for the liability of heirs it has been stated, in para. 544 that an heir is legally bound to provide, out of the estate which descends to him, maintenance for those persons whom the late proprietor was legally or morally bound to maintain. The reason is that the estate is inherited subject to the obligation to provide for such maintenance.

11. It would thus be seen that in respect of the wife, minor sons, unmarried daughters and aged parents the liability of a Hindu, though personal in character, is legal and it does not depend on his having any property. The late Raja, that is, the husband of the assessee, therefore, was tinder a legal obligation to maintain his mother, Rani Amrit Kunwar, and his wife, Smt. Jai Devi. So far as his sister and daughter are concerned, they had been married and of course he would have been under no legal obligation to maintain them. After his death, the property passed on to his elder widow and she is legally bound to provide for maintenance to the mother of her deceased husband and to her co-widow. As for Rajkumari Laxmi Devi and Rajkumari Indra Mohini, there was no legal obligation to provide maintenance out of this estate under the principles of Hindu law. For that family custom has been pleaded to which we would come shortly.

12. In regard to the liability of an heir the question had come up for consideration before a Full Bench of this court in the case of Janki v. Nand Ram [1889] ILR 11 All 194. The brief facts of that case were that there was a Hindu family which was joint in food and worship but was not possessed of any joint or ancestral property. The father was possessed of some self-acquired property. He had two sons, Ghasi Ram and Nand Ram. Ghasi Ram predeceased him (the father) leaving behind his widow, Janki. The father died intestate leaving his son, Nand Ram, and his widow. Thereafter, Janki, the widow of his (father's) predeceased son, Ghasi Ram, filed a suit for maintenance against her brother-in-law and mother-in-law, and also claimed to have that maintenance charged upon the immovable property of her father-in-law. The dictum laid down by the Full Bench was that the father was under a moral, though not legal, , obligation not only to maintain his widowed daughter-in-law during his lifetime but also to make provision out of his self-acquired property for her maintenance after his death and that such moral obligation in the father became by reason of his self-acquired property having come by inheritance into the hands of his surviving son, a legal obligation enforceable by suit against that son and against the property in question and for that reliance was placed in Sir Barnes Peacock's judgment in Khetramani Dasi v. Kashinath Das [1868] 2 BLR 15 (AJ) at p. 34 [FB]. It was also opined that the son in such a situation takes the estate not for his own benefit but for the spiritual benefit of the late proprietor. The general rule thus laid down regarding a person's liability to provide maintenance for others was that the heir of a person taking his estate is legally bound to maintain all those to whom the late proprietor was either legally or morally bound to maintain, for the heir takes the estate of the ancestor for his spiritual benefit. Thus what was a moral obligation in the ancestor becomes transformed into a legal obligation in his heir. The application of this principle in respect of the Hindu law of the Bengal school was recognised in the case of Kamini Dassee v. Chandra Pode Mondle [1889] ILR 17 Cal 373. It was emphasised in that case that this legal obligation was on an heir succeeding to property irrespective of the fact that the property so inherited is movable or immovable. The decision in Janki v. Nand Ram [1819] ILR 11 All 194 [FB] was followed and it was laid down that in each case it must be determined whether having regard to the relationship, the means and various other circumstances of the party claiming maintenance, the late proprietor was, according to the principles of Hindu law and the usage and practices of the Hindu people, morally bound to maintain that party. That was a suit filed by the deceased brother's widow and there was no ancestral property in the hands of the surviving brothers. Since the father-in-law was found morally bound to maintain the deceased son's widow, it was held that there was a legal obligation on the widow's brothers-in-law to maintain her from the estate inherited by them.

13. In V. Tulasamma v. V. Sesha Reddi, AIR 1977 SC 1944, while considering the nature of a Hindu widow's right to maintenance, Fazal Ali J., speaking for the court, observed (p. 1960):

"A Hindu widow's right to maintenance is a personal obligation so far as the husband is concerned, and it is his duty to maintain her even if he has no property. If the husband has property then the right of the widow to maintenance becomes an equitable charge on his property and any person who succeeds to the property carries with it the legal obligation to maintain the widow."

14. It was also observed that at any rate even without a charge the claim for maintenance is doubtless a pre-existing right so that any transfer declaring or recognising such a right does not confer any new title but merely endorses or confirms the pre-existing rights.

15. The same view has been expressed in Bai Vajia v. Thakorbhai Chelabhai, AIR 1979 SC 993.

16. This takes us to the consideration of the importance of custom in Hindu law. There are three main sources of Hindu dharma or law and they are : (1) Sruti, (2) Smriti and (3) custom. In the event of conflict between a custom and a text of the Smritis, the custom overrides the text (para. 15, Mulla's Hindu Law). In the Hindu system of law, clear proof of usage will outweigh the written text of. the law. Of course there are certain essentials of a valid custom and they are that a custom is a rule which in a particular family or particular class or community or in a particular locality, has from long usage obtained the force of law. Such custom must be ancient, certain and reasonable and being in derogation of general rules of law must be construed strictly. It must not be opposed to morality or public policy nor should it be expressly forbidden by the Legislature. It should not be in derogation of the fundamental rights of a citizen to hold and dispose of property by absolutely prohibiting alienation of the property even after actual division. For the proof of custom what is required is that it should be shown that the custom has been acted upon in practice for such a long period and with such invariability as to show that it has, by common consent, been submitted to as the established governing rule of a particular class, community or locality. In this case, this aspect would be relevant because the Appellate Tribunal found the origin of the practice of paying maintenance allowance in the custom in regard to all the four persons with whom we are concerned in this reference.

17. The more important question for consideration is the nature of the obligation. That is the decisive factor, and would provide a true test to find out as to whether the obligation to pay maintenance, as in the present case, is diversion of income or its application. In this behalf it is pertinent to note that the claim even of a widow for maintenance is not a charge on the estate of her deceased husband, whether joint or separate, until it is fixed and charged upon the estate. This may be done by the decree of a court or by an agreement between the widow and the holder of the estate, or by the will by which the property was bequeathed (see para. 469 of Mulla's Hindu Law, 13th Edn).

18. The leading case on the subject is of CIT v. Sitaldas Tirathdas [1961] 41 ITR 367 (SC). In that case the assessee, Sitaldas Tirathdas, in his assessments to income-tax for 1953-54 and 1954-55, claimed deductions of Rs. 1,350 and Rs. 18,000, respectively, on the ground that under a decree he was required to pay those sums as maintenance to his wife and his children. That suit had been filed in the Bombay High Court for maintenance allowance, separate residence and marriage expenses for daughters and for arrears of maintenance allowance, etc., and a decree was passed by consent. The assessee claimed the deduction on the strength of the decision of the Privy Council in Raja Bejoy Singh Dudhuria v. CIT [1933] 1 ITR 135. That contention was repelled by the revenue authorities as also by the Appellate Tribunal, On a reference the High Court held that the income to the extent of the decree must be taken to have been diverted to the wife and children and never became an income in the hands of the assessee. The Commissioner preferred an appeal before the Supreme Court which affirmed the decision of the High Court. After referring to several decisions, their Lordships of the Supreme Court laid down the proposition of law as under (p. 374):

"These are the cases which have considered, the problem from various angles. Some of them appear to have applied the principle correctly and some not. But we do not propose to examine the correctness of the decisions in the light of the facts in them. In our opinion, the true test is whether the amount sought to be deducted, in truth, never reached the assessee as his income. Obligations, no doubt, there are in every case, but it is the nature of the obligation which is the decisive factor. There is a difference between an amount which a person is obliged to apply out of his income and an amount which by the nature of the obligation cannot be said to be a part of the income of the assessee. Where by the obligation income is diverted before it reaches the assessee, it is deductible, but where the income is required to be applied to discharge an obligation after such income reaches the assessee, the same consequence, in. law, does not follow. It is the first kind of payment which can truly be excused and not the second. The second payment is merely an obligation to pay another a portion of one's own income, which has been received and is since applied. The first is a case in which the income never reaches the assessee, who even if he were to collect it, does so, not as part of his income, but for and on behalf of the person to whom it is payable."

19. In CIT v. Imperial Chemical Industries (India) (P.) Ltd. [1969] 74 ITR 17 (SC) the question as to whether the income was diverted by overriding title came up for consideration and, their Lordships, after considering a series of decisions, approved the above observations made in CIT v. Sitaldas Tirathdas [1961] 41 ITR 367 (SC) quoted above.

20. In. M.K. Brothers P. Ltd. v. CIT [1967] 63 ITR 28 (All), while dealing with the distinction between deductions made for ascertaining the profits and distributions made out of profits, his Lordship, M. C. Desai, Chief Justice, speaking for the Bench, laid down (p. 35):

" Every income has a source, whether it is a property or a business or a contract. There is a distinction between an obligation to spend money in a particular manner attaching to an income and a similar obligation attaching to the source of an income. Suppose a property is charged with an encumbrance, the income from it must be spent first in discharging the encumbrance. This is an instance of the source of an income being subject to an obligation. If the obligation is on the receiver of the income and not on the source of it, the legal effect of it is quite different. In the former case, the income that is subject to the obligation is diverted at the source and, therefore, not deemed to have; accrued or arisen. In the latter case, the income has accrued or arisen but has to be applied in a particular manner. In the former case, the income is not to be included at all in the taxable income; in the latter case, it is. Where a property is subject to the charge of maintenance of a certain person, a portion of the income from it that has to be spent on maintaining the person is not deemed to be the income of the person on whom devolves the property."

21. The Supreme Court in CIT v. Travancore Sugars and Chemicals Ltd. [1973] 88 ITR 1 had an occasion to consider the question of overriding charge with reference to an agreement between the parties and laid down the principle that the amount paid by reference to profits can either be that it is paid after the profits become divisible or distributable or that the amount is payable prior to such distribution or division to be computed by a reference to notional or what is termed as apparent net profits. In the former instance it will be distribution of profits and not deductible as an expenditure incurred in running the business, but in the latter, it may, on the facts and circumstances of the case and the agreement or the nature of the obligation under the particular instrument which governs the obligation, be an expenditure incurred as a contribution to the profit-earning apparatus or incurred at the inception and deductible as an overriding charge on the profit-making apparatus or one laid out and expended wholly and exclusively for purposes of such business.

22. Raja Bejoy Singh Dudhuria v. CIT [1933] 1 ITR 135 (PC) and Seth Motilal Manekchand v. CIT [1957] 31 ITR 735 (Bom) are instances of an obligation attaching to the source of an income. In Bejoy Singh Dudhuria in a suit riled by the step-mother for maintenance against the assessee a consent decree was made directing the assessee to make a monthly payment of a fixed sum to his step-mother and the maintenance was made a charge on the ancestral estate in the hands of the assessee. Lord Macmillan, dealing with the question, ruled (p. 138) ;

" But their Lordships do not agree with the learned Chief Justice in his rejection of the view that the sums paid by the appellant to his stepmother were not ' income ' of the appellant at all. This, in their Lordships' opinion, is the true view of the matter.

When the act by section 3 subjects to charge ' all income ' of an individual, it is what reaches the individual as income which it is intended to charge. In the present case the decree of the court by charging the appellant's whole resources with a specific payment to his step-mother has to that extent diverted his income from him and has directed it to his step-mother; to that extent what he receives for her is not his income. It is not a case of the application by the appellant of. part of his income in a particular way, it is rather the allocation of a sum out of his revenue before it becomes income in his hands. "

23. This case thus provides an instance where payment was made in pursuance of a decree creating a charge for that payment on the property of the assessee. Such charge may also be created by agreement between the parties and the case of Seth Motilal Manekchand v. CIT [1957] 31 ITR 735 (Bom) provides an instance thereof. In that case there was a Hindu joint family composed of A, his wife and his son, B. In a partition between the members of the family, the managing agency was also divided and the partition deed provided that A and B would be entitled to the managing agency remuneration in equal shares and that each, of them should pay to A's wife 2 as. 8 pies out of their respective 8 as. share in the managing agency. A and B constituted themselves into a registered firm and carried on the managing agency. In the assessment of the firm and each of the individual partners it was claimed that the 2 as. 8 pies share paid to A's wife by each of them should be deducted before ascertaining their taxable income. The view taken was that this was a case in which the portion of the managing agency commission was diverted to A's wife before it became the income of A and B and not a case of application of a part of the income of A and B. It was held that the amount payable to A's wife should, therefore, be deducted before ascertaining the taxable income of A and B. That was a decision of the Bombay High Court and they followed their earlier decision given in Prince Khanderao Gaekwar of Baroda v. CIT [1948] 16 ITR 294. In that case this principle was applied to voluntary settlement made by two sons in favour of their mother. .The test laid down was whether the property was subject to a valid and legal charge which could be enforced in a court of law under which the assessee was bound to pay a certain amount recurring annually ? While referring to that case, his Lordship, Chagia C.J., in Seth Motilal Manekchand [1957] 31 ITR 735 observed (p. 743):

" In our opinion, the test would be the same even though there may not be a specific charge so long as there was an obligation upon the assessee to pay which could be enforced in a court of law. "

24. Darab Ruttonshaw Shroff v. CIT [1957] 32 ITR 574 (Bom), Ratilal B. Daftari v. CIT [1959] 36 ITR 18 (Bom) and Raja Shiva Prasad Singh v. CIT [1942] 10 ITR 249 (Pat) as well are cases of obligation attaching to the property. In Darab Ruttonshaw Shroff the obligation was created by an agreement while in Raja Shiva Prasad Singh it arose out of a charge created on the estate. In Ratilal B. Daftari also the obligation was created as a result of an agreement between the parties.

25. Madan Mohan Mullick and Brothers, In re [1938] 6 ITR 315 (Cal) is a case of a voluntary settlement and payment of maintenance on the basis thereof was held liable to exclusion from the computation of income.

26. Also see CIT v. Crawford Bayley and Co. [1977] 106 ITR 884 (Bom) and CIT v. C. N. Patuck [1969] 71 ITR 713 (Bom).

27. The true test thus is whether the amount sought to be deducted in truth never reached the assessee as his income. Thus, in P.C. Mullick v. CIT [1938] 6 ITR 206 (PC), where on the basis of the will the appellant was required to pay a certain amount out of the income of his property on the occasion of addya sradh, the view taken was that it was a case of application of income and not diversion of income at source. Similarly in V. M. Raghavalu Naidu and Sons v. CIT [1950] 18 ITR 787 (Mad), where the assessees, who were the executors arid trustees of the will, were directed by the testator to continue his business and to pay maintenance allowance to his mother and wife, the view taken was that the maintenance allowance so paid was not an allowable deduction. There is a Full Bench decision of the Kerala High Court in S. Venugopala Varma Rajah v. Commr. of Agrl. I.T. [1968] 68 ITR 83, where settlements or dispositions of income of agricultural land were held to be merely applications of income.

28. The Income-tax Appellate Tribunal v. Sardar Virendrasingh [1978] 113 ITR 120 (MP) is an instance of an obligation created by a statute. In that case maintenance allowance was being paid to two ladies under the Jagir Manual of the then Holkar State. In 1951, the Madhya Bharat Abolition of Jagirs Act was passed. Section 9 of the Act provided that if any person were entitled to receive any maintenance allowance under any law or other provision having the force of law he would be entitled to receive it out of the compensation payable to the jagirdar. It also provided that in fixing the amount to be paid, the Jagir Commissioner would take into consideration the circumstances enumerated in the sub-clauses of the section. Section 13 provided for the procedure to be followed for passing various orders including the maintenance allowance under Section 9. The question that came up before the Madhya Pradesh High Court was whether the maintenance allowance with regard to which no order had been passed under Section 9 read with Section 13 continued to be diverted by overriding title. Following the decision in Sitaldas Tirathdas [1961] 41 ITR 367 (SC) it was held that as the maintenance allowance was payable under a legal obligation it was diverted by overriding title and did not form part of the assessee's income.

29. In CIT v. Tollygunge Club Ltd. [1977] 107 ITR 776 (SC) pursuant to a resolution passed at a general meeting of the assessee-company limited by guarantee, surcharge for local charities was charged from the race goers along with the price for admission. The view taken was that the surcharge was clearly impressed with an obligation in the nature of a trust before it reached the hands of the assessee and at no stage became part of his income.

30. Reference may also be made to CIT v. Smt. Kamlabai Juthalal [1977] 108 ITR 755 (Bom), Estate of Lala Shankar Shah v. CIT [1945] 13 ITR 500 (Lah) and L. Hira Lal, In re [1945] 13 ITR 512 (Lah). These are cases of payment of maintenance allowance under the will of a Hindu and the principle laid down was that if the payment is voluntary it must be included in the income of the assessee, but if the charge is obligatory that is subject to an overriding charge, such as a decree, the sum so charged must be excluded from the income of the payer.

31. On the basis of the case law discussed above the true test which emerges is whether the amount sought to be deducted in truth reached the assessee as his income or not. Broadly speaking, a payment voluntarily made would only amount to an application of income and not diversion at source. In order that a payment should be treated as a diversion at source, it is necessary that it should have been, made under some legal obligation. Such obligation must attach to the source of income. In other words, for such a payment there should be an overriding charge, a charge which is created under any law for the time being in force or by virtue of any court's decree or by an agreement or by a voluntary settlement or the obligation must be such, though not made a specific charge on the property, can be enforced in a court of law.

32. We may now consider this question with reference to the relevant provisions contained in the U. P. Estates Act, 1920, and the U.P. Zamindari Abolition and Land Reforms Act, 1951. Section 13 of the U.P. Estates Act, 1920, provides for maintenance to surviving relatives of estate holders. It says

" when an estate-holder dies leaving any such relatives as are mentioned in the Second Schedule, any person for the time being in possession of his estate shall be liable to the extent of the property of the deceased which has come into his possession to pay to each of such relatives...a reasonable annuity not exceeding the amount mentioned in the Schedule"

. The proviso to this section requires that such relative should, on the date of death of the deceased, have been living together with him and further that such relative is and continues to be without any other adequate means of maintenance. The other part of the proviso is not relevant for our purpose. Schedule II mentions the persons entitled to maintenance. In Clause (i) such persons are grandparents, parents and senior widow of the deceased and in Clause (ii) they are junior widows, brothers and sons of the deceased. Clauses (iii) and (iv) are not relevant for our purpose. Provision has been made in the Schedule in regard to the maximum amount of the annuity payable to each of such persons. It would be seen that Rani Amrit Kunwar, mother, and Smt. Jai Devi, junior widow, of the deceased estate-holder would be covered by this Schedule. Certainly Smt. Laxmi Devi and Smt. Indramohini Devi would not be covered by it. A controversy was raised by Mr. Ashok Gupta that the respondent-assessee cannot derive any benefit from the provisions contained in this schedule because the Appellate Tribunal had not addressed itself to the question of the amount of annuity payable to the mother and junior widow of the deceased estate-holder. We do not find any substance in this contention because no dispute was raised before the Appellate Tribunal, or for the matter of that before the revenue authorities, about the quantum of maintenance payable to these two ladies. Therefore, so far as the mother and junior widow of the deceased estate-holder are concerned, their right to obtain maintenance from the assessee finds support from the provisions contained in Section 13 read with Schedule II of the U.P. Estates Act, 1920.

33. Coming to the Zamindari Abolition and Land Reforms Act, the relevant provisions are contained in Sections 71 and 11 thereof. Section 71 provides that where any person claiming to be the guzaredar wants any portion of the compensation awarded to an intermediary, the Compensation Officer may, with the consent of the intermediary, direct, the payment of an agreed amount to the guzaredar. However, in case the consent of the intermediary is not forthcoming, the Compensation Officer may direct the claimant to institute a suit within the next three months. Till then the amount shall not be paid to anybody and if the suit is filed the amount shall be placed at the disposal of the court before which such suit is instituted. If, however, such a suit is not instituted within the period of three months aforesaid, the compensation shall be paid to the intermediary forthwith. The Explanation to this section is rather important since it defines the expression guzaredar. It says that a guzaredar means a person entitled to receive guzara under a registered deed, decree or order of court or any enactment, This section thus recognises the right of a guzaredar in regard to his maintenance. Similarly, Section 11 which provides for sir or khudkasht allotted in lieu of maintenance allowances, says that if a maintenance holder is in possession of land as guzara his status would be that of an asami and he shall be entitled to retain the land so long as his right to maintenance lasts. It would be seen that a charge to secure maintenance allowance can be created in four ways I that is, under any law or by virtue of any decree or by an agreement or by a document and Section 11 applies to all such cases. Thus, so far as the mother and junior widow of the deceased estate-holder are concerned, their right to maintenance could be said to be created by the provisions discussed above. Apart from this, the Explanation to Section 71 of the U. P. Zamindari Abolition and Land Reforms Act accords legal recognition to the agreement executed on March 22, 1943, and would thus cover not only the amount of maintenance which was being paid to these ladies prior to that agreement but also the enhanced amount which was to be paid to them under that agreement.

34. To conclude, therefore, the assessee had a legal obligation to provide maintenance from the estate inherited by her from her husband to her husband's mother. Rani Amrit Kunwar, and to her co-widow, Smt. Jai Devi, The source of the right of these two ladies to receive maintenance was attached to the property. It would amount to an overriding charge inasmuch as this obligation had for its basis the personal law governing these persons, the statutory provisions contained in Section 13 read with Schedule II of the U. P. Estates Act, 1920, and Section 71 of the U. P. Zamindari Abolition and Land Reforms Act, 1951. Apart from that it was also based on the special custom obtaining in the family. As for the other two ladies, viz., Smt. Laxmi Devi, sister, and Smt. Indramohini Devi, daughter of the late estate-holder, also the assessee was under a legal obligation to maintain them which obligation is based on special custom obtaining in this family. This being the position the Appellate Tribunal has been right in treating the sum of Rs. 15,737, representing maintenance allowance paid to these four persons as permissible deduction from the total income of the assessee for the assessment year under consideration.

35. We, therefore, answer all the three questions in the affirmative, in favour of the assessee and against the department. The assessee is entitled to her costs which we assess at Rs. 200 and counsel's fee in like figure.