JYOTENDRASINHJI Vs. S I TRIPATHI

JUDGEMENT

(1.) These appeals are preferred against the orders of the Settlement Commission dated March 31, 1989 in pursuance of the offers of settlement made by the appellant. Civil Appeals 1301-07 of 1991 relate to the assessment years 1964-65 to 1970-71 while Civil Appeals 1288-1300 of 1991 relate to the assessment years 1970-71 to 1982-83. Under its orders, the Settlement Commission computed the taxable income of the appellant's father (who died on August 22, 1969) and of the appellant for the aforesaid assessment years and gave certain directions, applying which the I.T.O. was directed to compute the total income for each of the said assessment years and raise demand for the tax due. The main issue in all these matters is the assessability of income from five foreign trusts created by the appellant's father, Sri Vikramsinhjl.

(2.) Sri Vikramsinhji, Ex-ruler of Gondal executed three deeds of settlements (trusts deeds) in the United States of America on December 19, 1963 and two deeds in the United Kingdom on January 1, 1964. The three settlements executed in U.S. are in identical terms. Similarly, the two settlements, executed in U.K. are similar. The two sets of settlements, however, differ from each other in certain pariculars, though both the sets are meant for the benefit of the settlor and the members of his family. We may refer to the relevant clauses in the settlements executed in U.S. in the first instance.

(3.) Under the U.S. settlements,. The National City Bank, New York is constituted the sole trustee. The trust is created for the benefit of the grantor/settlor, his wife and children and their spouses (referred to as family members) and their descendants. The trustee is empowered to collect the income from the trust properties and to apply the same among the family members and /or their descendants in such manner as he thinks appropriate. He is also authorised to terminate the trusts for any reason (including tax reasons) and to transfer, convey and pay off the property held thereunder to any person or persons then eligible to receive the income of the trusts. On such termination, the entire assets in the hands of the trustee are to be paid over to the then Maharaja (Ruler) or to his living male descendants in equal shares per stirpes. The clause which is relevant herein, which according to the Revenue, makes the trusts revocable ones - we may refer to it as para 1 (2) for the sake of convenience - reads thus: