JUDGMENT :

J.C. Shah, J.

1. Messrs T.D. Kumar & Bros. (Private) Ltd. hereinafter called "the Company" was incorporated in 1923 under the Indian Companies Act, 1913. The paid-up capital of the Company was Rs. 1,02,000 representing 1020 shares of Rs. 100 each. The entire share-capital was held by three persons who may be called "Kumars". Between September 19 to November 14, 1952 the shareholding of Kumars was transferred to five persons who may be called "Ghoshes", and as a part of that scheme for transfer of the shares, investments of the Company of the value of Rs. 1,01,000 odd were transferred to Kumars and the company purchased 400 shares of Messrs East India Housing and Land Development Trust Ltd. hereinafter called "the Trust" held by two out of the five Ghoshes at the rate of Rs. 257-4 per share. The Company sold the shares of the Trust to Messrs Chandoo Lall a registered share-broker at the rate of Rs. 60 per share, and the latter in their turn sold the shares to Bijan Mohan Kundu at the rate of Rs. 61 per share.

2. In proceedings for assessment for Assessment Year 1953-54 the Company claimed that it suffered a total loss of Rs. 76,241 in the transactions of purchase and sale o