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(7) Provided also further that during the minority of any of the said two sons of the settlor the trust herein or such of them as may survive the other will upon the death of any of the trustees hereby appointed shall out of the income be liable to defray the maintenance and education expenses of such minor son or sons as to pay Rs. 100 (Rupees one hundred) monthly and every month to the son or sons who has or have attained majority likewise after the death of the settlor, the trustee or trustees shall be liable to defray the maintenance of Rs. 50 (Rupees fifty) per month to the said Sm. Umasashi Dassi till the period of distribution mentioned in clauses 8 and 9 hereof. The trustees shall further defray the marriage expenses of the settlor's unmarried daughter, namely, Kumari Annapurna Coondoo.
Provisions are made to prevent frivolous litigation and prevent questioning the bona fides of the trustee, but those provisions do not have the effect of giving the settlor a right to reassume power directly or indirectly over the income or the assets. After this deed was executed the income of these properties belonged to the cestui que trust and if the settlor as trustee used this income he would be guilty of a breach of trust. The first proviso to Section 16(1)(c) only contemplates cases where the settlor can lawfully reassume power over the income or the assets. Unless that was so, the proviso would cover every trust where a settlor has made himself trustee because a trustee acting dishonestly could always assume control over the income."

27. The expression "reassumption of power" has been construed and explained by the Supreme Court in the case of Commissioner of Income-tax v. Jayantilal Amratlal [1968] 67 ITR 1 (SC). The deed in this case gave wide powers to the settlor. Under the clauses of the deed the settlor could direct the trustees to set aside any portion of the income of the trust for certain purposes ; the settlor could also direct any specific fund or investment or property forming part of the trust and/or the income thereof to be utilised and applied exclusively for one or more charitable objects; the settlor had power to direct the trustees to hand over the income of the trust or any part thereof to any institution, association or society, to be applied for all or any of the charitable purposes without being bound to see to the application thereof ; the settlor had power to direct the trustees to invest the trust fund in shares of companies or any debentures or in giving loans to any public company or firm of good standing and reputation and the settlor could direct the trustees to vary the investments. There was a separate clause providing that " all questions arising in the management and administration of the trusts or powers hereof and all differences of opinion amongst the trustees to be disposed of in accordance with the opinion of the settlor during his lifetime ". It was contended before the Supreme Court that under this deed the settlor retained absolute powers over the income and corpus of the trust estate and to the trust in question the first proviso to Section 16(1)(c) should be applied as the deed gave the settlor right to reassume power directly or indirectly over the income and assets of the trust. The Supreme Court held that the said deed and the clauses thereof were not hit by Section 16(1)(c) and that the income of the trust could not be assessed in the hands of the settlor. Sikri J. on page 10 of his judgment observed as follows--See [1968] 67 ITR 1 (SC) :

"What then is the fair meaning of Section 16(1)(c), proviso (i)? 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 a 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....."