Judgment

SHAH, J.: M/s. Madan Gopal Radhey Lal-hereinafter called the assessees-deal in shares and securities. They held in the relevant years as part of their stock-in-trade shares of certain companies. The assessees received from the Companies at different times bonus shares proportionate to their equity holding. From time to time the assessees sold the bonus shares received by them. The Income-tax Officer brought to tax Rs. 55,607 in the assessment year 1946-47; Rs. 41,625 in the assessment year 1948-49; Rs. 1,43,050 in the assessment year 1949-50 and Rs. 33,170 in the assessment year 1950-51 being the sale proceeds of the bonus shares, holding that those receipts represented income of the assessees arising from their business in shares. The order of the Income-tax Officer was confirmed by the Appellate Assistant Commissioner and by the Income-tax Appellate Tribunal.

2. At the instance of the assessees, the Tribunal referred the following question of law to the High Court of Allahabad for opinion :

"Whether the sale proceeds of bonus shares which had been issued in respect of shares which formed part of the assessee s stock-in-trade of the share dealing business are liable to incl