Judgment

BHAGWATI, J. : This appeal with special leave is directed against a judgment and order of the High Court of Judicature at Calcutta delivered on a reference by the Income Tax Appellate Tribunal (Cal. Bench) under S. 66(1) of the Indian Income Tax Act (Act XI of 1922) hereinafter referred to as "the Act" whereby the High Court answered the referred question in the negative.

2. The facts leading up to this appeal may be shortly stated as under :

Prior to November 29, 1928, Steel Bros. and Co., Ltd. (hereinafter referred to as "Steels") and Ellerman s Arracan Rice and Trading Co., Ltd. (hereinafter referred to as "Ellermans") carried on trade in Burma rice and/or its by-products in Burma, in London and elsewhere inter alia through Burma and London Bullenger Rice Pool and the New General Rice Company Limited. Apart from the selling of rice, both these Companies had rice milling machines and produced rice from paddy. There was another Company known as the Burma Co. Ltd., (hereinafter referred to as "Burma"). This Company also had a few rice mills. It never purchased paddy or sold rice. All the shares of this Company were held by Steels, who were also its Managing Agents.

3. On or ab