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Issues Involved:
1. Amount of capital gain. 2. Working out short-term capital gains. 3. Disallowance of vehicle maintenance expenses. 4. Addition on account of irrecoverable advances. 5. Charging of interest u/s 234B. Summary: 1. Amount of Capital Gain: The primary issue was whether the full value of consideration for the transfer of the Panasonic division should include Rs. 17.64 crores worth of shares allotted to shareholders. The assessee argued that this amount was diverted at source and never accrued to the company, citing the scheme of arrangement approved by the Hon'ble High Court. The AO and CIT(A) contended that the entire Rs. 50.12 crores should be considered, including the shares given to shareholders, as it was an application of income. The Tribunal held that the amount given to shareholders never reached the assessee and was diverted at source, thus not part of the income for computing capital gains. 2. Working Out Short-Term Capital Gains: The dispute was whether the cost of acquisition of fixed assets should be the WDV or the book value. The AO/CIT(A) adopted the WDV, while the assessee argued for the book value. The Tribunal held that the transfer was a slump sale, and the provisions of s. 50 were not applicable. The cost of acquisition should be the book value as per the balance sheet, not the WDV. 3. Disallowance of Vehicle Maintenance Expenses: The assessee argued that as a company, there could be no personal use of vehicles, and thus, the disallowance was unjustified. The Tribunal agreed, citing precedents that in the case of a company, vehicle expenses cannot be disallowed on the grounds of personal use. 4. Addition on Account of Irrecoverable Advances: The assessee claimed that advances given to certain parties for business purposes, which were not recovered, should be allowed as a business loss. The AO/CIT(A) treated these as non-business transactions. The Tribunal held that since the advances were made during the course of business and were not recoverable, they should be allowed as a business loss. 5. Charging of Interest u/s 234B: The assessee contested the levy of interest u/s 234B. The Tribunal, following the Supreme Court's decision in Anjum Ghaswala, held that the levy of interest under s. 234B is mandatory and directed the AO to recalculate the interest based on the revised income. Conclusion: The appeal was partly allowed, with the Tribunal ruling in favor of the assessee on the issues of capital gains computation, vehicle maintenance expenses, and irrecoverable advances, while upholding the mandatory nature of interest u/s 234B.
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