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Miscellaneous Judicial Case No. 934 of 1961, decided on 3rd September 1964.

-Transfer of shares in company to wife and minor child - Consideration whether adequate - Break-up value and expected yield of shares whether can be considered-Transfer to Hindu undivided family-Whether indirect transfer to wife and minor children-Sections 16 (3) (a) & 16 (3) (b)-Whether valid--Indian Income-tax Act, 1922, Ss. 16 (3) (a) & 16 (3) (b).

The provisions of sections 16 (3) (a) and 16 (3) (b) of the Income-tax Act do not violate the provisions of Article 14 or Article 19 (1)(g) of the Constitution.

Balaji v. Income-tax Officer, Akola (1961) 43 I T R 393 (S C) fol.

When assets are transferred by an individual to a Hindu undivided family, there is no- transfer either director indirect within the meaning of section 16 (3) (a) effected by the transferor in favour of his wife or minor child who may be members of the family.

The assessee transferred certain shares he owned in some private limited companies to his wife and minor sons. The shares were not quoted in the stock exchange. The shares had been transferred for cash consideration. The Income-tax Authorities took the view that, though the transfer of shares was made at a price higher than their face value, the price paid was much lower than the real value of the shares. In reaching the conclusion the Income-tax Authorities took into account the high break-up value of the shares and the high expected yield on the basis of the dividends declared. The incomes arising to the wife and minor sons of the assessee were included in his total income under sections 16 (3) (a) (iii) and 16 (3) (a) (iv):

Held, that the break-up value and expected yield of shares are relevant considerations to be taken into account in estimating the value of the shares of a company for which there is no stock exchange, quotation or regular market. The finding of the Tribunal that the consideration for the transfer was not adequate within the meaning of section 16 (3) (a) was not vitiated by any error of law. The income arising to the wife and minor children from the transfer of shares could be included in the total income of the assessee.

Attorney-General of Ceylon v. Mackie (1952) 2 All E R 775 (P C) and Commissioners of Inland Revenue v. Crossman and Inland Revenue Commissioners v. Manu (1937) A C 26 ref.

By this application presented on June 3, 1961, the assessee requires the Appellate Tribunal to refer to the High Court certain questions .of law which are said to arise out of the order of the Appellate Tribunal dated March 17, 1961, in I. T. A. No. 6556 of 1959-60. Inasmuch as, in our opinion, certain questions of law do arise out of the aforesaid order of the Tribunal, we hereby draw up an agreed statement of the case and refer it to the High Court under section 66 (1) of the Income-tax Act.

2. The statement of the case relates to the assessment for 1956-57 for which the assessment year is the financial year 1955-56.

3. The assessee is an individual. During the accounting period, the assessee had transferred a part of his shareholdings in some ten private limited companies for a consideration of Rs. 1,40,730 to his wife Srimathi Rajani Worah, his minor sons, Bharatendu Worah and Himangshu Worah, and to the Hindu undivided family consisting of himself, his wife and sons. The private limited companies whose shares were the subject-matter of transfer were under the control of 2/3 distinct separate families, the family of the assessee being one of them. These shares were not quoted on the stock exchange. The shares had been transferred for cash consideration which the transferees had raised, in their turn, from gifts received by them from the assessee's brother and father. The legality of these gifts was not challenged by the Department. The transfers in the case of ordinary shares were declared to have been made at 15% of the face value. In the case of preference shares of Sendra Bansjora Colliery Co. Ltd., the transfers were at the face value. There is no dispute that the break-up value of these shares were much higher than either the face value or the value at which they were transferred. It was, found that, in some cases, the break-up value came to Rs. 1,474 and Rs. 1,131 as against the face value of Rs. 100 and sale value of Rs. 150. It was also found that, in some cases, the yield on these shares in the form of dividend, in one year alone, was almost 100%. of the face value of the shares. The details of the persons to whom the shares were transferred, their face value, sale price and break-up value etc., were as follows:

The primary question that arose for consideration was whether the transfer of these shares had been made for adequate consideration. As regards the transfers to the assessee's wife and minor sons, the Income-tax Officer took the view that, although the transfers were at a price higher than the face value, yet the price paid was much lower than the real value of the shares. The facts which weighed with him in coming to this conclusion were the very high break-up values of these shares compared to the prices realised and the high expected yield on the basis of the dividends declared. He was, accordingly, of the view that the transfer to the wife and minor sons was otherwise than for adequate consideration and, therefore, the transfer came within the mischief of sections 16 (3) (a) (iii) and (iv) of the Income-tax Act. The contention of the assessee was that, according to the articles of association of the relevant companies, no shareholder could transfer his holding to a person who is not an existing shareholder unless it was first offered to the other shareholders and none of them was willing to purchase those shares. It was argued that, since none of the other shareholders willing to purchase the shares offered at the price paid by the wife and the minor sons, this clearly showed that the price paid was adequate. This contention did not find favour with the Income-tax Officer. The Income-tax Officer took the view that the assessee was not selling the shares to an outsider and he was only proposing to transfer them to the names of his wife and his minor sons, and the other shareholders could not possibly have any objection to such transfers within the assessee's own family. According to the Income-tax Officer, the condition that a shareholder cannot transfer shares to a non-existing shareholder comes into operation only in the case of transfers to rank outsiders.

With regard to the transfer of 250 shares of East Sathgram Colliery Co. to the Hindu family headed by Umedray Worah, the Income-tax Officer found that the shares which were alleged to have been transferred had not been registered in the name of the Hindu undivided family in the books of the company and that the shares continued to stand in the name of the assessee and that the dividend on these shares was received by him. It was held that even if the shares were, in fact, transferred to the Hindu undivided family, they were not for adequate consideration and that the transfer-was, therefore, covered by section 16 (3) (b), because the transfer to the Hindu undivided family benefits the assessee's wife and minor sons who are members of the Hindu undivided family. In determining whether there was adequate consideration within the meaning of section 16 (3) (b), the Income-tax Officer relied on the Full Bench decision of the Patna High Court in the case of H. P. Banerjee v. Commissioner of Income-tax ((1941) 9 I T R 137). The Income-tax Officer accordingly included the dividend declared on the shares transferred to the assessee's wife, minor sons and to the Hindu undivided family, in the total income of the assessee in accordance with the provisions of section 16 (3) (a) (iii) and (iv) and section 16(3)(b). A copy of the order of, the Income-tax Officer is made a part of this case and is Annexure "A".

The appeal before the Appellate Assistant Commissioner against the inclusion of such dividends in the total income of the assessee proved infructuous. It was contended by the assessee before the Appellate Assistant Commissioner that "adequate consideration" would not mean full consideration but only "sufficient consideration" or "consideration proportionate to the requirements of the transaction". It was contended that the sufficiency of consideration in its turn should be "legal sufficiency" and not "economic sufficiency", i.e., what is bona fide considered to be sufficient by the contracting parties. The assessee's case was that 1 times the face value of the shares could not be considered to be insufficient or inadequate. It was further argued that the break-up values of the shares do not always indicate the market price especially when, in the case of private limited companies concerned in the deal, there was certain restrictive conditions on transfer.

Another question that was raised before the Appellate Assistant Commissioner was regarding the constitutional validity of sections 16 (3) (a) and (b). It was argued that both these subsections were void:

(a) in so far as they seek to include one person's income into another's and,

(b) in so far as they discriminate against a-minor child only.

All these contentions were repelled by the Appellate Assistant Commissioner for the. reasons stated in paragraphs 12 to 16 of his order and he upheld the inclusion of the dividends on the various shares transferred in the total income of the assessee. A copy of the order of the Appellate Assistant Commissioner is made a part of this case as Annexure "B".

On second appeal before the Appellate Tribunal, two contentions were pressed namely, (1) in view of the restrictive clauses in the articles of association of the respective companies, the transfer of the shares at 150% of the face value was for adequate consideration, and (2) the provisions of section 16 (3) were ultra vires the Constitution in so far as they (a) had not imposed a charge in the hands of the transferor by explicitly deeming it to be the income of the transferor and (b) discriminated against a minor child only. The Tribunal's observations in connection with the first contention are as follows:

We do not think that there is any substance in the argument of the learned counsel for the assessee that it is not necessary that adequate consideration should mean sufficient or proportionate to the requirements. If one commodity is transferred in lieu of another, the consideration for the transfer can be said to be adequate if the values thereof are equal or at least roughly so. In its widest sense, consideration is the price, motive or inducement for a promise or for a transfer of property from one person to another. There can be no doubt that it must be valuable and it can be a benefit to the transferor or loss or injury to the transferee, though, no doubt, it is not necessary that the consideration and the promise should be equivalent in actual values, for, in practice, it would be difficult to determine whether, in a given case, the consideration was adequate without a psychological investigation into the motives of the parties in the transaction. The normal practice applied in such cases is to see if the conclusion would become to that inequality betokens mutual mistake or fraud or undue advantage alongside and it is well known that inadequacy may be a reason for refusing specific performance. It is clear, therefore, that the consideration and the promise must be roughly equal to each other so as to come under the caption adequate consideration."

"These are the facts in this case. No doubt transfer has been made at 150% of the face value but the figures worked out by the Department show how the break-up value is very much higher than this value. That apart the income from these shares is so good that one would not think of transferring them except for a substantial price or as in this case for natural love and affection and once that enters, it is clear the consideration cannot be adequate. There are some clauses in the articles of association of the companies which restrict transfer of shares. But such restriction is that they shall not be transferred to a person who is not a member so long as directors or any members or any person selected by the directors as one whom it is desirable in the interest of the company to admit to membership, is willing to purchase the same at a fair value to be determined in the manner provided. Two things thus stand out (1) that there is no prohibition to transfer to an outsider and (2) that the fair value is capable of determination. There is no proof in this case that the assessee ever offered those shares via the directors to outsiders and that they refused and so the transfer had to be made at the prices mentioned. Nor is there proof that the fair value was determined in the way provided for in the articles of association. The mere fact that the company wrote to some shareholders--who perhaps had a lot of shares already and were not willing to buy more-does not show that nobody else was willing to buy them at higher prices. Equally so the mere issue of some notices to the company that these shares were likely to be sold and there being no response does not show that any attempt was made to get adequate consideration for these shares. Much less can the price paid for this transfer be said to be a fair price having regard to the break-up value of the income-earning value. Quotations of shares in the market is no doubt a reliable guide and the definition of shares in a company given in Borland's Trustee v. Steel Brothers & Co. Ltd. (1901) 1 Ch. 279 may be a good guide in arriving at the value, but they are not the only criteria of determining the value. We are satisfied that in this case the value given for the shares by the transferees was not adequate and that the transaction is covered by section 16 (3) (a) (iii)."

The second contention was also negatived by the. Tribunal. The Tribunal held that section 16 (3) no doubt in terms does not deem this income of the transferees to be that of the transferor but the section provides that, in computing the total income of the assessee, so much of the income of a wife or minor child of such individual as arises directly or indirectly from assets transferred directly or indirectly to the wife by the husband otherwise than for adequate consideration or in connection with an agreement to live apart, shall be included in the hands of the assessee. According to the Tribunal, these words show that the statute postulates that the income arising from the transfer of assets directly or indirectly to a wife or minor child-is the income of that person but provides that it shall be included in the hands of the assessee and that the language used was sufficient to deem such income of a minor or wife to be the assessee's income for the purpose of this section.

Relying on the rulings in the case of B. M. Amina Umma v. Income-tax Officer, Kozhikode ((1954) 26 I T R 137) and E. V. Narasa Reddy v. Income-tax Officer, Nellore ((1960) 39 I T R 629), the Tribunal held that no discrimination was involved inasmuch as a reasonable classification had been made; by providing for inclusion in the total income of an assessee the income of a minor or wife which accrues from assets transferred directly or indirectly. A copy of the order of the Tribunal is made part of this case as Annexure "C".

It is on these facts that we refer the following questions of law for the opinion of their Lordships of the High Court:

"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the shares in the private limited companies were transferred by the assessee to his wife, minor children and to a Hindu undivided family consisting of himself, his wife and minor children, otherwise than for adequate consideration within the meaning of sections 16 (3) (a) (iii) and 16 (3) (a) (iv) of the Income-tax Act

(2) Whether the provisions of sections 16 (3) (a) and 16 (3) (b) are ultra vires the Constitution "

Lal Narayan Sinha, P. Chatterji, Sushil Kumar Mazumdar and M. M. Gajandhar for the Assessee.

M. Tarkeshwar Prasad for the Commissioner.

During the accounting period the assessee had transferred his shares in ten private limited companies for a sum of Rs. 1,40,730 to his wife, Shrimati Rajani, and his minor sons, Bharatendu and Bimangshu, and also to the Hindu undivided family consisting of himself, his Wife and his two sons. The private limited companies whose shares were the subject-matter of transfer were under the control of two or three families; the family of the assessee being one of them. The shares were not quoted in the stock exchange. The shares had been transferred for cash consideration which the transferee had raised in their turn from gifts received by them from the brother and father of the assessee. The legality of the gifts was not challenged by the Income-tax Department. The transfers in the case of ordinary shares were made at 150 percent. of the face value. In the case of preference shares of Sendra Bansjora Colliery Company Limited, the transfers were made at face value. The Income-tax Officer found that the cash consideration paid was inadequate because it was far less than the intrinsic or break-up value of the shares. It was also found that in some cases the dividend income of the shares for one year along was almost 100 percent. of the face value of the shares. The details of the transactions will appear from the following statement:

The Income-tax Officer took the view that, though the transfer of shares was made at a price higher than the face value, the price paid was much lower than the real value of- the shares. In reaching this conclusion the Income-tax Officer took into account the high break-up value of the shares and the high expected yield on the basis of the dividends declared. He was accordingly of the view that the' transfer of the shares came within the mischief of sections 16 (3) (a) (iii) and 16 (3) (a) (iv) of the Income-tax Act. It was contended on behalf of the assessee that according to the articles of association of the companies no shareholder could transfer his holding to a person who is not an existing shareholder unless it was first offered to the other shareholders and none of them was willing to purchase those shares. It was argued that, since none of the other shareholders was willing to purchase the shares offered at the prices mentioned by the assessee, it must be taken that the prices paid for the shares were adequate. This contention was rejected by the Income-tax Officer who considered that the case came within the purview of sections 16 (3) (a) (M) and 16 (3) (a) (iv) of the Income-tax Act. The assessee went up in appeal to, the Appellate Assistant Commissioner who dismissed the appeal. When the matter came up in appeal before the Appellate Tribunal it was argued on behalf of the assessee that the transfer of the shares at 150 percent. of the face value should be taken to be a transfer for adequate consideration.. It was also argued that the provisions of section 16 (3) of the Income-tax Act were unconstitutional as there was violation of the fundamental right of equality before the law in Article 14 of the Constitution. Both these arguments were rejected by the Income-tax Appellate Tribunal and the appeal of the assessee was dismissed.

Under section 66 (1) of the Income-tax Act, the Income-tax Appellate Tribunal has referred the following questions of law for determination by the High Court:

"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the shares in the private limited companies were transferred by the assessee to his wife, minor children and to a Hindu undivided family consisting of himself, his wife and minor children, otherwise than for adequate consideration within the meaning of sections 16 (3) (a) (iii) and 16 (3) (a) (iv) of the Income-tax Act

(2) Whether the provisions of sections 1,6 (3) (a) and 16 (3) (b) are ultra vires the Constitution "

After having heard learned counsel for both the parties, I have reframed the questions as follows in order to bring out the real points in controversy between the parties:

"(1) Whether the provisions of -sections 16 (3) (a) and

16 (3) (b) of the Income-tax Act are ultra vines the Constitution

(2) Whether, on the facts and circumstances of the case, the Income-tax Appellate Tribunal was legally justified in holding that the shares in the private limited companies were transferred by the assessee to his wife and minor children otherwise than for adequate consideration within the meaning of sections 16 (3) (a) (iii) and 16 (3) (a) (iv) of the Income tax Act

(3) Whether, on the facts and circumstances of the case, the Income-tax Appellate Tribunal was justified in holding that the shares of the East Sathgram Coal Company Limited were transferred to the Hindu undivided family otherwise than for adequate consideration within the meaning of sections 16 (3) (a) (iii) and 16 (3) (a) (iv) of the Income-tax Act "

The constitutional validity of sections 16 (3) (a) (i) and 16 (3) (a) (ii) of the Income-tax Act has recently been examined by the Supreme Court in Balaji v. Income-tax Officer, Special Investigation. Circle, Akola ((1961) 43 I T R 393 (S C)). It has been held by the Supreme Court in' that' case that the provisions of sections 16 (3) (a) (i) and 16 (3) (a) (ii), did not violate the fundamental right of equality before the law m Article 14 of the Constitution as it made a reasonable classification having regard to the object of preventing evasion of tax. It has also been held by the Supreme Court in that case that the provisions of sections 16 (3) (a) (i) and 16 (3) (a) (ii) did not impose an unreasonable restriction on the fundamental rights guaranteed under Articles 19 (1) (f) and 19 (1) (g) of the Constitution. In view of the decision of the Supreme Court in this case, it must be held that the provisions of sections 16 (3) (a) and 16 (3) (b) of the Income-tax Act do not violate the provisions of Article 14 or Articles 19 (1) (f) and 19 (1) (g) of the Constitution. Accordingly the first question of law must be answered against the assessee and in favour of the Income-tax Department.

As regards the second question, the Government Advocate on behalf of the assessee contended that the Income-tax Authorities were erroneous in taking into account the break-up value of the shares in examining whether the shares were transferred by the assessee to his wife and his minor children for adequate consideration. It was conceded on behalf of the assessee that the question of adequate consideration was a question of fact, but it was argued by the learned Government Advocate that the Income-tax Appellate Tribunal has misdirected itself in law in deciding this question when it took into account the break-up value of the shares. I am unable to accept the argument as correct. In the case of shares of a company for which there is no stock exchange quotation or regular market, it is rarely possible, to estimate the value of the shares from the price at which actual sales may have taken place. Even if the articles of association do not positively restrict the transfer of shares, sales are usually infrequent and do not take place under open market conditions. In such a case the commonest method of valuation is by comparison of past and prospective dividends with the yield on his money which a purchaser would expect, based on the yields obtainable from quoted shares of a similar class, with some allowance for the relative un-marketability of the unquoted shares. This method was approved by the House of Lords in Commissioners of Inland Revenue v. Crossman and Inland Revenue Commissioners v. Mann ((1937) A C 26). In that case the dividends represented a fairly full distribution of the profits. It may, however, happen that there is a wide discrepancy between the amount of the profits earned and the amounts distributed as dividends. In such a case; primary regard must usually be paid to the earnings of the company rather than the dividends in valuing the shares: Salvessen's Trustee v. Commissioners of Inland Revenue ((1930) A T C 43). It may also happen that the value, if calculated on the basis of dividends or earnings, would be considerably less than the "break-up value", i.e., the net amount which the shareholder would receive in the event of liquidation (see M'Connel's Trustees v. Commissioners of Inland Revenue ((1927) S L T 14). "Moreover, even when an early realisation of the assets would not necessarily be advantageous, the assets value' is a relevant factor in the valuation (Salvessen's Trustees v. Commissioners of Inland Revenue. And, where there have been violent fluctuations in results and a disruption of general business conditions by war, so that it is not possible to estimate a future average maintainable profit by arithmetical calculation from past profits and losses, it may be impossible to value the shares other than by reference to the value of the assets as a going concern' Attorney-General of Ceylon v. Mackie ((1952) 2 All E R 775 (P C)), a case under a, Ceylon statute in similar terms to section 7 (5) of the Finance Act, 1894, where the date of valuation, viz., 17th September 1940, was abnormal." Dymond's Death Duties, 13th edition, page 481): It is manifest, therefore, that the break-up value of the shares is a relevant consideration to be taken into account in estimating the value of the shares of a company for which there is no stock exchange quotation or regular market. I would accordingly reject the argument of the learned Government Advocate on this aspect of the case.

It was also contended on behalf of the assessee that, the Tribunal has not taken into account the articles of association of the companies which placed restrictions on the right of transfer of the shares. It was also submitted that the Tribunal has not taken into account the refusal of the members to purchase the shares at the price offered by the assessee. I do not think there is any substance in. this argument. The Tribunal has taken into account the fact that the articles of association of the companies restricted the transfer of the shares. The Tribunal also considered the circumstances that the assessee offered the shares for being purchased by other members who refused to purchase them at the price offered by the assessee. The argument was stressed on behalf of the assessee that the Tribunal has considered the dividend yield of the shares only for the accounting year and not for other years in calculating the value of the shares. It was submitted that the Tribunal should have taken into account the future prospects of the colliery companies. But there is nothing to show that the assessee produced the balance-sheets or the particulars of dividends for the years other than the accounting year, nor was any material produced before the Tribunal to indicate the future prospects of the colliery companies. It is, therefore, manifest that the finding of the Tribunal that consideration was not adequate within the meaning of section 16 (3) (a) of the Income-tax Act is not vitiated by any error of law.

When a case involves a question of fact, the jurisdiction of the High Court to interfere with the finding of the Tribunal is of a very limited character. If the Tribunal decides a question of fact without any material at all, or if the Tribunal decides a question of fact by applying a wrong principle, the High Court has jurisdiction to interfere. Also, in a case where the finding of the Tribunal is perverse, or if the finding is such that it cannot reasonably be entertained upon the material produced, the High Court would have jurisdiction to interfere with the finding of the Tribunal. It was observed by the Supreme Court in a recent case, Sree Meenakshi Mills Ltd. v. Commissioner of Income-tax ((1957) 31 I T R 28), that the findings on questions of pure fact arrived at by the Tribunal would not be disturbed by the High Court on a reference unless it appeared that there was no evidence before the Tribunal upon which they, as reasonable men, could come to the conclusion to which they had come. In other words, the findings of the Tribunal can be reviewed only on the ground that there was no evidence to support it was perverse. In a recent English case, Edwards (Inspector of Taxes) v. Bairstwo ((1955) 28 I T R 579) also, it was stated by Lord Simonds as universally accepted proposition that the Court would interfere with a pure finding of fact it appeared that the Commissioners had acted without any evidence or on a view of the facts which could not reasonably be entertained. Applying the principle to the present case, I am satisfied that the question at issue has not passed from the realm of fact into the realm of law and the High Court has no jurisdiction to interfere with the finding of the Tribunal on the question referred. The principle has been well stated by Lord Sterndale in Currie v. Commissioners of Inland Revenue ((1921) 12 T C 245, 259).

"The first question that has been debated before us is this: Is the question whether a man is carrying on a profession or not, a matter of law or a matter of fact I do not know that it is possible to give a positive answer to that question, because it must depend upon the circumstances with which the Court is dealing. There may be circumstances in which nobody could arrive at any other finding than that what the man was doing was carrying on a profession; and, therefore, taking it from the point of view of a judge directing a jury or any other tribunal which has to find the facts, the Judge would be bound to direct them that on the facts they could only find that he was carrying on a profession. That reduces it to a question of law. On the other hand, there might be facts on which the direction would have to be given the other way. But between those two extremes there is a very large tract of country in which the matter becomes a question of degree; and where it becomes a question of degree it is then undoubtedly, in my opinion, a question of fact; and if the Commissioners come to a conclusion of fact without having applied any wrong principle, then their decision is final upon the matter."

With regard to the third question, I am of opinion that it should be answered in favour of the assessee. The question is whether the transfer by the assessee to a Hindu undivided family of the shares of East Sathgram Coal Company was a transfer of assets within the meaning of section 16 (3) (a) to the wife and minor children of the assessee It is manifest that when property is transferred to a undivided family, income accrues to the joint family from the property so transferred. It could not be said to be income which accrues to any individual member of that family. In this connection it should be noticed that a- Hindu undivided family is a person in the eye of law within the meaning of the Income-tax Act. A Hindu undivided family is, therefore, an assessable unit under that Act. According to the doctrine of Hindu law, the ownership of co-parcenary property is in the whole body of coparceners and no individual member of that family whilst it remains undivided, can predicate, of the joint and undivided property, that he, that particular member, has a definite share. The interest of the coparcener is fluctuating interest capable of being enlarged by deaths in the family and liable to be diminished by births in the family. It is only on a partition that such coparcener becomes entitled to a definite share. As observed by the Privy Council in Katama Natchiar v. Moottoo Vijaya Ranganadha ((1962) 44 I T R 266), there is community of interest and unity of possession between all the members of the family, and upon the death of any one of them the others may well take by survivorship that in which they had during the deceased's lifetime a common interest and a common possession. It is, therefore, manifest that when assets are transferred to a Hindu undivided family these is no transfer, direct or indirect, effected by the transferor in favour of his wife or minor child who may be members of the Hindu undivided family within the meaning of the language of section 16(3)(a). I would accordingly answer the third question of law referred by the Income-tax Appellate Tribunal in favour of the assessee and against the Income-tax Department. This view is borne out by the decision of the Gujarat High Court in Keshav Lal v. Commissioner of Income-tax ((1962) 44 I T R 266).

I do not propose to make any order as to costs of this reference.

.-I agree.

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