VENKATADRI J.

These are references under section 66(1) of the Indian Income-tax Act. The facts out of which the references arise are the following: The assessee in T. C. No. 7 of 1963 is a registered firm, Messrs. Roopchand Chabildass & Sons, who will herein after be referred to as the firm. It consists of two partners, Milapchand R. Shah and Punamchand R. Shah, who are the assessees in T. C. Nos. 9 of 1963 and 14 and 37 of 1963, respectively. The firm was carrying on business in the manufacture and sale of wheat and gram products and also in money-lending. In the month of October, 1954, the said two partners of the firm transferred their flourmills business together with the building, machinery and plant including the goodwill to a limited company floated by the partners themselves called the South India Flour Mills Ltd. for a consideration of Rs. 6, 55, 000. The consideration was satisfied by the allotment of shares in the company. The partners were each debited with Rs. 3, 27, 500. Each partner was credited with his share of the goodwill amounting to Rs. 1, 87, 500. The two partners were also partners in another firm of the same name at Sangali, which will hereafter b