Ramaswami, J.

1. Legislation dealing with capital gain was first introduced in India by Section 6, Income-tax (Amendment) Act of 1947 (Act 22 of 1947). Sec.12B(1) which was newly enacted provided that

"in respect of any profit or gain arising in the sale, exchange or transfer of capital asset effected after 31-3-1946"

income-tax was payable by the assessee and

"such profits and gains shall be deemed to be income of the previous year in which sale, exchange or transfer took place."

The section was amended by virtue of Section 8, Finance Act of 1949 and the phrase "and before 1st April 1948" was added after the phrase "after 31st March 1946". The result therefore is that the assesses is liable to pay income-tax on capital gain in respect of the transfer of capital after 31-3-1946 and before 31-4-1948.

2. The assessee in this case is partnership called Messrs. Bhurangiya Coal Company. By an agreement dated 16-3-1946 the assessee agreed to transfer to a limited company, Bhurangiya Coal Co. Ltd. the properties described in Schedules 1 and 2 of the agreement consisting of all the movable and immovable properties appertaining to the colliery. The agreement was that the limited com