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(1) The trust is a specific trust wherein the above persons as beneficiaries had definite share of interest in the trust in the income as well as in the corpus--under the deed of trust dated 9-11-1977.

(2) On 19-10-1981 the beneficiaries have assigned and transferred their property interest under the trust to the assignees mentioned above.

This is in accordance with Section 58 of the Indian Trusts Act, 1882 which reads as under :

The beneficiary, if competent to contract, may transfer his interest, but subject to the law for the time being in force as to the circumstances and extent in and to which he may dispose of such interest:

8. After considering the submissions made on behalf of the assessee, the Commissioner was of the view that the Explanation to Section 164 was clearly attracted in the assessea's case and that the ITO erred in not assessing the assessee-trust as discretionary trust. He, therefore, directed the ITO to revise the order of assessment by assessing the trust as discretionary trust and determine the amount of tax payable by it as such.

9. Being aggrieved by the order of the Commissioner, the assessee has come up in appeal before the Tribunal. The learned counsel for the assessee vehemently argued that the Commissioner was not justified in holding that the provisions of the Explanation to Section 164 were attracted in the case of the assessee. In this connection, he submitted since all along in the past, the assessee-trust was treated as 'specific trust', the Explanation to Section 164 cannot be invoked as the provisions of the main Section of 164 are not applicable in the case of the assessee. Thereafter inviting our attention to [1980] 123 ITR (St.) 18, [1981] 131 ITR (St.) 158 and [1981] 131 ITR (St.) 35-36, the learned counsel for the assessee wanted to impress upon us that the Commissioner had failed to appreciate the purpose of insertion of the Explanation in Section 164. According to the learned counsel for the assessee, prior to the said insertion, the discretionary trust used to become 'specific trust' by passing appropriate resolutions with a view to modify the provisions of the trust. However, after the insertion of the said Explanation, this mischief was 'plugged'. Since, in the instant case even prior to the insertion of the said Explanation the assessee-trust was never held to be a discretionary trust, the provisions of the Explanation to Section 164 have been wrongly applied by the Commissioner. In this connection, he further submitted that if we were to ignore the deed of assignment executed by the aforesaid five beneficiaries then the terms and conditions of the original trust would be restored and in that case the assessee-trust would still be 'specific trust'. In other words, the learned counsel for the assessee wanted to impress upon us that by taking action under Section 263, the Commissioner has started an exercise in futility. Thereafter, the learned counsel for the assessee invited our attention to Sections 3, 8 and 58 of the Indian Trusts Act, 1882, to urge that the beneficiaries under the trust are competent to transfer their interest to whomsoever they desire. In this connection he relied on the decisions of the Hon'ble Supreme Court in the case of CIT v. Smt. Kasturbai Walchand Trust [1967] 63 ITR 656 and CIT v. Nawab Mir Barkat Ali Khan Bahadur [1974] 97 ITR 246. He, however, hastened to state that this action of the beneficiaries would not in any way convert the desire of the settlor as on their own volition they have assigned their interest to the named assignees. In this view of the matter, he submitted that since not applicable of the main Section 164 were to be applied in the instant case, the Commissioner has wrongly passed his order under Section 263, keeping in mind the Explanation inserted in the said Section from 1-4-1980. He, therefore, urged that the order of the Commissioner should be set aside.