Sabyasachi Mukharji, J. - (1.) In this reference, under Section 256 (1) of the I.T. Act, 1961, the following two questions have been referred to this court: " I. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in their conclusion that the indenture of settlement dated 21st May, 1960, was a revocable transfer within the meaning of Section 61, Section 62 and Section 63 of the Income-tax Act, 1961 ? 2, If the answer to the first question is in the negative and in favour of the assessee, whether the inclusion and assessment of the entire income from the trust property known as ' Kamani Mansion ' at No. 3, Allenbery Road, Calcutta, in the hands of the settlor for the assessment years 1967-68, and 1968-69 is justified and right in law? "
(2.) This reference relates to the assessment years 1967-68 and 1968-69. It appears that one Shri Girdharilal Hansraj Kamani had executed a registered indenture of settlement on May 21, 1960, settling on trust for public, religious and/or charitable purposes the property known as " Kamani Mansion " bearing No. 3, Allenby Road, Calcutta, in favour of six trustees specified in the said deed. As mainly the construction of the said trust deed is relevant for our purpose it would be instructive to refer to the relevant provisions. After the recital the trust deed declared in the habendum clause as follows : " Now this declaration and indenture made in Calcutta on this the 21st day of May, 1960, hereby witnesseth that in pursuance of the said desire and in consideration of the premises mentioned above the settlor doth hereby grant, assign and transfer and convey absolutely and irrevocably for ever unto the trustees the said immovable property made up of lands and buildings comprising the property, ' Kamani Mansion ' at premises No. 3, Alien- bery Road, in the city of Calcutta, more fully described in the said schedule already referred to above marked ' A ' appended here totogether with all the rights, title and interest of the settlor. To have and to sold the said property unto the trustees upon the trust and uses hereinafter appearing subject to the provisions and conditions hereinafter specifically declared and expressed. "
(3.) Then after specifying the duties of the trustees, the trust deed provided, inter alia, as follows : " 9. The trustees shall out of the trust fund or the income thereof first pay out discharge or meet, settle or compound such expenses or charges or taxes, cesses levies as may be lawfully payable in respect of the property hereby conveyed and/or of the income yield or return produced by that and/ or any undertaking trade commerce or industry and make payment of any other incidental outgoings and/or obligations in the shape of any remuneration if the trustees, in their discretion, decide upon granting any remuneration either to the managing trustee if they appoint or to any other person serving the trust in any legal accountancy, technical or professional capacity or as an agent or employee and/or of stamps, stationary, travelling conveyance which might, in accordance with the law, in force have to be incurred by the trustees for the purposes of administration of the affairs of and/or protecting the interest of the trust. 10. The net income of trust and/or the trust fund that shall remain after so discharging meeting or settling and/or compounding the expenses outgoings, charges, liabilities, etc., referred to in the immediately preceding paragraph shall be applied and/or appropriated and/or disposed of by the trustees in their absolute and unfettered discretion subject however to the restrictions and conditions only about the amount so to be paid applied or appropriated hereinafter appearing, namely, on the trustees, shall always permit the settlor to reside in and exclusively occupy the two flats at the 2nd floor of the immovable property known as Kamani Mansion identified today as bearing the Calcutta Municipal premises No. 3, Allenbery Road in the Bhowanipur area in the city of Calcutta in the State of West Bengal during the natural life of the settlor and/or of his wife and in the event of the settlor's death, his wife Smt. Naval Kusam Girdharilal Kamani and in the event of the latter predeceasing the settlor, for period of the natural life of the settlor, free from any obligation and/or liabilities to pay any rent provided however that the proportion of the owner and occupier's taxes and/or any other cesses or levies which might be imposed in accordance with the law on the said property by the Calcutta Corporation and/or any other authorities under the law attributable to the said two flats in comparison with the accommodation offered by the said entire property shall always be borne and/or paid personally by the settlor throughout his life and in the event of his death and his wife surviving him, by his said wife out of his or her respective personal resources, (b) In addition, the trustees shall pay an amount of Rs. 9,000 (rupees nine thousand only) per every calendar year of 12 months to the said settlor throughout his natural life or in the event of his predeceasing the said wife at the rate of Rs. 9,000 (rupees nine thousand only) per annum throughout her natural life, (c) The surplus left over after payment of these amounts to the settlor and/or his wife as the case may be shall be appropriated at an amount equal to or not less than 50% of such surplus to public religious and/or public charitable purposes for example (i) advancement of learning and/or the grant of continuous subscription to endowments, scholarships, stipends to meritorious students enabling them to pursue their studies; (ii) assisting the establishment and/or the maintenance of scientific technological art institutions, imparting cultural scientific technological learning or education or training; (iii) assisting establishment or maintenance of hospitals, dharamshalas, rest or recreative homes for the infirm, disabled, ailing or sick persons or pilgrims and assisting for religious purposes: (iv) rendering assistance to the persons affected by any natural calamity by flood, fire, earthquake and/or civil commotion, these objectives are only illustrative and not exhaustive ; the predominant intention of the settlor is that such net surplus and latter as hereinafter further provided the entire income produced by the trust fund or trust every year shall be appropriated subject to that minimum percentage for objects or purposes of public religious or charitable nature. 11. On the demise of the settlor and/or his wife the accommodation offered by the said two flats shall be at the disposal of the trustees specifically only for the following purposes : (i) For housing or offering residential accommodation to my two brothers, Shri Ramjibhai Hansraj Kamani and/or Shri Narbharam Hansraj Kamani, and/or their respective sons and daughters while in Calcutta throughout their respective lives ; (ii) To house and/or to offer residential accommodation to our said daughter, Smt. Lalita Nawalchand Modi, while in or compulsorily residing in Calcutta throughout her life; (iii) Subject to (i) and (ii) above, to realise reasonable rent or income therefrom at convenient and particular times in between the said residential accommodation or use of the said flats. 12. In addition, the said amount of Rs. 9,000 (rupees nine thousand only) per year shall be payable to the settlor throughout his life in the event of the settlor predeceasing her shall not be payable to any person or on account of any other private purpose or purposes whatsoever. The entire net income profits or gains produced by the said trust fund and/or the assets or properties of the trust shall be appropriated subject to the minimum percentage or amount as indicated above every year in their entire unfettered discretion of the trustees for the said public religious and/or public charitable purposes. It shall be competent for the trustees to build up a reserve fund every year or from time to time of the income, profits or gains produced by the said trust fund at a rate or not exceeding 50% of the net surplus of the income profits or gains over the expenditure, outgoings and liabilities incurred by the trustees shall always be ascertained on completion of the accounts as well as on completion of the check of these accounts by an independent accountant or auditor maintained for and at the end of every accounting year observed by the trust, such accounting year may consist of a period of less than 12 months for the first accounting year and shall always consist of 12 months for other subsequent accounting years.";