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(c) as to proviso (1) 13 I.T.R. 105.

The view expressed in the Ramji Keshavji case(1) was approved by this court in C.I.T. Patna v. Rani Bhuvaneshwari Kuer(2). In that case the assessee, who owned an estate known as 'Tekari Raj', created a trust with a view to liquidate the debts of Tekari Raj. The beneficiaries under the deed were the settlor, her husband and her sons. It was declared that the settlement, made was to be permanent and irrevocable but each beneficiary had full right to make any sort of arrangement about devolvement or succession or make such alienation as was considered fit about his share. It was observed that two conditions were necessary for the application of the third proviso to section 16(1) (c), (1) that the trust should not be revocable for a period exceeding six years or during the life-time of the beneficiary and (2) the settlor or disponer should have no direct or indirect benefit from the income given to the beneficiary. The following observations at page 927 are noteworthy :

"The third proviso to s. 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".