TMI Blog1992 (3) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 80L of the Income-tax Act, 1961, should be allowed ? " Shortly stated, the facts are that the assessee is a discretionary trust and was assessed in the status of an "association of persons". The assessee claimed relief under section 80L of the Income-tax Act, 1961. The Incometax Officer was of the view that, having regard to the provisions of Explanation 2 to section 164 of the Income-tax Act, 1961, a discretionary trust has to be taxed as an association of persons and, therefore, deduction under section 80L was not available to the assessee-trust. The Commissioner of Income-tax (Appeals) upheld the stand of the assessee-trust following the decision of the Hyderabad Bench of the Tribunal in the case of Education Trust Fund v. ITO. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses (iii) and (iv) of subsection (1) of section 160 are liable as representative assessees or any part thereof is not specifically receivable on behalf or for the benefit of any one person or where the individual shares of the persons on whose behalf or for whose benefit such income or such part thereof is receivable are indeterminate or unknown (such income, such part of the income and such persons being hereafter in this section referred to as 'relevant income', part of relevant income' and 'beneficiaries', respectively), tax shall be charged on the relevant income or part of relevant income at the maximum marginal rate. . . . Explanation 2. -In this section, 'maximum marginal rate' means the rate of income-tax (including surcharge on i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come. In fact, this section comes into play only after the income has been computed in accordance 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 " an association of persons " or as an " individual". The Supreme Court in CIT v. Indira Balkrishna [1960] 39 ITR 546, while considering what constitutes an association of persons, held that the word " association means " to join in any purpose " or " to join in an action ". Therefore, association of persons " as used in section 2(31)(v) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided family. It is now well-settled that the word "individual" does not necessarily and invariably always refer to a single natural person. A group of individuals may as well come in for treatment as an individual under the tax laws if the context so requires. Reference may be made in support of this proposition, to the Full Bench decision of the Kerala High Court in Kerala Financial Corporation v. WTO [1971] 82 ITR 477, where the statutory Corporation was held to be assessable as an individual. The said decision drew strength from a number of decisions of the Supreme Court including that in Sodra Devi's case [1957] 32 ITR 615. The other decision is Andhra Pradesh State Road Transport Corporation v. ITO [1964] 52 ITR 524 (SC). We may also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of 65 per cent. whichever course would be more beneficial to the Revenue. The expression "as if the relevant income or part of relevant income were the total income of an association of persons" is a clear pointer that the Legislature never conceived of assessment of a trust, answering the description of section 164(1), as an association of persons in the ordinary course. The assessability as an association of persons was only by the artifice of a deeming clause. Therefore, by no stretch of imagination, could either the trustees or the beneficiaries be an association of persons because there is no element of volition on their part which is the essence of association. They do not join of their volition in a common effort or endeavour to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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