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Issues Involved:
1. Assessment of long-term capital loss on sale of shares. 2. Revision of assessment u/s 263 of the Income-tax Act, 1961. For the assessment year 2003-04, the assessee sold shares of a closely-held company to his father at a price significantly lower than the calculated break-up value of the shares. The Commissioner of Income-tax found the transaction to be a sham arrangement to create a long-term capital loss for tax benefits. The Commissioner disallowed the capital loss claimed by the assessee, modifying the assessment accordingly. The assessee appealed, arguing that the transaction was genuine and supported by documentary evidence, and the Assessing Officer had correctly allowed the capital loss. The assessee contended that the revision of assessment lacked material support and failed to meet the conditions precedent under section 263 of the Income-tax Act. The Tribunal considered the arguments presented by both sides. While agreeing with the legal propositions cited by the assessee's representative, the Tribunal noted that the Assessing Officer had not properly evaluated the intrinsic value of the shares transferred. The Tribunal emphasized the importance of examining the circumstances surrounding the sale transaction, especially given the close relationship between the parties involved. The Tribunal found that the Assessing Officer's failure to compute the break-up value of the shares and investigate the significant difference in sale price indicated an erroneous assessment. The Tribunal concluded that the transaction had indeed reduced the taxable income of the assessee, resulting in prejudice to the revenue. Therefore, the Tribunal upheld the Commissioner's revision order, dismissing the appeal filed by the assessee.
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