Judgement

SIKRI, J.: This appeal by special leave is directed against the judgment of the High Court of Andhra Pradesh answering the question referred to it under S. 66 of the Income-tax Act, 1922, against the appellant. The question referred to was "whether on the facts and in the circumstances of the case a sum of Rs.79,494 is assessable as capital gains in the assessment year 1948-49."

2. The facts relevant to the question are as follows. The assessment year in question is 1948-49 and the accounting year is the official year 1947-48. The appellant hereinafter referred to as the assessee Alapati Venkataramaiah, was the proprietor of Mohan Tile Works, engaged in the manufacture of tiles and bricks and owned the factory buildings, plant and machinery. The assessee entered into an agreement dated March 17, 1948, with one Shri Manthena Venkata Raju agreeing to sell to the Mohan Industries Limited, hereinafter called the Company, the aforesaid factory, plant, machinery, furniture, stocks and goodwill for a sum of Rs.2,00,000. The agreement recited that the assessee had been carrying on business under the name and style of Mohan Tile Works at Tenali and that the company to be called the