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Issues Involved:
1. Gross capital gains on sale of shares. 2. Deletion of addition on account of dividend accrued. 3. Disallowance of sales tax liabilities. 4. Disallowance of bad debts. Issue-wise Detailed Analysis: 1. Gross Capital Gains on Sale of Shares: The Revenue challenged the relief of Rs. 54,97,100 granted by the CIT(A) on account of gross capital gains on the sale of shares, arguing that the CIT(A) erred in not addressing the Assessing Officer's objections to the valuation method adopted by the assessee. The assessee contended that the CIT(A) was wrong in taking the sale price of 10,000 equity shares at Rs. 33,98,500 against the declared sale consideration of Rs. 22,00,000 and in holding that the sale was aimed at reducing liability under Section 45 of the IT Act, 1961. The assessee owned 10,000 shares, including 5,000 bonus shares, of Hindustan Computers Limited (HCL) and claimed to have sold these shares at Rs. 220 per share. The ITO observed that the payments from some purchasers were not received till the end of the previous year and concluded that the sale was effected in June 1982 when the shares were transferred. The ITO also noted that the assessee purchased 6,400 shares of HCL at Rs. 339.85 per share and sold them at the same rate, resulting in no capital gain or loss. The ITO adopted the consideration for all shares at Rs. 889.56 per share, the break-up value as on 30th June 1982, and assessed the net capital gain at Rs. 1,19,13,784. The CIT(A) concluded that the sale of 10,000 shares was understated, noting discrepancies in payment rates and the acquisition of 6,400 shares at Rs. 339.85 per share. The CIT(A) fixed the consideration for 16,400 shares at Rs. 339.85 per share, resulting in capital gains of Rs. 28,98,500 for 10,000 shares and deleting the gains for 6,400 shares. The CIT(A) gave relief of Rs. 54,95,100 to the assessee. The Tribunal agreed with the CIT(A) and the Departmental Representative that the resolutions passed by the company were internal documents and could be viewed with suspicion. The Tribunal held that Section 52(1) was applicable and confirmed the sale consideration of Rs. 339.85 per share for 10,000 shares, finding it reasonable and in line with the consideration for 6,400 shares. 2. Deletion of Addition on Account of Dividend Accrued: The ITO noted that 16,400 shares were transferred to individuals and entities connected to the directors of the assessee company shortly before HCL declared a high dividend. The ITO held that this was a tax avoidance method and included the dividend of Rs. 3,69,000 in the assessee's income under Section 94 of the IT Act. The CIT(A) deleted the addition, and the Tribunal agreed, noting that the provisions of Section 94 were not applicable as the sales of shares were genuine and bona fide. The Tribunal upheld the CIT(A)'s detailed reasoning and found no merit in the Revenue's appeal. 3. Disallowance of Sales Tax Liabilities: The ITO disallowed sales tax liabilities aggregating to Rs. 58,770, including penalties and additional liabilities for previous years. The CIT(A) upheld the disallowance. The Tribunal found no merit in the assessee's appeal, agreeing that penalties for breach of law are not deductible and that additional demands received after the accounting period were rightly disallowed. The Tribunal also noted the lack of evidence for certain liabilities and upheld the disallowance. 4. Disallowance of Bad Debts: The ITO disallowed bad debts of Rs. 32,102 due to lack of evidence and details and the absence of steps taken for recovery. The CIT(A) upheld the disallowance. The Tribunal agreed with the CIT(A)'s detailed reasoning and found no further evidence brought on record by the assessee. The Tribunal upheld the disallowance of bad debts. Conclusion: Both the appeals by the Revenue and the assessee were dismissed. The Tribunal confirmed the CIT(A)'s orders on all issues, including the relief on capital gains, deletion of dividend addition, disallowance of sales tax liabilities, and disallowance of bad debts.
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