Section 304 — Liability of representative assessee. Successor to s.161, s.165, s.166, s.167 of the 1961 Act.
Section 304 is in Chapter XVII — Special Provisions Relating to Certain Persons, which runs from section 302 to section 355.
Sub-section (1) puts a representative assessee, as regards the income in respect of which he is a representative assessee, under the same duties, responsibilities and liabilities as if that income were his own beneficially. Two consequences are spelt out: he is liable to assessment in his own name, and any such assessment is deemed to be made upon him in his representative capacity only; and the tax on that income is, subject to the other provisions of the Chapter, levied upon and recovered from him in like manner and to the same extent as it would be leviable upon and recoverable from the person represented.
Sub-section (2) prevents a second assessment: a person assessable under this Chapter in the capacity of a representative assessee in respect of an income shall not, in respect of that income, be assessed under any other provision of the Act. Sub-section (3) preserves the direct route irrespective of the Chapter — the Assessing Officer may directly assess the person on whose behalf or for whose benefit the income is receivable, or recover the tax on that income from him.
Sub-section (4) deals with a trust only part of whose income is chargeable: the proportion of income receivable by a beneficiary from the trust that is derived from the chargeable part is determined from three quantities the sub-section defines — A, the chargeable part of the income of the trust; B, the whole income of the trust; and C, the income receivable by the beneficiary from the trust. Sub-section (5) gives the Assessing Officer the same remedies, in the same manner, against all property of any kind vested in or under the control or management of a representative assessee as he would have against the property of any person liable to pay tax, whether the demand is raised against the representative assessee or against the beneficiary direct.
Income often reaches its owner through someone else's hands, and the Act reaches it there. The section makes the person holding the income answerable exactly as the beneficiary would be, but confines the assessment to that income and to a representative capacity, so it is not an assessment of his own affairs. It then refuses to make the Department elect: sub-section (3) keeps the direct assessment of the beneficiary open, and sub-section (5) makes the property in the representative's hands answerable whichever way the demand is raised.
The assessment is in the representative's own name but sub-section (1)(a) deems it made upon him in his representative capacity only, so it is not an assessment of his beneficial income, and sub-section (2) bars a second assessment of the same income upon him under any other provision. That protection runs one way: sub-section (3) still allows the Assessing Officer to assess or recover from the beneficiary directly, so both routes exist and neither excludes the other. Sub-section (5) is where this bites in practice — the same remedies run against all property vested in or under the control or management of the representative assessee whichever of the two the demand was raised on. Where only part of a trust's income is chargeable, sub-section (4) does not give a rate or an amount; it fixes the three components from which the beneficiary's share derived from the chargeable part is determined.
A trustee receives income for a beneficiary. He is assessed in his own name, but the order records that it is in his representative capacity only, and the tax is levied on him to the same extent as it would have been on the beneficiary; the same income cannot then be assessed on him under any other provision. Suppose only part of the trust's income is chargeable — say 30 lakh rupees out of a whole income of 50 lakh — and the beneficiary is entitled to 10 lakh from the trust. Sub-section (4) makes the chargeable part, the whole income and the beneficiary's 10 lakh the components from which the beneficiary's share derived from the chargeable part is worked out. If the tax is not paid, sub-section (5) lets the Assessing Officer proceed against the trust property in the trustee's hands, and sub-section (3) separately allows the demand to be raised on the beneficiary.
In an assessment order framed in the name of a trustee, guardian or agent as representative assessee of another person, and in the recovery that follows against the property he holds. A beneficiary meets it when the Department raises the demand on him directly under sub-section (3) instead.
the representative assessee shall be liable to assessment in his own name in respect of that income and any such assessment shall be deemed to be made upon him in his representative capacity only
the Assessing Officer may directly assess the person on whose behalf or for whose benefit income therein referred to is receivable, or may recover from such person the tax payable in respect of such income
whether the demand is raised against the representative assessee or against the beneficiary direct
See the full 1961 to 2025 concordance.
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