WHETHER TRUST IS AN ASSOCIATION OF PERSON

1. As per Section 184(1) of the Companies Act, 2013, every director shall at
the first meeting of the Board in which he participates as a director and
thereafter at the first meeting of the Board in every financial year or
whenever there is any change in the disclosures already made, then at the
first Board meeting held after such change, disclose his concern or interest
in any company or companies or bodies corporate , firms, or other
association of individuals which shall include the shareholding, in such
manner as may be prescribed.
In the above definition, Trusts can be included in “other association of
individuals”.

2. In Income Tax site, the following is showing (highlighted part):

Trust claiming Tax Exemption under Section 10

Trusts and institutions formed for promotion of scientific research,
education, sports, certain professions, khadi and village industries, etc., or
as hospitals and notified charitable or religious institutions, are entitled for
total exemption from tax under Section 10 of the Income Tax Act.

Trust claiming Tax Exemption under Section 11

Section 11 lays down that any income, profit or gain derived from property
held under trust or other legal obligation wholly for religious and
charitable purposes, shall not be included in the total income of the trust
or institution in so far as such income is applied or accumulated for
application to such purposes.
 WHETHER TRUST IS AN ASSOCIATION OF PERSON

Trust eligible for Tax Exemption

The following charitable or religious trusts are entitled to exemption under
section 11 and section 12, on fulfillment of certain conditions:

 Trusts created wholly for charitable or religious purposes and applying

their income to such purposes in India.
 Trusts created before 1.4.1962 in part only for charitable or religious
purposes and applying (or accumulating) their income to such purposes,
in India.
 Trusts created before 1.4.1952 for charitable or religious purposes,
authorised by a general or special order of the Board, and applying their
income to such purposes outside India.
 Trusts created on or after 1.4.1952, for the charitable purpose of
promoting international welfare in which India is interested, authorised by
a General or special order of the Board, and applying their income for such
purpose outside India.
 Charitable trusts created for the benefit of scheduled castes, tribes,
backward classes or women and children.

3. Further, Delhi High Court in the case “Commissioner Of Income Tax vs Sae
Head Office Monthly Paid Employees” dated 10 September, 2004 stated
the following:

Almost similar question is raised before this Court by the revenue. We

have examined the decisions of Calcutta High Court and Gujrat High Court
and reading the judgments it is very clear that Section 164(1) does not
provide how the total income of the assessed has to be computed. The
Division Bench followed the decisions of the Supreme Court in the case of
G. Murugesan & Bros, (1973) 88 ITR 432 and CIT v. Indira Balkrishna
(1960) 39 ITR 546, to point out that individuals must voluntarily join
together for a certain purpose and there must be use of volition on the part
of the members of the association, which is an essential ingredient. The
Division Bench in CIT v Venu Suresh Sanjay Trust, ( 1996) 221 ITR 649,
pointed out that Section 164 deals with a Trust for the purpose of
charging tax where the share of beneficiary is unknown. A plain reading of
Sections 160 to 162 would go to show that representative assessed either
has to be "individual" or an artificial juridical person who is equated with
an individual. The Court examined the provisions of Sections 161 and 162.
The Court pointed out that reading of Section 164(1) would go to show
that it is by fiction of law that income of the beneficiary has to be treated
as income of association of persons for the purpose of charging tax. This
 WHETHER TRUST IS AN ASSOCIATION OF PERSON

legal sanction is available only for charging tax on the total income in the
case of a Trust. The Court emphasised that Section 164 is not concerned
with the manner of computation of the total income. In fact, this Section
comes into play only after the income has been computed in accordance
with other provisions of the Income-tax Act, 1961. Since determination of
the status of an assessed is part of the process of computation of income, it
is necessary to look into the general principles where the status of
the trustee of a discretionary Trust can be taken to be "association of
persons" or " individual".

4. Again, The Andhra Pradesh High Court in Jagadish Rai Agarwal and others
v. State of Andhra Pradesh and others, reported in 2005 (2) BC 497, while
considering the scope of Section 141 of the Negotiable Instruments Act,
held as follows:
"A plain reading of the expression "company" as used in sub clause (a) of
the Explanation is that it is inclusive of any body corporate or
"other association of individuals". The term "association of individuals"
will include club, trust, HUF business, etc. It shall have to be construed
ejusdem generis along with other expressions "company" or "firm".
Therefore, a joint family business must be deemed as a juristic person like
a company or firm. When it is specifically alleged that the respondent
Nos.1 and 2 are the joint proprietors/owners of the business of M/s New
Sheetal Traders, which is a joint family business of themselves and their
son Sheetal, prima facie, they are covered under Section 141 of the
Negotiable Instruments Act in view of the Explanation appended thereto.
A Trust, admittedly does not fall within the ordinary natural meaning of
the expression body corporate. Similarly, it does not fall within the ambit
of a firm also. But as we have already concluded, a Trust having two or
more persons will fall within the ambit of 'association of individuals' and
thus such a Trust is a company. But a Trust having a single trustee will
not fall within the ambit of 'association of individuals' and thus, it may
appear that such a Trust is likely to escape from the clutches of Section
141 of the Negotiable Instruments Act.”
5. Association of Persons (AOP), according to the Income Tax Act, 1961, is the
integration of two or more persons for a common purpose, and primarily
with an intention to earn some income.

6. As per THE INDIAN TRUSTS ACT, 1882, A “trust” is an obligation annexed

to the ownership of property, and arising out of a confidence reposed in
and accepted by the owner, or declared and accepted by him, for the
benefit of another, or of another and the owner: