VIMADALAL, J. - (1.)THIS is a reference at the instance of the CIT in which the following question has been formulated for our decision :
"Whether, on the facts and in the circumstances of the case, the assessee firm had made any profit liable to be assessed under S. 10(2)(vii) of the Indian IT Act, 1922 ?"

(2.)THE facts of the case are very simple. The assessee was a firm consisting of two partners, Puranmal as representing one HUF, and Manilal as representing another HUF. The firm had acquired certain assets, including machinery, on which depreciation was being allowed in the assessments under S. 10(2)(vi) of the Act.
The firm was, however, dissolved as from 6th April, 1949. On the 19th April, 1949, two documents were executed between the partners, one a deed of dissolution and the other a deed of release. In both these documents it was provided that Puranmal, who retired from the firm leaving the entire business to be carried on by Manilal, was to be paid a sum of Rs. 1,25,000 for transferring his right, title and interest in the assets of the firm mentioned in the said deeds, which included machinery of which the price was fixed at Rs. 92,500. It must be stated that the price of Rs. 92,500 fixed for the said machinery was in excess of the written down value thereof by a sum of Rs. 20,360. In the assessment made originally on the firm for the asst. year 1950 51, the said sum of Rs. 20,360 had not been included by the ITO in the profits of the firm, and for bringing that amount in the assessment, the ITO, therefore, started proceedings under S. 34 of the Indian IT Act, 1922, both in the case of the firm as well as in the case of its two partners. In the course of those proceedings, the ITO took the view that there was a sale by the firm of the machinery to its partners on which a deemed profit of Rs. 20,360 should be assessed under S. 10(2)(vii) of the Act. On appeal, the AAC took the view that there was no sale by the firm to the partners, but on a proper interpretation of the two documents, viz., the deed of dissolution and deed of release, it was Puranmal who had, on acquiring his share in the assets of the firm, sold it back and made such profit, and he, therefore, accepted the appeal of the firm, as well as the appeal of the partner, Manilal, but directed that the relative profit should be assessed in the hands of Puranmal. On appeal to the Tribunal, the Tribunal took the view that it was a mere case of a division of assets between the two partners on the dissolution of their firm and, therefore, there could not be said to have been a sale of machinery by the firm to its partners, or a sale of machinery by Puranmal by relinquishing his right therein. In taking that view, the Tribunal relied on two decisions of this Court, one in the case of CIT vs. Sir Homi Mehta's Executors (1955) 28 ITR 928 (Bom), and the other in the case of Rogers & Co. vs. CIT (1958) 34 ITR 336 (Bom). The Tribunal, therefore, held that no profit could be assessed in the hands of Puranmal, as the provisions of S. 10(2)(vii) of the Act did not apply. It is from that order that this reference in which the question set out above has been referred to us at the instance of the CIT, arises.

(3.)MR . Joshi has very fairly stated to us at the very outset of his arguments that, though the two decisions of this Court, the one in Sir Homi Mehta's Executor's case (supra) and the other in Rogers & Co.'s case (supra), relied upon by the Tribunal are, according to him, no longer good law in view of the decision of the Supreme Court in the case of CIT vs. B. M. Kharwar (1969) 72 ITR 603 (SC), if we take the view that the taking over of the assets by Manilal was part of the transaction of dissolution, the matter is now concluded by two other later decisions of the Supreme Court, one in the case of CIT vs. Dewas Cine Corporation (1968) 68 ITR 240 (SC), and the other in the case of CIT vs. Bankey Lal Vaidya (1971) 79 ITR 594 (SC). According to Mr. Joshi, the question as to whether or not the taking over of the assets by Manilal was part of the transaction of dissolution must be determined only on a construction of the deeds of dissolution and release. I do not agree with Mr. Joshi that the question as to whether the taking over the assets by Manilal was part of the transaction of dissolution has to be determined only on a construction of those documents. In my opinion, that question is a question of fact in regard to what transpired in the course of the transaction resulting in the dissolution of the firm, and, as such, it must be regarded as concluded by the Tribunal's finding. Once the legal aspect of the question is, therefore, also concluded, as it is by the decisions of the Supreme Court in Dewas Cine Corporation's case (supra) and Bankey Lal Vaidya's case (supra), the question referred to us on this reference must, in my opinion, be answered against the Revenue.