Sen, J. - (1.) The facts and the proceedings leading up to this reference are, inter alia, as follows. Shaw Wallace & Co. Ltd., the assessee, was at the material time the holding company in respect of the following subsidiary companies holding 100% of the shares of the later : (a) Atlas Fertilisers Ltd.; (b) Bengal Distilleries Co. Ltd., and (c) Indo-Agri. Ltd. Under schemes of arrangement arrived at by and between the assessee on the one hand and each of the said subsidiary companies on the other which were duly sanctioned respectively by this court in respect of Atlas Fetilisers Ltd. and Bengal Distilleries Co. Ltd. and by the Madras High Court in respect of Indo-Agri. Ltd., the said subsidiary companies were amalgamated with the assessee on the following terms and conditions : (a) All the property, rights and powers of the subsidiary companies would be transferred to the assessee as from the 1st January, 1966, and vest in the assessee under Section 394(2) of the Companies Act, 1956, (b) All liabilities and debts of the subsidiary companies would as from the said date be transferred to and become the liabilities and debts of the assessee. (a) The assessee being the beneficial owner of the entire issued share capital there would be no issue of shares to the assessee. (d) The subsidiary companies would within 21 days after the date of the order to be passed by the court cause a certified copy of the court's order to be delivered to the Registrar of Companies, West Bengal, for registration and on such certified copy being so delivered the subsidiary companies would be dissolved without winding up.
(2.) In the assessment year 1967-68, the previous year havingended on the 31st December, 1966, the assessee claimed a capital loss of Rs. 19,43,551 alleging that such loss had occurred on amalgamation of the said subsidiary companies with the assessee. The ITO held that the said claim was inadmissible under Section 47(vi) of the I.T. Act, 1961.
(3.) Being aggrieved, the assessee preferred an appeal to the AAC. The AAC held that no details of the said loss had been produced either before the ITO or in the appeal and that the claim was not substantiated. Accordingly, he confirmed the order of the ITO and disallowed the assessee's claim. He also held that the claim, in any event, was not admissible under Section 47 of the Act.;