H. R. KHANNA, C. J.

( 1 ) FOLLOWING question has been REFERRED TO to this Court under section 66 (1) of the Indian Income-tax Act, 1922 (hereinafter REFERRED TO to as the Act) :-

"whether the sum of Rs. 83,624. 00 was rightly assessed under section 12b of the Indian Income-tax Act, 1922?"

( 2 ) THE case relates to assessment year 1947-48, the previous year for which ended on March 1, 1947. The assessee is an individual who was carrying on business under the name and style of Mumick Opticians at Connaught Place, New Delhi. A private limited company called "mumick Limited" (hereinafter REFERRED TO to as the Company) was incorporated with the assessee as its Managing Director to take over the said business. An agreement to that effect was entered into between the said Company and the assessee on September 16, 1946- The nominal capital of the Company was Rs. 5 lakhs divided into 5000 ordinary shares of Rs. 100. 00 each. Clauses I and 2 of the agreement read as under :-

"1. The Vendor sells and the Company purchases :

FIRST the goodwill of the said business (with the exclusive right to carry on the business under the name and style of Mumik and represent the company as carrying on such busi

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