The Assessing Officer has assessed our trust in one order on the whole of the trust income at slab rates of its own. The shares of the beneficiaries are fixed and known. Is that how section 161 works?
No. Section 161(1) makes the representative assessee liable to assessment in his own name, but it deems that assessment to be made upon him in his representative capacity only, and it caps the charge: the tax 'shall, subject to the other provisions contained in this Chapter, be 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 by him'. Where the shares are determinate the measure of the trustee's liability is therefore the liability of each beneficiary separately, not a single composite charge on the trust. Section 161(2) is the other half of the protection: where a person is assessable under Chapter XV in the capacity of a representative assessee, he shall not, in respect of that income, be assessed under any other provision of the Act.
Decided by the CBDT Circulars & Instructions (Not applicable — statutory text) on 2000-04-01, reported as Section 161(1) and (2) of the Income-tax Act, 1961. It bears on section 161, section 161(1), section 161(1A), section 161(2), section 160, section 160(1)(iv), section 162, section 164, section 166 of the Income Tax Act 1961, in Charitable Trusts & Exemption, Assessment & Scrutiny and How Tax Law Is Read matters.
Two practical consequences follow from the words 'in like manner and to the same extent', and Assessing Officers routinely get one of them wrong in the taxpayer's favour and the other against him. In like manner means the assessment on the trustee is made in the same status and under the same computation provisions as would apply to the beneficiary, so a deduction or an exemption the beneficiary would have got is not lost merely because the trust is the assessee. To the same extent means the trustee's exposure is the beneficiary's exposure — which cuts both ways, because the rate is the rate applicable to that beneficiary's TOTAL income, including his income from outside the trust, and not merely the rate that his share of the trust income would attract standing alone. That second consequence is what the Gujarat High Court applied in Ganesh Chhababhai Vallabhai Patel v. CIT, and it is the reason a trust assessment that looks favourable on its face can be rectified upwards years later. Section 161(1) is also expressly made 'subject to the other provisions contained in this Chapter', and those other provisions are where the damage is done: section 161(1A) overrides sub-section (1) altogether where there are business profits, and section 164 charges the maximum marginal rate where shares are indeterminate. Finally, section 161(2) is a real bar and is under-used — it is the answer to an Assessing Officer who, having assessed the trustee under Chapter XV, then seeks to assess the same income in the trustee's own hands under some other head.
Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them.
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Section 161(1), as printed identically on all eight departmental pages read: 'Every representative assessee, as regards the income in respect of which he is a representative assessee, shall be subject to the same duties, responsibilities and liabilities as if the income were income received by or accruing to or in favour of him beneficially, and shall be liable to assessment in his own name in respect of that income; but any such assessment shall be deemed to be made upon him in his representative capacity only, and the tax shall, subject to the other provisions contained in this Chapter, be 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 by him.' Section 161(2): 'Where any person is, in respect of any income, assessable under this Chapter in the capacity of a representative assessee, he shall not, in respect of that income, be assessed under any other provision of this Act.'
A representative assessee is assessed in his own name but in his representative capacity only, and the tax leviable on and recoverable from him is measured by what would be leviable on and recoverable from the person represented — subject always to the other provisions of Chapter XV, which include section 161(1A) and section 164. A person assessable in a representative capacity in respect of an income cannot, in respect of that income, be assessed under any other provision of the Act.
Not applicable — this is a statement of statutory text taken from eight year-stamped departmental pages. No judicial reasoning is involved.
but any such assessment shall be deemed to be made upon him in his representative capacity only, and the tax shall, subject to the other provisions contained in this Chapter, be 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 by him.
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Handle my notice → Ask a CA on WhatsAppNo. Section 161(1) makes the representative assessee liable to assessment in his own name, but it deems that assessment to be made upon him in his representative capacity only, and it caps the charge: the tax 'shall, subject to the other provisions contained in this Chapter, be 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 by him'. Where the shares are determinate the measure of the trustee's liability is therefore the liability of each beneficiary separately, not a single composite charge on the trust. Section 161(2) is the other half of the protection: where a person is assessable under Chapter XV in the capacity of a representative assessee, he shall not, in respect of that income, be assessed under any other provision of the Act. This was decided by the CBDT Circulars & Instructions (Not applicable — statutory text) and bears on section 161, section 161(1), section 161(1A), section 161(2), section 160, section 160(1)(iv), section 162, section 164, section 166 of the Income Tax Act 1961. It is reported as Section 161(1) and (2) of the Income-tax Act, 1961. Two practical consequences follow from the words 'in like manner and to the same extent', and Assessing Officers routinely get one of them wrong in the taxpayer's favour and the other against him. In like manner means the assessment on the trustee is made in the same status and under the same computation provisions as would apply to the beneficiary, so a deduction or an exemption the beneficiary would have got is not lost merely because the trust is the assessee. To the same extent means the trustee's exposure is the beneficiary's exposure — which cuts both ways, because the rate is the rate applicable to that beneficiary's TOTAL income, including his income from outside the trust, and not merely the rate that his share of the trust income would attract standing alone. That second consequence is what the Gujarat High Court applied in Ganesh Chhababhai Vallabhai Patel v. CIT, and it is the reason a trust assessment that looks favourable on its face can be rectified upwards years later. Section 161(1) is also expressly made 'subject to the other provisions contained in this Chapter', and those other provisions are where the damage is done: section 161(1A) overrides sub-section (1) altogether where there are business profits, and section 164 charges the maximum marginal rate where shares are indeterminate. Finally, section 161(2) is a real bar and is under-used — it is the answer to an Assessing Officer who, having assessed the trustee under Chapter XV, then seeks to assess the same income in the trustee's own hands under some other head. If it applies to you, the first step is this: Insist that the assessment order state, beneficiary by beneficiary, the income attributed and the rate applied. 'In like manner and to the same extent' cannot be discharged by one composite computation where shares are determinate.
Section 161(1), as printed identically on all eight departmental pages read: 'Every representative assessee, as regards the income in respect of which he is a representative assessee, shall be subject to the same duties, responsibilities and liabilities as if the income were income received by or accruing to or in favour of him beneficially, and shall be liable to assessment in his own name in respect of that income; but any such assessment shall be deemed to be made upon him in his representative capacity only, and the tax shall, subject to the other provisions contained in this Chapter, be 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 by him.' Section 161(2): 'Where any person is, in respect of any income, assessable under this Chapter in the capacity of a representative assessee, he shall not, in respect of that income, be assessed under any other provision of this Act.' The matter was decided on 2000-04-01 by the CBDT Circulars & Instructions (Not applicable — statutory text). On those facts the CBDT Circulars & Instructions held as follows. A representative assessee is assessed in his own name but in his representative capacity only, and the tax leviable on and recoverable from him is measured by what would be leviable on and recoverable from the person represented — subject always to the other provisions of Chapter XV, which include section 161(1A) and section 164. A person assessable in a representative capacity in respect of an income cannot, in respect of that income, be assessed under any other provision of the Act.
Not applicable — this is a statement of statutory text taken from eight year-stamped departmental pages. No judicial reasoning is involved. In the words reproduced by the source cited on this page: "but any such assessment shall be deemed to be made upon him in his representative capacity only, and the tax shall, subject to the other provisions contained in this Chapter, be 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 by him."
It was decided by the CBDT Circulars & Instructions on 2000-04-01 and is reported as Section 161(1) and (2) of the Income-tax Act, 1961. Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 161, section 161(1), section 161(1A), section 161(2), section 160, section 160(1)(iv), section 162, section 164, section 166, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. A representative assessee is assessed in his own name but in his representative capacity only, and the tax leviable on and recoverable from him is measured by what would be leviable on and recoverable from the person represented — subject always to the other provisions of Chapter XV, which include section 161(1A) and section 164. A person assessable in a representative capacity in respect of an income cannot, in respect of that income, be assessed under any other provision of the Act. It arises in Charitable Trusts & Exemption, Assessment & Scrutiny and How Tax Law Is Read matters, on section 161, section 161(1), section 161(1A), section 161(2), section 160, section 160(1)(iv), section 162, section 164, section 166 of the Income Tax Act 1961, and was decided by Not applicable — statutory text. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Compute the beneficiary's total income, not just his share, before you decide whether the order under-taxes or over-taxes. If the rate applied is the rate on the share alone, expect a section 154 rectification and price it. Take every computation provision the beneficiary could have taken — status, heads, deductions — because the assessment is made in the beneficiary's manner. Check section 161(1A) before relying on sub-section (1) at all: if any part of the trust income is profits and gains of business, sub-section (1) is displaced and the whole income goes to the maximum marginal rate. If the same income is being brought to tax on the representative assessee under any provision outside Chapter XV, raise section 161(2) as a self-contained ground. Preserve the sub-section (1) words 'deemed to be made upon him in his representative capacity only' — they matter for recovery, and they are what section 162 builds on.
Still good law. Eight separately published versions of section 161, spanning 2000 to 2025, carry sub-sections (1) and (2) word for word identically, which is the best evidence available here that they stand unamended over that span. No later version has been located, no Finance Act text has been read, and no later treatment has been checked, so nothing after 2025 is certified. What that leaves a practitioner to do. Sub-section (1) is the provision that makes the representative assessee liable 'in like manner and to the same extent' as the beneficiary, and the whole weight of the words lies in that phrase: the representative is assessed on the beneficiary's income, in the beneficiary's character and status, and with the beneficiary's own reliefs and rates, so an assessment that charges the representative in his own character is bad on the face of it. Sub-section (2) is the limiting provision: where a person is assessed as a representative assessee he shall not be assessed under any other provision in respect of the same income. The two have to be read with section 160, which says who is a representative assessee at all, with section 162, which gives the right of recovery and retention, and with section 166, which preserves the Revenue's option to assess the beneficiary directly. Sub-section (1A), which charges the maximum marginal rate where the relevant income consists of or includes profits and gains of business, sits between them and is not part of what this entry states; it has its own commencement and its own proviso, and a reader whose trust carries on business must read it before relying on sub-section (1). No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The date in decided_on is a labelled placeholder and not a verified commencement date. It is set to 1 April 2000, the start of the tax year corresponding to the earliest published version of the section in which sub-sections (1) and (2) appear in this identical form. Sub-sections (1) and (2) are original provisions of the Income-tax Act, 1961, and no amendment footnote on any version read dates them, so no commencement is asserted for either. It is not a decision date, and this entry carries no bench and no result because there is no decision behind it. Section 161 has been read from eight separately published versions, all under the heading 'Liability of representative assessee' and all naming the Income-tax Act, 1961. Every one of them prints sub-section (1), sub-section (1A) with its proviso, and sub-section (2), word for word identically. That is the whole of the evidence for the statement in the validity note that the two sub-sections stand unamended across that span. Two amendment footnotes are printed on the earliest of those versions, and where each marker sits on the page matters. Footnote 28, 'Inserted by the Finance Act, 1984, w.e.f. 1-4-1985', carries a marker immediately before the opening bracket of '(1A)', and that is what pins the commencement of sub-section (1A) to 1 April 1985. Footnote 29, 'Omitted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1991', carries a marker printed between the proviso to sub-section (1A) and sub-section (2), as an omission placeholder in the form '[29] [***]'. What that establishes is only this: a provision which once stood between the proviso to sub-section (1A) and sub-section (2) was omitted by the Finance (No. 2) Act, 1991 with effect from 1 April 1991. The omitted text is not printed, so this entry does not name that provision and does not state what it said. A reader who needs it must take it from the Act as it stood before 1 April 1991. Every word of the statutory text quoted in this entry is taken from the Department's own published text of the section, under its own heading and naming the Act. None of it comes from a commentary. One thing this entry does not attempt: it does not set out section 164, which charges the maximum marginal rate where the shares of the beneficiaries are indeterminate or unknown, although that section is tagged here because it is the provision a dispute under section 161 most often turns into. The boundary between the two is where the argument lies, and it is not drawn on this page. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
A representative assessee is assessed in his own name but in his representative capacity only, and the tax leviable on and recoverable from him is measured by what would be leviable on and recoverable from the person represented — subject always to the other provisions of Chapter XV, which include section 161(1A) and section 164. A person assessable in a representative capacity in respect of an income cannot, in respect of that income, be assessed under any other provision of the Act.
TaxSphere, “Statutory position — s.161(1) and (2): the representative assessee is taxed 'in like manner and to the same extent' as the person represented, and cannot be assessed under any other provision”, https://taxnotice.vittsphere.com/caselaw/case/statutory-position-161-1-and-2-in-like-manner-and-to-the-same-extent/ (validity last checked 2026-09-08)
The judgment itself is a government work and may be quoted freely. The summary, the validity note and the reasoning on this page are this library's own writing: quote them with attribution, and please do not present either as the words of the court — this page keeps the two apart and so should a quotation of it.
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The Department has assessed our trustee under section 161 and has now issued a notice to me as beneficiary on the same income. Which section stops it doing both, and is it section 167?
Our family trust has determinate shares, mostly interest and rent, and a small share of profit from a partnership business. The Assessing Officer has charged the entire trust income at the maximum marginal rate. Can he, when the shares are fixed?
Our trust was assessed under section 161 on the beneficiaries' shares at the rate their shares alone attracted. Four years later the Assessing Officer rectified it under section 154 and applied each beneficiary's personal rate on his whole income. Could he do that in rectification?
Our private trust has determinate beneficiaries and the deed lets the trustees carry on business. The Assessing Officer has assessed the whole business income as one unit in the status of AOP. Is that right?
