Representative trust deduction under section 80C allowed where income is taxed like beneficiaries' income.

A discretionary trust assessed as a representative assessee was treated as entitled to the deduction under section 80C because the trust's income is assessed in the same manner and to the same extent as the beneficiaries' income. The court applied the earlier principle that such a trust is not to be equated with a Hindu undivided family or an association of persons for this purpose, and that the term "individual" in the Act is wide enough to include a body of individuals constituting a taxable unit. As section 80C was regarded as materially similar to section 80L, the deduction was held allowable and the issue was decided against the Revenue.

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Issues: Whether a discretionary trust assessed as a representative assessee is entitled to deduction under section 80C of the Income-tax Act, 1961 for the relevant assessment years.

Analysis: The question was controlled by the earlier decision holding that a discretionary trust is not a Hindu undivided family or an association of persons for the relevant provision, and that the term "individual" in the Income-tax Act is wide enough to include a body of individuals constituting a unit for tax purposes. The assessment of income in the hands of the trust is to be made in the same manner and to the same extent as it would have been made in the hands of the beneficiaries. Since section 80C stands on the same footing as section 80L for this purpose, the same principle applies.

Conclusion: The question was answered against the Revenue and in favour of the assessee, and the deduction under section 80C was held allowable.

Ratio Decidendi: A representative assessee of a discretionary trust is entitled to statutory deductions available to an "individual" where the trust is assessable in the same manner and to the same extent as the beneficiary, and the relevant deduction provision is materially similar to the one previously construed.

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