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  SI.    Name                        No. of equity
No.                                shares held

2.    Shri Madan Lal Aggarwal         470
















                                    _______
                            Total   5,170
                                   ________

3. On 23-8-1977, a firm was constituted evidenced by an instrument of the said date executed and drawn up on that date. The business of the partnership was to be carried on by the firm of Bakeman's Home Products. This partnership was constituted by six partners, i.e.,

On 31-8-1977, an agreement was entered into between Rieta Biscuit Co. (P.) Ltd. (lessor) and the firm of Bakeman's Home Products (lessee) both having their registered office at Patiala respectively through Shri Om Sarup s/o Late Sham Lal Aggarwal being the managing director of lessor company and Seth Charan Dass partner representing the firm of Bakeman's Home Products (the lessee). The important terms and conditions of this agreement which appears at pages 1 to 15 of the assessee's paper book are as under :

17, We find that if the assessee had to set up an establishment of the type that it got under the terms of the agreement, substantial capital investment would be necessary for import of requisite machinery and it would have sufficient gestation period in which substantial amount would remain locked up. The assessee, therefore, thought that the terms of the agreement with the lessor for parting with the assets for exploitation by the assessee for the manufacture of biscuits was a better proposition. After careful perusal of the terms of the agreement we find that the lessor did not have anything which could be said as payment without commercial considerations. Even according to the ITO, the value of the assets in the market though negligible on the basis of the written down value would be substantial to the extent of Rs. 48 lakhs at the time when the agreement was entered into. The assessee in fact claims that the value of such a plant and machinery would be much higher and that in the terms of the agreement, the assessee saw commercial gains and no benefit of the type to the lessor that may be said to be given on extra commercial considerations. We have carefully perused clauses (3), (4), (7) and (8) to (13) of the agreement. It becomes clear that both the parties were trying to protect their respective commercial interests to the utmost. Thus, Clause (6) provided that the lessee, being party of the second part will have the option to purchase all the 'finished goods' and 'in-process' products. It even got, under Clause 7, the right to use the lessor's brand name if it so decided. It, of course, further secured the right under this clause to give any other brand name to the goods manufactured by it during the continuance of the agreement. It in fact utilised this right and option and named and branded its products as 'bakeman'.