1. Two questions have been referred to this Court for decision which are as follows;

"(i) Whether, on the facts and in the circumstances of the case, the sum of Rs. 4,65,515 being profit arising on the devaluation of the Indian rupee on 6th June, 1966, was income chargeable to Incometax?

(ii) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law is rejecting the assessee's claim to deduct an amount of Rs. 52,935, being loss arising on the valuation of closing stock of government securities in determining its total income for the assessment year 1967 68?"

2. The assessee is a banking company and, as part of its banking business, has been purchasing cheques, payment orders, mail transfers, demand drafts, bills and other negotiable instruments drawn in foreign currencies and, sometimes, foreign currencies themselves from its clients. These foreign exchange assets are subsequently sold or encashed through the assessee's correspondent-banks in the foreign countries concerned and the proceeds credited to the current account of the assessee with the correspondent-banks concerned. These bank balances are periodically transferred to Ind