( 1 ) THE Income-Tax Appellate Tribunal, bangalore Bench, Bangalore, has referred at the instance of the Department, the following question under Section 256 (1) of the Income-Tax Act, 1961 (hereinafter referred to as the Act) for the opinion of this Court :"whether, on the facts and in the circumstances of the case, the I. T. A. T. is right in holding that the provisions of Section 64 (1) (vii) do not apply in the present case ? "

( 2 ) THE assessee in this reference is an individual. M/s D. L. Narasimhaiah family Trust and M/s. M. D. Veeranarasimhaiah family Trust are partners in the registered firms of M/s. Jaya and Co. , and m/s. D. L. Narasimhaiah and Brothers. D L. Narasimhaiah is the other partner in the firm M/s. D L. Narasimhiah and Brothers while M. D. Venkatanarasimhiah is the other partner in the firm M/s. Jaya and Co. In the D. L. Narasimhaiah Family Trust the beneficiaries are the 5 minor children of the said Narasimhaiah represented by their mother, trustee in the firm of M/s. Jaya and Co. Similarly in the Veeranarasimhiah trust the 3 minor children of veeranarasimhiah are represented by their mother as the trustee in the registered firm of Narasimhi