Judgement

SHAH, C.J.I. : The respondent who is the Karta of a Hindu Undivided Family entered on behalf of the family into a partnership with one Devi Sharan Garg to carry on the business of manufacturing and selling pharmaceutical products and literature relating thereto. On July 27, 1946 the partnership was dissolved. The assets of the firm which included goodwill, machinery, furniture, medicines, library and copyright in respect of certain publications were valued at the date of dissolution at Rs. 2,50,000/-. The respondent was paid a sum of Rs. 1,25,000 /- in lieu of his share and the business together with the goodwill was taken over by Devi Sharan Garg.

2. In proceedings for assessment of the respondent for the year 1947-48 the Income-tax Officer sought to bring an amount of Rs. 70,000/- to tax as capital gains. The contention raised by the respondent that no part of the amount of Rs. 1,25,000/- received by the respondent represented capital gains was rejected by the Incometax Officer, Appellate Assistant Commissioner and the Income-tax Appellate Tribunal. The Tribunal however reduced the amounts of capital gains brought to tax to Rs. 65,000/-. The Tribunal referred the followin