( 1 ) THE facts found and/or admitted in this reference under Section 256 (1) of the I. T. Act, 1961, are of short compass. The Calcutta Jute Agency (P.) Ltd. , Calcutta, the assessee, carries on business in purchase and sale of jute. Under an agreement dated 3rd April, 1963, one W. F. Ducat and Co. had been engaged to carry on the business of the assessee as the latter's manager and/or managing agents. Acting on behalf of the assessee, W. F. Ducat and Co. entered into a contract for purchase of jute in London from Pakistan in 1965, and opened a letter of credit there covering the price of the said jute in favour of the intending seller. Thereafter, hostilities broke out between India and Pakistan, the contract could not be performed and the letter of credit remained unoperated. There was devaluation of the Indian rupee in June, 1966, and by reason of the unoperated letter of credit, W. F. Ducat and Co. received a sum of Rs. 1,52,710 in excess over the amount originally deposited by them in rupees. This surplus was passed on to the account of the assessee and included by the assessee in its own profit and loss account in the accounting year ending 31st March, 1968. In its