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11,82,238 52,17,812       1,23,19,117 The three settlements executed in the United States are on identical terms. Similarly, the two settlements executed in the UK are similar. Both the sets of settlements are meant for the benefit of the settlor and the members of his family. The settlor died on 22nd June, 1969. He was being assessed in the status of an 'individual' from the asst. yr, 1959-60 onwards. His son Shri Jyotindrasinhji, the assessee, filed settlement petitions before the Hon'ble Settlement Commission under the IT Act and also WT Act regarding the taxability of the income and assets of the aforesaid trusts for the asst. yrs. 1964-65 to 1970-71 in the hands of the settlor. Separate petitions were filed by the assessee regarding the taxability of the income of the assets of the aforesaid trusts for asst. yrs. 1970-71 to 1982-83. The Settlement Commission has decided the matter under the IT Act and returned the petition under the WT Act to the Department for appropriate action since the assessee did not cooperate with the Government valuer for valuation of the immovable properties. The Settlement Commission, has held that the US settlements are in the nature of discretionary trusts and they fall within the mischief of Section 63(a)(ii) of the IT Act, . 1961. For this reason, the whole of the income arising from the US trusts was liable to be included in the income of the settlor. According to the Settlement Commission, since the entire income from the US trusts has been received by the assessee after the death of the father, it constitutes his income and is liable to be assessed in his hands. So far as the UK trusts are concerned, the Settlement Commission held that these two trusts are specific trusts in view of operation of Clause 4 whereunder the entire income under the UK settlements flowed to the settlor during his lifetime and on his death, to his elder son, the assessee before us. The Settlement Commission further held that the entire income from the UK trusts was received by the settlor during his lifetime and after the settlor's death, by the assessee and, therefore, on this basis also, the said income is liable to be included in the total income of the settlor and after his death, the assessee before us.

6. Insofar as the three settlements executed in the US are concerned, the Hon'ble Supreme Court has held that the US trusts are revocable trusts and income from these trusts has been rightly included in the income of the settlor by virtue of Section 61 r/w Section 63 of the IT Act, 1961.

7. Regarding the two settlements executed in the UK the Hon'ble Supreme Court upheld the inclusion of the trusts income in the hands of the settlor on the ground that the settlor has himself admitted in the returns that the income belongs to him. So, with regard to the interpretation of the various clauses of the UK settlement, the Hon'ble Supreme Court has duly taken note of the reasoning and finding of the UK settlements, However, the Hon'ble Supreme Court, while approving the order of the Settlement Commission, has recorded no express finding regarding the interpretation of these two settlements.

(b) attains the age of eighteen years......."

It is not necessary to notice the other provisions/clauses of these deeds. During his lifetime, the settlor, Vikramsinhji, was including the whole of the income from these trusts in his returns of income just as he was doing in the case of the US trusts. The said income was also included in the two returns filed by his son (who is the assessee before us) for the asst. yr. 1970-71, However, the assessee took the stand before the Settlement Commission that the income from these trusts is not includible in his income and inclusion of such income in the returns submitted by his father for the asst. yrs. 1964-65 to 1969-70 and by him in the return relating to the asst. yr. 1970-71 was under a mistake. We have already indicated above that the Settlement Commission rejected the contentions of the assessee and held that in view of the default on the part of the settlor and thereafter by his son, the assessee, in appointing discretion exercisers who could exercise the discretion of disposing of the trust income, Clause 4 had come into operation and the income of the UK trusts accrued to the settlor during his lifetime and to his elder son, the assessee, after his death.

The Settlement Commission had analysed these crucial clauses vide paras 11.1 to 18.12 of its order dt. 31st March, 1989, in the case of late Shri Vikramsinhji. According to the Settlement Commission, Clause 3(2) gives the power of appointment of discretion exercisers to the Maharaja. As mentioned in the clauses, this appointment has to be "by any deed or deeds revocable or irrevocable". This discretion exercisers would have the discretion of selection of beneficiaries, their shares and conditions of making any grants to them. Now, it is an admitted position that neither the settlor Shri Vikramsinhji nor his son Shri Jyotindrasinhji who is the assessee before us, ever passed any order of appointment in writing in favour of the trustees. For default in the appointment of discretion exercisers, as provided in Clause 3(2) above, Clause 4 clearly comes into operation and the income of the trust would accrue to the settlor and after his death to his elder son. The interpretation placed by the Settlement Commission is, in our opinion, fully in consonance with the language used in the aforesaid clauses of the UK settlements. The learned counsel for the assessee has put forward the argument before us that no formal time-limit has been prescribed for appointment of discretion exercisers and, therefore, it cannot be said that the Maharaja i.e., the settlor or his elder son, the assessee, has committed any default. According to the learned counsel, there can be hundred and one reasons for the delay in the appointment of discretion exercisers inasmuch as the matter involves collection of considerable facts and material and detailed correspondence with the trustees as well as the Maharaja. We are not persuaded to accept the contention of the learned counsel. The UK settlements have been executed in January, 1964 and even after a lapse of about 38 years, no such appointment appears to have been made. There is not even an iota of evidence of any correspondence exchanged on the point between the trustees and the beneficiaries. There is nothing on record to show that the trustees have been engaged in any steps to ascertain any facts in this connection. To a specific query made by the Bench, the learned counsel expressed his inability to enlighten the Bench on the issue. The total inaction on the part of the Maharaja and the trustees in the matter of implementing the provisions of Clause (3) of the settlements, reproduced as above eloquently manifests the true intention of the settlor to treat the trust income and trust funds as his own. The settlor Shri Vikramsinhji had two sons, two daughters and several other members in his family who were all beneficiaries of the trust in question. If the trusts were really intended to be discretionary, the trustees had a duty cast on them to ascertain the relative needs and personal circumstances of all the beneficiaries and to allocate the income of the trusts among them from time to time according to the objects of the trusts. However, the tell-tale facts as indicated above bring out the intention of the settlor to treat the trust property as his own. The settlor and after his death his son, have been showing the income of foreign trusts in the returns of income filed from time to time. Had the trust deeds been really understood by the trustees and the beneficiaries as discretionary by virtue of the operation of Clause 3, one would have expected the state of affairs to have been different, In our considered view, the true intention of the settlor, as reflected in his subsequent conduct in treating the trust property as his own is clearly in conformity with the normal family traditions of princely families whereby trust property and income therefrom were to be treated as belonging to the Maharaja with the beneficiary and the family members not entitled to any share therein. Apart from the aforesaid facts, it deserves to be noted that the method and manner of maintaining records and accounts separately in respect of capital of the trust funds as well as income thereof further bring out the fact that the trustees were well aware about the requirements of Clause 4. The Settlement Commission has referred to these facts and pointed out that the assessee filed income appropriation account for the year ending 31st March, 1971, which separately indicated income and capital of the settlor Shri Vikramsinhji as well as his son Shri Jyotindrasinhji. The account reproduced at p. 66 of the order of the Settlement Commission in the case of late Shri Vikramsinhji clearly indicated that Clause 4 of the settlement deeds operated and income from UK trusts belonged to the settlor and after his death the income belonged to his elder son Shri Jyotindrasinhji, the assessee. Having regard to the aforesaid discussion, we are inclined to hold that due to failure on the part of the Maharaja to appoint discretion exercisers, as per Clause 3(2), Clause 4 has become operative and the UK trusts are, therefore, specific trusts. Accordingly, we respectfully concur with the express findings reached by the Hon'ble Settlement Commission regarding UK trusts being the specific trusts. The income from these trusts is, therefore, assessable in the hands of the assessee for the asst. yrs. 1984-85 to 1989-90 under appeal.