JUDGMENT

SABYASACHI MUKHARJI, J. :— The original appellant Bank of Cochin Ltd., has been amalgamated with the State Bank of India and on an oral application of the appellant for substitution and with the consent of the respondent, this application was allowed and the amendment was directed to be effected.

2. This appeal arises by special leave against the judgment and decision of the High Court of Kerala at Ernakulam dated 25th January, 1973 in Income-tax Reference No. 31 of 1971 (reported in 1973 Tax LR 11099).

3. The assessee, previously the Bank of Cochin Ltd., a banking company, as part of its banking business, had been purchasing cheques, payment orders, mail transfers, demand drafts, bills and other negotiable instruments drawn in foreign currencies and sometimes foreign currencies themselves from its clients. These foreign exchange assets were subsequently sold or encashed through the assessees correspondent-banks in the foreign countries concerned and the proceeds credited to the current account of the assessee with the correspondent-bank concerned. Consequent on the devaluation of the Indian rupee on 6th June, 1966, the amounts credited to the assessee in the foreign banks