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1. A trust for a charitable purpose has been created by members of Kale family at Nagpur and the settlors shown in the trust deed dated June 21, 1950 (annex. A to the statement of the case), were : (1) Shri. Purshottam Balkrishna Kale, (2) Smt. Ansuyabai Purushottam Kale (husband and wife), and (3) Shri. Kashinath Purushottam Kale, and (4) Shri. Balakrishna Purushottam Kale, who were the sons of the first two settlors. One of the properties settled on trust is known as "Kale Bhawan", the value of which was shown in the trust deed at Rs. 2,74,000 and belonged exclusively to settlor No. 1959. The respondent in this reference is the accountable person, being the widow of the deceased, Shri K. P. Kale. It is not necessary to refer in detail to the charitable purposes for which the trust was created because it has not been found as a fact by a Tribunal that the trust is a public trust for be utilised for charities which according to the trust would include "donations to erect funds for scholarships, prizes, medals, etc.," establishment of technical schools and colleges and other educational institutions and hostels for students of either sex, medical relief of all kind help to the destitute and poor and aid for people stricken by calamities such as floods, fire, etc., and no distinction was to be made on the basis of caste, creed or religion in respect of beneficiaries who would benefit by the trust. So far as "Kale Bhawan" is concerned, it appears that the property was transferred to the trust subject to the trust accepting the liability of Rs. 50,000 which was the encumbrance in the form of a mortgage debt on the said property. The settlor were themselves to be the trustee.

7. The rest of the provisions of s. 12 are not relevant for our purpose. Section 12(1) is in the two parts : the first part deals with the reservation interest in the trust property for life or any other period determinable by reference to death, whether expressly or by implication; and the second part deals with reservation by the settlor by the right to revoke the trust, with the ultimate result of restoring to the settlor the trust property or enabling him to reclaim the absolute interest in such properties. In any one of these contingencies such property, though a trust may have been created in respect thereof has been provided to deem to pass on the death of the settlor.

8. The first question referred is a composite question turning on the applicability of the two contingencies referred to in s. 12(1). We shall first deal with the arguments advanced by the learned counsel for the Revenue that cls. 6 and 19 of the trust deed has the effect of reserving the kind of interest contemplated by s. 12(1) and, therefore, according to the learned counsel Kale Bhawan property must be deemed to have been passed on the death of the deceased. Clause 6 refers to the remuneration payable to the managing trustee which, as already pointed out, was to be 25 per cent. of the trust income subject to a maximum of Rs. 2,000 per month. Now, the managing trustee, under the terms of the trust deed, was initially to be Mrs. Anusayabai Kale till her lifetime and thereafter, if Mr. Kale chose to accept the officer of the managing trustee, then he was to so act as the managing trustee further for his lifetime. Under cl. 19, after the death of Mr. Purushottam Balkrishna Kale, there were to be two managing trustees and there is no doubt that the deceased and his brother, Balkrishna Purushottam Kale, were to be the managing trustees, who were also to hold officer for life or till one or both of them resigned or relinquished his or their office and appointed his or their successors. Now, unless we go as far as to hold that he will be the managing trustee for which he will receive certain amount of remuneration out of the trust fund, such a provision by itself would amount to reservation of interest as contemplated by s. 12(1), will be difficult to accept the submission advanced by Shri. Joshi. where a settlor creates a trust, it lief within his power to also make a provision as to the management of the trust property. It is perfectly permissible for a settlor to nominate any person as trustees or first trustees and where there were more than one trustee, a managing trustee. It is also within his power to regulate the appointment of trustees in future as well as the managing trustee. There is no prohibition in law if the settlor himself takes over the function of the managing trustees after the trust has come into being. When the settlor himself becomes a trustee or managing trustee a change undergoes in his capacity from one of an owner of property to that of trustees holding the trust property for the benefit of the beneficiaries or for the purpose of working out the directions in the deed of trust. If for such work, any remuneration is provided for by the terms of the trust deed, that would not, in our view, amount to the reservation of any interest for the purposes of s. 12(1). Though no authority for this proposition is really needed, we may refer to the decision of this court in CED v. Sultan Alam Khan , to which one of us was a party. In that case, we were dealing with a wakf, one of the clauses of which was that the settlor, who was himself the trustee, was permitted to occupy one of the flats in the trust property in order to manage the trust properties and it was held that a provision permitting occupation of the trustee property did not amount to a reservation of any interest in the property settled by the settlors. The Department was, therefore, not entitled to rely on cls. 6 and 19 to contend that here was reservation of interest of the trust property and, therefore, the value of Kale Bhawan was liable to be treated as a part of the dutiable estate.

9. Second limb of the argument of the learned counsel for the Department is based on cl. 23. Clause 23, which we have reproduced above, expressly reserve the power to the settlors to dissolve the trust. This power is conditional by two conditions : firstly, there is absolute prohibition against revocation of the trust for a period of 10 years from October 7, 1951. The second restriction on the power of revocation is that the power of revocation can exercised only if "this trust cannot function for any reason whatsoever." What is contended by Shri Joshi is that notwithstanding the fact that the power to revoke the trust is controlled by the recitals in cl. 23 and it can be exercised only after a period of 10 years and further only if thereafter if it is seen that the trust cannot function for any reason, the power if essentially one of revocation and this according to the learned counsel is enough for the purposes of the applicability of the provisions of s. 12(1). What is contended by Shri Manohar on behalf of the accountable person is that apart from the fact that the power is circumscribed by conditions and there is no absolute power reserved t the settlors to revoke the trust, in this particular case when the settlors wanted to revoke the trust, their efforts to do so too have proved to be futile because, according to the learned counsel, they had approached the Asst. Charity Commissioner appointed under the provisions of the Bombay Public Trusts Act, 1950, after the trustees had passed a resolution revoking the trust in terms of cl. 23 of the trust deed. The order of the Asst. Charity Commissioner is dated April 21, 1962, which clearly after the death of the deceased whose estate is now being brought to tax. The resolution itself is dated December 20, 1961, which is also after the death of the deceased. The order of the Asst. Charity commissioner is annex. G to the statement of case. The Asst. Charity commissioner referred to the several provisions of the Bombay Public Trust Act and took the view that the public trust is created for the purposes of education, relief of poor and distressed and for other objects of general public utility. He took the view that the power of revocation in the trust deed is not unconditional and, therefore, the mere wish of the trustees to dissolve the public trust cannot dissolve it when the trust properties could be applied to the objects set out in the trust deed. Now, as already pointed out, there can hardly be any doubt that cl. 23 of the trust deed is a repository of the express power of revocation which could be exercised after the period of 10 years from the date specified therein and if the trust cannot function for any reason. If the mere reservation in the case of a public trust was sufficient to bring the case within the latter part of s. 12(1) of the E.D. Act, the Revenue would be entitled to succeed if the decision is to be given only on a reading of the document of trust. It appears to us, however, that the reference cannot be decided merely on the footing that the deed of trust contains a clause reserving the power of revocation to the trustees by the settlors, who were themselves the trustees. We are dealing with a public trust and unless we are satisfied that public trust can be validly put to an end to or that it lies within the power of the settlors to retrace their steps leading to the creation of the public trust with or without the power of revocation, it will be difficult for us to hold that merely because in the case of public trust a power to revoke is reserved by the settlor, such property must be deemed to pass on the death of the settlor for the purposes of s. 12(1) of the E.D. Act. When s. 12(1) refers to the reservation by the settlor of the right to exercise the power of revocation, it obviously presupposes that such a power of revocation can be validly and legally reserved by the settlor. In other words, even if the documents of trust does contain a clause expressly the power of revocation if in law such a power of revocation is impossible to be either reserved or exercised, in our view, the Department would not be entitled to rely on the latter part of s. 12(1) merely because in the settlement the settlors purported to reserve the power to revocation.