Summarize the following court judgment. Appeal No. 488 of 1975. (Appeal by Special Leave from the Judgment and Order dated 24 9 1973 of the Calcutta High Court in Appeal from Original Order & No. 335/73). 172 Hardayal Hardy	 for appellant No. 1. K. Sen	 S.K. Mehta	 M. Qamaruddin and P.N. Puri	 for respondent No. 2. S.C. Manchanda	 P.L. Juneja and S.P. Nayar	 for respondents. The Judgment of the Court was delivered by GUPTA	 J. The first appellant	 performing Right Society Limited	 (hereinafter called the Society) is a company incorporated under the (English) Companies Acts	 1908 and 1913	 having its registered office at Copyright House	 33 Margaret Street	 Cavendish Square	 London a company limited by guarantee and having no share capital. The Society is an association of composers	 authors and publishers of copy right musical works established to grant permission for the performing right in such works. 'Performing right ' means the right of performing in public	 broadcasting and causing to be transmitted to subscribers to a diffusion service	 in all parts of the world. The members of the Society are required to assign to the Society the performing right in their works	 and the Society exercises and enforces on their behalf all rights and remedies in respect of any exploita tion of such works. The Society collects royalties for the issue of licences granting such permission and distributes the royalties to the members of the society	 namely	 the composers	 authors	 music publishers and other persons having an interest in the copyright in proportion to the extent to which a member 's work is publicly performed or broadcast after a pro rata deduction of the expenses. Arti cle 43 of	 the Articles of Association of the Society pro vides that the business and operations of the Society shall be conducted and managed by a General Council	 and Article 48 authorises the General Council to apply the receipts also for certain other purposes. Article 48 reads as follows: "48. The General Council may	 before making any distri bution among the Members: (a) Apply out of the receipts such sums as it thinks proper or has agreed to contribute as : (i) Gratuities	 donations	 pensions and emolu ments to any Member or ex Member of the Society or any person at any time in the employment of the Society	 or engaged in any business acquired by the Society	 and the 'wives	 widows	 families and dependants of any such person; (ii) Contributions to any benevolent	 pension or similar fund which may be established for the benefit of Members	 ex Members or employees of the Society or their wives	 widows	 families or depend ants . (b) Set aside out of the receipts such sums as it thinks proper as subscriptions	 donations	 loans	 gifts other payments for any of the purposes for which powers is given by paragraphs (iii) and (iv) of Clause 3(f) of the Memorandum of Association	 provided 173 that without the assent of the Society in General Meeting the aggregate of all such payment shall not in any one year exceed the sum of one thousand pounds and four thousand pounds 'under the provi sions of those paragraphs respectively. (c) Set aside out of the receipts such sums as it thinks proper as a reserve fund to meet contingen cies	 or for future distribution	 or for repairing	 improving and maintaining any of the property or premises of the Society and for such other purposes as the General Council shall in its absolute dis cretion think necessary or conducive to the inter ests of the Society	 and may invest for the several sums so set aside in such investments as it may think fit	 and from time to time deal with or vary such investments and dispose of all or any part thereof for the benefit of the Society	 and may divide the reserve fund into such special funds as it thinks fit	 and employ the reserve fund or any part thereof for the general purposes of the Socie ty	 and that without being bound to keep the same separate from the other assets. " On December 13	 1953 the Society entered into an agreement with the President of India owning and controlling broadcasting stations in India and organizing and conducting the same under the name of All India Radio (hereinafter referred to as the licensee) whereby the Society granted to the licen see the authority	 (a) to broadcast from the licen see 's sound broadcasting stations in India all musical works included in the repertoire of the Society	 and (b) to utilize	 solely	 for the pur pose of sound broadcasting as aforesaid	 any origi nating performance of such musical works	 irrespec tive of the source of such performance and the means whereby the such performance is conveyed to the point of broadcast transmission from the licen see 's stations. The agreement was executed in England. It may be stated here that previous to this agreement the parties had entered into a similar agreement in the year 1940. The agreement of 1953 states that the licence granted thereby "shall be deemed to have come into force on April 1	 1949 and shall continue from year to year until determined by either party giving to the other three calendar months ' notice in writing to expire on March 31 in any year". The agreement provides that the licensee shall send to the Society at its registered office in London	 the lists of all musical works broadcast in each week during the term of the licence from each of the licensee 's main stations (Delhi	 Bombay	 Calcutta and Madras) and the external services	 and requires the licen see to furnish a return after the first day of April every year during the period of licence	 stating the agreegate number of hours occupied during the period ended on the previous 31st March	 in broadcasting Western music from each of the licensee 's main and external Service Stations. The agreement further provides that for the rights granted	 the licensee will pay to the Society annually a sum calculated at the rate of 2 (Two pounds) per hour of broadcasting Western music from each of the licensee 's 174 main and external Service Stations and that such annual payments must be made to the Society in London. The second appellant	 M/s. Natsin India Private Limited is a private limited company incorporated under the (Indian) Companies .Act having its office at 26	 Chowringhee Road	 Calcutta. The second appellant was appointed by the Society to be its lawful attorney in India by virtue of a power of attorney granted by the Society to the	 second appellant in July	 1967. As agent in India for the Society	 the second appellant realises on its behalf royalties from cinema houses and other sources where music over which the Society has copyright is played in this country	 and has	 inter alia	 the power to commence and prosecute suits and other proceedings	 engage lawyers	 and sign plaints	 petitions etc. Prior to July	 1967 the Society	 a non resident company	 used to file its returns of income before the Income tax Officer	 Madras	 through its former agent in India	 M/s. Vernon and Company of Madras. The royalties or fees realised from the licensee were not included in its returns for the assessment years 1947 48 to 1950 51. Later	 the .Income tax Officer	 Madras	 issued notices under section 34(1) of the Income Tax Act	 1922 and assessed the said income after deducting the proportionate administrative ex penses. The appeals taken by Vernon and Company against the supplementary assessment orders for the aforesaid years were dismissed by the Appellate Assistant Commissioner	 Madras. The matter rested there and the Society had been paying tax on its income in India including the income from royal ties. received from the licensee without objection until the assessment year 1967 68 for which the accounting year ended December 31	 1966. In the said assessment year also the Income tax Officer	 Companies Circle L(II)	 Madras by his order dated October 23	 1963 assessed the total income of the Society treating the income arising out of the agreement with the licensee as chargeable as was being done all these years. Against this order of assessment	 the Society through the second appel lant made a revisional application under section 264 of the Income Tax Act	 1961 (hereinafter re ferred to as the Act) to the Commissioner of In come tax	 West Bengal	 where the Society 's income tax file had been transferred in the meantime. The Additional Commissioner of Income tax who dealt with the application dismissed the same by his order dated July 18	 1970. The Society then moved a writ petition before the Calcutta High Court chal lenging the order of the Additional Commissioner of Income tax. A rule nisi was issued on the petition by a learned Judge of the High CoUrt but ultimately the rule was discharged and the petition was dis missed. On appeal by the Society	 a Division Bench of the High Court affirmed the view taken by the learned single Judge and dismissed the appeal on September 24	 1973. In this appeal by special leave the appellants question the correctness of that decision and challenge the order of assessment on two grounds: (1 ) the agreement between the Society and the Licensee having been executed in England and the royalties being also payable in England	 the income out of this agreement is not liable to be taxed in India; 175 (2) the Society being under an obligation to distribute the income to its members	 the royalties realised are not really the income of the Society. The first point seems to be covered by the provi sions of section 5(2) (b) of the Act. Section 5(2) reads as follows: "5. Scope of total income: (1) x x x (2) Subject to the provisions of this Act	 the total income of any previous year of a person who is a non resident includes all income from whatever source derived which (a) is received or is deemed to be received in India in such year by or on behalf of such person; or (b) accrues or arises or is deemed to accrue or arise t0 him in India during such year. Explanation 1 . Income accruing or arising outside India shall not be deemed to be received in India within the meaning of this section by reason only of the fact that it is taken into account in a balance sheet prepared in India. Explanation 2. For the removal of doubts	 it is hereby declared that income which has been included in the total income of a person on the basis that it has accrued or arisen or is deemed to have accrued or arisen to him shall not again be so included on the basis that it is received or deemed to be received by him in India . " The Society is a non resident company	 and though it receives the income out of the agreement execut ed not in India but in England	 the income undoubt edly accrues or arises in India. On behalf of the appellants it was contended that the source of income was really the agreement which was entered into in England. We do not think that the question as to the source of the income is relevant because subsection (2) of section 5 provides that all income "from whatever source derived" is to be included in the total income of the non resident assessee if the income accrues or arises in India during the relevant year. Reference was also made to section 9 of the Act which enumerates the in comes that shag be "deemed to accrue or arise in India" though actually accruing elsewhere	 to establish that the income in question could not be deemed to accrue or arise in India. But the income in this case has in fact accrued in India and no question arises whether it should be "deemed" to accrue or arise in India. 'Whether a certain income accrued or arose in India within the meaning of section 5(2) is a question of fact "which should be looked at and decided in the light of commonsense and plain thinking" as the Calcutta High Court considering a similar question under section 4(1) 176 of the Income Tax Act	 1922 observed.(1) In the case before us the High Court and the income tax authorities considered it a hard matter of fact that the income derived from broadcast of copyright music from the stations of All India Radio arose in India. In our opinion this was the correct view to take and we find no reason to differ from it. The next question is whether the income from the royalties was the Society 's own income. It was Contended on the authority of Raja Bejoy Singh Dudhuria vs Commissioner ofIncome Tax	 Bengal	(") that the obligation to disburse the sum among its members diverted the income from the Society to the members	 and it could not be called the income of the Society. In Bejoy Singh Dudhuria 's case there was a decree of the court charging the appellant 's whole resources with a specific payment to his step mother	 the Privy Council held that the decree had to that extent diverted his income from him and directed it to his step mother	 and that to that extent what he received for her was not his income. But where payments are made by the assessee after he has received the income as his	 the position is different. This was pointed out by the Judicial Committee in a later case	 P.C. Mullick and another (Executors)v. Commissioner of Income tax	 Bengal	(1) where the executors in accordance with the directions in the will had paid Rs. 5	537/ to the person who performed the testator 's addya Sradh	 and another sum of Rs. 1	25	000/ for pro bate duty out of the income of the estate. It was held that this was not a case in which a portion of the income was by an overriding title diverted from person who would otherwise have received it as in Bejoy Singh Dudhuria 's case but it was "simply a case in which the executors having received the whole income of the estate apply a portion in a particular way pursuant to the directions of their testator	 in whose shoes they stand". The true test for the application of the rule of diversion of income by an overriding title has been explained by this Court in Commissioner l	come tax	 Bombay City vs Sitaldas Tirathdas(4) "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 ever)	 case	 but it is the nature of the obligation which is the decisive fact. 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 (1) In the matter of V. G. Every. (1937) 5 I.T.R. 216 (Coskello J.) (2) (3) (4) (pp. 374 375). 177 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. " On the facts of the present case it is clear that the royalties payable by the licensee under the agreement are realised by the Society as its income; Article 48 of the Society 's Articles of Association puts the matter beyond doubt. Out of the receipts are deducted the expenses and also such other sums as in the discretion of the General Council should be set aside for the purposes men tioned in Article 48. This is a case where the assessee having received the income applies it in a particular way; it is not a case of diversion of income by an overriding charge. The appeal is accordingly dismissed. There will be no order as to costs. P.B.R. Appeal dismissed.

The appellant Society which is an association of compos ers	 authors and publishers of copyright musical works was incorporated under the English Companies Act	 1908 and 1913 with its registered office in London. It collects royalties for the issue of licences	 granting permission for performing right in the works of its members and distributes the royalties to its .members. The Society entered into an agreement in England with the President of India by which it granted to the All India Radio (the licensee) authority to broadcast from its sound broadcasting stations in India the. musical works of the Society. Under the agreement the licen see had to pay in England annual licence fee payable to the Society. The appellant contended (i) that the agreement between the appellant and the licensee having been executed in England and the royalties being also payable in England	 the income out of this agreement was not liable to be taxed in India and (ii) the Society being under an obligation to distribute the income to its members	 royalties realised are hot really income of the Society. Rejecting the contentions	 HELD: (1)(a) Whether a certain income accrued or arose in India within the meaning of section 5(2) is a question of fact "which should be looked at and decided in the light of commonsense and plain thinking. " The Society is a non resident company and though it received the income: out of the agreement executed	 not in India but England	 the income undoubtedly accrued or arose. in India. [175H and F] (b) The question whether the agreement is the source of the income is not relevant because section 5(2) provides that all income "from whatever source derived" is to be included in the total income of the non resident assessee if the income accrues or arises in India during the relevant year. The income in this case had infact accrued in India and by virtue of section 9 no question arises whether it should be "deemed" to. accrue or arise in India. [175 G] In the matter of V.G. Every: (19 '37) approved. (2) Article 48 of the Society 's Articles of Association shows that the royalties payable by the licensee under the	 agreement are realised by the Society as its income. Out of the receipts are deducted the expenses and also such other sums as in the discretion of the General Council should be set aside for the purposes mentioned in that article. This is a case where the assessee having received the income	 applies it in a particular Way; it is not a case of diver sion of income by an overriding charge. [177 C] Raja Bejoy Singh Dudhuria vs Commissioner of Income tax	 Bengal 	 P.C. Mullick and another (Executors) vs Commissioner of Income tax	 Bengal and Commissioner of Income tax	 Bombay City vs Sitaldas Tirathdas (pp. 374 375) dis tinguished.