TMI Blog1968 (8) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... estate was Rs. 6,977 and that was the income returned by the trustees of the trust. Now out of this income of Rs. 6,977 a sum of Rs. 3,000 was paid by the trustees to Kalpana, who was one of the beneficiaries under the trust. Since the income of Kalpana from other sources amounted to Rs. 35,973 the Income-tax Officer thought that it would be more beneficial to the revenue to tax the sum of Rs. 3,000 received by Kalpana under the trust in the hands of Kalpana rather than to tax it in the hands of the trustees. The Income-tax Officer accordingly included the sum of Rs. 3,000 in the total income of Kalpana and directly assessed her in respect of that amount. That left a balance of Rs. 3,977 to be assessed in the hands of the trustees and, since the individual shares of the beneficiaries under the trust were indeterminate or unknown, the Income-tax Officer proceeded to assess the trustees as representative-assessee in the status of association of persons under section 164 and charged tax on the balance, of Rs. 3,977 at the rate applicable to the income of Rs. 6,977. The trustees were aggrieved by the application of the rate appropriate to the total income of Rs. 6,977 and they carried ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be leviable upon and recoverable from the person represented by him." Every representative-assessee is liable to assessment in his own name in respect of the income in respect of which he is a representative-assessee and the assessment on him in respect of such income is deemed to be made upon him in his representative capacity only and the tax is also to be levied upon him in like manner and to the same extent as it would be leviable upon the person represented by him. This last provision can obviously apply only where income is specifically receivable by the representative-assessee on behalf or for the benefit of a single beneficiary or where there are more beneficiaries than one, the individual shares of the beneficiaries are determinate and known. Tax in such a case would be levied on the representative-assessee on the portion of the income to which any particular beneficiary is beneficially entitled in the same manner and to the same extent as it would be leviable upon the beneficiary and in respect of such portion of the income, the representative-assessee would be assessed in a representative capacity as representing the beneficiary. But this does not mean that the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l income of an association of persons, or, where such income or such part thereof is actually received by a beneficiary, then at the rate or rates applicable to the total income of the beneficiary if such course would result in a benefit to the revenue. " What this section provides is that where any income or any part thereof is not specifically receivable by the representative assessee for the benefit of a single beneficiary or where there are more beneficiaries than one, the individual shares of the beneficiaries are indeterminate and unknown, tax shall be charged in the hands of the representative-assessee as if such income or such part thereof were the total income of an association of persons. That part of the income which may be either the whole of the income of the trust or a part of it in respect of which it cannot be predicated that a particular beneficiary is beneficially entitled to it either wholly or in any determinate and known share so as to attract the applicability of the last part of section 161(1), would have to be taxed in the hands of the trustees as if it were the total income of an association of persons. So much for the main part of section 164 but there i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his would appear to be clear on principle both having regard to the scheme of sections 161, 164 and 166 as also on the application of the doctrine that the revenue cannot, in the words of the Supreme Court in Commissioner of Income-tax v. Murlidhar Jawar and Purna Gining and Pressing Factory, "seek to assess the one income twice". But apart from principle, there is also a decision of the Bombay High Court in Trustees of Chaturbhuj Raghavji Trust v. Commissioner of Income-tax, where the same view has been taken in regard to the construction of the corresponding section 41 of the Income-tax Act, 1922, which, so far as is material for the present purpose, was in almost identical terms with the main part of section 164 and section 166. The Bombay High Court pointed out in that case that section 41 provided for two alternative methods, namely, either to tax the income in the hands of the trustees or to tax it directly in the hands of the person on whose behalf the income was receivable under the trust and one of them having been availed of by the income-tax department in making direct assessment on the beneficiary, which was a valid assessment under section 41(2), the other alternative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax Act would have equal validity under the present Income-tax Act. Wherever any income is excluded from chargeability to tax either expressly or by necessary implication arising from the scheme of the Act or its provisions, exclusion operates in the computation of the total income not only for the purpose of liability to tax but also for the purpose of determination of rate. If the intention of the legislature is to exclude such income from the computation of the total income only for the purpose of chargeability to tax and not for the purpose of determination of rate, the legislature makes a specific provision in that behalf and unless such specific provision is found in the statute, exclusion of such income from the total income for the purpose of chargeability to tax must be held to carry with it exclusion from total income for the purpose of determination of rate. Once income goes out from the total income for the purpose of liability to tax, it would also go out for determination of rate unless there is at specific provision in the statute providing the contrary. Now here in the present case, the sum of Rs. 3,000 was taxed in the hands of Kalpana and having already been tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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