VEERASWAMI J.

The question in this reference relating to the assessment year 1960-61 is whether a sum of Rs. 12, 442 was liable to be assessed to tax under section 10(2)(vii) of the Income-tax Act, 1922. Till the year ended March 31, 1959, the assessee was carrying on business in forest contracts. For purposes of that business, he owned three lorries which were valued in its books, as on March 31, 1959, at Rs. 15, 925. The written down value of the lorries as on that date, as per the assessment records, was Rs. 2, 558. By a deed of partnership dated August 5, 1959, the proprietary business of the assessee was converted into a, firm of partnership consisting of himself and another by name V. Abdul Kayoom. The partnership as agreed between the two was to commence as and from April 1, 1959, and it was to be one at will, determinable by either party by notice of a specified period. The net profits and losses of the partnership were to be divided or borne by the partners in the proportion of 9 annas and 7 annas in the rupee as between the assessee and the other partner respectively. Each partner was to contribute a sum of Rs. 4, 000 towards initial capital of the firm. Any ad