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(J) bank records bearing declarations by authorized signatories, including directors, for purposes of anti-money laundering and ancillary compliances, do not confer 'beneficial ownership' or status of 'beneficiary' to sums lying to the credit of bank accounts, within the meaning of s.139(1) Explanations 4 & 5 of the Act;

(K) bank statements and other documents, including purported letters, have at no time been received by the Assessee, and as such are matters beyond the knowledge of the Assessee and not liable to be explained by the Assessee, but in any event, there is adequate material on record in relation to revocation of the Trust settlement, including prompt steps adopted by the Settlor to induct his son Mr. ITA NOs. 6720, 6721, 6722 & 6723/MUM/2018 Shri Vilas Waman Katre Nirav Haji Sarabhai, also a non-resident and citizen of Singapore, as beneficial owner of the Trust Vehicle jointly with Mr. Haji Dilip Sarabhai [Paper Book @ page 253]. Among diverse documents constituting record of revocation of the Trust by Mr. Haji Dilip Sarabhai, acting in his capacity as Settlor, are the letter of Share Corp dated 6 February 2012 to Mr. Haji Dilip Sarabhai confirming it holds shares in the Trust Vehicle on behalf of Mr. Haji Dilip Sarabhai [Paper Book @ page 250], a Board Resolution dated 6 February 2012 of the Trust Vehicle recording that Mr. Haji Dilip Sarabhai is authorized signatory of the bank account [Paper Book @ page 251], a subsequent letter dated 13 February 2012 recording joint beneficial ownership of both Mr. Haji Dilip Sarabhai and his son Mr. Nirav Haji [Paper Book @ page 253], followed by a Board Resolution dated 13 April 2012 recording the name of Nirav Dilip Haji Sarabhai to be added as co-signatory, with grant of authority to both Mr. Haji Dilip Sarabhai and Mr. Nirav Dilip Haji Sarabhai to operate the bank account of the Trust Vehicle [Paper Book @ page 252], all of which conclusively establish cessation of the Assessee's limited and circumscribed role of trustee of the revocable discretionary oral trust settlement of Mr. Haji Dilip Sarabhai.

7. Cohesive reading of the statutory framework of the Act, with sections 3, 77 & 78 of the Indian Trusts Act, 1882 establishes that:

(i) trusts, oral and written, are contemplated in Indian law; (ii) statutory lines of distinction existing among settlor, trustee and beneficiary, are incapable of being blurred- each are distinct offices/capacities, with corollary rights and obligations; (iii) power for revocation of trusts are capable of being reserved at the discretion of the settlor; (iv) a trustee can have, at best, legal ownership, but no beneficial ownership in relation to assets of the trust, unless the trustee were among the nominated class of beneficiaries in a specific trust (distinct from the framework of a discretionary trust); and, (v) upon the exercise of power of revocation in relation to a Trust, the trust stands extinguished. The position of law that a trust creates separation of legal ownership from that of beneficial ownership, is enunciated in Yasmin Properties (P.) Ltd. v. ACIT [1993] 46 ITD 331 (Bombay) [Para 9] & in Suleman Isubji Dadabhai v.

Naranbhai Dahyabhai Patel 1979 SCC OnLine Guj 43 / AIR 1980 Guj 165 [Para 12]; a fiduciary with narrow powers is not a ITA NOs. 6720, 6721, 6722 & 6723/MUM/2018 Shri Vilas Waman Katre beneficial owner, is laid down in HSBC Bank (Mauritius) Ltd. v. DCIT (Int. Tax) (2017) 78 taxmann.com 174 (Mum Trib.) [Para 9].

8. Legal rights, powers, duties and obligations of a Trustee may be determined from the framework of the Indian Trusts Act, 1882, absent evidence of foreign law to the contrary, based on the judgment of the jurisdictional High Court in Malaysian International Trading Corpn. v. Mega Safe Deposit Vaults (P) Ltd. (2006) 68 SCL 52 (Bom) (Para 23). While the Act specifically recognizes the existence of oral trusts within the framework of s.160(1)(v) read with s.164A, as indeed does the Indian Trusts Act, 1882 (s.78). In the absence of assets or income of the offshore trust structure in India, the Assessee had no obligation, in the capacity of trustee, to maintain books of accounts of the Trust in India, much less to file a return of income in relation to the Trust under the Act. Offshore trust structures are governed by laws of incorporation, in this case, the laws of British Virgin Islands. In Yashovardhan Birla v. DCIT, Central Circle-4(1), WTA No.2 to 8/Mum/2020 (AYs 2007-08 to 2013-14, order dated 24.12.2020, Para 32), it has been held that offshore trusts / entities incorporated in offshore jurisdictions are liable to be taxed in their respective offshore jurisdictions, and as such, it must follow that the Trust Vehicle is liable to tax in the country of its incorporation.

19. At the same time, we observe that the Income Tax Act does acknowledges the existence of oral trusts within the framework of Section 160(1)(v) read with section 164A, as well as the Indian Trusts Act, 1882.

Offshore trust structures are governed by laws of incorporation of the respective countries in which they are incorporated, which in this case, are governed by the laws of British Virgin Islands. The coordinate Bench in the case of Yashovardhan Birla v. DCIT, Central Circle-4(1), WTA No.2 to 8/Mum/2020 (A.Ys 2007-08 to 2013-14, order dated 24.12.2020, Para 32), has held that offshore trusts / entities incorporated in offshore jurisdictions are liable to be taxed in their respective offshore jurisdictions. It therefore follows that the Trust Vehicle ITA NOs. 6720, 6721, 6722 & 6723/MUM/2018 Shri Vilas Waman Katre is liable to tax in the country of its incorporation. The relevant extract is reproduced below: