Judgment

HEGDE, J. :- These are cross-appeals by certificate. They arise from the decision of the Calcutta High Court in a Reference under Section 66 (1) of the Indian Income-tax Act, 1922 (to be hereinafter referred to as the Act). At the instance of the assessee as well as the Commissioner, the Income-tax Tribunal B Bench, Calcutta stated a case and submitted as many as five questions to the High Court for obtaining its opinion. Some of the questions referred to the High Court have not been pressed before this Court. Therefore we shall not refer to them. The questions that were pressed before us are :

"(1) Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the proceedings under Section 34 (1) (a) have been validly initiated ?

(2) Whether on the facts and in the circumstances of the case, any capital gains within the meaning of Section 12-B could be said to arise by the transaction involving transfer of the investments held by the assessee to the Company, admission of the Company as a partner in the assessee firm and issue of shares of the Company to the public and

(3) Whether on the facts and in the circumstances of the case, the Tribu