JUDGMENT

PATHAK, CJI. :— The assessee is a Hindu Undivided Family deriving income from interest on securities, dividends, property and dealing in shares. In 1941 the assessee purchased a share of the Shorrock Spinning and Manufacturing Co. Ltd., hereinafter referred to as "the Shorrock Co.", of the face value of Rs. 1,000/- for Rs.,3,307/-. Later this share was split into 10 shares of Rs. 100/-each, and from time to time a total of 80 shares of the face value of Rs. 100/- each was issued to the assessee by way of bonus shares. In consequence, on 31 December, 1959 the assessee owned 90 shares in the, Shorrock Co. of the face value of Rs. 100/- each.

2. There is another company called the New Shorrock Spinning and Manufacturing Co. Ltd. to which reference may be made as "the New Shorrock Co.". It was decided to amalgamate the Shorrock Co. with the New Shorrock Co., and upon petitions filed under S. 391 and S. 394 of the Companies Act, 1956 the Gujarat High Court made an order dated 23 September, 1960 directing meetings of the share holders of both the companies. The meetings were held on 27 October, 1960 and the scheme of amalgamation was approved. On 25 November, 1960 the High Court