JUDGMENT - Mrs. SUJATA MANOHAR, J.:---The petitioner has prayed for an order directing the Income-tax Appellate Tribunal, Bombay, to state the case and to raise and refer to this Court the following questions : 1. Whether on the facts and in the circumstances of the case, Tribunal was right in law in holding that only an amount of Rs. 1,80,000/- be considered as income of three beneficiaries to be shared equally and that the balance income be allocated to Jhaverbai Patel Charitable Trust No. II? 2. Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that this is a case of diversion of income at source and not of application of income? This application is made to us upon refusal of the Tribunal to state the case and refer these questions to us. The relevant facts are as follows : 2. The respondent Trust was created under a Deed of Trust dated 27th April, 1984 by Sarojben Jhaverbai Patel for the benefit of her three grand daughters Nina, Varsha and Bharati. She set aside a sum of Rs. 1,00,000/- for this purpose. Under the terms of the Deed of Trust the three beneficiaries have an equal share in the income and corpus of the Trust. As per Clauses 4(b) and (c) of the Trust Deed, the net income of the Trust was to be divided in three equal shares and applied for the benefit of the three beneficiaries. The arrangement was to continue till Bharati attained the age of 35 years. 3. In 1976 the three beneficiaries, who were all majors, entered into three different agreements dated 15th March, 1976 under which the trustees were to grant to each of the three beneficiaries annuities of the value of Rs. 5,000/- per month. The beneficiaries also executed deeds of assignments dated 19th March, 1976 under which the three beneficiaries assigned their rights and shares in the residuary income, after payment of the above annuities, to Jhaverbai Patel Charitable Trust No. II. On the same day the three beneficiaries, by three separate deeds of gift, also gifted their interest in the corpus of the trust property to another trust. 4. For the assessment years 1977-78 and 1978-79 the Income-Tax Officer has held that the entire income of the trust corpus is liable to be taxed in the hands of the beneficiaries. On the same day the three beneficiaries, by three separate deeds of gift, also gifted their interest in the corpus of the trust property to another trust. 4. For the assessment years 1977-78 and 1978-79 the Income-Tax Officer has held that the entire income of the trust corpus is liable to be taxed in the hands of the beneficiaries. The assessee Trust preferred appeal before the Commissioner of Income-Tax (Appeals). The Commissioner of Income-Tax (Appeals), by his order dated 27th February, 1982, partly allowed the appeal. The Income-tax Appellate Tribunal, by its common order dated 21st December, 1984, dismissed the appeals filed by the petitioner from the order of the Commissioner of Income-tax (Appeals). Thereafter on the refusal of the Tribunal to refer the above questions to us, the present application has been made. 5. Under section 58 of the Indian Trust Act, the beneficiary, if competent to contract, may transfer his interest, but subject to the law for the time being in force as to the circumstances and extent and to which he may dispose of such interest. In the present case, all the three beneficiaries, who are competent to contract, were in a position to transfer their interest or any part of it in the trust properties or income from the trust properties. The beneficiaries have, by a deed of assignment of 29th March, 1976, assigned their interest and shares in a portion of the income, as set out earlier, in favour of Jhaverbai Patel Charitable Trust No. II. Once the beneficiaries have given up their right, title and interest in a portion of the income in favour of the said Jhaverbai Patel Charitable Trust No. II, it cannot be said that in fact they are entitled to receive the entire income and it is the beneficiaries who thereafter diverted a part of their income in favour of the said charitable trust. The beneficiaries have divested themselves of this part of the income at source. Hence the income so given up and assigned to the said charitable trust cannot be taxed in the hands of the beneficiaries as this income has not accrued to them. 6. The beneficiaries have divested themselves of this part of the income at source. Hence the income so given up and assigned to the said charitable trust cannot be taxed in the hands of the beneficiaries as this income has not accrued to them. 6. In the case of (Commissioner of Income-tax, Bombay v. Smt. Kasturbai Walchand Trust)1, reported in (1967) I.T.R. 656 (Supreme Court), the deed of trust provided, inter alia, that from and after the death of Kasturbai the trustees were to apply the net income of the trust, at their discretion, on certain public charitable purposes. Bai Kasturbai, in her life time, executed a deed declaring that she did thereby surrender, release transfer and assign unto the trustees all the income accruing to her from the trust funds and her beneficial life interest to the intent that her beneficial interest may be determined and the same may be immediately vested in the trustees and that the trustees may utilise the same for charitable purposes. The Supreme Court held that Bai Kasturbai validly surrendered her right under the trust in favour of the trusts for charitable purposes, so that her right became extinguished. The same ratio would apply in the present case where also, by virtue of the deed of assignment, the right of the beneficiary to receive a part of the income so assigned has become extinguished. Mr. Jetly, learned Advocate for the petitioner, sought to distinguish this position by pointing out that under the deed of trust itself, in the above case, ultimately on the death of Bai Kasturbai the income was to be applied for the charitable purposes. This, however, can make no difference of the ratio in this case because during the life time of Kasturbai the income was to be received by her and could not have been applied for charitable purposes. It was by virtue of the relinquishment of this right by Kasturbai that the Supreme Court held that her right to receive the income became extinguished and the income could not be taxed in her hand. 7. A similar principle has been laid down by the Supreme Court in the case of (Motilal Chhadami Lal Jain v. Commissioner of Income Tax)2, reported in (1991)190 Income-tax Reports, page 1. The Supreme Court there has made a distinction between the application of income after accrual and diversion of income by overriding title. 8. 7. A similar principle has been laid down by the Supreme Court in the case of (Motilal Chhadami Lal Jain v. Commissioner of Income Tax)2, reported in (1991)190 Income-tax Reports, page 1. The Supreme Court there has made a distinction between the application of income after accrual and diversion of income by overriding title. 8. In the premises, in our view, no referable question of law arises which requires to be framed and referred to us for determination. 9. Petition is dismissed. Rule is discharged with costs. Petition dismissed. -----