M.S. Sanklecha, J.

1. This appeal by revenue under Section 260A of the Income Tax Act, 1961 (the 'Act') assails the order dated 12th July 1999 passed by the Income Tax Appellate Tribunal (the 'ITAT').

2. The Assessment Year involved is Assessment Year 1992-93.

3. The appeal was admitted on 10th September 2001 on the following substantial question of law:

"Whether on facts, the ITAT was right in holding that short-term capital gain was derived from foreign exchange asset. If so, whether on sale of bonus shares investment income within Section 115E of the Act accrued?"

4. It is an admitted position that for the purposes of this appeal, the Respondent-Assessee is a non-resident under the Act. During the previous year relevant to the Assessment Year 1992-93, Respondent-Assessee sold 10,000 shares of Tata Chemicals Ltd. received by him as bonus shares. The shares were sold after obtaining permission from the Reserve Bank of India. The original shares on which the aforesaid bonus shares had been received was purchased by Respondent-Assessee in the year 1997 in convertible foreign exchange.

5. In its return of income for the Assessment Year 1992-93, the Respondent-Assessee claimed the b