2001 (11) TMI 23 - HC - Income Tax

Trust - Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in directing the Assessing Officer to allow deduction under section 80C as claimed by the assessee? - A discretionary trust is obviously 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 had 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 the case of a discretionary trust must be regarded as an individual and thus would be entitled to the benefit of deductions under section 80L of the Act. - this question is answered against the Revenue and in favour of the assessee.

Summary

The High Court of Madras ruled in favor of the assessee, allowing deduction under section 80C for a trust managing trustee on behalf of a minor beneficiary. The court cited a similar case to support its decision, stating that a discretionary trust can be considered as an individual for tax purposes and is entitled to deductions under section 80C.