Per Shri V. Balasubramanian, Vice President - The assessee-trust is assessed in the status of an association of persons. The assessees claim for relief under section 80L of the Income-tax Act, 1961 (the Act) was disallowed by the ITO on the ground that such relief is allowable only to individuals and HUF and in those exceptional cases of husband and wife of the formerly Portuguese territories.
2. On appeal, the AAC held that the true status of the assessee ought to be individual and not an AOP. He, therefore, held that the assessee was entitled to deduction under section 80L. The department has come up on appeal against this order of the AAC.
3. The learned counsel for the department, taking us through the provisions of section 80L, section 164 of the Act and the charging section, etc., has pointed out that the status taken by the ITO of the assessee of an AOP is the correct status in the present case. The AAC, therefore, erred in altering the status in his appellate order of individual and on that basis granting the relief under section 80L. It is also pointed out that whether the assessee fell within the provisions of sub-section (1) or sub-section (2) of section 164, its liability to tax would not differ.
4. On behalf, of the assessee, reference is made to the decision of the Madras Bench of the Tribunal in the case of Gopal Srinivasan Trust v. ITO  3 ITD 322. According to the learned counsel, the status in the present case had to be taken as individual to whom relief under section 80L was available.
5. After hearing the parties and going through the provisions referred to, I find that there is no substance in the departmental appeal though not for the reasons stated by the AAC. Section 80L (1) refers (a) an individual or (b) an HUF, or (c) an AOP or a BOI consisting only of husband and wife governed by the system of community of property, etc. The learned counsel for the department as well as the departmental authorities have sought to exclude the expression association of persons obtaining in sub-clause (c) of section 80L (1) and restricted its application to a husband and wife governed by the system of community of property in Portuguese territories. Inherent in the argument is an inconsistency which would make the interpretation canvassed untenable. There is no dispute about sub-clauses (a) and (b). Sub-clause (c) refers to an association of persons or a body of individuals, etc. Where a husband and wife governed by the Portuguese law are involved, either they could be called a body of individuals or an AOP. Prima facie, there could not be a case of these two people being treated as a body of individuals and in the alternative an association of persons. If they are a BOI that should be sufficient to describe them amply. The question of another appellation, viz., AOP, does not arise. Also in the light of decisions like CIT v. Indira Balkrishna : 39ITR546(SC) , an AOP stipulates a voluntary joining up for some income-earning purposes. It would be certainly incorrect, if not verging on absurdity to apply this concept of an AOP to the husband and wife in a Portuguese marriage. The expression association of persons therefore, clearly cannot apply to this set of people. This means that the relief section 80L would be available to an (1) individual, (2) HUF, (3) AOP, and (4) BOI representing husband and wife under Portuguese law. Even an AOP thus, would be entitled to the relief under section 80L. Even if, therefore, the status adopted by the ITO for this assessee, rightly or wrongly, is regarded as the correct status of the assessee, the deduction under section 80L would be available to the assessee.
6. Apart from the above, whether a trust has two or more beneficiaries or has two or more trustees, no provision of law has been cited to term this trust as an association of persons. The author of the trust puts the trust property under an obligation. For administration of the obligation, he may appoint one person or a multitude of persons. He may make the trust for the benefit of one person or many persons. In neither of these cases can the group of trustees coming together of the group of beneficiaries jointed together be termed as constituting an AOP under the ratio laid down by the Supreme Court in the case of Indira Balkrishna (supra) and other cases. It would be more accurate to treat the status of a trust as an individual. The learned counsel for the department has referred to the provisions of sub-section (1) and (2) of section 164, especially the reference to association of persons therein to stress his point that whenever there are more than two trustees or two beneficiaries, the status should be an association of persons. He also pointed out drawing his support from the Supreme Courts decision in CWT v. Trustees of H. E. H. Nizams family (Remainder Wealth) Trust : 108ITR555(SC) that section 164 by itself would impose a fresh charge. In my view, neither of these nor any provisions of the general law relating to trusts helps the department to fix the status of an assessee trust as an association of persons
7. The assessee is entitled to deduction under section 80L. The departmental appeal is dismissed.