JUDGMENT

SHAH J.-An association of five persons carried on a business in the name and style of "Morning Star Bus Service" - hereinafter called "the service". On May 31, 1955. the business was transferred to the Morning Star Bus Service (Private) Ltd.-hereinafter called " the company ". The assets transferred by the service to the company consisted of seven motor buses and a workshop, and the consideration for the transfer as entered in the profit and loss account of the service was Rs. 74,000. The written down value of the seven motor buses in the books of account of the service was Rs. 24,302. In a proceeding for assessment to tax in the year 1956-57 the Income-tax Officer held that out of the consideration of Rs. 74,000, Rs. 4 000 should be allocated to the workshop assets (in respect of which no depreciation had been previously allowed), and the balance of Rs. 70.000 be taken into account under section 10(2)(vii). proviso two, of the Indian Income-tax Act, 1922, as profit of the service. The Appellate Assistant Commissioner agreed with the view of the Income-tax Officer. He observed that" the sale value of the assets would be taken at Rs. 70,000 for the 7 buses " and the excess