(1) THE High Court answered the following question in the affirmative and against the assessee :

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the distribution of the plant and machinery belonging to the assessee firm by it to its partners constituted a transfer of the assets and, hence, it was a case of deemed gift by way of sale of the assets at a consideration less than the market price thereof The assessee is in appeal by special leave.

(2) THE assessee is a partnership firm. It was engaged in the activity of excavating tunnels. It had five partners. During the assessment year under consideration, namely, Assessment year 1979-80, it transferred cetain items of machinery to each of its five partners and debited their accounts with the consideration charged therefor. The aggregate of such consideration came to Rs. 1,26,035/-. This, apparently, was the written down value of the machinery in the assessees books. About three months later, the five partners floated another partnership and brought in the said machinery as their capital contribution thereto, of the value of Rs. 9,48,100/-. Then, the new partners