1972 (11) TMI 3

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..... y - Tribunal is not right in holding that the claim of the assessee for the deduction of Rs. 31,26,000 was rightly rejected as coming under s. 2(m)(ii)
Judge(s) : K. S. HEGDE., P. JAGANMOHAN REDDY. and H. R. KHANNA. JUDGMENT The judgment of the court was delivered by HEGDE J.--These appeals are by certificate. They arise from the consolidated judgment of the High Court of judicature at Madr .....

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..... are not in dispute and they lie within a narrow compass. The assessee is a public limited company established with a view to carry on the business of merchants, store-keepers, commission agents, retailers, manufacturers, hotel-keepers and catering service. The assessee was mainly carrying on business in South India. There was another company known as M/s. G.F. Kellner & Co. (hereinafter referred .....

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..... nd the Bengal and North Western Railway and its goodwill for a consideration of Rs. 31,26,000. Part of this consideration was to be paid in cash on demand by Kellners. One of the terms of the agreement was as under : " If while the said Rs. 31,26,000 mentioned in clause (2) or any part thereof remains unpaid G.F. Kellner and Company Ltd. shall propose to go into voluntary liquidation any special .....

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..... ity by itself. It is true that the assessee had a controlling interest in Kellners but that does not, in law, make Kellners a part of the assessee-company. The Kellners and the assessee-company are two different legal entities. It was alleged by the assessee and not denied by the revenue that Kellners have been assessed to wealth-tax in the relevant accounting periods and in computing its net weal .....

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..... see. The contention of Mr. A. N. Kirpal, the learned counsel for the revenue, that because the assessee had a controlling interest in Kellners, its liability ceased to be a " debt " is unsustainable in law. As mentioned earlier, the two companies are different legal entities. Whatever control may have had over Kellners, the Kellners continued to be a separate legal entity. We see no merit in t .....

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