JUDGMENT

This appeal by the assessee arises out of Income Tax Reference No. 279 of 1973 made at the instance of the assessee which was disposed of by the Calcutta High Court by the impugned judgment dated August 25, 1978. Out of the two questions referred to it for its opinion, the High Court declined to answer question No. 1 as it did not arise from the judgment of the Income Tax Appellate Tribunal (hereinafter referred to as the Tribunal ) and question No. 2 was answered against the assessee and in favour of the Revenue. The said question was in these terms :

"Whether the Tribunal was right in holding that on the facts and circumstances of the case the exchange of one security for another could be described as realisation of the security resulting in profit ?"

2. The matter relates to the assessment year 1963-64 for the relevant previous year ended on July 31, 1962. The assessee is a company dealing in shares. It was holding 14500 shares of Asiatic Oxygen and Acetylene Company Limited (hereinafter) referred to as the first Company), of the face value of Rs. 10/- each as its stock-in-trade. The said shares were valued by the assessee at Rs. 1,45,000/- (the cost price) at the end of