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5. Jayesh & Karsanbhai Oral Disc. Family Trust.
6. Sanjay & Karsanbhai Oral Disc. Family Trust.
7. J.H. & K.K. Oral Disc. Family Trust
8. S.H. & K.K. Oral Disc. Family Trust
9. J. Patel & K. Patel Oral Disc. Family Trust
10. S. Patel & K. Patel Oral Disc. Family Trust
11. Jayesh Karsanbhai & Shantaben Oral Disc. Family Trust
12. Sanjay, Karsanbhai & Shantaben Oral Disc. Family Trust There are three individual beneficiaries in each trust, Shri Karsanbhai K. Patel is a common beneficiary in all the trusts with two minors of the family in different combinations. Further, each trust has three trustees and the trustees in each trust included Shri Karsanbhai K. Patel and/or his wife Smt. Shantaben.

(iv) The Hon'ble Accountant Member has recorded his findings and conclusions in para-12 and 13 of his order, the relevant extracts therefrom are reproduced hereunder 51 TTJ at p. 322 to 324 :

"12. I would now examine and consider the question of applicability of provisions of s. 164(1) to the income receivable for and on behalf of various categories of beneficiaries.

(c) There are six oral discretionary family trusts and these trusts were formed on 28th December, 1979, i.e. three days before the formation of the assessee trust. The beneficiaries of each of these six oral discretionary family trusts are two oral discretionary trusts formed on 9th December, 1979. Each of these two oral discretionary trusts formed on 9th December, 1979 has three individual beneficiaries. There are thus 12 individuals who have been grouped in combinations of three each. Out of these 10 individuals, 2 are major and the remaining 8 are minors. Both major beneficiaries Shri Karsanbhai and his wife Smt. Shantaben are among the individual beneficiaries of the assessee trust and Shri Karsanbhai is also one of the trustees of the assessee trust. The substance of the trust deed would show that the settlor intended benefit to pass to the said 10 ultimate individual beneficiaries through the said 6 oral discretionary trusts of 28th December, 1979 and then 12 discretionary trusts of 9th December, 1979. The income receivable for and on behalf of the said 6 oral discretionary trusts was allocated to them as per the share ratio provided in the trust deed. The said 6 oral discretionary trusts did not further distribute the income to the beneficiaries so as to reach the ultimate individual beneficiaries. Those 6 oral discretionary trusts, however, filed returns through their trustees and paid tax at the appropriate rate availing the benefit of proviso (i) to s. 164(1) instead of paying the tax at maximum marginal rate under s. 164(1). The said 12 oral discretionary trusts formed on 9th December, 1979 have no other income to benefit the ultimate 10 individual beneficiaries. It so appears that the very object of forming the said 12 oral discretionary trusts on 9th December, 1979 was to enable the said 6 oral discretionary trusts to pay tax at appropriate rate instead of maximum marginal rate by availing concession as per proviso (i) to s. 164(1) which provides that in case where none of the beneficiaries has any other income chargeable under the Act exceeding the maximum amount not chargeable to tax in the case of an AOP or is a beneficiary under any other trust, tax shall be charged on the relevant income or part of relevant income as if it were the total income of an AOP. Otherwise, the formation of said 12 oral discretionary trust had no other object or purpose to serve. The arrangement so made was thus sham or make-believe and not real and genuine for bona fide purpose. Such device was adopted only to reduce incidence of tax in the hands of said 6 oral discretionary trusts, i.e. the beneficiaries of the assessee-trust. Keeping these facts in view, the AO taxed the income receivable and allocated to the beneficiary oral discretionary trusts at maximum marginal rate under s. 164(1) of the IT Act.

4.1 As far as first category is concerned, there are seven individuals. Six of these individuals were partners in firm of Neo Detergent. The seventh individual is a minor who had been admitted to the benefit of said partnership. As far as oral discretionary trusts are concerned they are oral trusts created on or about 28th December, 1979 mentioned above. Each of these trusts, as already stated, has two beneficiaries and those two beneficiaries are by themselves oral discretionary trusts and beneficiaries of the subsequently mentioned oral trusts are three individuals. As far as third category is concerned, it consists one oral specific trust known as V. G. Zala Oral Specific Family Trust of which there are three beneficiaries.

13.1 The clause in the trust deed relating to these beneficiaries is very important. That clause is cl. III(b)(ii) which is as follows :
`It is hereby agreed and declared between the parties to this deed of trust that the trustees shall stand possessed of the 28.5% balance of the income which shall be divided and receivable for and on behalf of and for the benefit of the trusts mentioned as beneficiaries in the Sch. II herein attached to this trust deed, and shall be divided as per shares specified against each of the said beneficiaries mentioned herein in the said Sch. II herein attached, but it is specifically made known that the beneficiaries of the said trusts shall have no right, title or interest either vested or contingent in the said income up to the period mentioned in this clause and, therefore, it is specifically provided and made known that the said income which is receivable for and on behalf of the said trusts which are beneficiaries, is to be accumulated and not to be paid to the each of the said beneficiaries of the said trusts and shall be forming part of the corpus of and for and on behalf of each of the said trusts upto the period of 19 years from the date of this presents.' From the above clause it is clear that the beneficiaries of these oral specific deferred trusts have no right, title or interest either vested or contingent in the income of the assessee-trust upto the period of 19 years and that the said income was liable to be accumulated and was not liable to be paid to the beneficiaries and that the income was to form part of the corpus of those trusts. From this provision it is clear that the said income is not receivable by the assessee-trust for and on behalf and for the benefit of any individual. That income was liable to be given by the assessee-trust towards the corpus of those trusts. The assessment order of one of the beneficiaries in these oral specific deferred trusts is on record at page 149 of the paper book and the said assessee has not shown income receivable from the assessee-trust. It is clear that all the parties have construed this clause as stating that the said income would not accrue to those oral specific deferred trusts for 19 years. In these circumstances the provisions of s. 164(1) would be clearly attracted in respect to this income and maximum marginal rate would be liable to be paid. We may mention here that there is identical clause in the constitution of these oral specific deferred trusts. Normally assessee should not have been concerned with the question as to how the trustees of these oral specific deferred trusts would distribute the income to the beneficiaries. However, as specific clause has been inserted in the trust deed of the assessee-trust to the effect that the beneficiaries of those oral specific deferred trusts would have not right, title or interest, either vested or contingent in said income and that the said income would be accumulated and would form part of the corpus of those trusts. The real beneficiaries in Sch. II are the beneficiaries of the oral specific deferred trusts. The trusts of oral specific deferred trusts are not the real beneficiaries. Since the real beneficiaries have not right, title or interest in respect of the said income, it cannot be said that the said income was receivable for and on behalf and for the benefit of any person in the relevant accounting year. Consequently, the tax at maximum marginal rate was liable to charged under s. 164(1) of the Act in respect of that income.