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3. Before the Income-tax Officer the assessee contended that the income from the property held under trust was liable to be taxed in the hands of an association of persons and not in his own hands. The Income-tax Officer did not accept this contention and included the whole of the income from the properties settled upon trust in the total income of the assessee. The matter was carried in appeal to the Appellate Assistant Commissioner, who confirmed the inclusion of the full income from the trust properties in the assessee's total income. He did so on the ground that the settlement came within the extended meaning of 'revocable transfer' as specified in the first proviso to section 16(1)(c). He took the view that the provision in the trust deed whereby the assessee as the settlor had made himself eligible for atleast 50% of the income form the trust properties clearly brought the settlement within the scope of the first proviso as also the third proviso. The assessee carried the matter further in second appeal to the Appellate Tribunal. It was contended on behalf of the assessee before the Appellate Tribunal that the settlement did not come within the first proviso to section 16(1)(c), because the settlor had no right to reassume power directly or indirectly over the income or assets. It was contended that the proviso contemplated two stages, namely, creation of a settlement and subsequent commission of an act which would result in the reassumption of power over the income or assets of the trust and that in the instant case all that had happened was that the assessee had settled certain properties on trust and he had done nothing subsequently in order to get 50% of the income from the trust properties. Relying upon this Court's decision in the case of Ramji Keshavji vs. C.I.T., Bombay, reported in 13 ITR 105 it was submitted that atleast 50% of the income from the trust properties should be excluded from the income of the assessee. On behalf of the Department it was urged that the decision in 13 ITR 105 was not at all relevant to the point at issue it was clear from the provisions of the trust deed that immediately on attainment of majority by Virendra the assessee became entitled to half the income from the trust properties and as such the trust was deemed to be a revocable trust falling within the first proviso to section 16(1)(c). The Tribunal dismissed the appeal and while doing so took the view that the settlement dated 3rd April, 1946 must be deemed to be revocable because it contained a provision for the re-transfer of the income of the trust properties to the assessee or it gave him a right to reassume power over the income of the trust properties. IT further held that no doubt in the beginning the assessee could take over the whole income and subsequently he could take over half the income, but the extent of the income over which the assessee had a right was not material, the decisive thing being the provision in the settlement to transfer the assets which made it possible for the assessee to secure a part of the whole of the income from the properties transferred to the Trust. As is stated above it is at the instance of the assessee that the aforementioned question has been referred to us for our opinion.

The aforesaid provision which is to be found in the trust dated makes two things very clear. In the first place, the net income of the trust properties, after deducting the expenses of management etc., is to be paid fully to the settlor until the attainment of the age of majority by his brother Virendra. Secondly even after the attainments of the age of majority by his brother Virendra, the trustees are directed to pay 50% of the net income to the settlor during his life time and the balance of 50% is to be utilised for the maintenance, education advancement and upbringing of Virendra and his sister Saroj till the sister either attains the age of majority or gets married whichever event happens first and after the happening of that event the trustees are required to pay the balance of 50% of the net income to the said Virendra during of majority even before the commencement of the year of account, it would be the second part of the aforesaid disposition that would be applicable, namely, 50% of the income was payable to the settlor and the balance of 50% was to be spent on the maintenance, education, advancement and upbringing of Virendra and Saroj. The question is whether under the provisions of section 16(1)(c), 1st proviso, of the Income-tax Act, 1922 the aforesaid trust deed containing the aforesaid material provision amounts to a revocable trust or not.

Provided that for the purposes of this clause a settlement, disposition or transfer shall be deemed to be revocable if it contains any provision for the retransfer directly or indirectly of the income or assets to the settlor, disponer or transferor, or in any way gives the settlor, disponer or transferor a right to reassume power directly or indirectly over the income or assets."

By reason of the particular provision which is to be found in clause 2 of the deed of trust dated 3rd April, 1946, namely, that on attainment of the age of majority by Virendra the trustees being directed to pay 50% of the net income to the settlor during his life time and the balance being directed to be spent by the trustees for the maintenance, education, advancement and upbringing of Virendra and his sister Saroj the taxing authorities as well as the Tribunal took the view that this trust deed will have to be regarded as a revocable trust within the first proviso to section 16(1)(c) of the Act and therefore the entire income from the trust properties has been directed to be assessed in the hands of the assessee.

6. Mr. Munim appearing for the assessee has contended before us that in a case where by reason of the provisions contained in the deed of settlement itself, any part of the income of the trust properties is made available to the settlor it would not be a case where the deed would be containing a provision for the transfer directly or indirectly of income to the settlor or a provision going the settlor a right to reassume power directly or indirectly over the income or assets. His contention has been that the re-transfer directly or indirectly of the income or assets to the settlor must be as a result of an overtact - overtact being the exercise of a power reserved to the settlor whereby a right to reassume power directly or indirectly over the income or assets is vested in the settlor. Secondly, he contended that unless the provisions of the deed conferred a right to reassume power directly or indirectly over the entire income or assets, the deed cannot be regarded as a revocable trust falling within the first proviso to section 16(1)(c) of the Act. In any event he urged that, if at all, the deed would be regarded as revocable only to the extent of 50% of the income and not a revocable deed to the extent of 505 of the income which was to be utilised by the trustees for the maintenance, education, advancement and upbringing of Virendra and his sister Saroj and as such the entire income from the trust properties could not be directed to be included in the assessee's income. In support of his contention he relied upon the two decisions of the Supreme Court, one in the case of Commissioner of Income-tax, Punjab vs. S. Raghbir Singh, reported in (1965) 57, I.T.R. 408 and the other in the case of Hrishikesh Ganguly vs. Commissioner of Income-tax, Calcutta, reported in (1971 82 I.T.R. 160).