JUDGMENT : G.T. Nanavati, J. The Tribunal has referred the following questions to this court under section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") : "(1) Whether, on the facts and in the circumstances of the case, the capital loss arising on sale of shares of Rajesh Textile Mills Ltd. by the trustees of the trust of which the assessee was a beneficiary as also the settlor can be set off against the individual income of the assessee from capital gains ? (2) Whether the Tribunal was justified in law in holding that, while determining the income falling under the head 'Capital gains', the Income-tax Officer was bound to consider the capital loss which had arisen in the hands of the trust as, unless the said loss is taken into consideration, the assessee's total income cannot be computed in accordance with law ? " 2. The respondent-assessee is a beneficiary under the Veenaben Vadilal Trust. The assessee possessed shares of Sayaji Mills Limited. As a shareholder of Sayaji Mills Limited, she got 186 shares of Rajesh Textile Mills Limited. The trust also held shares of Sayaji Mills Limited and, as a shareholder, it got 157 shares of Rajesh Textile Mills Limited. During the assessment year 1971-72, the assessee sold her 186 shares and the trust sold 157 shares of Rajesh Textile Mills Limited. In the return of income filed for that year, the assessee claimed a capital loss of Rs. 42,317 on sale of 343 shares of Rajesh Textile Mills Limited. While working out the capital loss, the assessee claimed the cost of the share which was Rs. 100 per share and also a deduction of Rs. 108.75 per share, being the difference between the cum-right and ex-right quotations of the shares of Sayaji Mills Limited. The Income-tax Officer disallowed the deduction of Rs. 108.75 per share claimed by the assessee and determined the capital gains at Rs. 4,104. Rs. 2,139 was found to be the capital gain in respect of the sale of shares which belonged to her personally and Rs. 1,963 in respect of sale of shares held by the trust. We are not referring to the other claims which were disallowed as that is not necessary for the purpose of this reference. 4,104. Rs. 2,139 was found to be the capital gain in respect of the sale of shares which belonged to her personally and Rs. 1,963 in respect of sale of shares held by the trust. We are not referring to the other claims which were disallowed as that is not necessary for the purpose of this reference. As the assessee's claim for deduction of capital loss was rejected by the Income-tax Officer, she preferred an appeal to the Appellate Assistant Commissioner. It was contended before the Appellate Assistant Commissioner that, while determining the capital loss on account of sale of shares of Rajesh Textile Mills Ltd., the assessee was entitled to deduction on account of the fall in value of shares in Sayaji Mills Limited, as the shares of Rajesh Textile Mills Limited were received as right shares. The Appellate Assistant Commissioner, following the decision of the Tribunal in Income-tax Appeal No. 1206 (Ahd)/70-71, held that the assessee was entitled to the deduction of the fall in value of shares in Sayaji Mills Limited while computing the capital gain in respect of shares of Rajesh Textile Mills Limited. Therefore, the addition of Rs. 2,139 made by the Income-tax Officer was ordered to be deleted and he was directed to verify the claim of capital loss made by the assessee and allow the same. As regards the similar claim made in respect of sale of 157 shares of Rajesh Textile Mills Limited by the trustee, the Appellate Assistant Commissioner did not accept the assessee's contention and agreed with the finding of the Income-tax Officer that capital loss suffered on that account cannot be considered in the hands of the assessee as a beneficiary. 3. The assessee thereupon preferred an appeal to the Tribunal. The question which the Tribunal was required to consider was whether capital loss suffered on account of sale of 157 shares of Rajesh Textile Mills Limited by the trustee could be rightly claimed by the assessee while working out her total income. 3. The assessee thereupon preferred an appeal to the Tribunal. The question which the Tribunal was required to consider was whether capital loss suffered on account of sale of 157 shares of Rajesh Textile Mills Limited by the trustee could be rightly claimed by the assessee while working out her total income. The Tribunal decided the appeal in favour of the assessee by holding that, as the Income-tax Officer has preferred to assess the beneficiary, the total income of the beneficiary was required to be computed and, therefore, while determining the income falling under the head "Capital gains", the Income-tax Officer was bound to consider the capital loss which had arisen in the hands of the trust because, without taking into consideration the said loss, the assessee's total income could not have been computed in accordance with law. The Tribunal, therefore, remitted the matter to the Income-tax Officer for recomputation of the capital loss arising to the assessee on account of sale of shares of Rajesh Textile Mills Limited by the trust. 4. The Revenue, feeling aggrieved by the said decision of the Tribunal, filed an application for referring the two questions which are quoted above and a third question which is as follows: "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in remitting the matter to the Income-tax Officer for recomputation of the capital loss arising to the assessee on sale of the shares of Rajesh Textile Mills Ltd. ?" 5. The Tribunal has referred the two questions to this court, but declined to refer the third question by holding that remitting the matter to the Income-tax Officer for recomputation was only consequential in nature and no question of law arose as a result of that part of the order. 6. What is contended by learned counsel for the Revenue is that the beneficiary under a trust is entitled to enjoy the benefits of the trust and the loss suffered by the trust cannot be passed on by the trustees to the beneficiary. It is submitted that the loss suffered by the trust cannot be regarded as a loss of the assessee who was merely a beneficiary under the trust. It is submitted that the loss suffered by the trust cannot be regarded as a loss of the assessee who was merely a beneficiary under the trust. The loss suffered by the trust could have been taken into consideration for the purpose of determining the capital gains made by the trust, but the assessee, being a beneficiary, was not entitled to claim the said loss while determining her total income. In our opinion, this contention does not deserve to be accepted and the Tribunal was right in not accepting the same. The position under the Act is that the trustee is regarded as a representative assessee and it is open to the Income-tax Officer to assess the beneficiary directly or to assess the trustee. If the Income-tax Officer decides to assess the representative assessee, then tax has to 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. As stated earlier, in this case, the Income-tax Officer had opted for direct assessment (on the beneficiary). Therefore, while determining the total income of the assessee, income falling under all the heads, including capital gains, was required to be considered. If the loss suffered in the value of the shares of Sayaji Mills Limited as a result of issuance of right shares was not taken into consideration, then that would not have reflected correctly the total income of the assessee. As the position under the Income-tax Act is slightly different from the general law, the contention that the beneficiary would be entitled only to the benefits of the trust and not to the losses suffered by the trust cannot be accepted. We are, therefore, of the opinion that the Tribunal was right in rejecting the Revenue's contention and dismissing the appeal. 7. In the result, questions Nos. 1 and 2 are answered in the affirmative and against the Revenue. Consequently, the income-tax application filed by the Revenue will have to be dismissed. Rule is discharged with no order as to costs.