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M/s.Arcil Reconstruction Fund II Trust

b) During the year under consideration, the assessee has received income/(Loss) of Rs.4,67,65,656/- after claiming a total expenses of Rs.4,68,11,986/- on account of protection, preservation & insurance expenses and management fees from Such investment activity upon redemption of the principal amount of Security Receipts(SR).

c) As per trust deed, AARF I1 has been appointed as a Settlor as well as trustee also and beneficiaries in this rust are the various QIBS/persons who contributed funds in the trust and are also the beneficiaries.

d) The Indian Trusts Act, 1882 defines "Trust as an obligation annexed ownership of property and arising out o a confidence reposed in and accepted by the owner or declared and accepted by him, for the benefit of another or of another and the owner. The fundamental principle of a trust is that the Trustees of the Trust act in a fiduciary capacity for the benefit of the beneficiaries. In an ideal condition, trusts are created by a Settlor and the settlor ought to contribute its assets/property in the Trust called the trust property for the benefit of the persons, referred to as beneficiaries. Here, there is no trust property to which the trustee needs to manage. A trustee is appointed to manage the affairs or the trust.

e) In the case of a real trust, the three constituents i.e. Settlor, trustee and beneficiaries would never be the same persons. in the instant case, the settlor and the beneficiaries are the same and identical.

f) A Trust has three constituents 1.e Settlor, Contributor and Beneficiaries and all the three constituents are independent and distinct whereas in the present case contributors are also the beneficiaries themselves.

g) This so-Called Trust has been created for the sole motive to the benefit of the Settlor/contributor. Therefore, the plea made by the assessee that it is a trust completely erroneous.