K. A. Thanikkachalam, J. - (1.) AT the instance of the Department, the Tribunal referred the following common question for the opinion of this court in respect of six assessees for the assessment years 1973-74 to 1975-76 under section 256(1) of the Income-tax Act, 1961 : "Whether, on the facts and in the circumstances of the case, the assessee which is a private trust, with beneficiaries, whose shares are indeterminate, is eligible for relief under section 80L for the assessment years 1973-74 to 1975-76 ?"
(2.) THE assessee is a private trust of which T. S. Krishna was the trustee. It is common ground that it is a discretionary trust in view of the fact that the shares of the beneficiaries are not ascertainable. Though the trusts are different trusts, this fact is common. THE issue that arose for consideration was whether the assessee would be eligible for relief under section 80L in respect of interest on certain securities, dividends, etc. THE Income-tax Officer was of the view that the assessee's status can be an association of persons, because there is more than one beneficiary whose shares in the trust are not definite. Since the assessee admittedly is not an association of persons envisaged under section 80L(1)(c) and is not an individual or a Hindu undivided family, the assessee is not eligible for the relief. THE Income-tax Officer relied upon section 164 which specifically stipulated that where the shares of the beneficiaries are not definite, the tax has to be charged as if the relevant income or part of the relevant income were the total income of an association of persons or at the rate of 65 per cent., whichever course would be more beneficial to the Revenue. On appeal, the Appellate Assistant Commissioner accepted the assessee's plea. On further appeal, the Tribunal found that section 164 is not an independent section and does not determine the status of the assessee, but merely imposes a liability at the same rate of tax as on an association of persons. This conclusion was arrived at by the Tribunal on a reading of sections 160, 161 and 162 of the Act. The Tribunal further held that the assessment should be made on the trustee as an individual in his representative capacity. The Tribunal further pointed out that the fact that in this case the beneficiaries are groups of individuals does not mean that the liability of the assessee is of an association of persons. Accordingly, it was held that the determination of total income therefore took into consideration the deductions provided under section 80L as well. Accordingly, the Tribunal confirmed the order passed by the Appellate Assistant Commissioner. A similar question came up for consideration before this court in CIT v. Venu Suresh Sanjay Trust [1996] 221 ITR 649, wherein this court held (page 660) : "The determination of total income depends on the various provisions of the Income-tax Act which takes into consideration the deductions to be provided under section 80L of the Act as well. The charge of tax comes into play after the income has been determined in the manner stated above. In the present case, the trustee is an individual. His status, therefore, has to be adopted as that of an individual and from his individual income the assessee is entitled to deduction under section 80L of the Act. On the income so computed the tax has to be charged in view of the provisions contained in section 164(1) treating such income as if it was the income of an association of persons or at the rate of 65 per cent. whichever was more beneficial to the Revenue. Therefore, the assessee is entitled to deduction under section 80L of the Act. In view of the foregoing discussions, we consider that the Tribunal was correct in granting relief under section 80L of the Act." Accordingly, we answer the question referred to us in the assessment years under consideration, in the case of each of the assessees in the affirmative and against the Department. No costs.;