( 1 ) THIS reference has been made under section 66 (1) of the Indian Income-tax Act 1922 at the instance of the Commissioner of Income-tax Bombay North Ahmedabad. The assessee in this case is the Viramgam Mills Company Limited. The relevant assessee year is 1952-53 the accounting year being the calendar year 1951. The assessee Company is one in which at the relevant time the public were not substantially interested as envisaged under sec. 23a of the Income-tax Act. The balance-sheet of the Company for the accounting year showed the paid up capital of the Company as Rs. 6980 On the liability side of the balance-sheet there was the Buildings and Machinery Depreciation Fund amounting to Rs. 6 24 948 the Reserve Fund amounting to Rs. 2 20 0 and the Income tax Fund in excess of requirement amounting to Rs. 93 387 making in all Rs. 9 38 335 The sum of Rs. 6 24 948 under the leading Buildings and Machinery Depreciation Fund and been carried forward from year to year in the balance sheets of the Company from the sear 1946 onwards. In 1946 the assessee Company had sold its buildings and machinery and realised a sum of Rs. 400 for its buildings and Rs. 21 99 38 for its machin