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4. Essentially, therefore, it appears that under Clause 10 of the deed, the trustees were enjoined to permit the settlor and his wife to occupy and reside free of rent in two flats on the second floor of the trust property for their lives and to pay an amount of Rs. 9,000 for every calendar year for the settlor and his wife and after the settlor's life, to his wife. The surplus left over after the payment of this amount to the settlor or his wife was to be applied in the manner specified in the said clause to the public, religious and charitable purposes as specified in the deed. It appears that up to and inclusive of the assessment year 1966-67, the trust had been assessed separately and those separate assessments were made on the settlor by the ITO including the sum of Rs. 9,000 which the settlor received from the trustees as well as the value of the dwelling house on account of the use by the settlor of the two flats as aforesaid in the computation of the settlor's income. The settlor died on April 28, 1967. For the assessment year 1967-68, for which the previous year was 2022 C.D., corresponding to the year ending November 12, 1966, the ITO held on a scrutiny of the clauses of the deed of trust dated May 21, 1960, that the settlor had the benefit of Rs. 9,000 per annum from the income of the trust property for his exclusive use. He, therefore, held that the trust was revocable within the meaning of Section 62 and Section 63 and that income from the trust was, therefore, chargeable in the hands of the assessee under Section 61, though the trust was created before April 1, 1961. The ITO, accordingly, included the entire income from the property, " Kamani Mansion ", in the computation of the settlor's total income. For the next assessment year, viz., 1968-69, for which the previous year ended on April 28, 1967, the ITO included the net property rental from the trust property for a period of six months only as computed in the earlier year, since the settlor passed away in the middle of the previous year on April 28, 1967.

'The third proviso to Section 16(1)(c) does not operate to exclude the income which the settlor receives as a beneficiary, from liability to income-tax : it merely excludes that part of the income which is under the deed of settlement given to another person from liability to tax in the hands of the settlor, if the conditions prescribed by the third proviso are fulfilled. The contention raised by the Commissioner that, if under the deed of trust the settlor has reserved to himself as a beneficiary any part of the income of the property settled, the third proviso will not apply to the deed of trust, runs contrary to the plain words of the statute.' The further contention of the Commissioner that the third proviso only operated in respect of deeds of settlement or dispositions which were referred to in Clause (c) but not the deeds of settlement or disposition which by the first proviso were deemed to be revocable was rejected by saying that the function of provisos (1) and (2) was plainly explanatory and it was impossible to hold that the third proviso did not operate in respect of settlements, dispositions or transfers which were by the first proviso revocable for the purposes of that clause.

" What then is the fair meaning of Section 16(1)(c), proviso (1)? It seems to us that the words ' reassume power ' give indication to the correct meaning of the proviso. The latter part of the proviso contemplates that the settlor should be able, by virtue of something contained in the trust deed, to take back the power he had over the assets or income previous; to the execution of the trust deed. A provision enabling the settlor to give directions to trustees to employ the assets or funds of the trust in a particular manner or for a particular charitable object contemplated by the trust cannot be said to confer a right to reassume power within the first proviso. Otherwise, a settlor could never name himself as sole trustee. It seems to us that the latter part of the proviso contemplates a provision which would enable the settlor to take the income or assets outside the provisions of the trust deed. Mr. Desai says that if a settlor can derive some direct or indirect benefit under a trust deed, the trust deed would fall within the first proviso. But the first proviso does not use these words. The words ' direct or indirect benefit' occur only in the third proviso. This court held in Commissioner of Income-tax v. Raghbir Singh that although the settlor in that case obtained a benefit from the trust--payment of these debts--the first proviso was not attracted."

" Without first looking at the authorities and on the basis of the interpretation of Section 16(1)(c) and its first proviso just stated, it is essential to correlate the following facts. In the first place, the registered deed of trust in this case, which is said to create a revocable trust, does not itself contain any provision for ' retransfer' or for ' reassuming ' within the meaning of the first proviso to Section 16(1)(c). We emphasise the language in the first proviso ' if it contains any provision '. That means that the settlement, disposition or transfer itself must contain such provision. We hold there is none in this case. The second point which we emphasize is about the two words of significant importance : ' retransfer' and ' reassume '. The prefix ' re ' plainly indicates that it must be a ' transfer ' to himself as himself and not in any different capacity or it must have to ' reassume', which means to assume for himself as himself and not in a different capacity. Looking at the relevant clause of the trust deed quoted, on which reliance was placed for the Revenue, there is no provision which can be treated or construed even remotely as a case of ' retransfer ' or giving a right to ' reassume'. A refinement of this branch of the argument was made by Mr. Sen for the Revenue by saying that, although there is no clause for retransfer or reassuming within the meaning of the first proviso of Section 16(1)(c) directly, these clauses may be interpreted as creating a right to ' retransfer ' or a right to ' reassume ', indirectly. In other words, he tried to shift the emphasis from the words ' retransfer ' and ' reassume ' to the word ' indirectly'. But the fact remains that the words ' directly or indirectly' appearing in the first proviso to Section 16(1)(c) must necessarily mean and qualify the words ' retransfer ' or ' reassume'. Even if it is to be indirectly, then it has got to indirectly retransfer or reassume. Reading the above clauses of the trust deed set out above, it is impossible in our view to read them as a provision which 'retransfers ' the legal title from the settlor to himself as owner or which gives him a right to ' reassume ' as owner. These clauses, in our view, are clauses of control and regulation of the administration of trust by the trustees. They appear under ' powers of the board of trustees ', ' the number of trustees ' and ' appointment, retirement and removal of trustees'. The language of these clauses and the context in which they appear do not give any right to the settlor to 'retransfer' the trust properties to himself as owner or to ' reassume ' these trust properties for himself either directly or indirectly. Clause 12 quoted above is a clause relating to investment and the power of investment by the trustees. It is not a power to retransfer the trust properties or to reassume the trust properties for the settlor himself personally. Clause 12(e) relates to framing of schemes, rules and regulations for managing the affairs of the trust and for giving effect to the objects of the trust as that clause expressly says. The concluding words in Clause 12(e) ' to vary the same' is not varying the trust but varying the schemes, rules and regulations which may have to be made from time to time. Clause 20 does not mean any right to retransfer the property or to reassume the property directly or indirectly for the settlor himself. That clause only deals with the compensation money when the trust properties are acquired by statutory bodies under statutory authorities and expressly says that the ' compensation money will be invested in such manner as the trustees will tlunk fit'. The language is ' invested ' and not ' retransfer ' or ' reassume ' the money by the settlor personally."