B. P. Jeevan Reddy, J. - (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: "Anything hereinabove to the contrary notwithstanding, at any time and from time to time the Trustee shall transfer, convey and pay over any portion of the income of the trust fund and any portion or all of the principal held in trust to or to the use of such one or more members of a class composed of the Grantor, the wife or widow of the Grantor, the children of the Grantor living from time to time, the spouse of any child of the Grantor then living or deceased (hereinafter referred to as the "Family Members"), and the descendants of the Family Members living from time to time, in such amounts, shares and proportions, either absolute or in trust, and upon such terms and conditions (including the grant of a further low to appoint) as the Trustee and a Maharaja who shall have attained the age of eighteen (18 years) shall at any time and from time to time appoint and direct in a written instrument in amounts, absolutely conditions power which refers to and specifically exercises this power and which is duly executed by the Maharaja and by the Trustee then acting hereunder. The foregoing power to appoint may be released in whole or in part by the Maharaja or by the Trustee or by both at any time by one or more written instruments duly executed by the Maharaja or by the Trustee or by both and delivered to the Trustee then acting hereunder, provided, however, that if either the Maharaja or the Trustee, but not both of them, shall release such power, then the party not so releasing shall continue to have the power of appointment hereinbefore provided, acting alone" ;