SUHAS CHANDRA SEN, J. ( 1 ) THE Tribunal has referred the following questions of law to this court under Section 256 (2) of the Income-tax Act, 1961 ("the Act") :"for the assessment years 1964-65 and 1965-66 : 1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the share capital of Rs. 4 lakhs (rupees four lakhs) only issued to James Mackie and Sons Ltd. cannot be said to have been brought into existence by creating or increasing (by revaluation or otherwise) any book asset of the assessee-company within the meaning of Explanation 1 of Rule 2 of the Second Schedule to the Companies (Profits) Surtax Act, 1964. ( 2 ) IF the answer to question No. 1 is in the negative, then whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the Income-tax Officer did not have jurisdiction to pass the rectification order for excluding the above sum of Rs. 4,00,000 (rupees four lakhs) in the computation of capital for the purpose of assessment under the Companies (Profits) Surtax Act ? For the assessment year 1967-68 :1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the share capital of Rs. 4,00,000 (rupees four lakhs) issued to James Mackie and Sons Ltd. cannot be said to have been brought into existence by creating or increasing (by revaluation or otherwise) any book asset of the assessee-company within the meaning of Explanation 1 to Rule 2 of the Second Schedule to the Companies (Profits) Surtax Act. 2. If the answer to question No. 1 is in the negative, then whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the Income-tax Officer did not have jurisdiction to pass the rectification order for excluding the above sum of Rs. 4,00,000 (rupees four lakhs) in the computation of capital for the purpose of assessment under the Companies (Profits) Surtax Act. 4,00,000 (rupees four lakhs) in the computation of capital for the purpose of assessment under the Companies (Profits) Surtax Act. ( 3 ) WHETHER, on the facts and in the circumstances of the case, and on a correct interpretation of the provisions of Section 80e (1) of the Income-tax Act, 1961, and Rule 4 of the Second Schedule to the Companies (Profits) Surtax Act, 1964, the Tribunal was justified in holding that there can be two interpretations of the said Rule 4 of the Second Schedule and in that view cancelling the rectification order of the Income-tax Officer in proportionately reducing the capital of the assessee as eight per cent. of the profit from priority industry carried by the assessee-company was not included in its total income. "2. So far as the first two questions for the assessment years 1964-65 and 1965-66 are concerned, the facts found by the Tribunal are that the asses-see-company had issued 4,000 shares of Rs. 100 each to James Mackie and Sons Ltd. The consideration for the issue of the shares found by the Tribunal was that the assessee, by an agreement with James Mackie and Sons Ltd. , had been permitted to use Mackie's goodwill in the textile machinery market in India during the period of three years from the date of allotment of shares. The contention before the Tribunal was that the assessee took the benefit of Mackie's goodwill in the textile machinery market in India and had also obtained permission to use Mackie's machine designs, to describe machines of such designs as being of the Mackie type, and generally to identify itself with the reputation and products of Mackie. 3. The Tribunal held that these shares which were issued in consideration of the transfer of goodwill by James Mackie and Sons Ltd. apparently was not an increase of capital by revaluation of the assets. ( 4 ) THE Tribunal held that in any event this cannot be a case of rectification of an error. ( 5 ) WE are of the view that this is a case where two opinions are possible and this is not a case of an error on the face of the record. The Tribunal came to the correct conclusion. ( 6 ) QUESTIONS Nos. 1 and 2 for the assessment year 1967-68 are similar to questions Nos. 1 and 3 for the assessment years 1964-65 and 1965-66. The Tribunal came to the correct conclusion. ( 6 ) QUESTIONS Nos. 1 and 2 for the assessment year 1967-68 are similar to questions Nos. 1 and 3 for the assessment years 1964-65 and 1965-66. So far as question No. 3 is concerned, it relates to calculation of relief under Section 80e (1) of the Act for the assessment year 1967-68. There, the contention of the assessee was that the relief from the income of priority industry was contained in Section 80e and that the relief was given only if the profits of a priority industry were included in the total income of an assessee. It was argued that the relief was given by way of deduction from such profits of an amount equal to 8 per cent. thereof. From this, it was concluded that Rule 4 of the Second Schedule to the Companies (Profits) Surtax Act, 1964 ("the Surtax Act"), did not apply to such a case. This rule could apply only to a case where a part of the income of the company was not includible in its total income at all. Rule 4 of the Second Schedule provides as follows :"4. Where a part of the income, profits and gains of a company is not includible in its total income as computed under the Income-tax Act, its capital shall be the sum ascertained in accordance with Rules 1, 2 and 3, diminished by an amount which bears to that sum the same proportion as the amount of the aforesaid income, profits and gains bears to the total amount of its income, profits and gains. " ( 7 ) THE argument made on behalf of the assessee cannot be brushed aside. Rule 4 of the Second Schedule clearly speaks of profits and gains of a company which are not includible in its total income. The contention made on behalf of the assessee was that the profit under Section 80e can only be calculated if the income was included in the gross total income of the assessee. This is a possible interpretation of Section 80e. Therefore, the Income-tax Officer could not, under the guise of rectification, correct an alleged error. The case of the Income-tax Officer is that eight per cent. of the profit from priority industry which was excluded from the total income of the assessee had not been proportionately deducted from its capital. This is a possible interpretation of Section 80e. Therefore, the Income-tax Officer could not, under the guise of rectification, correct an alleged error. The case of the Income-tax Officer is that eight per cent. of the profit from priority industry which was excluded from the total income of the assessee had not been proportionately deducted from its capital. On this question, conceivably, there may be two opinions. ( 8 ) UNDER these circumstances, questions Nos. 1 and 2 for the assessment years 1964-65 and 1965-66 are answered in the affirmative and in favour of the assessee. ( 9 ) QUESTIONS Nos. 1 to 3 for the assessment year 1967-68 are also answered in the affirmative and in favour of the assessee. ( 10 ) THERE will be no order as to costs.