Law:

Section:

Section 80C, read with section 160, of the Income-tax Act, 1961 - Deductions - Life insurance premia, contribution to provident fund, etc. - Assessment years 1987-88 and 1988-89 - Whether a discretionary trust would become entitled to deductions provided it can be regarded as an individual - Held, yes - Whether even though assessment of income is in hands of trust, it has to be made in same manner and to same extent as it would have been made in hands of beneficiaries - Held, yes - Whether representative assessee in case of a discretionary trust must be regarded as an individual and, thus, would be entitled to benefit of deductions - Held, yes - Whether deduction under section 80C was to be allowed, as claimed by assessee who was beneficiary of a trust - Held, yes FACTS A return was filed on behalf of minor S, as one of the beneficiaries of a trust disclosing the beneficiary's share from the trust. Deduction claimed under section 80C was allowed by the Assessing Officer. Subsequently, on finding that the trust was carrying on business, the Assessing Officer rejected the assessee's claim for deduction under section 80C and concluded that the whole of the income must be assessed to tax at the maximum marginal rate. The Commissioner (Appeals) allowed the assessee's appeal. On the revenue's appeal, the Tribunal directed the Assessing Officer to allow deduction under section 80C as claimed by the assessee. On reference : HELD In the case of CIT v. Venu Suresh Sanjay Trust [1996] 221 ITR 649/[1997] 90 Taxman 486 (Mad.), it was held that a discretionary trust is not a Hindu undivided family nor an association of persons contemplated by that section. Therefore, such a trust would become entitled to the deductions provided it can be regarded as an individual. 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. Even though the assessment of income is in the hands of the trust, it has to be made in the same manner and to the same extent as it would have been made in the hands of the beneficiaries. The representative assessee in…

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