JUDGMENT

M. C. DESAI, C.J. - The Income Tax Appellate Tribunal Delhi, has, at the instance of the assessee, referred a statement of the case to this court for its opinion on the three questions given below :

"(1) Whether on a true interpretation of the provisions of section 18 and 14(7) of the U. P. Government Encumbered Estates Act, 1934, the liability for the debts and interest thereon due from Wahiduddin had passed on the U. P. Government with the passing of the decree on February 18, 1940, by the special judge appointed under the U. P. Encumbered Estates Ac ?

(2) If the answer to question No. 1 is in the affirmative whether on the facts and in the circumstances of the case the surplus of Rs. 79,347 being the difference between the market price of the U. P. Government Encumbered Estate Bonds and the balance of the debt due from Wahiduddin was revenue income liable to tax ?

(3) Whether the receipt by the assessee of the sum of Rs. 58,266 in April, 1935, during the execution proceedings of the decree was rightly treated by the Tribunal as receipt towards the principal of the deb ?"

From the statement I find that the assessee advanced a loan of Rs. 1,50,000 to two brothers, Wahiduddin a