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7. Referring to the provisions of Section 3 of the Trusts Act the ld AO held that :-

"10.5.2"It is again reiterated that the basic point is missed by the assessee. The issue is not having sole beneficiary but the issue is having settlor as sole beneficiary."

10.5.3.1 "This provision requires that the creation of Trust is reposing of confidence or in other words it is an obligation arising out of confidence reposed by the settlor -owner of a property in the person to whom the properties are entrusted for the benefit of another."

ii. That the appellant trust had been created in violation of the provisions of Section 3 of the Indian Trusts Act, 1882 whereby the settlor and the sole beneficiary were the same i.e. EL.
iii. From the examination of the facts and discussion vis-a-vis the statements of the trustees it appeared that they had not exercised any discretion or independence in the management of the trust and their existence was notional and not in the real sense. Further it was EL which was funtioning as the real trustee combining in itself the role of the settlor, trustee and the sole beneficiary.
2[***] (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.

18. Firstly, we come to the issue who is the settlor of the trust , who is the trustee and who is the beneficiary. Importantly the ld AO has examined the trustee and he found that trustees do not have much idea about the functioning of the trust. They do not have real property in the hands of those trustees. It is interesting to note that in Para no 6 at page no 59 of Page | 37 63 of the assessment order, the ld AO himself has stated that Shri S A Dave , who is the trustee of this trust was the highest shareholder of the company M/s Escorts Limited having 37300031 shares along with Shri Pritam singh Jointly. Therefore, it is apparent that trust is highest holder of shares of Escorts Limited in the name of trustees. Thus there was no real property in the name of the assessee trust is devoid of any merit. The shares are always registered in the name of the trustees and not in the name of trust. There I always a declaration u/s 187Cof the companies act if it held in the name of the beneficiaries. Therefore, naturally the share cannot be in the name of the trust. Even otherwise, they are shows in the financial of the assessee and dividend income received therefore is shown as income. No doubt assessee being professional directors of the group or are independent persons may not be knowing each and everything about the trust, but they are trustees, they have the responsibility assigned to them in the Indian trust act as well as other regulatory laws including Income tax. However, that does not mean that they should know each thing, howsoever small it may be. That is neither the responsibility cast up on them by general nor any specific law. Undoubtedly, the trust is belonging to Escorts Ltd , it is the settlor and it is the beneficiary. However, that does not mean that it is the trustee also. The ld AO has not brought on record any evidence to show that Escorts Limited is the trustee of the assessee. Therefore, the allegation of ld AO that Escorts Limited is also the trustee is devoid of any merit and based on mere conjectures and surmises. Further the sole beneficiary is Escorts Limited and Settlor r of the trustis Escorts Limited is the major reason why the ld AO is refusing to recognize the above trust. Honorable Gujarat High court has answered it in BHAVNA NALINKANT NANAVATI vs. COMMISSIONER OF GIFT TAX (2002) 70 CCH 0059 Guj HC (2002) 174 CTR 0152, (2002) 255 ITR 0529 where the settlor was also the sole beneficiary was held to be a valid trust. Revenue did not show us any bar in the trust act where the settlor cannot be beneficiary of that trust. I Assessee alsosubmitted identical structures in case of Mahartana Companies, which were not found be Page | 38 violating Trust Act. Therefore, we do not find any infirmity in the Escorts Limited being the settlor and sole beneficiary of the trust.

29. Taking up Ground No. 6 which encompasses two issues (1) conclusions drawn from the statements of the trustees recorded u/s 131 of the Act and (2) allegation of tax evasion thus creation of the trust being a "colorable device".We must observe at the outset that both the AO and the Ld. CIT(A) have stressed more on the statements of the trustees to draw adverse inferences, basing these on surmises and conjectures rather than reality. The ld AO has held that trustees do not know the object and purposes of the trust or other minute facts about the operation of the trust. This issue has already been discussed us , therefore does not Page | 44 deserves repletion. The ld AO has picked up 'words and phrases" from the statements rather than considering them as a whole. The ld AO totally ignored that the trustee have attended the meetings, holding the property and have fulfilled their duties as the trustees. Coming to the statements, recorded Shri S.A. Dave was an ex-trustee aged above 80 years, having no relationship with EL or the appellant trust for a last 3 years. He was not allowed access to his papers as requested by him to answer the questions and it was but natural that some of the answers were likely to be incoherent because of age and reduction in the ability to remember dates and events.However, that does not go against the assessee trust or the trustees. The ld AO has also not put any evidences on record that even remotely suggest that assessee trust is run by the Settlor and beneficiary as trustee. As regards the statement of Mr. G. B. Mathur he was appointed as a trustee w.e.f. 2nd September 2014 and he deposed in that capacity and not as a witness. He rightly answered that everything pertaining to the trusts had been completed before he became a trustee. The questions to him as in the case of Shri Dave & Shri Ajay Sharma generally related to the trusts other than the appellant trust, the former being created by amalgamating companies with which Mr. Mathur had no relationship.It is also observed and specifically adverted to by the Ld. Counsel that when the statement of Mr. Mathur was recorded on 21.12.2018, the statement of Shri Dave was already available having been recorded on 19.12.2018 The said statement was not confronted to Mr. Mathur but who thereafter was faulted for misleading the department with a false statement vis-à-vis certain averments made by Shri Dave resulting in consequences as extreme as prosecution.Considering the facts before us and the legal position connected thereto, the statement of Shri Dave as far as it implicates Mr. Mathur is required to be ignored.Adverting to the view expressed by the AO and the Ld. CIT(A) that the trustees have acted on a "notional basis" and that the real trustee is EL along with being the settlor and the sole beneficiary, at the outset , we hold that the appellant trust was formed with the sole object of holding the shares of EL on behalf of the sole beneficiary i.e. EL. The single pay Page | 45 out on account of dividend was directly credited to the bank account of the trust and by the same mode paid over to the sole beneficiary. In other words other than bank charges and audit fee, there was no likelihood of any other expenditure being incurred such as the one contemplated by the Ld. CIT(A) in Para 10.2.8 of his order. The same logic would apply to the non-existence of any other asset and in our opinion the allegation that the facilities of M/s EL have been utilized, is an assumption, there being no legal basis for an adverse view on the common address of the appellant trust and M/s EL.