P. B. MUKHARJI, J.

( 1 ) IN this Reference under Section 66 (2) of the Income-tax Act the High Court directed the Tribunal to refer the following question for its decision:"whether on the facts and in the circumstances of the case the Tribunal was right in holding that the sum of Rupees forty thousand two hundred and forty seven could not be deemed to be profits of the assessee company under second proviso to Section 10 (2) (vii) of the Indian Income-tax Act?"

( 2 ) THE assessee is Associated Clothiers Ltd. of 21, Old Court House Street, Calcutta and is a private Limited Company. It was formerly carrying on business as clothiers and dealers under the name of M/s Phelps and Company Limited. M/s Phelps and Co. started as a partnership on the 5th February, 1912 and was later converted into a Limited Company on the 30th September, 1939, On the 21st March, 1952 the name of Phelps and Company Ltd. was changed into the name of the assessee. But on the same day a new Phelps and Co. was incorporated. On this 21st March, 1952, there was an agreement between the Associated Clothiers Ltd. , the assessee, described as having its registered office at 5, Mission Row Extension, Calcutta and calle

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