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TMI Blog1991 (6) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... . M/s. T. Stanes and Co. Ltd., deduction under section 80M should be allowed in respect of dividend income received by the assessee from M/s. T. Stanes Co. Ltd. itself for the assessment years 1973-74 to 1975-76 ? " The assessees are the trustees of T. Stanes and Co. Ltd., Staff Pension Fund, Coimbatore. The said trust was constituted under certain rules framed in 1939 as modified in 1953 ; the original beneficiaries of the trust were four persons ; the said Rules provided that, after payment of pension to the aforesaid four persons, the balance income of the trust has to be paid to the company, T. Stanes and Co. Ltd. ; the said beneficiaries having died, the entire income became payable to the said company which thus became the sole bene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come received by the trust from T. Stanes and Co. Ltd. only (and not the dividend income received from the other abovesaid two companies) the Tribunal was not right in allowing the deduction under section 80M, when the said income had been paid over to the same company, as beneficiary, by the trust, since section 80M provided deduction only for intercorporate dividend, that is, dividend received by one company from another domestic company. His contention is that when the same company received dividend of its own, there could be no application of section 80M at all. But, learned counsel for the assessee contends that section 161 of the Act postulates vicarious liability and assessment on the trustees has to be with the same incidence as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the option to levy or collect tax from the trustee or the beneficiary ; the tax can be levied upon and recoverable from the trustee in like manner and to the same extent as it would be leviable upon and recoverable from the person on whose behalf such income, profits or gains are receivable. In short, it imposes a vicarious liability on the trustee. The expression 'all the provisions of this Act shall apply accordingly' indicates that there is no distinction in the matter of assessability of the income in the hands of a trustee or the beneficiary as the case may be. " No doubt in section 161 of the present Act, the clause "all the provisions of this Act shall apply accordingly " occurring in section 41 of the old Act or the clause "the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there would have to be as many assessments on the trustee as there are beneficiaries with determinate and known shares, though, for the sake of convenience, there may be only one assessment order specifying separately the tax due in respect of the wealth of each beneficiary. Secondly, the assessment of the trustee would have to be made in the same status as that of the beneficiary whose interest is sought to be taxed in the hands of the trustee. This was recognised and laid down by this court in N. V Shanmugham and Co. v. CIT [1971] 81 ITR 310 (SC). And, lastly, the amount of tax payable by the trustee would be the same as that payable by each beneficiary in respect of his beneficial interest, if he were assessed directly. " Therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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