Judgment

CHINNAPPA REDDY, J. : - The wormken of the Associated Rubber Industry Ltd., Bhavnagar are the appellants in this appeal filed pursuant to a certificate under Art. 133(1) of the Constitution granted by the High Court of Gujarat.

2. The Associated Rubber Industry Ltd. had purchased, some years back, shares of INARCO Ltd. by investing a sum of Rs.4,50,000/-. they were getting annual dividends in respect of these shares and the amount so received was shown in the Profit and Loss Account of the company year after year. It was taken into account for the purpose of calculating the bonus payable to the workmen of the company. Sometime in the course of the year 1968, the company transferred the shares of INARCO Ltd. held by it to Aril Bhavnagar Ltd. (subsequentty changed to the Aril Holdings Ltd.), a subsidiary company wholly owned by the Associated Rubber Industry Ltd. Aril Holdings Ltd. had no other capital except the shares of INARCO Ltd. transferred to it by the Associated Rubber Industry Ltd. It had no other business or source of income whatsoever except receiving the dividend on the shares of INARCO Ltd. The dividend income from the shares of INARCO Ltd. was not transferred to