Rajagopalan, J.-The assessee and V. Gopal Naidu were partners in each of the three partnership concerns (1) R.G.S. Naidu and Co., (2) T.A. Ramalingam Chettiar Sons and Company and (3) A.G. Guruswami Naidu and Company. R.G.S. Naidu and Company were the Managing Agents of the Coimbatore Spinning and Weaving Company Limited. T.A. Ramalingam Chettiar Sons and Company were the Managing Agents of Sri Murugan Mills, Ltd. A.G. Guruswami Naidu and Company were the Managing Agents of Sri Radhakrishna Mills, Limited. Clauses 8 and 9 of the deed of partnership of R.G.S. Naidu and Company ran: "8. The partners shall have an individual right to sell or mortgage his share or interest in the partnership, but such partner before selling or mortgaging it to a stranger shall make the offer by due notice to each of the other co-partners who shall have the first option to purchase the share at a valuation determined by all the partners or their assigns for the time-being. "9. But in case a stranger purchases the share of any of the partners, the mode of conducting the business and the interference in the business of this firm shall be at the option of the original partners or their assigns or successors remaining then ". The deed of partnership of T.A. Ramalingam Chettiar Sons and Company gave even wider rights. Clause (6) of that deed ran: "We six each can sell his right in the partnership to anyone agreed to by the other partners. The person buying will get all the rights and be a partner in his place". In the case of A.G. Guruswami Naidu and Company the preamble itself recited:- "We agree individually to the agreement hereby entered into viz., each of us or the heirs or assigns of each ......." R. G. S. Naidu and Company were the Managing Agents of the Coimbatore Spinning and Weaving Company Limited. Clause (16) of the Managing Agency Agreement between the company and the partnership firm provided: "It shall be lawful for the said firm to assign this agreement and the rights of the said firm hereunder to any person, firm or company .... and upon such assignment being made and notified to the said company, the said company shall be bound.....to recognise the person or firm or company aforesaid as the agents and secretaries. ... and upon such assignment being made and notified to the said company, the said company shall be bound.....to recognise the person or firm or company aforesaid as the agents and secretaries. ... in lieu of the said firm." Clause (19) of that agreement ran: "It shall be lawful for any member of the said firm to assign the whole or any portion of the interest in the said firm or to withdraw from the said firm altogether without thereby in any way affecting the appointment of the said firm as such agents and secretaries as aforesaid ". In paragraph 2 of the Statement of the Case it was recorded: "The assessee’s share in R. G. S. Naidu and Company was transferred in favour of Gopal Naidu in exchange for the latter’s shares in T. A. Ramalingam Chettiar Sons and Company and A. G. Guruswami Naidu and Company under an agreement entered into between the assessee and Gopal Naidu on 30th April, 1946. The transfer itself was to take effect from 1st April, 1946. As a condition of the transfer, Gopal Naidu paid Rs. 1,00,000 in cash in addition to the shares held by him in the other two firms and transferred by him to the assessee ". No document was placed before us to evidence these transfers, but that these were the terms of the transfer was never in dispute. The departmental authorities treated this sum of Rs. 1,00,000 received by the assessee as capital gains, liable to tax under section 12-B of the Income-Tax Act in the assessment year 1947-48 for the corresponding account year of the assessee ending with 31st March, 1947. The assessee appealed without success to the Appellate Tribunal. The Appellate Tribunal referred the following questions to this Court under section 66(1) of the Act: "1. Whether the sum of Rs. 1,00,000 received by the assessee during the year of account can be assessed to tax under the provisions of section 12-B of the Indian Income-Tax Act; and 2. Whether the sum of Rs. 1,00,000 was paid as a consideration for the transfer of capital asset or as a compensation for loss of future profits ". But for the strenuous arguments of Mr. Subbaraya Ayyar, the learned counsel for the assessee, we should have thought the narration of facts should have itself sufficed to answer both the questions against the assessee. 1,00,000 was paid as a consideration for the transfer of capital asset or as a compensation for loss of future profits ". But for the strenuous arguments of Mr. Subbaraya Ayyar, the learned counsel for the assessee, we should have thought the narration of facts should have itself sufficed to answer both the questions against the assessee. The learned counsel for the assessee contended (1) that the right of a partner in a partnership which had a managing agency was not a capital asset as defined by section 2(4-A) of the Act, and (2) even if it was a capital asset, the requirements of section 12-B of the Act were not satisfied in this case, because there was no sale, exchange or transfer. What section 12-B subjects to tax is the profits and gains arising from the sale, exchange or transfer of a capital asset effected after the 31st day of March, 1946 and before the 1st day of April, 1948. It was common ground that none of the provisos to section 12-B applied to the claim of the assessee. Section 2(4-A) runs: "Capital asset means property of any kind held by an assessee, whether or not connected with his business, profession or vocation, but does not include- (i) any stock-in-trade, consumable stores or raw materials held for the purposes of his business, profession or vocation: (ii) personal effects, that is to say, movable property (including wearing apparel, jewellery and furniture) held for personal use by the assessee or any member of his family dependent on him ; (iii) any land from which the income derived is agricultural income “. It is true that property has not been further defined by the Income-Tax Act. Nonetheless we are unable to accept the contention of the learned counsel for the assessee that his share in a partnership concern is not property within the meaning of section 2(4-A) of the Act. In J.K. Trust, Bombay v. Commissioner of Income- Tax and E.P. T.1 the learned Judges referred to the decision of the Privy Council in Commissioner of Income-tax v. Gurrimbhoy and. Sons2, and observed: ”.....in that case the Privy Council was considering the meaning to be given to the expression “property”. In J.K. Trust, Bombay v. Commissioner of Income- Tax and E.P. T.1 the learned Judges referred to the decision of the Privy Council in Commissioner of Income-tax v. Gurrimbhoy and. Sons2, and observed: ”.....in that case the Privy Council was considering the meaning to be given to the expression “property”. They were construing the word “ property” as used in section 42 (1) of the Act and the opinion their Lordships gave was that the word “property” as it occurs in sub-section (1) of section 42 could not be given so special a colour but was used as an ordinary English word to be taken in its usual signification subject to the context provided by the rest of the sub-section... The Privy Council has emphasised the fact that there is no definition given of the expression “ property” in the Act, and property must be construed in its plain natural meaning subject to the context in which that expression occurs.“ The learned Judges went on to hold that in the case before them it was not necessary to decide the questions, whether the commission earned by the Managing Agents was as a result of the contract whether that commission constituted a benefit under the contract and the benefit under the contract would be property within the meaning of section 4 (3) (1). We are concerned in this case with the question, whether the assessees’ shares in the partnership concerns constituted property within the meaning of section 2 (4-A) of the Act. Except for what has been excluded by section 2 (4-A) itself, the term, property, has to be given its ordinary meaning in the English language. It would be impossible to hold that a share in a partnership is not property. In Guruswami Naidu v. Commissioner of Income-tax3, the learned Judges observed: ” The assessee purchased for his exclusive benefit the interest of Palaniappa Chettiar, one of the partners who owned a five anna interest in the partnership. For acquiring that asset which was a profit-yielding one he had to expend this amount. It is in the nature of capital expenditure for acquiring a profit-yielding asset“. We respectfully agree with the view of the learned Judges, that a share in a partnership is a profit-yielding asset. That would certainly make it property within the meaning of section 2(4-A). For acquiring that asset which was a profit-yielding one he had to expend this amount. It is in the nature of capital expenditure for acquiring a profit-yielding asset“. We respectfully agree with the view of the learned Judges, that a share in a partnership is a profit-yielding asset. That would certainly make it property within the meaning of section 2(4-A). In A.R. Rangachari v. Commissioner of Income-tax4, we had occasion to point out at page 541 of the report the difference between a share in the partnership as an asset, and a mere right to receive a share in the profits without an assignment of the share itself. In T. Sadasivam v. Commissioner of Income-Tax5, we quoted with approval the observation of Lord Macmillan in Van Den Bergh’s Case6. ‘In my opinion that asset, the congeries of rights which the appellants enjoyed under the agreements and which for a price they surrendered was a capital asset.” Applying that dictum to the agreement between the assessee and his partners in the three firms we have mentioned above and also to the managing agency agreement between R.G.S. Naidu and Company and the Coimbatore Spinning and Weaving Company Limited, we should hold that the congeries of rights which the assessee enjoyed under the agreements and which for a price he conveyed to Gopal Naidu constituted a capital asset. In Commissioner of Income- Tax, Bombay City v. Asiatic Textile Company, Ltd., Bombay1, the learned Judges had no difficulty in holding that the rights under a managing agency agreement constituted a capital asset. Only in that case which was one of surrender, the learned Judges came to the conclusion, that section 12-B did not apply as there was no sale, exchange or transfer of a capital asset within the scope of section 12-B. In Kishen Prasad Co., Ltd. v. Commissioner of Income-Tax2, which the Supreme Court pointed out at page 53 “ . . . . the managing agency of a mill . . . . . . the managing agency of a mill . . . no doubt would have been an asset of an enduring nature and would have brought them profits......” The learned counsel for the assessee contended that what was payable under the managing agency agreement between R.G.S. Naidu and Company, of which the assessee was a partner, and the Coimbatore Spinning and Weaving Company Limited, was really remuneration for services rendered by each of the partners, and that therefore the right to receive such remuneration would not be property within the meaning of section 2(4-A). Clauses (16) and (19) of the managing agency agreement, which we have already set out, should suffice to repel this contention. It was a transferable right that R.G.S. Naidu and Company obtained under the managing agency agreement. Clause (19) specifically recognised the right of each partner of the partnership concern to transfer or assign his rights without in any ‘way impairing the continuance of the managing agency agreement. In Lakshminarayan Ram Gopal v. Government of Hyderabad3, their Lordships of the Supreme Court pointed out at page 460: “When a partnership firm comes into existence it can be predicated of it that it carries on a business, because partnership, according to section 4 of the Indian Partnership Act, is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.” Therefore, where a partnership acquires a right of managing agency, it carries on business, and the right of managing agency itself is one of the assets of that business. At page 458 their Lordships pointed out that in the case before them the appellants were the agents of the company and not merely servants of the company remunerated by wages or salary. As we said the terms of the managing agency agreement should themselves suffice to repel the contention of the learned counsel for the assessee, that what was payable to the managing agents was salary and that the relationship between the company and the partnership firm was that of master and servant. As we said the terms of the managing agency agreement should themselves suffice to repel the contention of the learned counsel for the assessee, that what was payable to the managing agents was salary and that the relationship between the company and the partnership firm was that of master and servant. The learned counsel for the assessee referred to E.D. Sassoon and Co., Ltd. v. Commissioner of Income-tax4, but we are unable to find anything in that case to help the contention of the assessee, that what was payable under the terms of the managing agency agreement in the case of the assessee’s partnership was salary, and that the relationship between the company and the managing agent was that of master and servant. Summing up what we have stated earlier, we hold that the share which the assessee had in each of the three partnership concerns was a capital asset within the meaning of section 2 (4-A) of the Act. The next question is was there a sale, exchange or transfer of the assessee’s capital assets. As we pointed out earlier, no document evidencing the transaction between the assessee and Gopal Naidu was placed before us. But the accuracy of the statement in paragraph 2 of the Statement of the case submitted by the Tribunal was never in dispute. It was a condition of the transfer of the share of the assessee in R.G.S. Naidu and Co., to Gopal Naidu that Gopal Naidu transferred to the assessee the share held by Gopal Naidu in the other two partnership concerns to the assessee and paid in addition a sum of Rs. 1,00,000. There were all the elements of a sale in the transaction, which involved both exchange and transfer of capital assets. The second of the questions referred to this Court was whether this sum of Rs. 1,00,000 represented the consideration for the transfer of a capital asset or was Compensation for loss of future profits. The managing agency agreement between R.G.S. Gopal Naidu and Company and Coimbatore Spinning and Weaving Company Limited was left unimpaired by the transfer effected by the assessee in favour of Gopal Naidu of the transferrers share in the partnership concern, R.G.S. Naidu and Company. The managing agency agreement between R.G.S. Gopal Naidu and Company and Coimbatore Spinning and Weaving Company Limited was left unimpaired by the transfer effected by the assessee in favour of Gopal Naidu of the transferrers share in the partnership concern, R.G.S. Naidu and Company. No doubt, thereafter the assessee was not entitles to claim any share in the profits earned by R.G.S. Naidu and Company, but could hardly be said that the transaction between the assessee and Gopal Naidu should be viewed as compensation for loss of future profits which R.G.S. Naidu and Company could hope to earn. Our answer to the second question is that the sum of Rs. 1,00,000 was paid by Gopal Naidu as consideration in part for the transfer of a capital asset. In addition, as we pointed out above, Gopal Naidu transferred his share in the other two partnership concerns to the assessee. Our answer to the first question is in the affirmative and against the assessee. As the assessee has failed, he will pay the cost of this reference. Counsel’s fee Rs. 250. V.S. ----- Answer accordingly.