Representative trust assessment follows beneficiary status, allowing available deductions and exemptions in computing total income.

Trustees assessed in a representative capacity under sections 160, 161 and 166 are liable only to the same extent as the beneficiaries represented, so the assessment status follows the beneficiary's status. In a discretionary trust where the beneficiaries would be treated as individuals on direct assessment, the trustees are likewise treated as individuals for representative assessment. The deeming rule in section 164 does not enlarge that liability or remove exemptions and deductions otherwise available in computing total income. On that basis, the trust was entitled to deduction under section 80L, and the Revenue's objection failed.

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Issues: Whether the trustees of a discretionary trust, assessed in a representative capacity, were entitled to deduction under section 80L of the Income-tax Act, 1961 and whether their status for such assessment was that of an individual.

Analysis: The statutory scheme of representative assessment shows that the liability of a trustee under sections 160, 161 and 166 is coextensive with that of the person represented and is confined to assessment of the beneficial income in the same manner and to the same extent. The status of the trust for assessment therefore follows the status of the beneficiary. In a discretionary trust, where the beneficiaries would, on direct assessment, be treated as individuals, the trustees take the same status for representative assessment. The deeming provision in section 164 does not alter the basic character of assessment under section 161 so as to deny exemptions and deductions otherwise available in computing total income. On that footing, the trust answered the description of an individual for section 80L purposes.

Conclusion: The deduction under section 80L was admissible to the discretionary trust and the Revenue's objection failed.

Ratio Decidendi: A trustee assessed as a representative assessee is entitled to the same exemptions and deductions as the beneficiary would obtain in direct assessment, because the trustee's liability is coextensive with and not wider than that of the person represented.

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