SETHURAMAN J.

This reference is at the instance of the Commissioner of Income-tax, Tamil Nadu IV, Madras, and is under s. 256(1) of the I.T. Act The following question has been referred

"Whether, on the facts and in the circumstances of the case, it has been rightly held that there was no transfer of assets in the assessee's case within the meaning of section 2(47) read with section 45 of the Incometax Act, 1961 ?" *

The assessment year under consideration is 1968-69, for which the previous year ended on March 31, 1968. One Damodaran Nair was carrying on business in bus service under the name and style of Andavar Transports, Devakottai, till March 3l, 1967. On April l, 1967, he converted the individual business into a partnership business in which he and his two nephews, H. Rajan and H. Kannan Unni, were the partners. Damodaran Nair had a half share in the firm and others had one-fourth share each. The ITO was of the view that the buses along with routes had been transferred by Damodaran Nair to the partnership at the same value as they stood in the books of Damodaran Nair. The ITO was of the opinion that the transfer was for less than the market value. He took the (marke