JUDGMENT

Sen, J.-In this case the question of law is :

Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessee was liable to pay tax in respect of capital gains on receipt of the amount equal to the face value of the preference shares of M/s. Universal Corporation Pvt. Ltd. on the company redeeming its preference shares?

2. The High Court answered the question in the affirmative and against the assessee. The High Court granted a certificate of fitness for appeal under Section 261 of the Income Tax Act in view of the fact that they had taken a view contrary to the view adopted by the Madras High Court on this question.

3. The facts of the case, as stated in the judgment of the High Court, are as under :-

"The assessee is an individual and the assessment year under reference is assessment year 1969-70, the year of account being the calender year 1968. The assessee held 297 redeemable preference shares of M/s. Universal Corporation Private Limited a company incorporated under the Companies Act (hereinafter referred to as the "Company"). The face value of such of these preference shares was Rs. 1,000/- and, therefore, the total fac