TMI Blog1993 (12) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... ve assessee and as the tax has to be levied upon and recovered from him in the like manner and to the same extent as it would be leviable upon and recoverable from the person represented by him, in the assessment of the representative assessee, exemptions, deductions and benefits have to be given as the beneficiary would have been entitled to in case of direct assessment. The Tribunal held that the trustees of a trust take colour of their status from that of the beneficiary and it cannot be different from the persons they represent. The Tribunal, relying upon the observations made by the Supreme Court in matters arising under the Wealth-tax Act, 1957, held that the status of the trustees of a discretionary trust is necessarily that of an individual and, therefore, that would also be the status of the trustees for the purpose of assessment under sections 161 and 162. Taking this view, it confirmed the order passed by the Appellate Assistant Commissioner and dismissed the appeal. What is contended by learned counsel for the Revenue is that the decision of the Tribunal proceeds on the basis that section 161 and not section 164 is the basis for assessment of a representative assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overed by section 164, then clause (iv) of section 160(1) indicates that in such cases one has to proceed on the basis that the income receivable by the representative assessee is the income of the assessee and not the beneficiary. Even this contention cannot be accepted because the fiction created for one purpose cannot be utilised for a different purpose. Section 164 does not provide how the total income of the representative assessee is to be computed. Therefore, obviously, the provisions relating to computation of income would be applicable even in a case where the representative assessee has to be assessed under section 164 of the Act. Therefore, whether an assessee, including a representative assessee, would be entitled to the benefit of deduction under section 80L or not will have to be decided by reference to the provisions contained in that section. Section 80L provides for deductions in respect of interest on certain securities, dividends, etc. These deductions are made available to an individual, or a Hindu undivided family, or an association of persons or a body of individuals consisting only of husband and wife governed by the system of community of property in force ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not make them an association of receivers. The three receivers jointly represented the real owners. The Supreme Court, after referring to its earlier decision in CIT v. Indira Balkrishna [1960] 39 ITR 546, observed that " association of persons " means an association in which two or more persons join in a common purpose or common action, and as the words occur in a section which imposes a tax on income, the association must be one, the object of which is to produce income, profits or gains. It was submitted that in the case of trustees of a discretionary trust, it cannot be said that they have joined in a common purpose or common action and the object of their association is to produce income, profits or gains. It was submitted that they became trustees of the trust not because they have mutually agreed to be trustees but because they have been appointed as such under the trust deed. By no stretch of imagination, can it be said that they have joined together in common for the purpose of carrying on an activity which would produce income, profits or gains. The persons, who come together as trustees, must be such that left to themselves they might not on their own even sit together ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment is upon a trustee, the tax has to be levied and recovered in the manner provided in section 41. The only option that the Legislature gives is the option embodied in sub-section (2) of section 41 and that option is that the Department may assess the beneficiaries instead of the trustees, or having assessed the trustees it may proceed to recover the tax from the beneficiaries. But, on principle, the contention of the Department cannot be accepted that, when a trustee is being assessed to tax, his burden which will ultimately fall upon the beneficiaries should be increased and whether that burden should be increased or not should be left to the option of the Department. The basic idea underlying section 41, and which is in conformity with the principle, is that the liability of the trustees should be co-extensive with that of the beneficiaries and in no sense a wider or a larger liability. Therefore, it is clear that every case of an assessment against a trustee must fall under section 41, and it is equally clear that, even though a trustee is being assessed, the assessment must proceed in the manner laid down in Chapter III.... Section 41 only comes into play after the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . . . . the word 'individual' has not been defined in the Act (Indian Income-tax Act, 1922) and there is authority for the proposition that the word 'individual' does not mean only a human being but is wide enough to include a group of persons forming a (natural) unit. " This decision, though not directly on point, does lay down that the term " individual " as used in the Income-tax Act does not mean a single living human being but would include in its ambit a body of individuals constituting a unit for the purposes of the Act. The Bombay High Court in Lalchand Tikamdas Makhija v. J. K Kuriyan, CIT [1991] 188 ITR 253 has held that in a case where the shares of the beneficiaries were known or determinate, the fact that the trust was carrying on business was not material and the assessment had to be made in like manner and to the same extent as it would have been made on the beneficiaries separately. For that reason, it was further held that the assessment of the income of the trust in the status of a body of individuals was not justified. In that case also, the question which we have to consider did not directly arise, but it does indirectly help in the sense that even though the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t effected by the Finance Act, 1980, has done away with the deeming provisions whereby a trust, under section 164(1), could be assessed as though it were an association of persons. Where, however, a case falls under sub-section (2) of section 164, the tax is chargeable as if the income to be charged were the income of an association of persons. But the fiction of an association of persons as contained in sub-section (2) or, for that matter, sub-section (3) of section 164 relates only to a charitable or public religious trust but not to a discretionary private trust dealt with by sub-section (1) of section 164. Section 164(1) only lays down the rate of tax applicable to a discretionary trust. It is not concerned with the manner of computation of total income. In fact, this section comes into play only after the income has been computed in accord ance with the other provisions of the Income-tax Act, 1961. Since the determination of the status of an assessee is a part of the process of computation of income, it is necessary to look into the general principles for determining whether the status of the trustees of a discretionary trust can be taken to be as 'association of persons' or a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. v. CIT [1982] 137 ITR 635, has observed that in income-tax matters, which are governed by an all-India statute, when there is a decision of another High Court on the interpretation of a statutory provision, it would be a wise judicial policy and practice not to take a different view (whatever one's own view may be), barring, of course, certain exceptions, like where the decision is sub silentio, per incuriam, obiter dicta or based on a concession or takes a view which it is impossible to arrive at or there is another view in the field or there is a subsequent amendment of the statute or reversal or implied overruling of the decision by a higher court or some such or similar infirmity is manifestly perceivable in the decision. Following the decision of the Bombay High Court in Maneklal Chunilal's case [1953] 24 ITR 375, this court in CIT v. Sarabhai Sons Ltd. [1983] 143 ITR 473, 486, observed that, " even though we may be persuaded to take a different view, we are not inclined to do so in view of the settled practice referred to in the decision of the Madras High Court and the decisions of the Bombay High Court and the Madhya Pradesh High Court adverted to above ". In view ..... X X X X Extracts X X X X X X X X Extracts X X X X
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