Can a trust give loan to trustees

The learned counsel for the appellant says that these clauses read fairly would enable the Settlor to direct the Trustees to give a loan to him and he could give directions to the Trustees in 'such a way as to re-assume control over the assets. He says that as a matter of fact the Income-tax Officer did find that the Settlor has been utilising these powers for his own benefit. There is no doubt that under the Trust Deed the Settlor has very wide powers and the Settlor could direct theTrustees to grant loan to him. The Trustees could even grant loan to a firm in which be was interested. But this would be contrary to the provisions of the Bombay Public Trust Act. Section 35 (I) of the Bombay Public Trust Act provides :

as per income tax any benifight given to trustee ,by trust will be treated

as deemed income of trust and no any exemtpion is to given on that deemed income 

go through defination of trust  as per incometax u will get answer of ur first question

If trust will invest that amount in Bank FD then it will receive interest at 7%.

But trustees are ready to give interest on loan at 12%.

then how will it be considered as benefit derived by trustees from trust??