JUDGMENT

Bharucha, J.-These are the appeals by the Revenue against the decision of a Division Bench of the High Court of Kerala on a reference application at the instance of the assessees under Section 256(1) of the Income Tax Act, 1961. The High Court was called upon to answer the following three questions :

"1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that on the amalgamation of Ambassador Steamships Pvt. Ltd. with Collis Line Pvt. Ltd., there was a transfer by the assessee of their shares in Ambassador Steamships Pvt. Ltd.?

2. In case the answer to question No. 1 above is in the affirmative, whether the Tribunal was right in holding that the transfer was made in consideration of the allotment for to the assessees of shares in Collis Line Pvt. Ltd.?

3. Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that Section 49(2) of the I.T. Act, 1961 applied to the sale of the shares of the assessees in Collis Line Pvt. Ltd., which were obtained by the assessees on the amalgamation of Ambassador Steamship Pvt. Ltd. with Collis Line Pvt. Ltd.?"

2. The High Court