Judgement

T. L. VENKATARAMA AIYAR, J. : This is an appeal against the judgment of the High Court of Patna in a reference under S. 66 (1), Indian Income-tax Act, 1922. The respondent is a firm and was the owner of a colliery, at a place called Bhurangya. On 16-3-1946, it entered into an agreement to sell the colliery, lands, super-structures, machinery and fixtures to a company called Bhurangya Coal Co. Ltd., for a consideration of Rs. 6,10,000. There is a schedule attached to the deed of agreement and thereunder are set out in great detail all the properties which are the subject-matter of the agreement. It consists of two parts; the first part includes land, building and the structures and the second part consists of movables including machinery, trucks, pipes, motor cars and the like. The value of the property mentioned in Part 1 is fixed at Rs. 2,00,600 and that of the properties described in the second part at Rs. 4,09,400. It is recited in the agreement that the properties mentioned in the second part are capable of being transferred by delivery it may be mentioned that the Bhurangya Coal Company Ltd., was incorporated only on 18-3-1946. But two of the promoters of the company