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2003 (7) TMI 38 - HC - Income TaxAvoidance of tax – applicability of provisions of section 94 - Assessing Officer dealt with the facet of sale of shares and came to hold that the assessee had sold shares worth Rs. 5,40,640 of Perfect Refractories Limited to the directors of the company at the face value of Rs. 10 per share and then the transfer/sale had taken place a month before declaration of dividend. It was found on scrutiny of the accounts that the book value of these shares was Rs. 65 per share. In this backdrop, the assessee was specifically asked to show cause as to why the provisions of section 94 of the Act should not be invoked as there had been avoidance of tax - Tribunal was justified in holding that the assessee was entitled to the benefit of the provisions of section 94(3)(b) of the Income-tax Act, 1961, in respect of the dividends on the shares transferred to one of its directors because there has been no systematic effort by the assessee to avoid the tax. It has been done only once - Further assessee is entitled to deduction u/s 36(1)(vii)
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