TMI Tax Updates - e-Newsletter
January 18, 2017

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws FEMA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

TMI SMS

• PoPoS - Service received by the employee of the assessee at New York, cannot be said to be service rendered from America & received in India

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• Manufacture - captive consumption - untrimmed Sheets/ circles of Copper are not liable to duty because the marketability has not been proved

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Articles

1. Returns under Revised GST Model Law-At a Glance:

   By: Ashish Mittal

2. AGGREGATE TURNOVER UNDER REVISED GST LAW

   By: Pradeep Jain

News

1. Centre, states reach consensus on GST; rollout from July 1

2. RBI Reference Rate for US $

Notifications

DGFT

1. 35/2015-2020 - dated 17-1-2017 - FTP

Minimum price for import of Areca Nuts is enhanced from existing ₹ 162/- to ₹ 251/- per Kilogram

VAT - Delhi

2. F.3(14)/Fin(Rev-I)2012-13/DSVI/17 - dated 10-1-2017 - DVAT

Corrigundum – Notification No. F.3(14)/Fin. (Rev.-I)/2012-13/DSVI/334 dated 07/10/2016

Circulars / Instructions / Orders

Customs

1. 03/2017 - dated 16-1-2017

Import of point of sale (PoS) terminal devices, its cells & batteries and labelling requirements thereof

Highlights / Catch Notes

Income Tax

• Training for Seamen Deemed Charitable; Section 11 Exemption Applies Despite Some Courses Lacking Approval.

  Case-Laws - AT : Exemption u/s 11 - Assessee is giving training in the area to seamen - All the courses may not be approved by the Director General of Shipping but that by itself is no ground to hold that the purpose is not charitable - AT
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• Excise Duty Reimbursement in Bihar Classified as Capital Receipt, Excluded from Book Profits u/s 115J.

  Case-Laws - HC : The subsidy received as Excise Duty reimbursement from the State of Bihar was in the nature of capital receipt. Hence the same cannot be added to arrive at book profits u/s 115J - HC
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• Section 276CC: Prosecution for Late ITR Filing Eased if Returns Accepted and Assessments Completed.

  Case-Laws - HC : Prosecution u/s 276CC for non filing of ITR - the contention that the section which prescribes that if the assessee fails to file the return within the time due, the rigour would be attracted, would stand diluted by virtue of the returns having been accepted and assessments having been carried out therein. - HC
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Service Tax

• Employee Services in New York Not Classified as Foreign Services Received in India by Assessee.

  Case-Laws - AT : Place of provision of service - the service received by the employee of the assessee at New York, cannot be said to be service rendered from America or outside India and received by the assessee in India - AT
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• Tax Paid Pre-Notice Invalidates Show Cause u/s 73, Penalty Levy Unjustified.

  Case-Laws - AT : Levy of penalty - the appellant had paid the tax prior to issue of the show cause notice, the whole show cause notice is bad and not tenable under the provisions of Section 73 of the Finance Act - AT
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Central Excise

• Rule 9: Goods Cleared to Related Parties for Consumption Exempt from Valuation Rules; Rule 8 Also Inapplicable.

  Case-Laws - AT : Valuation - related party - Rule 9 of valuation rules clearly stipulates that if the goods are cleared to a person who is consuming the same, then the provisions of Rule 9 are not applicable - neither the provisions of Rule 8 nor the provisions of Rule 9 are applicable in the present case - AT
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• Copper Sheets & Circles Used Internally Not Dutiable; Lack Marketability Evidence Under Central Excise Rules.

  Case-Laws - AT : Dutiability of Untrimmed Sheets of Copper - intermediate goods - captive consumption - untrimmed Sheets and circles of Copper are not liable to duty because the marketability of the said has not been proved. - AT
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Case Laws:

• Income Tax

• 2017 (1) TMI 862
  Net profit estimation - Income estimation - additional evidence submitted - Held that:- The assessee has brought on record the additional evidence after a lapse of 2½ years. The additional evidence submitted before us could have been submitted before the AO to substantiate his claim, so that the department could have initiated proper proceeding in the case of Sri. S. Venkateswara Rao. At this juncture, we find inappropriate to consider the additional evidence filed by the assessee before us and, accordingly, we reject the additional evidence filed by the assessee. Coming to the alternate submissions of the AR of the assessee, we agree that only the income should be brought to tax and not the credits in the bank account. Considering the transactions in the bank account, there are receipts as well as payments taken place, hence, it can be treated as business transactions and only the net profit alone can be brought to tax as held in various decisions of the Courts. Accordingly, we direct the AO to estimate the profit on the gross receipts @ 8% or the profit %age as declared by the assessee in his own business for the AY under consideration, whichever is higher. Accordingly, the grounds raised in this regard by the assessee are treated as allowed for statistical purposes.

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• 2017 (1) TMI 861
  Disallowance u/s 14A - Held that:- While adjudicating the appeal for the AY.2009-10,the Tribunal had restricted the disallowance to 1% of the dividend income.Following the same,we hold that disallowance should be restricted to 1% of the exempt income.First ground of appeal is decided in favour of the assessee,in part. Disallowance of expenditure on account of repairs and maintenance - Held that:- During the course of hearing before us,the AR admitted that the assessee had not supplied the required information to the AO/FAA about the repairing.In our opinion,it is the duty of the assessees to produce evidence in their support if they claim that any expenditure was incurred for carrying out business. In the case under consideration,the assessee has failed to prove the genuineness of the expenditure incurred by it during the year under consideration. Therefore,we are of the opinion that order of the FAA does not suffer from any legal infirmity.

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• 2017 (1) TMI 860
  Disallowance u/s. 14 A read with Rule 8D 2 (iii) - Held that:- The departmental authorities were not justified in invoking the provisions of section 14 A r.w.r.8D of the Rules. The fundamental principle for making disallowance against the exempt income is that the assessee should have claimed some expenditure against the such income and thus should have availed double deductions. In the case under consideration, the assessee had not claimed any expenditure against the dividend income of 2,000/-. Therefore, there was no justification for making any disallowances under any of the heads under rule 8D(2)of the Rules. The Tribunal had,in the AY.2009-10, upheld the disallowance because the assessee itself had offered for it. - Decided in favour of the assessee Bogus purchases - Held that:- We find that the assessee had made payment of 2.76 lakhs to VE, that in the statement before the VAT authorities it had admitted to have issued bogus bills, that the assessee had produced the purchase bills and copies of the bank statement showing the payments made by it to VE,that cross examination of VE was not allowed to the assessee though it had made a specific request for it. The issue can be decided against the AO and in favour of the assessee only on this count,as the principles of natural justice were violated. The settled principles of taxation envisage that no adverse material should be used against an assessee without affording it an opportunity to rebut it. But, we would like to decide the issue on merits also. The AO or the FAA has relied upon the statement made by VE,but has not mentioned that it had specifically named the assessee in its statement. A general statement of issuing of bogus bills by an alleged hawala dealer cannot be used against a particular assessee to establish the fact that the purchase bills obtained by it were not genuine. It is to be noted that all the payments were made by cheques and there is no evidence of money coming back to the assessee. Secondly,the provisions of section 69C of the Act are not applicable to the facts of the case. The assessee had not made cash purchases - Decided in favour of the assessee

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• 2017 (1) TMI 859
  Exemption u/s 11 denied - assessee providing services of training and education - Held that:- Hon'ble jurisdictional High Court in the case of DIT vs Samudra Institute of Maritime Studies Trust [2014 (9) TMI 575 - BOMBAY HIGH COURT] held that the Tribunal rightly held that the exemption u/s 11 of the Act can be availed of by the Assessee - the objects of the trust are to set up, administer and maintain technical training institution at various places in India for pre-sea and post-sea training for the ships and maritime industry as a Public Charitable Institute for education - That is to provide on-board and offshore training and continuing technical education for Officers, both on the deck and engine side - One of the object was to register with the Director General of Shipping and obtain other necessary approvals at the State and Central levels - Thus the Assessee is giving training in the area to seamen - All the courses may not be approved by the Director General of Shipping but that by itself is no ground to hold that the purpose is not charitable - The exemption u/s 11 can be claimed and bearing in mind the object of the Trust - Decided in favour of assessee

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• 2017 (1) TMI 858
  Penalty imposed under section 271(1)(c) - wrong claim of indexed cost of acquisition and wrong claim of exemption under section 54F - "concealment of income" and "furnishing inaccurate particulars" - Held that:- We have already seen the meaning of the word "particulars" in the earlier part of this order. Reading the words in conjunction, they must mean the details supplied in the Return, which are not accurate, not exact or correct, not according to truth or erroneous. We must hasten to add here that in this case, there is no finding that any details supplied by the assessee in its Return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under Section 271(1)(c) of the Act. In the light of the foregoing discussion, We are of the considered opinion that at least penalty is not leviable, therefore, the ld. Assessing Officer was rightly directed to delete the penalty, therefore, we find no infirmity in the conclusion of the Ld. Commissioner of Income Tax (Appeals). - Decided in favour of assessee

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• 2017 (1) TMI 857
  Disallowance being the preliminary expenditure under Section 35 D - Held that:- It is not in dispute that in the preceding assessment year, very expenditure stand accepted. The issue is squarely covered against the revenue in light of the decision of the Hon’ble Supreme Court in the case of Shasun Chemicals 15,25,746/. The learned Tribunal has directed the Assessing Officer to set off assessee’s prior period of expenditure and income as per the law. Therefore, necessary consequence shall follow. Under the circumstances, we see no reason to interfere with the impugned judgment and order passed by the learned Tribunal. Question B is also held against the revenue and in favour of assessee

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• 2017 (1) TMI 856
  Penalty 272A(2)(k) - TDS returns filed after the due dates - Held that:- We find that the FAA had called for the details of delay and filing of TDS returns, that she had followed the order of the Tribunal and had directed the AO to recalculate the penalty amount from the date of payment of taxes to the date of filing of returns. In our opinion, there is no legal factual infirmity is in her order. Therefore, confirming her order we decide the effective ground of appeal against the AO.

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• 2017 (1) TMI 855
  Obligation on the part of Assessing Authority to issue a notice to the assessee inviting attention towards defect in the return under Section 139 (9) - Held that:- The first question with regard to Section 139(9) of Act 1961, does not arise, for the reason that Assessing Authority has not rejected Return for any defect therein and in fact the revised Return filed by Assessee on 21.01.1993 was taken and thereafter Returning Authority proceeded to make assessment by means of order dated 13.12.1994. Hence Section 139(9) has no application. Therefore, as agreed by learned counsel for both parties, we find that question 1 does not arise from impugned judgment. Rectification of mistake - assessed loss and unabsorbed depreciation to be carried forward and treat return as a valid return in absence of Section 139(9) - Held that:- CIT(A) in fact, considering various submissions advanced by Assessee on merits, has virtually changed earlier order and now allowed appeal and directed Assessing Officer to allow assessed loss and unabsorbed depreciation to be carried forward and treat return as a valid return in absence of Section 139(9) of Act 1961 and thereby has virtually reviewed earlier assessment. This approach of CIT(A) in passing order dated 21.09.2000 under Section 154 is found patently illegal and without jurisdiction. Since in the garb of rectification of mistake, CIT(A) could not have reviewed its earlier order. Therefore, in the appeal preferred by Revenue, Tribunal has rightly allowed appeal and set aside order passed by CIT(A). As in the garb of rectification of mistake, no authority has jurisdiction to review an earlier order and pass fresh order having effect of changing order in its result and on various other aspects. This cannot be said to be a mistake apparent on the face of record. We therefore, answer question against appellant-Assessee and in favour of Revenue.

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• 2017 (1) TMI 854
  Reopening of assessment - Held that:- This Court in Hindustan Lever Ltd vs. R.B. Wadkar, Assistant Commissioner of Income Tax and Others [2004 (2) TMI 41 - BOMBAY High Court] has held that re-opening notice has to be justified on the basis of the reasons recorded at the time of issuing the impugned notice. The impugned notice must stand or fail on the reasons recorded. These reasons recorded cannot be supplemented by further reasons or by filing an affidavit and/or making oral submission. The reasons are a manifestation of the mind of the Assessing Officer and must be self explanatory and should not keep the assessee guessing. It cannot be justified on the basis of inferences or interpretation. The reasons as recorded prima facie do not seem to indicate reasonable belief that income chargeable to tax has escaped assessment. In view of above, prima facie the impugned notice is without jurisdiction. Accordingly, pending hearing and disposal of this petition there shall be stay of the impugned notice dated 31st March, 2016.

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• 2017 (1) TMI 853
  Nature of income - subsidy received as Excise Duty reimbursement - whether is not a revenue receipt? - Held that:- The subsidy scheme formulated by the Government of Bihar was for the purpose of attracting capital investment and to encourage setting up/expansion of existing units. Thus the object/purposes of the subsidy was for the purposes of encouraging capital investments in the State of Bihar. Consequently the impugned order holds that subsidy would be on Capital account and could not be considered to be on Revenue account.In fact this issue about the object/purpose of the subsidy deciding its character as revenue or capital is no longer res integra in view of the decision of the Supreme Court in CIT, Madras v/s. Ponni Sugars & Chemicals Ltd. (2008 (9) TMI 14 - SUPREME COURT ) Addition made to book profits on account of subsidy received by way of excise duty - Held that:- As we have already held that the subsidy received by the respondent-assessee from the State of Bihar was in the nature of capital receipt. Hence the same cannot be added to arrive at book profits of the respondent-assessee under Section 115J of the Act.

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• 2017 (1) TMI 852
  Reopening of assessment - no business loss could be claimed as the petitioner had not carried out any business activity during the year - Held that:- AO had come to a reasonable belief that no business loss could be claimed as the petitioner had not carried out any business activity during the year. This is also supported by notes to the account filed along with the Return of Income which indicates that the petitioner did not carry on any business activity during the year. This fact would form the basis for reasonable belief that income chargeable to tax has escaped assessment. In as much as expenditure which has nothing to do with the business is being claimed as business expenditure. At the stage of issuing a notice all that the Assessing Officer has to reach is a prima facie view that the income chargeable to tax has escaped assessment and there must be reasons for that belief. It is not expected of the Assessing Officer to have a castiron case before exercising jurisdiction to issue reopening notice. All that is required is reasonable belief. It is likely that on a fuller consideration, the Assessing Officer may reach a different conclusion. But the likelihood of a different view when material exist of forming a belief will not justify our stopping the Assessing Officer for exercising jurisdiction to assess the petitioner on the reopening notice. No restrain the Assessing Officer from proceeding further with assessment pursuant to the impugned notice dated 5th October, 2015. - Decided against assessee

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• 2017 (1) TMI 851
  Reopening of assessment - Computation of capital gain on Long Term Capital Gain arising on sale of two properties - assessee held undivided shares of 1.56% and 6.25% respectively along with other co-owners - valuation of the property by the Government approved Valuer - refernce to DVO challenged - AO issued a notice u/s 148 relying upon the report of the DVO in the case of another co-owner of the same properties - Held that:- We find that assessment in this case had been completed u/s 143(3) of the I.T. Act. The reopening has been solely done on the basis of DVO’s report in the case of a third party. No other material has come into the possession of the AO. In such circumstances, the case law of ACIT vs Dhariya Construction Company (2010 (2) TMI 612 - Supreme Court of India) is applicable. Hence in our considered opinion the order of the learned CIT(Appeals) in this regard is quite correct. Accordingly we uphold the view that the reopening in this case is invalid and deserves to be cancelled. We uphold the order of learned CIT(Appeals) in this regard. As regards the merits of the issue as we have already upheld the order of learned CIT(Appeals) quashing the assessment on jurisdiction itself. In such circumstances, in our considered opinion, adjudicating upon the merits of the case is only of academic interest. Hence we are not engaging into the same. - Decided in favour of assessee

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• 2017 (1) TMI 850
  Addition as unexplained deposit in the savings bank account - Assessment Order u/s.144 - agricultural income - Held that:- On the basis of AIR information notice u/s.142(1) was issued to the assessee. However, there was noncompliance for which the Assessing Officer issued another notice calling for certain details. Still there was no compliance for which the Assessing Officer passed the order u/s. 144 making addition of 14 lakhs as unexplained deposit in the savings bank account. The Assessing Officer has also did not allow the basic exemption limit while completing the assessment u/s.144 of the I.T. Act. Thus find in appeal, in absence of any satisfactory explanation given by the assessee regarding the source of deposit, the CIT(A) upheld the addition made by the Assessing Officer. It is the submission of the assessee that the entire deposit of 14 lakhs in the bank account is out of agricultural income of the family of the assessee which has been deposited in her bank account. It is also the submission of the Ld. Counsel for the assessee that given an opportunity the assessee is in a position to explain the source of deposit of 14 lakhs. Considering the totality of the facts of the case and in the interest of justice, I deem it proper to restore the matter back to the file of the Assessing Officer with a direction to give one more opportunity to the assessee to substantiate her case. - Decided in favour of assessee for statistical purposes.

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• 2017 (1) TMI 849
  Rejection of books - reference to DVO - whether the A.O. could have made a reference under Section 142A of the Act? - Held that:- This issue is no longer res integra as it has been settled by the Apex Court. The only circumstances under which a matter can be referred to the DVO is, when the books of account of the assessee have been rejected. The facts in the present case are otherwise. The law as settled by the Apex Court in the case of Sargam Cinema Vs. CIT (2009 (10) TMI 569 - Supreme Court of India ) covers the matter squarely wherein held that matter could not refer to the Departmental Valuation Officer without the books of account being rejected.- Decided in favour of the assessee

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• 2017 (1) TMI 848
  Prosecution initiated against the petitioners in terms of Section 276 CC - Failure to furnish returns of income - Held that:- The fact that the petitioner had already filed his return of income as on the date of the order of sanction, which had gone unnoticed, is not in dispute and the learned counsel for the respondent would endorse the same. The tenor of Section 276 CC of the IT Act contemplates that if a person has failed to furnish the return of income in time, it is then that the rigour of the section would be attracted. For, if the return of income had been filed belatedly or otherwise, the section cannot apply at all and therefore, the prosecution ranged against the petitioner is vitiated. Consequently, the petition would have to be allowed. The returns are accepted and assessments are carried out, which would not be the same as holding that the returns filed belatedly have been held to have been nonest and therefore, the authorities have proceeded thereupon. This would make a difference to the situation and therefore, the contention that the section which prescribes that if the assessee fails to file the return within the time due, the rigour would be attracted, would stand diluted by virtue of the returns having been accepted and assessments having been carried out therein. Consequently, the prosecution initiated against the petitioners in terms of Section 276 CC of the IT Act cannot be sustained.

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• 2017 (1) TMI 847
  Validity of reopening of assessment - reasons to believe - Held that:- We find that both the CIT(A) as well as the Tribunal have on facts held that all facts necessary for assessment were truly and fully disclosed by the respondent assessee for the subject assessment year during the assessment proceedings. In fact, even the basis of the present proceedings i.e. the reasons recorded in support of the notice does not support, even remotely, any submission to allege failure on the part of the respondent assessee to truly and fully disclose all necessary facts for assessment. Therefore, as correctly held by the CIT(A) and the Tribunal, the reopening notice dated 24th September, 2003 would be hit by the proviso to Section 147 of the Act.

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• 2017 (1) TMI 823
  Guarantee commission - allowable business expenditure u/s 37 - Held that:- The Special Leave Petitions are dismissed. HC order [2011 (10) TMI 443 - KARNATAKA HIGH COURT] confirmed. Guarantee commission expenditure incurred is not for the purpose of earning profits of the business. Merely because the banks insisted on such guarantee and the Managing Director agreed to stand as a guarantor on payment of such commission, the commission is actually paid. That would not constitute a lawful expenditure so as to claim deduction under Section 37 of the Act. - Decided against the assessee

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• 2017 (1) TMI 822
  Reopening of assessment - failure to produce share application form details of shares allotted to the so called share holders and proof of attendance of Annual General Board Meeting of the said so called share holders - Held that:- Learned counsel appearing for the petitioner seeks permission to withdraw the Special Leave Petition. The Special Leave Petition is, accordingly, dismissed as withdrawn. HC ref [2016 (6) TMI 899 - GUJARAT HIGH COURT]

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• 2017 (1) TMI 821
  Stay of recovery - Penalty under section 271E - violation of the provisions of section 269T - Held that:- Learned counsel for the appellant says that the tax due has already been paid. Out of a penalty amount of 14 crores, an amount of 1.6 crores has already been recovered from the appellant. There shall be a stay of further recovery of penalty till the disposal of the appeal. HC ref case - 2015 (11) TMI 71 - KARNATAKA HIGH COURT

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• Customs

• 2017 (1) TMI 834
  Confiscation of bus - imposition of fine - Smuggling of Gold - gold found to be in possession of driver of the bus - the appellant is the owner of the bus - whether the appellant is involved in smuggling of gold? Held that: - no case of involvement of the owner-Mr. Vishnu Thapa has been found in the alleged smuggling of gold. Further, no involvement of the agent of the owner, namely, Shri Sunil Chaalise of Transport Department of M/s ABC Tours & Travels Pvt. Ltd., Kathmandu, Nepal, (power of attorney holder), have been found by the Id. Commissioner and no penalty was imposed under Section 112 of Customs Act, 1962. Further, the Id. Commissioner have erred in holding that the driver of the bus, Shri Hari Bahadur Shreshtha, to be the agent of the owner, which is without any basis. No case for confiscation is made out of the bus u/s 115(2) of Customs Act, 1962. The owner-appellant have proved that the bus was so used without knowledge or connivance of the owner himself or his agent in using the conveyance for smuggling. Further, it is admitted fact on record that the gold was not concealed in the bus but was found on the person of the driver. Accordingly, confiscation of the bus set aside and fine on its owner the appellant u/s 115(2) of Customs Act, 1962 also set aside. Appeal allowed - decided in favor of appellant.

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• 2017 (1) TMI 833
  Benefit of N/N.32/97-Cus - denial on the ground that major quantity of raw materials used was indigenous and not imported and thus, the respondents could not be said to be job-workers - The Assistant Commissioner in his order noted that the major quantity of raw-materials used in the process was purchased by the respondents themselves, though in value terms it was very small as compared to the value of imported goods. The Assistant Commissioner, therefore, allowed the exemption to the appellants. Held that: - no new ground has been raised by the Revenue in their appeal. It is seen that the Commissioner (Appeals) has adequately dealt with this issue. We are in agreement with the order of the Commissioner (Appeals) - Revenue appeal rejected - decided against Revenue.

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• 2017 (1) TMI 832
  Evidence - statement of accused - end use of Brass Scrap in dispute - confiscation - penalty - Held that: - the appeal paper book is having a copy of statement of the appellant dated 10th January, 2008, wherein he has categorically stated that he had non role in the import of said Brass Scrap - From the ruling of Hon'ble High Court of Allahabad in the case of ASHOK KUMAR SINGH Versus UNION OF INDIA [1998 (8) TMI 99 - HIGH COURT OF JUDICATURE AT ALLAHABAD] it was held that on the basis of statement of co-accused alone and in the absence of any other evidence, the lower court cannot proceed against an accused. In the present case, I find that the statements of Manoj Sikka and Shri R.K. Gupta are contradictory to each other. This situation may create suspicious about the role of Shri R.K. Gupta, however, suspicion cannot be the basis for punishment, and therefore, I hold that in the facts and circumstances of the case, Shri R.K. Gupta was not liable to impose with penalty - appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2017 (1) TMI 830
  Scheme of Amalgamation - Held that:- Considering the approval accorded by the shareholders and creditors of the Petitioner Companies to the Scheme; and the report and affidavit filed by the Official Liquidator and the Regional Director, Northern Region, respectively, not raising any objection to the Scheme, there appears to be no impediment to the grant of sanction to the Scheme. Consequently, sanction is hereby granted to the Scheme. The Petitioner Companies will comply with the statutory requirements in accordance with law. Upon the sanction becoming effective from the appointed date of Scheme, i.e. 1st April, 2015 the Transferor Company shall stand dissolved without undergoing the process of winding up. Notwithstanding the above, if there is any deficiency found or violation committed, qua any enactment, statutory rule or regulation, the sanction granted by this Court to the Scheme will not come in the way of action being taken, albeit, in accordance with law, against the concerned persons, directors and officials of the Petitioner Companies. It is made clear, that this order shall not be construed as an order granting exemption, inter alia, from, payment of stamp duty or, taxes or, any other charges, if, payable, as per the relevant provisions of law or, from any applicable permissions that may have to be obtained or, even compliances that may have to be made, as per the mandate of law.

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• 2017 (1) TMI 829
  Scheme of demerger - Held that:- The said Scheme is not prejudicial to the interest of any person or entity, which has a stake/interest in the petitioners. The said scheme as framed is not violative of any statutory provisions. The proposed scheme, as formulated, is fair, just, sound and is not contrary to any public policy or public interest. No proceedings appear to be pending under the provisions of Sections 231 to 251 of the Companies Act, 1956. All the statutory provisions appear to have been complied with. Consequently, there shall be an order approving the scheme of arrangement (Demerger) between M/s.Renaissance RTW Asia (P) Limited (Demerged company) and M/s.RC Colours Private Limited (Resulting company), with effect from 01.01.2016, as per the procedure laid down under Sections 391 to 394 of the Companies Act, 1956. Needless to say, the procedure prescribed will be duly complied with.

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• 2017 (1) TMI 828
  Compounding for violation of provisions of section 75 of the Companies Act, 1956 - Held that:- We have seen the certified extract copy of the Board Resolution dated 31st March 2015 wherein the Board has passed a resolution to file necessary Compounding Application. We have seen the Memorandum and Articles of Association of the company, copy of Balance Sheet for the year ended 31/03/2012 and copy of the Return of Allotment filed in Form PAS-3, Challan, Board Resolution for allotment and List of Allottees and after going through the Company Petition under section 621A of the Companies Act, 1956 and further submissions made by the Practicing Company Secretary for the Applicant and the observations of the Registrar of Companies, we hereby levy the compounding fee on the Applicant as set out in the table. As the compounding fee has been remitted by the Applicants, the offence stated in the petition is compounded. A copy of this Order be sent to Registrar of Companies, Karnataka, Bengaluru for appropriate action.

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• 2017 (1) TMI 827
  Penalty on the appellants under Section 15HB of SEBI Act - the appellants have violated regulation 23(1) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 - obligation cast on the BoD of a company under the Takeover Regulations, 1997 - Held that:- In the present case the appellants as BoD of the company knew very well that prior approval of the general body of shareholders was necessary before entering into any document for encumbering the assets of the company and accordingly the appellants as BoD of the company had convened EOGM on January 18, 2010. Even after knowing their obligation under regulation 23, the appellants ought not to have indulged in encumbering the Vile-Parle (West) property of the company in gross violation of regulation 23 of the Takeover Regulations, 1997. In the absence of any compelling reason for entering into the MoU on December 26, 2009, before the EOGM scheduled on January 18, 2010 the appellants who have grossly violated regulation 23 of the Takeover Regulations, 1997, deserve harsh punishment. In these circumstances, we see no reason to interfere with the penalty of 1 crore imposed on the eight appellants which is directed to be paid jointly and severally.

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• FEMA

• 2017 (1) TMI 826
  Violation of Section 8 (3) and Section 8 (4) of the Foreign Exchange Regulation Act, 1973 read with Chapter 7A.20 (i) of the Exchange Control Manual, 1995 - Held that:- Courts have repeatedly held that in quasi criminal proceedings the penalty should not be imposed merely because it is lawful to impose the penalty. Whether penalty should be imposed or not is a matter of discretion to be exercised judicially and on consideration of all the relevant circumstances. Further simplicitor from the non-compliance of placing on record no inference can be drawn that the foreign remittance was not used for the purpose of import. It is trite law that to impose a penal liability compliance should be sought within a reasonable time and a person cannot be penalised for not retaining the documents for a period of 13 years. During the course of the present appeal, exchange copy of Bill of Entry qua transaction at Sr. No. 2 has already been placed however, despite best efforts the appellant could not locate the exchange copies of Bills of Entry qua other two transactions. In view of the belated show cause notice being served on the appellant, the defence of the appellant that it was not in possession of the copies of Bill of Entry for the two transactions is plausible. It cannot be held that the respondent has proved its allegation beyond reasonable doubt and the copies of the Bills of Lading probablise that the remittances were utilized for import. Consequently, the impugned orders passed by the Appellate Tribunal and the Adjudicating Authority are set aside.

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• Service Tax

• 2017 (1) TMI 846
  Construction of Complex Services - period involved is 2006-07 and 2007-08 - service rendered by the appellant for Rajasthan Housing Board, Jaipur with reference to construction of eight Nos. of houses at Pratap Nagar, Jaipur - whether the activity of constructing individual houses for Housing Board can be covered under the taxable service under the head construction of Complex Services? Held that: - the construction of Complex Service stipulates that there should be more than 12 residential units. Admittedly, in the present case, we are dealing with individual eight houses. On this ground alone, the impugned order is not sustainable - appeal allowed - decided in favor of appellant.

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• 2017 (1) TMI 845
  Appropriate forum to file appeal - activities of the State in relation to the agricultural urban wholesale markets - Held that: - we preserve all such issues raised by the State for being raised in appropriate proceedings, since we are of the view that it would be inappropriate for us to consider such an issue in this appeal because no such ground was raised in the writ petition - All issues relating to the constitutionality of the provisions as may be found available to the appellant would stand left open and the impugned judgment is affirmed in so far as it relegates the State to the appropriate statutory appellate authority - The interlocutory order granted in this appeal will continue for a period of four weeks to enable the appellant to submit its appeal before the appropriate statutory authority - appeal disposed off.

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• 2017 (1) TMI 844
  Place of provision of service - whether the service or training received by their employee, who have undergone Management Course at Columbia University, New York, by travelling and staying at New York for the said course during the period 2007-08 can be said to be a service rendered from outside India and received in India? Held that: - under the provisions of Taxation of Service (provided from outside India and Received in India) Rules, 2006 read with Circular F.No.B1/4/2006-TRU, dated 19.04.2006, wherein Para 4.2.8, it have been clarified that "specified taxable services, which involve physical performance, fall under Rule 3(ii) of the said Rules and the same are treated as services provided from outside India and received in India, if such services are partly or wholly performed in India - the service received by the employee of the assessee at New York, cannot be said to be service rendered from America or outside India and received by the assessee in India - demand set aside - appeal allowed - decided in favor of appellant.

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• 2017 (1) TMI 843
  Business Auxiliary Service - Whether appellant is liable to pay penalty u/s 76 and 78 and whether the appellant, which is a proprietorship concern of Mr. Arvind Bansal, is liable to service tax under the classification of Business Auxiliary Service prior to the period 1st May, 2006? - Held that: - the appellant had made suo motu compliance and deposited the tax from the date the definition was amended with effect from 01/05/2006. We hold that no case of contumacious conduct or suppression of facts from the revenue is made out - appellant not liable to service tax for the period prior to 1st May 2006 - penalty also set aside. Whether the show cause notice dated 18.02.2008 is against the provisions of the Act and the Rules demanding tax under the head Business Auxiliary Service for the period 02/09/2006 to 10/05/2007 under the fact that the appellant had been making regular compliances in paying Service Tax under Business Auxiliary Service, as they were registered dealer? - Held that: - the appellant had paid the tax prior to issue of the show cause notice, the whole show cause notice is bad and not tenable under the provisions of Section 73 of the Finance Act. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2017 (1) TMI 842
  Valuation - related party - assessable value in terms of Rule 11 read with Rule 9 & 8 of Central Excise Valuation (Determination of Price of excisable goods) Rules, 2000 - Held that: - Rule 9 of said Rule provides that when the assessee arranges sale of goods manufactured by them through a related person, then the value of goods for determination levy of duty is the price at which said related person sales the said goods. It clearly means that if the goods are cleared to a person who is consuming the same, then the provisions of Rule 9 are not applicable In the present case, show cause notices has invoked Rule 11 and for invoking Rule 11, it has taken assistance of provisions of Rules 8 & 9 of the said Rule. We find that neither the provisions of Rule 8 nor the provisions of Rule 9 are applicable in the present case. Therefore, the show cause notices are not sustainable - appeal dismissed - decided against Revenue.

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• 2017 (1) TMI 841
  100% EOU - Benefit of N/N. 22/2003-CE - denial on the ground that the condition of use in own unit not satisfied - transfer of capital goods for utilization in their 100% EOU for use with their captive power plant/diesel generating set - Held that: - there have been substantial compliance of the conditions of N/N. 22/2003 - CE, which required that duty-free capital goods acquired by the 100% EOU should be utilised by it for manufacture of goods, which are finally exported. Accordingly, there is no error found in the Order-in-Appeal passed by Ld. Commissioner (Appeals) - appeal dismissed - decided against Revenue.

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• 2017 (1) TMI 840
  Disallowance of CENVAT credit - various input services - capital goods - Rule 15(2) of Cenvat Credit Rules, 2004 read with Section 11AC of Central Excise Act, 1944 - extended period of limitation - Held that: - All input services received are held as eligible for credit except Services totaling 35,516/- disallowed on services of Services of peon at H.O. + Services utilized for a ppty. Of Mr. Daga at Kolkata, Rent-a-cab services, Payment to sea court in Jaypee Green and Loading/ unloading of trading goods. As regards the disallowance of Cenvat credit paid by the appellant-assessee, on the basis of challans (for work done by them by their petty contractors), it is explained that such petty contractors were not well educated not well versed with service tax, hence they assisted them in depositing the service tax and the same was duly reflected in the bills, which amount was duly accounted for. I hold that the appellant-assessee is entitled to take Cenvat credit as the payment of such tax is supported both by the invoices as well as the challans, which are in procession of the appellant. Credit allowed in most of the services except four services mentioned - penalty set aside - appeal allowed - decided partly in favor of assessee.

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• 2017 (1) TMI 839
  Time limitation - CENVAT credit - whether the Id. Commissioner (Appeals) have rightly allowed the appeal of respondent-assessee, holding that the Show Cause Notice was time barred as under the facts and circumstances extended period of limitation was not invokable? - Held that: - the Adjudicating Authority have not negated the assertions of the respondent-assessee and moreover the issue of Modvat/Cenvat credit, on the disputed items, was subjudice before four different Authorities and even this Tribunal had taken different views, under similar facts and circumstances. Accordingly, the Id. Commissioner have found that no case of any contumacious conduct, concealment etc., is found or made out and accordingly allowed the appeal of the respondent-assessee holding the Show Cause Notice to be time barred. Appeal dismissed - decided in favor of respondent-assessee.

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• 2017 (1) TMI 838
  Extended period of limitation - Section 35-G of Central Excise Act, 1944 - suppression of facts - Held that: - there was no suppression of fact deliberate but there was a bona fide dispute and in any case demand being raised beyond period of limitation was not justified. It has directed Revenue authorities to requantify the demand falling within the period of limitation and thereafter proceed accordingly - decision of Kerala High Court in CCE, Cochin vs. Idea Mobile Communication Ltd., [2008 (9) TMI 292 - KERALA HIGH COURT] was followed - appeal dismissed - matter on remand.

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• 2017 (1) TMI 837
  Waiver of Penalty - duty and penalty paid before adjudication - Held that: - the appellant has paid the entire amount of duty and penalty as demanded in the impugned Show Cause Notice. Further, the appellant has paid 25% of the penalty impose under Section 11AC of Central Excise Act, 1944 before adjudication - as provided under Section 11AC of Central Excise Act, 1944, during the material period that if penalty imposed is paid within thirty days of such imposition then penalty stands reduced to 25% the entire payable penalty the appellant - Since, the duty, interest already paid, the proceedings of said SCN dated 09/07/2008 are concluded

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• 2017 (1) TMI 836
  Dutiability of Untrimmed Sheets of Copper - Untrimmed Sheets and Circles of Brass & Copper were being manufactured by the appellant which were captively consumed in the manufacture of Trim Sheets and Circles and that there was no clearance of Untrimmed Sheets and Circles - whether it was justified in holding that the said goods were captively consumed and are not sold, and are thus not marketable, thereby not liable to tax? - Held that: - this Tribunal has categorically in Para 12 of said final order dated 14/07/1999 held that Untrimmed Sheets of Copper are not liable to duty because the marketability of the said has not been proved. In respect of such a clear finding on the issue Id. Commissioner (Appeals) deviated from the judicial discipline and has held in the impugned Order-in-Appeal No. 136-137-CE/MRT-II dated 29/06/2007, that Untrimmed Sheets of Copper are excisable goods. We, therefore, find that the impugned Order-in-Appeal is bad in law - Untrimmed Sheets and Circles not liable to tax - appeal allowed - decided in favor of appellant-assessee.

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• 2017 (1) TMI 835
  CENVAT credit - security services - manufacturer of HDPE/LLDPE, LPG and various other petro-chemical products - whether M/S Gail India Ltd. are entitled to Cenvat credit on security services received for taking care of their residential colony/ township? Held that: - the residential colony/ township is located at a remote place, where no municipal services are available. Further it is admitted fact that, it is an industrial township set up by the respondent-assessee so that trained manpower is available to run their plant for production of dutiable output - as the said security services qualify that input service under Rule 2(1) of Cenvat Credit Rules, 2004 being the service utilized by the manufacturer in relation to manufacture of dutiable output, credit is allowed - The respondent-assessee will be entitled to refund or re-credit of the duty reversed under protest with interest as per rules - appeal dismissed - decided against Appellant-Revenue.

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• CST, VAT & Sales Tax

• 2017 (1) TMI 831
  Validity of order of Learned Single Judge - transfer of Collection Amin from Kanpur to Etawah - Authority under U.P. Trade Tax Collection Amins' Service Rules, 1995 to transfer - Rule 27 of 1995 Rules and Rule 29 of the 1974 Rules - Held that: - as far as 1974 Rules are concerned, they have no application whatsoever in reference of Collection Amin who have been working as such in the Uttar Pradesh Trde Tax Department, and have been absorbed in Trade Tax Department whereas Rule 29 of the 1974 Rules are applicable only in reference of Collection Amin of Revenue Department. As per exigency of service, transfer order has been effectuated after permission has been taken by the State Government strictly in consonance with the transfer policy, then there is no occasion for us to intervene in the matter - appeal dismissed - decided against appellant.

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• Indian Laws

• 2017 (1) TMI 825
  Validity of action taken by the respondents under the Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) - action without authority in law - Held that:- The present petition is not accepted for its any of the prayers. The same is disposed of by observing that the respondent Bank may proceed to issue a fresh notice under Section 13(4) of the SARFAESI Act against the petitioner as it has withdrawn the earlier notice dated 08th September, 2016 as stated in the affiavitin- reply mentioned hereinabove. While permitting the respondent Bank to issue fresh notice as above, liberty is reserved for the petitioners to avail statutory alternative remedy of appeal before the Debt Recovery Tribunal challenging the action of the Bank on all available contentions including the above and those others raised in this petition.

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• 2017 (1) TMI 824
  Complain under Prevention of Corruption Act - whether the respondent police without any evidence implicated the petitioner/A1? - Held that:- Considering the submissions made on both sides and on perusal of the records and citations referred on behalf of the counsel for both parties, the contention raised by the learned counsel for the petitioner is not acceptable, the Division Bench has held otherwise and followed the directions of the Apex Court. Reliance was also placed upon the decision of the Hon'ble Supreme Court in Vineet Narain V. Union of India (1997 (12) TMI 615 - SUPREME COURT OF INDIA) - "The CBI manual based on statutory provisions of the Cr.PC provides essential guidelines for the CBI's functioning. It is imperative that the CBI adheres scrupulously to the provisions in the Manual in relation to its investigative functions, like raids, seizure and arrests. Any deviation from the established procedure should be viewed seriously and severe disciplinary action taken against the officials concerned". Subsequently, this Court in various occasions expressed its view that Rules under Vigilance Manual are only administrative and on non-observance of the same, there is no mandatory violation, which would affect the validity of the prosecution. Once it is decided that the compliance of the rules of the DVAC Manual is not mandatory, if at all any officials violating the rules of manual the court should recommend for taking departmental action against the officials concerned, which will not go to the root of the case. As already stated, that this Court finds there are specific allegations made against this petitioner in the FIR, charge sheet and also in the statement given by the official witnesses recorded during the investigation under Section 161 Cr.PC, there are prima facie allegations made out against this petitioner. Merely because the tainted money has not been recovered from the petitioner/A1 directly, it is not a ground for quashing the proceedings. Further, it is settled proposition that latches on the part of prosecution will not vitiate the case. At this stage, this Court cannot interfere with the power of the trial Court by invoking the provisions contemplated under Section 482 Cr.PC, which is not automatic and it has to be invoked sparingly. It is already held that there is prima facie sufficient materials available to proceed against the accused, the petitioner has not made out any ground to quash the proceedings. The grounds taken are not valid under law and not sufficient to quash the proceedings. Under such circumstances, this Court is not inclined to invoke the discretionary powers given under Section 482 Cr.PC to quash the proceedings and the petition filed by the petitioner for quashing the proceedings is liable to be dismissed and the same is hereby dismissed. Criminal original petition is dismissed. Consequently, connected miscellaneous petition is also closed.

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