Section 164 — Charge of Tax Where Share of Beneficiaries Unknown
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Provision: Live. Part C of Chapter XV (Representative assessees — Special cases). The maximum-marginal-rate charge on discretionary/indeterminate-share trusts.
Subject: Where income is receivable by a representative assessee under a trust and the individual shares of the beneficiaries are indeterminate or unknown, tax is charged on the relevant income at the maximum marginal rate (with provisos for specified cases that are charged at the ordinary rate).
Finance Act, 2026: No change. Chapter XV is untouched by the Finance Act, 2026; the section stands as amended up to the Finance Act, 2025.
A. SECTION COMMENTARY
1. A charging/rate provision riding on section 161 machinery
Section 164 is the most heavily litigated section of Chapter XV. It is not an independent code: it supplies a rate of charge (the maximum marginal rate) for a defined situation — a trust whose beneficiaries' individual shares are 'indeterminate or unknown' (the discretionary trust being the paradigm) — while borrowing its assessment machinery from section 161. The policy is anti-avoidance: to deny the rate advantage that could otherwise be obtained by interposing a discretionary trust between income and identifiable beneficiaries.
2. The trigger: 'indeterminate or unknown' shares — judged when?
The section bites only where the beneficiaries or their individual shares are indeterminate or unknown. Determinacy is judged as on the date of the trust deed: if the beneficiaries are identifiable and their shares ascertainable on that date, Explanation 1 is not satisfied and section 164 (and the MMR) does not apply — the assessment then falls to be made under section 161 (P. Sekar Trust; Marsons Beneficiary Trust). Subsequent contingencies (a beneficiary's birth or death) do not, of themselves, convert a determinate-share trust into an indeterminate one (the principle in the cognate wealth-tax authority, Nizam's Family Trust).
3. Status of the trust: 'individual', not AOP
Although the MMR mimics the rate that an association of persons might bear, the assessable status of the discretionary trust/trustee is that of an 'individual', the beneficiaries being individuals. The point, once controversial, was settled by the Ahmedabad Special Bench in Deepak Family Trust and followed by the High Courts (Venu Suresh Sheela Trust; Shriram Ownership Trust). The trustee is assessed in a representative capacity; section 164 only prescribes how the tax is charged.
Section 164 must be read with section 161 (which supplies the machinery and the determinate-share alternative) and section 166 (which preserves the Revenue's option to assess the beneficiary directly where income is actually received by him). The architecture is a graded one: determinate shares → section 161; indeterminate shares → section 164 MMR; income actually received by a beneficiary → section 166 option.
5. Cognate wealth-tax authority
The structural twin of section 164 is section 21 of the (now-repealed) Wealth-tax Act, and the Supreme Court's three-fold rule in Nizam's Family Trust — as many assessments on the trustees as there are determinate-share beneficiaries; assessment in the same status as the beneficiary; and tax the same as if the beneficiary were assessed directly — is the universally cited statement of the representative-assessment principle imported into section 161/164 jurisprudence. It is cited here as cognate, not as a direct section 164 income-tax decision.
B. STATUTORY POSITION (verbatim text)
The text of the section, as it stands in the Act (FA-2025 base), is set out below.
164. (1) Subject to the provisions of sub-sections (2) and (3), where any income in respect of which the persons mentioned in clauses (iii) and (iv) of sub-section (1) of section 160 are liable as representative assessees or any part thereof is not specifically receivable on behalf or for the benefit of any one person or where the individual shares of the persons on whose behalf or for whose benefit such income or such part thereof is receivable are indeterminate or unknown (such income, such part of the income and such persons being hereafter in this section referred to as "relevant income", "part of relevant income" and "beneficiaries", respectively), tax shall be charged on the relevant income or part of relevant income at the maximum marginal rate :
Provided that in a case where—
(i) none of the beneficiaries has any other income chargeable under this Act exceeding the maximum amount not chargeable to tax in the case of an association of persons or is a beneficiary under any other trust; or
(ii) the relevant income or part of relevant income is receivable under a trust declared by any person by will and such trust is the only trust so declared by him; or
(iii) the relevant income or part of relevant income is receivable under a trust created before the 1st day of March, 1970, by a non-testamentary instrument and the Assessing Officer is satisfied, having regard to all the circumstances existing at the relevant time, that the trust was created bona fide exclusively for the benefit of the relatives of the settlor, or where the settlor is a Hindu undivided family, exclusively for the benefit of the members of such family, in circumstances where such relatives or members were mainly dependent on the settlor for their support and maintenance; or
(iv) the relevant income is receivable by the trustees on behalf of a provident fund, superannuation fund, gratuity fund, pension fund or any other fund created bona fide by a person carrying on a business or profession exclusively for the benefit of persons employed in such business or profession, tax shall be charged on the relevant income or part of relevant income as if it were the total income of an association of persons :
Provided further that where any income in respect of which the person mentioned in clause (iv) of sub-section (1) of section 160 is liable as representative assessee consists of, or includes, profits and gains of business, the preceding proviso shall apply only if such profits and gains are receivable under a trust declared by any person by will exclusively for the benefit of any relative dependent on him for support and maintenance, and such trust is the only trust so declared by him.
(2) In the case of relevant income which is derived from property held under trust wholly for charitable or religious purposes, or which is of the nature referred to in sub-clause (iia) of clause (24) of section 2, or which is of the nature referred to in sub-section (4A) of section 11, tax shall be charged on so much of the relevant income as is not exempt under section 11 or section 12, as if the relevant income not so exempt were the income of an association of persons :
Provided that in a case where the whole or any part of the relevant income is not exempt under section 11 or section 12 by virtue of the provisions contained in clause (c) or clause (d) of sub-section (1) of section 13, tax shall be charged on the relevant income or part of relevant income at the maximum marginal rate.
(3) In a case where the relevant income is derived from property held under trust in part only for charitable or religious purposes or is of the nature referred to in sub-clause (iia) of clause (24) of section 2 or is of the nature referred to in sub-section (4A) of section 11, and either the relevant income applicable to purposes other than charitable or religious purposes (or any part thereof) is not specifically receivable on behalf or for the benefit of any one person or the individual shares of the beneficiaries in the income so applicable are indeterminate or unknown, the tax chargeable on the relevant income shall be the aggregate of—
(a) the tax which would be chargeable on that part of the relevant income which is applicable to charitable or religious purposes (as reduced by the income, if any, which is exempt under section 11) as if such part (or such part as so reduced) were the total income of an association of persons; and
(b) the tax on that part of the relevant income which is applicable to purposes other than charitable or religious purposes, and which is either not specifically receivable on behalf or for the benefit of any one person or in respect of which the shares of the beneficiaries are indeterminate or unknown, at the maximum marginal rate :
Provided that in a case where—
(i) none of the beneficiaries in respect of the part of the relevant income which is not applicable to charitable or religious purposes has any other income chargeable under this Act exceeding the maximum amount not chargeable to tax in the case of an association of persons or is a beneficiary under any other trust; or
(ii) the relevant income is receivable under a trust declared by any person by will and such trust is the only trust so declared by him; or
(iii) the relevant income is receivable under a trust created before the 1st day of March, 1970, by a non-testamentary instrument and the Assessing Officer is satisfied, having regard to all the circumstances existing at the relevant time, that the trust, to the extent it is not for charitable or religious purposes, was created bona fide exclusively for the benefit of the relatives of the settlor, or where the settlor is a Hindu undivided family, exclusively for the benefit of the members of such family, in circumstances where such relatives or members were mainly dependent on the settlor for their support and maintenance, tax shall be charged on the relevant income as if the relevant income (as reduced by the income, if any, which is exempt under section 11) were the total income of an association of persons :
Provided further that where the relevant income consists of, or includes, profits and gains of business, the preceding proviso shall apply only if the income is receivable under a trust declared by any person by will exclusively for the benefit of any relative dependent on him for support and maintenance, and such trust is the only trust so declared by him :
Provided also that in a case where the whole or any part of the relevant income is not exempt under section 11 or section 12 by virtue of the provisions contained in clause (c) or clause (d) of sub-section (1) of section 13, tax shall be charged on the relevant income or part of relevant income at the maximum marginal rate.
Explanation1.—For the purposes of this section,—
(i) any income in respect of which the persons mentioned in clause (iii) and clause (iv) of sub-section
(1) of section 160 are liable as representative assessee or any part thereof shall be deemed as being not specifically receivable on behalf or for the benefit of any one person unless the person on whose behalf or for whose benefit such income or such part thereof is receivable during the previous year is expressly stated in the order of the court or the instrument of trust or wakf deed, as the case may be, and is identifiable as such on the date of such order, instrument or deed ;
(ii) the individual shares of the persons on whose behalf or for whose benefit such income or such part thereof is received shall be deemed to be indeterminate or unknown unless the individual shares of the persons on whose behalf or for whose benefit such income or such part thereof is receivable, are expressly stated in the order of the court or the instrument of trust or wakf deed, as the case may be, and are ascertainable as such on the date of such order, instrument or deed.
Explanation 2.— Omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. Charge of tax in case of oral trust.
C. AUTHORITIES
Section 164 is the most litigated section of Chapter XV. The verified direct authorities (trigger, status, machinery) are grouped below; the principal wealth-tax and AOP authorities are flagged as cognate. All citations are web-verified.
Cluster A — Trigger: determinate shares oust section 164
CIT v. Marsons Beneficiary Trust
Citation: (1991) 188 ITR 224 (Bom)
Facts: A trust where the beneficiaries and their shares in income were known and determinate; the Revenue sought to apply the maximum marginal rate.
Held: Where the shares of the beneficiaries are known and determinate, section 164 is not attracted at all; the income must be assessed under section 161(1) in the like manner and to the same extent as on each beneficiary; that the trust carries on business is immaterial.
Facts: Beneficiaries were in existence and their individual shares ascertainable as on the date of the trust deed; the Revenue applied the MMR.
Held: Where the beneficiaries are identifiable and their shares ascertainable on the date of the trust deed, the conditions of Explanation 1 to section 164(1) are not satisfied and the MMR does not apply; determinacy is judged as on the date of the trust deed.
Relevance: Leading recent High-Court authority on the determinacy test under Explanation 1.
Cluster B — Status of the discretionary trust: 'individual', not AOP
ITO v. Deepak Family Trust No. 1 (Special Bench)
Citation: (1988) 25 ITD 254 (Ahd)(SB)
Facts: Conflicting Tribunal benches on the status of a discretionary trust assessed under section 164.
Held: A discretionary trust is to be assessed in the status of an 'individual', not as an AOP; section 164 is only a charging/rate provision supplying no independent machinery, the assessment being made on the trustee in a representative capacity.
Relevance: Leading Special-Bench authority resolving the individual-versus-AOP controversy.
CIT v. Venu Suresh Sheela Trust
Citation: (1998) 233 ITR 99 (Mad)
Facts: Discretionary trust; question of status and entitlement to deduction under section 80L.
Held: The trustee of a discretionary trust is assessed in the status of an 'individual'; section 164 only prescribes how the tax is charged, while section 161 confines levy and recovery to the like manner and extent as against the beneficiary; consequently the deduction was allowable.
Relevance: Reinforces individual status and confirms section 164 as a rate provision riding on section 161.
CIT v. Shriram Ownership Trust
Citation: (2021) 430 ITR 356 (Mad)
Facts: Private discretionary trust with multiple trustees and beneficiaries; whether to be assessed as individual or AOP.
Held: A private discretionary trust must be assessed as an 'individual' because the beneficiaries are individuals; it cannot be assessed as an AOP merely because there are several trustees and beneficiaries.
Relevance: The most recent High-Court restatement of individual status.
Cluster C — Cognate authority (wealth-tax section 21; AOP)
Cited as cognate, not as direct section 164 income-tax decisions.
CWT v. Trustees of H.E.H. Nizam's Family (Remainder Wealth) Trust
Citation: (1977) 108 ITR 555 (SC)
Facts: Wealth-tax assessment of trustees under section 21 of the Wealth-tax Act (the structural twin of section 164) where beneficiaries/shares had to be ascertained on the valuation date.
Held: Three-fold rule: as many assessments on the trustees as there are determinate-share beneficiaries; assessment in the same status as the beneficiary; and tax the same as if the beneficiary were assessed directly. So long as on the relevant date the beneficiaries are known and shares determinate, later contingencies do not defeat the determinate-share regime.
Relevance: The foundational statement of the representative-assessment principle imported into section 161/164 jurisprudence (cognate, wealth-tax).
N.V. Shanmugham & Co. v. CIT
Citation: (1971) 81 ITR 310 (SC)
Facts: What constitutes an 'association of persons'.
Held: A common purpose or common action producing income is necessary to constitute an AOP.
Relevance: Cognate — underpins the AOP-rate fiction that section 164 borrows for indeterminate-share trusts.
Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text is reproduced from the Income-tax Act, 1961 (text as printed in the local Act, base text amended up to the Finance Act, 2025), with the publisher's footnote apparatus and amendment-marker brackets removed; three asterisks (***) denote words or a provision omitted by amendment and retained only to mark the omission. The Finance Act, 2026 amends no section of Chapter XV of the Income-tax Act, 1961 (its Part-A amendments touch ss.92CA, 139, 140B, 144B, 144C, 147A, 148, 150, 153, 153B, 220, 222, 234, 245, 245MA, 254 and 270A-276 only). Citations are stated as reported; orders of the Tribunal and High Courts are flagged as such. Where a section has not been judicially construed, that is stated candidly and the nearest governing authority is given. This material is for professional reference and is not legal advice.
CHAPTER XV — LIABILITY IN SPECIAL CASES
Section 164 — Charge of Tax Where Share of Beneficiaries Unknown
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Provision: Live. Part C of Chapter XV (Representative assessees — Special cases). The maximum-marginal-rate charge on discretionary/indeterminate-share trusts.
Subject: Where income is receivable by a representative assessee under a trust and the individual shares of the beneficiaries are indeterminate or unknown, tax is charged on the relevant income at the maximum marginal rate (with provisos for specified cases that are charged at the ordinary rate).
Finance Act, 2026: No change. Chapter XV is untouched by the Finance Act, 2026; the section stands as amended up to the Finance Act, 2025.
A. SECTION COMMENTARY
1. A charging/rate provision riding on section 161 machinery
Section 164 is the most heavily litigated section of Chapter XV. It is not an independent code: it supplies a rate of charge (the maximum marginal rate) for a defined situation — a trust whose beneficiaries' individual shares are 'indeterminate or unknown' (the discretionary trust being the paradigm) — while borrowing its assessment machinery from section 161. The policy is anti-avoidance: to deny the rate advantage that could otherwise be obtained by interposing a discretionary trust between income and identifiable beneficiaries.
2. The trigger: 'indeterminate or unknown' shares — judged when?
The section bites only where the beneficiaries or their individual shares are indeterminate or unknown. Determinacy is judged as on the date of the trust deed: if the beneficiaries are identifiable and their shares ascertainable on that date, Explanation 1 is not satisfied and section 164 (and the MMR) does not apply — the assessment then falls to be made under section 161 (P. Sekar Trust; Marsons Beneficiary Trust). Subsequent contingencies (a beneficiary's birth or death) do not, of themselves, convert a determinate-share trust into an indeterminate one (the principle in the cognate wealth-tax authority, Nizam's Family Trust).
3. Status of the trust: 'individual', not AOP
Although the MMR mimics the rate that an association of persons might bear, the assessable status of the discretionary trust/trustee is that of an 'individual', the beneficiaries being individuals. The point, once controversial, was settled by the Ahmedabad Special Bench in Deepak Family Trust and followed by the High Courts (Venu Suresh Sheela Trust; Shriram Ownership Trust). The trustee is assessed in a representative capacity; section 164 only prescribes how the tax is charged.
4. Relationship with sections 161 and 166
Section 164 must be read with section 161 (which supplies the machinery and the determinate-share alternative) and section 166 (which preserves the Revenue's option to assess the beneficiary directly where income is actually received by him). The architecture is a graded one: determinate shares → section 161; indeterminate shares → section 164 MMR; income actually received by a beneficiary → section 166 option.
5. Cognate wealth-tax authority
The structural twin of section 164 is section 21 of the (now-repealed) Wealth-tax Act, and the Supreme Court's three-fold rule in Nizam's Family Trust — as many assessments on the trustees as there are determinate-share beneficiaries; assessment in the same status as the beneficiary; and tax the same as if the beneficiary were assessed directly — is the universally cited statement of the representative-assessment principle imported into section 161/164 jurisprudence. It is cited here as cognate, not as a direct section 164 income-tax decision.
B. STATUTORY POSITION (verbatim text)
The text of the section, as it stands in the Act (FA-2025 base), is set out below.
164. (1) Subject to the provisions of sub-sections (2) and (3), where any income in respect of which the persons mentioned in clauses (iii) and (iv) of sub-section (1) of section 160 are liable as representative assessees or any part thereof is not specifically receivable on behalf or for the benefit of any one person or where the individual shares of the persons on whose behalf or for whose benefit such income or such part thereof is receivable are indeterminate or unknown (such income, such part of the income and such persons being hereafter in this section referred to as "relevant income", "part of relevant income" and "beneficiaries", respectively), tax shall be charged on the relevant income or part of relevant income at the maximum marginal rate :
Provided that in a case where—
(i) none of the beneficiaries has any other income chargeable under this Act exceeding the maximum amount not chargeable to tax in the case of an association of persons or is a beneficiary under any other trust; or
(ii) the relevant income or part of relevant income is receivable under a trust declared by any person by will and such trust is the only trust so declared by him; or
(iii) the relevant income or part of relevant income is receivable under a trust created before the 1st day of March, 1970, by a non-testamentary instrument and the Assessing Officer is satisfied, having regard to all the circumstances existing at the relevant time, that the trust was created bona fide exclusively for the benefit of the relatives of the settlor, or where the settlor is a Hindu undivided family, exclusively for the benefit of the members of such family, in circumstances where such relatives or members were mainly dependent on the settlor for their support and maintenance; or
(iv) the relevant income is receivable by the trustees on behalf of a provident fund, superannuation fund, gratuity fund, pension fund or any other fund created bona fide by a person carrying on a business or profession exclusively for the benefit of persons employed in such business or profession, tax shall be charged on the relevant income or part of relevant income as if it were the total income of an association of persons :
Provided further that where any income in respect of which the person mentioned in clause (iv) of sub-section (1) of section 160 is liable as representative assessee consists of, or includes, profits and gains of business, the preceding proviso shall apply only if such profits and gains are receivable under a trust declared by any person by will exclusively for the benefit of any relative dependent on him for support and maintenance, and such trust is the only trust so declared by him.
(2) In the case of relevant income which is derived from property held under trust wholly for charitable or religious purposes, or which is of the nature referred to in sub-clause (iia) of clause (24) of section 2, or which is of the nature referred to in sub-section (4A) of section 11, tax shall be charged on so much of the relevant income as is not exempt under section 11 or section 12, as if the relevant income not so exempt were the income of an association of persons :
Provided that in a case where the whole or any part of the relevant income is not exempt under section 11 or section 12 by virtue of the provisions contained in clause (c) or clause (d) of sub-section (1) of section 13, tax shall be charged on the relevant income or part of relevant income at the maximum marginal rate.
(3) In a case where the relevant income is derived from property held under trust in part only for charitable or religious purposes or is of the nature referred to in sub-clause (iia) of clause (24) of section 2 or is of the nature referred to in sub-section (4A) of section 11, and either the relevant income applicable to purposes other than charitable or religious purposes (or any part thereof) is not specifically receivable on behalf or for the benefit of any one person or the individual shares of the beneficiaries in the income so applicable are indeterminate or unknown, the tax chargeable on the relevant income shall be the aggregate of—
(a) the tax which would be chargeable on that part of the relevant income which is applicable to charitable or religious purposes (as reduced by the income, if any, which is exempt under section 11) as if such part (or such part as so reduced) were the total income of an association of persons; and
(b) the tax on that part of the relevant income which is applicable to purposes other than charitable or religious purposes, and which is either not specifically receivable on behalf or for the benefit of any one person or in respect of which the shares of the beneficiaries are indeterminate or unknown, at the maximum marginal rate :
Provided that in a case where—
(i) none of the beneficiaries in respect of the part of the relevant income which is not applicable to charitable or religious purposes has any other income chargeable under this Act exceeding the maximum amount not chargeable to tax in the case of an association of persons or is a beneficiary under any other trust; or
(ii) the relevant income is receivable under a trust declared by any person by will and such trust is the only trust so declared by him; or
(iii) the relevant income is receivable under a trust created before the 1st day of March, 1970, by a non-testamentary instrument and the Assessing Officer is satisfied, having regard to all the circumstances existing at the relevant time, that the trust, to the extent it is not for charitable or religious purposes, was created bona fide exclusively for the benefit of the relatives of the settlor, or where the settlor is a Hindu undivided family, exclusively for the benefit of the members of such family, in circumstances where such relatives or members were mainly dependent on the settlor for their support and maintenance, tax shall be charged on the relevant income as if the relevant income (as reduced by the income, if any, which is exempt under section 11) were the total income of an association of persons :
Provided further that where the relevant income consists of, or includes, profits and gains of business, the preceding proviso shall apply only if the income is receivable under a trust declared by any person by will exclusively for the benefit of any relative dependent on him for support and maintenance, and such trust is the only trust so declared by him :
Provided also that in a case where the whole or any part of the relevant income is not exempt under section 11 or section 12 by virtue of the provisions contained in clause (c) or clause (d) of sub-section (1) of section 13, tax shall be charged on the relevant income or part of relevant income at the maximum marginal rate.
Explanation1.—For the purposes of this section,—
(i) any income in respect of which the persons mentioned in clause (iii) and clause (iv) of sub-section
(1) of section 160 are liable as representative assessee or any part thereof shall be deemed as being not specifically receivable on behalf or for the benefit of any one person unless the person on whose behalf or for whose benefit such income or such part thereof is receivable during the previous year is expressly stated in the order of the court or the instrument of trust or wakf deed, as the case may be, and is identifiable as such on the date of such order, instrument or deed ;
(ii) the individual shares of the persons on whose behalf or for whose benefit such income or such part thereof is received shall be deemed to be indeterminate or unknown unless the individual shares of the persons on whose behalf or for whose benefit such income or such part thereof is receivable, are expressly stated in the order of the court or the instrument of trust or wakf deed, as the case may be, and are ascertainable as such on the date of such order, instrument or deed.
Explanation 2.— Omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. Charge of tax in case of oral trust.
C. AUTHORITIES
Section 164 is the most litigated section of Chapter XV. The verified direct authorities (trigger, status, machinery) are grouped below; the principal wealth-tax and AOP authorities are flagged as cognate. All citations are web-verified.
Cluster A — Trigger: determinate shares oust section 164
CIT v. Marsons Beneficiary Trust
Citation: (1991) 188 ITR 224 (Bom)
Facts: A trust where the beneficiaries and their shares in income were known and determinate; the Revenue sought to apply the maximum marginal rate.
Held: Where the shares of the beneficiaries are known and determinate, section 164 is not attracted at all; the income must be assessed under section 161(1) in the like manner and to the same extent as on each beneficiary; that the trust carries on business is immaterial.
Relevance: Foundational on the negative trigger of section 164 — determinate shares mean section 161, not section 164/MMR.
CIT v. P. Sekar Trust
Citation: (2010) 321 ITR 305 (Mad)
Facts: Beneficiaries were in existence and their individual shares ascertainable as on the date of the trust deed; the Revenue applied the MMR.
Held: Where the beneficiaries are identifiable and their shares ascertainable on the date of the trust deed, the conditions of Explanation 1 to section 164(1) are not satisfied and the MMR does not apply; determinacy is judged as on the date of the trust deed.
Relevance: Leading recent High-Court authority on the determinacy test under Explanation 1.
Cluster B — Status of the discretionary trust: 'individual', not AOP
ITO v. Deepak Family Trust No. 1 (Special Bench)
Citation: (1988) 25 ITD 254 (Ahd)(SB)
Facts: Conflicting Tribunal benches on the status of a discretionary trust assessed under section 164.
Held: A discretionary trust is to be assessed in the status of an 'individual', not as an AOP; section 164 is only a charging/rate provision supplying no independent machinery, the assessment being made on the trustee in a representative capacity.
Relevance: Leading Special-Bench authority resolving the individual-versus-AOP controversy.
CIT v. Venu Suresh Sheela Trust
Citation: (1998) 233 ITR 99 (Mad)
Facts: Discretionary trust; question of status and entitlement to deduction under section 80L.
Held: The trustee of a discretionary trust is assessed in the status of an 'individual'; section 164 only prescribes how the tax is charged, while section 161 confines levy and recovery to the like manner and extent as against the beneficiary; consequently the deduction was allowable.
Relevance: Reinforces individual status and confirms section 164 as a rate provision riding on section 161.
CIT v. Shriram Ownership Trust
Citation: (2021) 430 ITR 356 (Mad)
Facts: Private discretionary trust with multiple trustees and beneficiaries; whether to be assessed as individual or AOP.
Held: A private discretionary trust must be assessed as an 'individual' because the beneficiaries are individuals; it cannot be assessed as an AOP merely because there are several trustees and beneficiaries.
Relevance: The most recent High-Court restatement of individual status.
Cluster C — Cognate authority (wealth-tax section 21; AOP)
Cited as cognate, not as direct section 164 income-tax decisions.
CWT v. Trustees of H.E.H. Nizam's Family (Remainder Wealth) Trust
Citation: (1977) 108 ITR 555 (SC)
Facts: Wealth-tax assessment of trustees under section 21 of the Wealth-tax Act (the structural twin of section 164) where beneficiaries/shares had to be ascertained on the valuation date.
Held: Three-fold rule: as many assessments on the trustees as there are determinate-share beneficiaries; assessment in the same status as the beneficiary; and tax the same as if the beneficiary were assessed directly. So long as on the relevant date the beneficiaries are known and shares determinate, later contingencies do not defeat the determinate-share regime.
Relevance: The foundational statement of the representative-assessment principle imported into section 161/164 jurisprudence (cognate, wealth-tax).
N.V. Shanmugham & Co. v. CIT
Citation: (1971) 81 ITR 310 (SC)
Facts: What constitutes an 'association of persons'.
Held: A common purpose or common action producing income is necessary to constitute an AOP.
Relevance: Cognate — underpins the AOP-rate fiction that section 164 borrows for indeterminate-share trusts.
Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text is reproduced from the Income-tax Act, 1961 (text as printed in the local Act, base text amended up to the Finance Act, 2025), with the publisher's footnote apparatus and amendment-marker brackets removed; three asterisks (***) denote words or a provision omitted by amendment and retained only to mark the omission. The Finance Act, 2026 amends no section of Chapter XV of the Income-tax Act, 1961 (its Part-A amendments touch ss.92CA, 139, 140B, 144B, 144C, 147A, 148, 150, 153, 153B, 220, 222, 234, 245, 245MA, 254 and 270A-276 only). Citations are stated as reported; orders of the Tribunal and High Courts are flagged as such. Where a section has not been judicially construed, that is stated candidly and the nearest governing authority is given. This material is for professional reference and is not legal advice.