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TMI Blog1987 (4) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act. The assessee filed appeal before the AAC. The order passed by the learned AAC was in the following words : " I have considered the submissions made by the appellant and I hold that the appellant is entitled to deduction under section 80L of the Income-tax Act... I.T.O. is directed to allow an opportunity to the appellant of being heard and allow deduction under section 80L as claimed by the appellant. The appeal is allowed. " Against the above order, the department has come up in appeal before us and two grounds have been raised. The first ground is that the learned AAC erred in entertaining the appeal against an order under section 143(1) of the Act. The second ground is without prejudice to the first ground and that ground is that the learned AAC had erred in holding that the assessee was entitled to deduction under section 80L of the Act. 4. It is to be noted that the learned AAC has not recorded a clear finding whether the status of the assessee was that of an individual or an AOP. That finding was necessary in order to determine whether deduction under section 80L of the Act was allowable. In fact, he appears to have assumed the status of the assessee that of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the words "an association of persons or body of individuals". We may mention here that the said question has now become academic because of retrospective amendment made in clause (c) of section 80L(1) by Taxation Laws (Amendment) Act, 1984 with effect from 1-4-1972. By the said amendment, the words "in either case" have been inserted after the word 'consisting' and before the word 'only' in the said clause. Besides, a 'comma' is inserted after the word 'consisting' and also after the word 'case'. In view of this amendment, it is obvious that the clause (c) would apply to an association of persons or body of individuals only if the said association of persons or body of individuals consisted only of husband and wife governed by the system of community of property in force in the Union territories of Dadra and Nagar Haveli and Goa, Daman and Diu. The result is that if the real status in which the assessee trust is liable to be assessed is that of an association of persons or body of individuals provisions of section 80L(1) would not apply and as such, relief claimed by the assessee would not be admissible. It is for this reason that the assessee has raised the plea in the cross-obje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be so assessed in the status of individual but for purposes of rate to be treated as association of persons. 10. In this connection, it is to be noted that it is nowhere expressly stated that the trustees are to be assessed in the status of the 'individual'. We may refer to sub-section (4) of section 21 of the Wealth-tax Act, 1957 which is in pari materia with section 164(1) of the Income-tax Act, 1961. There, the charging provision is expressed as follows : " the wealth-tax shall be levied upon and recovered from the court of wards.... (etc.), in the like manner and to the same extent as it would be leviable upon or recoverable from an individual who is citizen of India and resident in India for the purposes of this Act, and (a) at the rates specified in Part I of Schedule I or (ii) at the rate of three per cent whichever course would be more beneficial to the revenue. " 11. Under the Wealth-tax Act, AOP is not a unit of assessment. Section 21(4) of the said Act lays down that tax shall be levied in the like manner and to the same extent as it would be leviable upon or recoverable from an individual who is citizen of India and resident in India. Because of this express ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4(1) of the Income-tax Act, 1961. The said proviso was as follows : " provided that where any such income, profits and gains or any part thereof are not specifically receivable on behalf of any one person, or where individual shares of the persons on whose behalf they are receivable are indeterminate or unknown, the tax shall be levied and recoverable at the maximum rate ; but where such persons have no other personal income.... as if such income... were the total income of association of persons. " 13. It was argued before the High Court that the said representative assessees cannot be assessed in the status of AOP because they had not associated to produce the income and there cannot be an A.O.P. unless they are said to have combined to produce the income. The High Court repelled this submission by observing as follows : " While there is good deal of force in Mr. Mitra's argument that joint decree holders like the plaintiffs in the present suit do not associate to produce the income, we are of the opinion that in view of the deeming provision contemplated by the proviso to section 41, even though they do not associate to produce the income, if the person who is in actual re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he decision of the Supreme Court in CIT v. Indira Balkrishna [1960] 39 ITR 546. This decision was considered by Calcutta High Court in the above case and it was observed that the said decision was not applicable. The Tribunal held that trustees would be treated A.O.P. only for rate purposes and not for the purpose of status of assessment. This is also contrary to decision of Calcutta High Court where it has been held that status of assessment would be that of A.O.P. We have already stated that for wealth-tax the trustees are treated as "individual" because of specific provision in Wealth-tax Act while corresponding provision in the Income-tax Act refers to A.O.P. and not individual. 16. We may mention here that the learned authors of Income-tax Law by Chaturvedi and Pithisaria have noticed this legal position at page 155 in the following words : " 'Deemed association of persons'. In contingency contemplated by the proviso to section 164(1)(i) or section 164(2) of section 164(3)(a) or the proviso to section 164(3)(a) of the 1961 Act, even though there is no association of persons as contemplated by section 2(31) it will be deemed to be an association of persons. See Smt. Santimo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Association of Persons at the rates mentioned in said section. Consequently, their status would also be that of Association of Persons and specific rates mentioned therein would be applicable. As already emphasised, there is nothing in that section to indicate that they would be assessed in the status of individual and only for the rate purposes they would be treated as Association of Persons. They would be liable to be treated as Association of Persons for the rate purposes and also for status in which they are assessed. This is because of deeming the provision contained in the section as explained by the Calcutta High Court in the case of Smt. Santimoyee Bose which we have discussed in detail. 19. It has been held by Bombay High Court, in CIT v. Smt. Godavaridevi Saraf [1978] 113 ITR 589 that if there is a decision of a High Court on any point, the Tribunal was bound to follow the same. We, therefore, follow the above decision of the Calcutta, High Court and hold that the assessee in these cases are liable to be assessed in the status of A.O.P. and not in the status of individual. Since the assessees do not come under clause (c) of section 80L(1), deduction under section 80L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n under section 80L(1)(a) is not allowable. 22. We now deal with the I.T.A. No. 3424/Bom/1984 and the C.O. No. 390/Bom/1984 arising out of the said appeal. The assessee in this appeal and the cross objection is Dharamsi Morarji Employees (Kumhari Staff) Welfare Fund. The assessment year is 1980-81. In this case also, the assessee had filed return and then in the course of assessment proceedings, it had filed a letter dated 16-3-1983 claiming deduction under section 80L of the Act. The Income-tax officer did not consider the claim under section 80L and passed an assessment order under section 143(1) of the Act. The assessee filed the appeal before the Appellate Assistant Commissioner and the Appellate Assistant Commissioner allowed the same. The Appellate Assistant Commissioner did not record a definite finding whether the status in which the assessee should be assessed was that of an Individual or an A.O.P. However, the Appellate Assistant Commissioner held that the relief under section 80L was allowable. He directed the Income-tax Officer to allow the said relief. In the appeal by the department, two grounds have been raised which are identical with the grounds raised in I.T.A. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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