JUDGMENT:— These five appeals arise out of the assessments of Nawab Mir Barkat Ali Khan as the legal representative of the late Nizam of Hyderabad (hereinafter referred to as the assessee). The appeals arise out of the assessments made on the assessee for the assessment years 1959-60, 1960-61, 1961-62, 1962-63 and 1963-64. Two questions, which are common to all these assessment years, were answered by the High Court of Andhra Pradesh in favour of the assessee and against the Revenue and the Commissioner of Income-tax has preferred these appeals. We shall deal with these two questions.

2. The first question was in the following terms:

"Whether, on the facts and in the circumstances of the case, the income of Rs. 83,709, Rs. 83,709, Rs. 84,076, Rs. 84,779 and Rs. 96,431/ - for the assessment years 1959-60, 1960-61, 1961-62, 1962-63 and 1963-64, respectively, relating to HEH the Nizams Pilgrimage Money Trust are not taxable in the assessees hands by reason of S. 16(1)(c) of the Income-tax Act, 1922 /Sections 60 and 61 of the Income-tax Act, 1961?"

The High Court answered this question in favour of the assessee, following its earlier decision in Commr. of Income-tax v. Nawab Sir Mir Osman Ali Bahadur, (1985) 153 ITR 514. The short point arose this way. The assessee had constituted a trust known as the Nizams Pilgrimage Money Trust". Cl. 3(c) of the Trust Deed authorised the trustees to utilise the income of the trust, inter alia,...

"During the lifetime of the settlor to defray the expenses of Haj of the settlor and of such of the members of his family as he may take with him and of their visit and pilgrimage to various Mahomedan shrines and holy places Hadjaz and Irag and making religious offerings and expending monies for charitable purposes as the settlor in his absolute discretion may from time to time think fit and require out of the income as well as the corpus of the trust fund in such matter and to such extent as the settlor may from time to time direct and for all or any of such purposes as aforesaid to pay such monies out of the income of the corpus of the trust fund as the settlor may from time to time require."

3. The departments argument was that this clause gave the settlor/ assessee the right to reassume power directly or indirectly over the income or assets which had been transferred to the trustees under the Trust Deed. This question was discussed at length by the Andhra Pradesh High Court. Relying upon the exposition of S. 16(1)(c) of the Income-tax Act, 1922 in the decisions of this Courts in CIT v. Raghbir Singh, (1965) 57 ITR 408; CIT v. Jayantilal Amratlal, (1968) 67 ITR 1; and Hrishikesh Ganguli v. CIT (1 971) 82 ITR 160; the High Court came to the conclusion that though, under the clause, the settlor had a wide discretion to decide ,upon the manner in which the income from the trust could be paid for the above purposes such power was conferred on him only in his capacity as trustee and did not attract the first proviso to S. 16(1)(c) of the 1922 Act/ S. 61 of the 1961 Act. The High Court accordingly answered the question against the department.

4. We have gone through the judgment of the High Court and we are of the opinion that the conclusion of the High Court follows upon the exposition of Section 16(1)(c) of the Income-tax Act by the decisions of this Court earlier cited. It has also been brought to our notice that the Commissioner of Income-tax preferred a special leave petition against the judgment reported in (1985-153 ITR 514) but that the said petition was dismissed by this Court. In the circumstances mentioned above, we are of the opinion that the High Court answered the question correctly and that there are no grounds to interfere.

5. The second question which arises for our consideration is worded as follows:-

"Whether, on the facts and in the circumstances of the case, the income arising for the respective assessment years from assets transferred by the assessee to trusts for the benefits of (i)(a) Smt.