JUDGMENT :

P.N. Bhagwati, J.

The short question that arises on this reference is whether a sum of Rs. 38,000 received by the assessee in redemption of 380 redeemable preference shares held by her in a company called Sakarlal Ballabhai and Company Ltd., ought to be included in the assessment made upon the assessee for the assessment year 1957-58, the accounting year being Samvat Year 2012, the determination of the question rests upon the proper construction of section 2(6A)(a) of the Income Tax Act, 1922. A highly ingenious argument has been advanced by Mr. Kaji on behalf of the assessee in an attempt to persuade us to answer the question in favour of the assessee and though the argument has been presented with skill and ability, we find there is no merit in it and it must be rejected.

2. The material facts giving rise to the reference may be summarised as follows :

Sakarlal Ballabhai and Company (hereinafter referred to as the company), at all material times carried on business as managing agent of another limited company called Sarangpur Cotton Manufacturing Company Limited, which owned a cotton textile mill situate in the Cith of Ahmedabad. On or about 13th December, 1951, the compan