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(3) At any rate, with the death of the settlor, the U.S. trusts ceased to be revocable trusts, assuming that they were so during his lifetime.. So " far as the appellant is concerned, he cannot be taxed on the income received by him from the said trust. Only the trustee can be taxed. (4) So far as U.K trusts are concerned, the settlement commission has committee an error of law in holding that clause (3) could come into operation only if and when the settlor appointed the additional trustees as contemplated by it. In fact, the trust, had come into existence with the sole trustee (McGill) ;and it did not depend upon the appointment of additional trustees. Clause (3) prevails over clause (4). If so, the U.K. trusts/settlements are also discretionary trusts and not specific trusts as held by the Settlement Commission. In such a case again the assessment can be made only upon the trustees and not upon, the beneficiaries recipients..

That these trusts are discretionary trusts is not in controversy. The main question is whether Para 1(2), quoted hereinbefore, makes it a revocable trust within the meaning of Section 63? The said clause begins with a non-obstante clause, "anything hereinabove to the contrary. not withstanding' thereby giving it an overriding effect over what has been said in the earlier-recitals. It then says that "at any time and from time to time, the trustee shall transfer, convey and pay over any portion or of the income of the trust fund and any portion or of all the principal held in trust', to such member of the settlor's family 'as the trustee and a maharaja who shall have attained the age of 18 years shall at any time and from time to time appoint and direct in a written instrument which refers to and specifically exercise this power and which is duly executed by the Maharaja and the trustee then acting here-under.' In other words, the said clause empowers-the settlor/transferor and the trustee, acting together to direct the trustee, at any time, to pay over the entire income and/or entire corpus. or a pan thereof to such member of the settlor's family or their descendants as they may direct. The said power cannot be exercised by the settlor acting alone. The question is whether the said clause attracts Section 63? Section 63 defines the expressions 'transfer' and 'revocable transfer'. It says that for the purposes of Sections 60, 61 and 62, 'a transfer shall be deemed to be revocable if (i) it contains any provisions for the retransfer directly or indirectly of the whole or any part of the, income or assets to the transferor or (ii) it in any way gives the transferor a right to reassume power directly or indirectly over the whole or any part of the income or assets.' The expression "transfer" is defined to include any settlement, trust, covenant, agreement or arrangement. The expression 'family members' occurring in the aforesaid clause in the trust deeds is defined in the deeds to mean "the children of the grantor living from time to time, the wife or widow of the grantor, the spouse of any child of the grantor then living or deceased.' The "descendants of the family members' which expression also occurs in the aforesaid clause is defined 'in the deeds to mean "the descendants of the family members living from time to time during the trust term.' The contention of Sri Ashok Desai the learned counsel for the appellant is that Section 63 will be attracted 'only where the transferor is vested with the exclusive and/or absolute power to give direction of the nature contemplated therein and not where such a power has to be exercised by the transferor jointly with another person or with the concurrence or consent of another person. Indeed, he argues that the said power is really given to the trustee to be exercised in concert with the Settlor. We find it difficult to agree with the learned counsel. Firstly, the power, properly construed, is given to the settlor to be exercised together with the trustee and not to the trustee to be exercised together with the settlor. The trustee is anyhow vested with an absolute discretion to distribute the income of or the principal of the trust to such member of the family, as he thinks appropriate, under the clause preceding and paras following para 1(2). If so, there was no point in saving that he can, together with the settlor, be empowered to pay over part or whole, of income/principal to "such one or more members of a class composed of the family members living".It cannot also be forgotten that the trustee in this case is a Bank one of the largest in the U.S.A. and not an individual acquainted with the affairs of the settlor's family. Now coming to Section 63, it is equally not possible to agree with the learned counsel. Section 63 does not say that the power of revocation vesting in the transferor should be absolute or unconditional. As pointed out by Chagla, CJ. in Behramji Sorubji v. Commissioner of Income Tar, Bombay, (16 I.T.R. 301), "the only question that has got to be asked is whether the transfer is capable of being revoked by the assessee or not..... it may be that before the power is exercised, the consent of two beneficiaries might have to be taken but even so, although the revocation may be contingent or conditional, still the deed remains a revocable deed of trust." The same idea was reiterated by Tendulkar, J. in the said judgment, in the following words:

We find ourselves in agreement with the said opinions. Section 63 of the present Act corresponds to the proviso appended to Section 16(1)(c) of the 1922 Act. The first proviso read thus: "provided that for the purposes of this clause the- settlement, disposition or a transfer shall be deemed to be revocable if it contains any provision for the retransfer directly or indirectly of the income or assets to the settlor, disponer or transferor or in any way gives settlor, disponer or transferor a right to. reassume power directly or indirectly over the income or assets.' Section 63(1) also does not say that the deed of transfer must confer or vest an conditional or an exclusive-power in the transferor to give the power/direction of the nature contemplated by it., Accordingly, we hold that merely because the concurrence of the trustee had to be obtained by the transferor/settlor for giving the said direction, it cannot be said that the deed does not contain a; provision giving the transferor a; right to reassume power directly or indirectly over the whole or any part of income or assets within the meaning of Section 63(a)(ii)of the Act In this view of the matter, it is not necessary for us to refer to other decisions cited, before us in any detail. The decision of this Court in commissioner,of Income Tax, Bombay City v. Ratilal Nathalal 25 I.T.R. 426- emphasises,that the power of revocation must be given to the settlor as settlor and not in any other capacity. In the deeds before us, the power is indisputably conferred upon the Settlor in the very same capacity and not in any different capacity. The other decision of this court in Sevantilal Maneklal v. C.I.T. 67 I.T.R. 1 is distinguishable for the, reason that the power of the settlor therein was merely to choose among the several objects of the trust and, therefore, it was held that it does not attract Section 63. On the other hand, Tarunendra Nath Tagore v. Commr. of Income Tax 33 I.T.R. 492 Calcutta was a case where the trust deed empowered the settlor to cause a re-transfer of the trust assets, in certain specified contingencies. The question was whether such a provision makes the transfer a revocable one within the meaning of the first proviso to Section 16(1)(c) of the 1922 Act. It was held that it does, notwithstanding the fact that the power had to be exercised only in certain specified contingencies. The decision of the Madras High Court in K Subramania Pillai v. Agricultural Income For Officer, Thukalay 53 I.T.R. 764 was also a case where the power of revocation was to be exercised in certain specified contingencies alone. Even so, it was held that it was a revocable settlement.

The first contention urged with respect to U.K. trusts is that the commission has wrongly construed clause (3) which we have extracted hereinbefore. Sri Desai argues that the trust had already come into existence with the appointment of the sole trustee, Mr. McGill, and that the coming into existence of the trust did not depend upon the appointment of additional trustees. The commission was wrong in holding that until and unless the additional trustees are appointed, the trust in clause (3) does not come into existence. Properly construed, says Sri 'Desai, clause (3) creates a discretionary trust. Inasmuch as the sub-clause does not prescribe any time limit within which the trustees must decide to distribute the income among the beneficiaries, says the counsel, clause (4) has, not and had never come into operation. In this case the trustees never did decide not to exercise their discretion under clause (3). If so, no income ever arose or accrued to the Settlor or the appellant under clause (4). If the trustees fail to exercise their discretion under clause (3), the only remedy for the beneficiaries is to approach the court to compel the trustees to exercise their discretion one way or the other, but they cannot say that the trust income has accrued to them. Clause (4) comes into operation, says the counsel, only where the trustees decide not to distribute the income among the specified beneficiaries; only then does the trust income belongs to and has to be paid over to the settlor and after the death of the settlor to his elder son, the appellant. Accordingly, the counsel says, the Commission was wrong in law in treating these trusts as specific trusts. in our opinion, however, the question urged is academic in the facts and circumstances of the case. As a matter of fact, both the settlor and the appellant have been receiving the income from these trusts during the several assessment years concerned herein. Sri Vikramsinhji had voluntarily included the entire income from the U.K. trusts in his income in the returns filed by him for the assessment years 1964-65 to 1969-70. It is unlikely that he would have so included unless he really received it. The Commission treated those declarations as proof of the settlor's real intention. The Commission also relied upon certain other circumstances including the manner in which the accounts of these trusts were maintained in support of their opinion that all concerned with the trusts, acted on the basis that the trust income was flowing to the settlor, and after his death to the appellant. The Commission also referred specifically to similar declarations made by the appellant in his returns. It referred to his statements made in the two returns filed for the assessment year 1970-71, one relating to the income received by his father till his death and the other with respect to the income received by him during the accounting year after the death of his father. Even subsequent to the death of Sri Vikramsinhji, the Commission pointed out, the appellant has been making similar declarations from time to time. For instance, in the letter dated March 3, 1975 written by the appellant to the I.T.O., A-Ward, Rajkot relating to the A.Y. 1972-73, he had stated, "as per statement of U.K. sent herewith, the trustees have arrived at income of 13,027 pounds for the benefit of Sri Jyotendrasinhji. According to our opinion, this income is not taxable as U.K. trust is discretionary. However, as it has been taken last, the income may be included in the hands of Sri Jyotendrasinhji subject to our appeal". It is significant to notice the ground of non- taxability put forward in the said letter. The appellant did not say that he did not receive the income. All he said was, since it is a discretionary trust, its income is not taxable in his hands. If he had not received the income, he would have put forward that fact in the forefront. But he did not. Similarly, in the return relating to the A.Y. 1973-74, a note was appended by the appellant to the following effect: