Ramesam, J.

1. This reference under Section 51 Act VII of 1918 relates to the assessing of the Mylapore Hindu Permanent Fund for purposes of income-tax.

2. The fund was established in 1872, being registered under the Indian Companies Act of 1866. It then started with 11,904 shares and gradually increased the shares up to 119,047 shares. A shareholder subscribes one rupee per share per mensem and at the end of seven years draws 102 1/2 rupees and then he ceases to be a shareholder (qua that share). The rate of interest works out at slightly less than 6 1/4 per cent at simple interest. The amount of Rs. 18 1/2 thus earned on each share is described as the guaranteed rate of interest. Other rules reduce the rate earned in case of withdrawal within seven years. A shareholder has to pay interest on the subscription if not paid within the time prescribed by the rules. The Fund gives loans to the shareholders, divided into ordinary loans and special loans. Occasionally when there are large amounts not borrowed by the shareholders they may be invested on fixed or current deposits in outside institutions such as the public Banks of Madras. The excess of interest earned by the Fund ove