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3. In IT Appeal No. 1277 (Hyd.) 1983 we are concerned with K.V.R. Family Trust, Kakinada. Copy of the trust deed is furnished from pages 1 to 22 of the first paper book filed on behalf of the assessee. One Smt. Chundru Bulliammai alias Sathomma wife of Sri Venkanna, belonging to Machavaram village, Ramachandra-puram Taluk was the settlor and the author of the trust She settled a sum of Rs. 10,000 for the benefit of Sri K. Veerraju Choudhary son of Sri Narayanamurthy of Kakinda. The appointed trustee is one Smt. Kantipudi Sitaratnam wife of Sri Veerraju Choudary of Kakinada. That means the trustee is none other than the wife of the beneficiary. According to Clause 4 of trust deed the trust moneys can be invested in shares, stocks, securities and other investments in business, purchase of properties and the income thereof together with the trust fund should be aggregated or accumulated for a period of 10 years and after the expiry of 10 years from the date of trust deed the income of the trust fund will be applied for the benefit of the beneficiary. The accumulation shall not exceed the period of 10 years or the death of the settlor whichever is longer. Before the expiration of the period of determination of trust if the beneficiary dies then the heirs of the beneficiary or beneficiaries other than the settlor shall be treated as equal beneficiary under the trust. Even in such a case the income of the trust be accumulated and should not be applied for any beneficiary or beneficiaries and thereafter i.e. after the expiration of the trust period the same shall be handed over to the beneficiary. Under clause 6 the trust was stated to be irrevocable and no part of the trust fund shall be paid or applied for the benefit of the settlor. Clause 7 releases the trustee from the obligation to invest the trust moneys only in the recognised investments but allows her to invest the moneys in purchase of immovable properties or in development thereof, in purchase of stocks, funds, shares and securities of any company or corporation, in making loans or deposits with any person, firm, company or corporation, in purchase of any movable property etc. Clauses 3 and 4 of the trust deed signify what the trust fund should consist of. Clause 3 states that the trust funds are consisted of not only the sum settled viz., Rs. 10,000 but all additions to the trust fund and all income arising thereof upon the trust. Clause 4 appears to be more specific and the relevant portion reads as follows :

It is an undisputed fact that none of the subsequent settlors executed a trust deed of his own in favour of the beneficiaries. It is also not the case of the settlors that any of the trustee or trustees after receiving the gift money from the settlors made a statement in writing under their signature or signatures set out the purpose or purposes of the trust, particulars of the trustee or trustees, the beneficiary or beneficiaries and the trust property within three months from 1-6-1981 or within three months from the declaration of deed of trust. Explanation 2 under Section 160 defines what an oral trust is. According to its terms an oral trust means a trust which is not declared by a duly executed instrument in writing and which is not deemed under Explanation 1 to be a trust declared by a duly executed instrument in writing. Therefore it can be seen that if the trustee leaves a statement in writing containing the particulars stated in Explanation 1 to Section 160 then though there is no formal deed of trust the declaration so left with the Income-tax Officer within three months from 1-6-1981 or from the date of duly executed trust deed would itself be considered to be a trust and all such cases should be taken to be a trust and declared a duly executed instrument. If such a, procedure is not followed but at if a settlor makes a gift to a beneficiary under an existing trust then it would be considered to be an oral trust not declared by a duly executed instrument in writing under Explanation 2 to Section 160(1) and the income thereon should be charged with maximum marginal rate under Section 164(1).

10. Now we have to see whether this finding of the learned Commissioner is tenable on a consideration of facts and circumstances of the case. It is argued by Sri B. Satyanarayana Moorthy, the learned counsel for the assessee that this is not an oral trust and this is a trust made by each of the settlors enumerated in the three lists noted in the order above. They made the gifts to the respective trusts after fully knowing the terms of those respective trust deeds and also the beneficiaries of the respective trusts. He submitted that the settlors not only made the gifts but also submitted the gift-tax returns shown against each one of their names in the three tables above. Except in the case of one or two persons the Gift-tax Officer completed their assessments also. The assessment orders and the statements that were filed along with the G.T. returns by each and every settlor who made the gifts to the three trusts which are subject matters before us are filed in the second paper book in each of the three appeals before us. As the statements are all stereotyped it is enough if we extract one of such statements. For instance the statement of Ch. Amanna son of Narayya of Kakinada may be extracted as under:

The Kakinada Income-tax Circle II Officer-

Respected Sir, I have gifted Rs. 10,000 (Rupees ten thousand only) on 2-3-1981 to Sitharatnam Family Trust, Kakinada. I have secured the amounts from out of my agricultural income. I have possessed 4.64 acres agricultural lands in Machavaram village. From out the amounts realised from agricultural lands the above said gift was made by me. I have also filed G.T. return. What all I have stated above is true.

The order would become unwieldy if we have to extract the statements sent along with their gift-tax returns by each and every one of the settlors on the three trusts. As can be readily seen from the above statement the gift is made to the trust. Admittedly the gifted amount was handed over to the trustee of the respective trusts to whom each settlor wanted to make a gift. The very fact that the statement extracted above is clear and unambiguous and similar statements were made by each and every settlor and each and every G.T. return was accompanied by such statement and the very fact that their G.T. returns were accepted and G.T. assessments were made against them (except one or two persons whose assessments are said to be still pending) would go to establish the fact that each settlor must be knowing the contents of the trust deed, the trustees appointed thereunder, the beneficiaries under each of the trust deed and every other particular concerning the trust to which each of them was making a gift. We can understand the argument of the revenue if a gift of an amount is made to the beneficiary named under the trust without naming the trust in the statement. But that is not the case here. The statement would clearly show that each of the settlor wanted to settle the amount on the beneficiary in terms of the trust he mentions in his statement accompanying his gift-tax return. In such a case the trust cannot be said to be an oral trust and the same terms and stipulations of the trust deeds would govern the disposal of the gifted amounts also. The gifted amounts according to Sri B. Satyanarayanamurthy would form part of the corpus of the trust. There are instances where the Hon'ble Supreme Court as well as the Andhra Pradesh High Court held that when additional amounts were gifted to the already existing trust evidenced by written instrument then the gifted amount should be considered to be governed by the same terms and stipulations as found in the written trust deeds. He had cited before us two decisions--the first being Sardar Bahadur S. Indra Singh Trust v. CIT [1971] 82 ITR 561. In the case before the Supreme Court the assessee is a charitable trust constituted under a trust deed dated 19-12-1944 supplemented by another trust deed dated 16-1-1951. The object of the trust deed is stated to be advancement of learning and education, amelioration of the sufferings of all citizens of Indian Union irrespective of caste, colour or creed for maintaining library or libraries for the free use of the public in general etc. etc. Sardar Ajaib Singh is one of the trustees. The assessment year in appeal is 1960-61 for which the previous year ended on 31-3-1960. On 23-1-1959 Sardar Ajaib Singh transferred 640 fully-paid up equity shares of the face value of Rs. 6,40,000 to the assessee-trust. He reserved to himself the right to revoke or recall the transfer of either the entire 640 shares or any portion thereof but not until the expiry of clear full seven years from the date of the delivery of the shares to the trust. The trust by their letter dated 1-2-1959 accepted the offer and also the terms and conditions upon which the offer had been made and ratified the same by their resolution dated 5-2-1959 and March 4, 1959. Therefore shares were transferred and given delivery of to the trustees. In the accounting year in question a dividend amounting to Rs. 1,28,000 accrued on which tax was deducted at source. The assessee trust claimed that the said income was exempt from the payment of income-tax. The Income-tax Officer refused the refund on the ground that the trust deed under which the trust was formed did not contain any provision for receipt of donations or gifts from outsiders and therefore the gift was not a valid gift. The Hon'ble Supreme Court after having appreciated the facts on record gave their decision as follows at page 566 :