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2. After its creation, the so-called trust entered into contribution assignment through offer document dated 27.12.2007 for the sole purpose of taking NPAs for sale at a profit. Such entity can at best be classified as an AOP created jointly by several person s for earning profits.

3. Capital contribution is a revocable transfer by the transferors, but the income arising out of the activities of the fund is an ascertained income and the contributors have no control over it, and in the strict sense of the terms, the provisions of Sections 61 & 63 of the Act are not applicable to the assessee's case.

8.5 In this regard, I find that the reliance of the appellant on the decision of the Bangalore ITAT in DCIT vs India Advantage Fund-VII (supra) is in order. Considering the totality of the facts and the circumstances of the issue involved, it is held that the appellant Trust is a valid Trust."

We have given a thoughtful consideration to the aforesaid observations of the CIT(A), and find ourselves to be in agreement with the view therein taken by him. As observed by the CIT(A), as per Sec. 9 of the Indian Trust Act, 1882, there is no prohibition on the settlor in becoming a beneficiary of the trust. In fact, as provided in Sec. 9 of the Indian Trust Act, 1882, every person capable of holding property may be a beneficiary of the trust. Further, as per Sec. 7 of the Indian Trust Act, 1882, any person competent to contract can become a settlor of the trust. In the backdrop of our aforesaid observations we concur with the CIT(A) that the observations of the A.O that the assessee trust was not a valid trust, for the reason, that its contributors and beneficiaries were the same, clearly militates ITO, 21(3)(2) Vs. Scheme A1 of ARCIL CPS 002 XI Trust 13 against the express provisions of the Indian Trust Act, 1882, and thus, cannot be accepted. As a matter of fact, we find that as observed by the CIT(A), all the necessary ingredients for the formation and existence of the trust had been fulfilled, and the RBI guidelines had duly been followed by the assessee trust. Interestingly, we find that in case the claim of the A.O that the assessee is not a valid trust and its creation was only a façade for evasion of taxes was to be accepted, then it would be imply that the trust does not exist at all. If that be so, then we concur with the CIT(A) that there would be no legal sanction to treat the trust as an AOP, as had been advocated by the A.O. Under such a situation, the only transaction that would subsist will be the direct investment by the beneficiaries in the financial assets, and therefore, the question of assessing the assessee trust as an AOP or under any other head of income would be totally out of question. Accordingly, in the backdrop of our aforesaid observations, we are of the considered view that the CIT(A) had rightly dislodged the aforesaid view of the A.O, and in the totality of the facts had correctly observed that the assessee is a valid trust.

"10.3 Upon careful consideration of the facts on record and various judicial decisions, I find that a common purpose or a common action is the core strength and foundation for an AOP to come into existence with the sole objective to earn common income and profit. The Ld. AR has pointed out that there is nothing on record to suggest that the beneficiaries have agreed for any common objective. The beneficiaries do not have any c o n t r o l o n t h e activities carried on by the trustee in managing the trust. The beneficiaries make investment based on the offer documents and on the basis of the investment made in the trust, they are allotted the SRs which represented the undivided and proportionate interest of the investors in the corpus of the trust. On the other hand, the AO opined that the motive behind creation of the trust is income-earning asset reconstruction activity and to handle NPAs. However, how this inference of motive akin t o f orm at i on of A OP has n ot b ee n el ab or at e d i n t h e ass essm ent or de r. Up on examination of the documents before the undersigned, I find that the two beneficiaries have made investments based on the offer document separately and not together and t he y are al l ott ed t he S ecuri t y Recei pt s (S Rs ) represent i ng t he undi vi ded and proportionate interest of the investors in the corpus of the trust. The AO has not brought on record any material which remotely suggest that a concerted effort has been made by the beneficiaries to earn income jointly. Hence, the action of the AO in treating the appellant trust as an AOP is unsubstantiated and without any basis. Even otherwise, since it is already held in the preceding paragraphs that the appellant trust is a valid trust, the debate regarding treating the appellant as AOP does not survive."

We have given a thoughtful consideration to the observations of the lower authorities in context of the aforesaid issue under consideration before us. Admittedly, the meaning of an "Association of Persons" (for short "AOP") had witnessed a change, vide the Finance Act, 2002 w.e.f. 01.04.2002. As per the amended definition of the term AOP as contemplated in Sec. 2(31)(v) of the Act, the requirement as was earlier laid down by the Hon‟ble Supreme Court in its various judgments that the various person as per their volition should have associated with the object of deriving income, profits or gains, had been ITO, 21(3)(2) Vs. Scheme A1 of ARCIL CPS 002 XI Trust 20 dispensed with by the legislature, vide the "Explanation" to Sec. 2(31) of the Act, as had been made available on the statute vide the Finance Act, 2002, w.e.f 01.04.2002. As per the "Explanation" to Sec. 2(31) of the Act, an AOP shall be deemed to be in existence, whether or not it was formed or established with the object of deriving income, profits or gains. However, in the case before us, we find, that the CIT(A) had rightly observed that there is nothing on record which would suggest that the beneficiary had agreed to associate for any common objective. In fact, the beneficiaries who do not have any control over the activities carried on by the trustee in managing the trust, had made their respective investments based on the offer documents, and on the basis of their investments made in the trust were allotted the SRs which represented their undivided and proportionate interest in the corpus of the trust. We are unable to comprehend as to on what basis the A.O had concluded that the motive behind creation of the trust was the income earning asset reconstruction activity and handling of NPAs. On a perusal of the records, we find that the two beneficiaries viz. (i) ARCIL; and