Judgement

SUBBA RAO, J. : This appeal by special leave raises the question of the true construction of the provisions of S. 4(3)(i) of the Indian Income-tax Act, 1922, hereinafter called the Act.

2. The relevant facts may be briefly stated. By an indenture dated September 14, 1950, H. E. H. the Nizam of Hyderabad created a trust known as "H. E. H. the Nizam s Religious Endowment Trust", hereinafter referred to as the Trust, under which he settled certain securities of the face value of Rs. 40 lakhs for implementing the objects described in the Trust deed Under the Trust deed three trustees were appointed, including the settlor. It will be convenient at this stage to read the relevant provisions of the trust deed.

Clause 3. The Trustees shall hold and stand possessed of the Trust Fund upon Trust.

(a) To manage the Trust Fund and to recover the interest and other income thereof.

(b) * * * *

(c) During the lifetime of the Settlor the balance of the income shall be accumulated and shall be added to the corpus of the Trust Fund.

(d) On and after the death of the Settlor the Trustees shall hold the accumulated corpus of the Trust Fund upon trust to spend the income thereof for any one or mo