ORDER K.K. Dube, J - 1. This and the other six applications are made at the instance of the Additional Commissioner of Income Tax seeking a direction of this Court to direct the Income tax Appellate Tribunal to state the Case and refer questions of law arising out of the orders of the Tribunal, in I.T.A. Nos. 1531, 1532 and 1533 of 1969-70; 454 and 3735 of 1970-71 and 580 and 581 of 1971-72 The order in this case shall also govern the disposal of Misc. Civil Case Nos. 104/76, 105/76, 106/76, 107/76, 108/76 and 109/76. 2. Though the seven cases relate to different periods, the controversy arising out of them is common. The parties are the same and the facts are also similar. The Income-tax Appellate Tribunal refused to draw up the statement of the case and hence the above application. 3. The assessment years in question are 1961-62; 1962-63; 1963-64; 1964-65; 1965-66; 1968-69 and 1969-70 and the corresponding previous years are calendar years 1960, 1961, 1962, 1963, 1964, 1967 and 1968, The brief facts necessary for appreciating the controversy in the above cases are these: The erstwhile Maharaja of Gwalior was carrying business of banking in the name and style of Krishnaram Baldeo Bank. The assessee company was incorporated on 4.1.1958 to take over the banking business of the Maharaja. The banking business of Maharaja was taken over with effect from 17-4-1953. At the time of taking over the business the assets were valued at 2, 21, 69, 441/- while the liabilities were determined at Rs. 1,54, 21, 343/-. The capital of the Maharaja in the business, therefore, worked out to Rs. 67, 48, 098- The transfer of the banking business to the assessee private limited company was in consultation with the Reserve Bank of India and in accordance with the scheme which had its approval, the assessee company was accepted as a scheduled Bank by the Reserve Bank. The paid up capital of the assessee Bank was Rs.25,00,000 divided into 50,000 ordinary shares of Rs.50- each. The Maharaja was allotted 49, 899 shares of Rs. 50 each in lieu of the business transferred to the company. The excess of the book value of the assets over the face value of the shares which came to Rs 42, 53, 148.00 was appropriated as reserves, on the date when the business was transferred to the assessee company. The Maharaja was allotted 49, 899 shares of Rs. 50 each in lieu of the business transferred to the company. The excess of the book value of the assets over the face value of the shares which came to Rs 42, 53, 148.00 was appropriated as reserves, on the date when the business was transferred to the assessee company. The reserve fund included Rs. 10.00,000 as contingency reserve, Rs. 25,00,000,00 as statutory reserve; Rs. 80, 239 as reserve for doubt-fuldebts and Rs. 35, 909 as provision for gratuity included in the capital thus transferred to the assessee Bank sold in subsequent years. The securities were given a book value at the time of transfer and the Income-tax Officer as also the Appellate Tribunal found that the book value thus shown was not inflated and was shown correctly, when the securities were sold year after year, an income was made by the assessee Bank and this income, according to the assessee, was the sale-price minus the book value at which the securities had been purchased. The department does not agree with this contention. According to the department; since the assets of the Maharaja were transferred at a low price and a saving was made at the stage, this saving should be proportionately added to the sale-price of the securities. 4. The assessee made the following sales of the securities:- For the 1st year - Rs. 31,26,413 For the 2nd year - Rs. 5,68,137 For the 3rd year - Rs. 4,4l,290 For the 4th year - Rs. 5,76,261 For the 5th year - Rs. 13,20,234 For the 6th year - Rs. 4,04,100 For the 7th year - Rs. 3,00,000 the book value of the securities was as shown below:- For the 1st year - Rs. 27, 81, 976 For the 2nd year - Rs. 5,50,532 For the 3rd year - Rs. 4,35,772 For the 4th year - Rs. 5,40,059 For the 5th year - Rs. 12,98,459 For the 6th year - Rs. 3,99,655 For the 7th year - Rs. 2,95,860 According to the assessee, the surplus on account of these sales was For the 1st year - Rs. 3,34,437 For the 2nd year - Rs. 17,605 For the 3rd year - Rs 5,517 For the 4th year - Rs. 36,202 For the 5th year - Rs. 33,935 For the 6th year - Rs. 4,445 For the 7th year - Rs. 4,140 5. 3,34,437 For the 2nd year - Rs. 17,605 For the 3rd year - Rs 5,517 For the 4th year - Rs. 36,202 For the 5th year - Rs. 33,935 For the 6th year - Rs. 4,445 For the 7th year - Rs. 4,140 5. The Income-tax Officer as already stated, took the view that when the assessee company started, it had taken over net assets worth Rs. 67,48, 098 from the Maharaja, by allotting to him shares of the face value of Rs. 24,94,950. The difference between the two amounts represented the saving which the assessee had effected in taking over the assets of the business which belonged to Maharaja On a rough estimate, he determined the saving at 22% and on that footing, arrived at the profit realised on the sale of securties for each of the years thus: For the 1st year - Rs. 9,50,203 For the 2nd year - Rs. 1,38,372 For the 3rd year - Rs.84,140 For the 4th year - Rs. 1,33.590 For the 5th year - Rs 50,428 For the 6th year - Rs. 39,842 For the 7th year - Rs. 23,324 6. Similarly, for the first year in question the assessee had written off bad debts amounting to Rs. 1,55,728. This included three debts namely. Rs.1,51,942 in the account of Rai Bahadur Seth Dunichand and others, Rs.3,498 in the account of Shri Kamal Narain and Rs. 288 in sundry accounts. The Income-tax Officer did not dispute the claim that the debts were trade debts. He, however, disallowed the amount on the ground that the assessee had made a saving of 22% while taking over the assets and since the bad debts written off were less than 22% of the value of the debts taken with the assessee was not entitled to any deduction. 7. The Assistant Appellate Commissioner in appeal took the view that the real value of the shares of the assessee company alloted to the Maharaja was not the face value at Rs. 24,94,950 but Rs. 67,48,098 which was the value of the net assets taken over by the assessee company. He, therefore, deleted the additions made by the Income tax Officer on account of the profit of sale of securities and he also allowed Rs. 1,27,628 as bad debt for first year. 24,94,950 but Rs. 67,48,098 which was the value of the net assets taken over by the assessee company. He, therefore, deleted the additions made by the Income tax Officer on account of the profit of sale of securities and he also allowed Rs. 1,27,628 as bad debt for first year. The Income-tax Appellate Tribunal endorsed the view taken by the Assistant Appellate Commissioner and held that the assessee company had not effected any saving in acquiring the assets as alleged by the Income Tax Officer and the cost of assets must be taken to be the cost as recorded in the books of business first when it was owned by the Maharaja and later when it was transferred to the assessee company. The tribunal found that though the face value of each of the shares allotted to Maharaja in the assessee company was Rs. 50 in actual fact it was worth Rs. 127 and the the excess represented the premium paid on the shares There was no dispute regarding the valuation of the property. The book value was not shown in any manner to be inflated or manipulated There was also no dispute even about the valuation of the liability to the outsider. Since there was no, dispute as regards the valuation of the property, no question of law arose: for being referred to the High Court. 8. The Additional Commissioner of Income - tax contends - that a question of law arises as to whether the Tribunal was justified ill the circumstances of the case to hold that the company had not effected any saving in acquiring the assets and that the coat of the assets moot be taken to be the cost as re-corded in the book of business first when it was owned by the Maharaja of Gwalior and later when it was transferred to the company. 9. Shri M.C. Jain, learned counsel appearing on behalf of the department contends that the value of securities sold by the assessee company were, in effect, acquired by the assessee company at a cheaper rate. The saving of 22% of the book value of the securities must, therefore, be added as income of the assessee. 10. It was permissible in law to allot shares for considerations other than cash. There was nothing wrong in transferring the assets worth Rs 67, 48,098 for 49, 899 shares of Rs.50 each. The saving of 22% of the book value of the securities must, therefore, be added as income of the assessee. 10. It was permissible in law to allot shares for considerations other than cash. There was nothing wrong in transferring the assets worth Rs 67, 48,098 for 49, 899 shares of Rs.50 each. The Tribunal had found that there was no manipulation of the accounts of the value of the assets and liabilities represented at the time of transfer is the correct value of the assets and liabilities. In Commissioner of Income Tax v. Standard Vacuum Oil Company 59 ITR 685 the Supreme Court examined the question whether or not the excess of the net value of assets 50 transferred over the par value of the shares issued could be considered as income. The Supreme Court laid down that the difference between the value of assets taken over and the value of shares issued by the assessee Company was premium realised from the issue of shares. The Supreme Court observed as under: "Therefore, where stock is issued in consideration of transfer of assets, the par value of stock is not necessarily equal to the value of assets transferred. Where the value of assets transferred exceeds the par value, the difference may appropriately be regarded as "premium" according to the nomenclature used in India" We think that the Standard Vacuum Oil Company's case squarely covers the controversy here. In the Supreme Curt case, the assessee company was formed to take over the business of Socony Vacuum Oil Company and Standard Oil Company (New Jersey), the assets of which were 97.715, 701 and 46, 767, 397 respectively. The transferor companies were allotted 49, 995 shares each. The remaining 10 shares were also divided equally between the two companies for cash at par. The Socony Vacuum Oil Company was allotted bonds of the value of S.13, 093, 000 The bonds were redeemable and had been redeemed subsequently. The net profits earned by the assessee company year after year subject to certain appropriations were shown in the balance sheet under the caption “earned surplus" or earnings reinvested." The Income-tax Officer -disallowed the claim of the assessee company for inclusion of the account capital paid in surplus and earned surplus in computation of the taxable capital under schedule If, rule 2(1) of the Business Profits Tax Act. The excess of The value of the assets so transferred over the par value of stock issued and 'the serial bonds were entered in the books in the account styled "Capital paid in surplus". The Income-tax Appellate Tribunal held that the difference between the value of the assets taken over and the value of stock and serial bonds Issued by the assessee company was premium realized from the issue of its shares and retained in the business within the meaning of rule 3 of the schedule II and was in any event reserve not allowed in computing profits within the meaning of rule 2(1) The Supreme Court held that the surplus over the par value of the shares issued was premium realised from the issue of shares and in that view, the same could not be taxed as income. 11. In view of the decision of the Supreme Court, the surplus of the assets over the par value of the shares allotted to Maharaja could not be considered as saving to the assessee company. It has appropriately to be regarded as premium as pointed out by the Supreme Court. Once the concept of capital which includes premium on capital is understood, it would become clear that it is not income within the meaning of the Income-tax Act. Similarly, when the reserve was to be treated as capital, in the circumstances of the case, it would not be treated as income since the question stands concluded and no other question arises we reject these applications. In the circumstances of the case, there shall be no order as to costs.