TMI Tax Updates - e-Newsletter
October 26, 2017

Case Laws in this Newsletter:

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

Articles

1. VALIDITY OF SECTION 7 OF INSOLVENCY AND BANKRUPTCY CODE, 2016

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Govt. expected to raise ₹ 750 Crore through OFS of 5% shares of NLC India Limited; Non-retail portion over-subscribed by 3.19 times

2. Financial regulation and economic policies for avoiding the next crisis (Urjit R. Patel, Governor, Reserve Bank of India - October 15, 2017 - at the 32nd Annual G30 International Banking Seminar, Inter-American Development Bank, Washington, D.C.)

3. RBI Reference Rate for US $

4. General Provident Fund (GPF) and other similar funds shall carry interest at the rate of 7.8% w.e.f. 1st October, 2017 to 31st December, 2017

5. Strong Macro-Economic Fundamentals And Reforms for Sustained Growth

6. Strong Macro-Economic Fundamentals And Reforms for Sustained Growth

7. Minister for Commerce and Industry reviews Government’s initiatives on IPR

Notifications

Companies Law

1. F. No. 1/27/2013-CL-V(Part-I) - dated 23-10-2017 - Co. Law

Delegation of powers under section 247 of CA 2013 to Insolvency and Bankruptcy Board of India

2. F. NO. 1/27/2013-CL-V - dated 23-10-2017 - Co. Law

Companies (Removal of Difficulties) Second Order, 2017

Customs

3. 52/2017 - dated 24-10-2017 - ADD

Seeks to impose anti-dumping duty on the imports of Cold-rolled Flat products of stainless steel of width greater than 1250 mm of all series not further worked than Cold rolled (cold reduced) with a thickness of up to 4mm (width tolerance of +30 mm for Mill Edged and +4mm for Trimmed Edged)

4. 97/2017 - dated 24-10-2017 - Cus (NT)

Amendment in Notification No. 96/2017-CUSTOMS (N.T.), dated 18th October, 2017

5. 14/2017-Customs (N.T./CAA/DRI) - dated 24-10-2017 - Cus (NT)

Amendment in Notification No. 4/2017-Customs (N.T./CAA/DRI) dated 30th January 2017

6. 13/2017-Customs (N.T./CAA/DRI) - dated 24-10-2017 - Cus (NT)

Amendment in Notification No. 1/2017-Customs (N.T./CAA/DRI) dated 13th January 2017

7. 12/2017-Customs (N.T./CAA/DRI) - dated 24-10-2017 - Cus (NT)

Appointment of Common Adjudicating Authority by DGRI

DGFT

8. 37/2015-2020 - dated 25-10-2017 - FTP

Export Policy of Animal By-Products - Procedure for export of Lanolin to the European Union

GST

9. 50/2017 - dated 24-10-2017 - CGST

Waiver of late fee payable for delayed filing of FORM GSTR-3B for Aug & Sep, 2017

10. 17/2017 - dated 24-10-2017 - UTGST

Application of notifications issued u/s 21 of the CGST Act, 2017 for the purpose of UTGST automatically.

GST - States

11. F.No.12(56)FD/Tax/2017-127 - dated 24-10-2017 - Rajasthan SGST

Notification regarding waiver of the late fee for late filing of FORM GSTR-3B, for the month of August and September, 2017

12. F.No.12(56)FD/Tax/2017-Pt-III-109 - dated 13-10-2017 - Rajasthan SGST

THE RAJASTHAN GOODS AND SERVICES TAX (REMOVAL OF DIFFICULTIES) ORDER, 201

13. F.No.12(56)FD/Tax/2017-Pt-III-108 - dated 13-10-2017 - Rajasthan SGST

Amendment in the Notification Number F.12(56)FD/Tax/2017-Pt-I-51 dated the 29th June, 2017.

14. F.No.12(56)FD/Tax/2017-Pt-III-107 - dated 13-10-2017 - Rajasthan SGST

Amendments in the Notification Number F.12(56)FD/Tax/2017-Pt-I-50, dated the 29th June, 2017

15. F.No.12(56)FD/Tax/2017-113 - dated 13-10-2017 - Rajasthan SGST

Amendment in Notification No.F.12(56)FD/Tax/2017-58 dated 30.06.2017.

16. F.No.12(56)FD/Tax/2017-112 - dated 13-10-2017 - Rajasthan SGST

Amendment in Notification No.F.12(56)FD/Tax/2017-Pt-I-43 dated 29.06.2017.

17. F.No.12(56)FD/Tax/2017-111 - dated 13-10-2017 - Rajasthan SGST

Amendments in the Notification Number F.12(56)FD/Tax/2017-Pt-I-41 dated the 29th June, 2017.

18. F.No.12(56)FD/Tax/2017-110 - dated 13-10-2017 - Rajasthan SGST

Amendment in this Notification Number F.12(56)FD/Tax/2017-Pt-I-40 dated 29th June 2017

Money Laundering

19. 7/2017 - dated 23-10-2017 - PMLA

Prevention of Money-laundering (Maintenance of Records) Sixth Amendment Rules, 2017

Circulars / Instructions / Orders

DGFT

1. Trade Notice No. 19/2018 - dated 25-10-2017

Implementation of Notification No.22 dated 21.8.2017- reg.

2. 34/2015-2020 - dated 24-10-2017

Onetime relaxation for EO extension and clubbing of Advance Authorsations – reg.

Highlights / Catch Notes

Income Tax

• Case Transfers Invalid Without Section 127 Order: No Agreement Between Authorities, Jurisdiction Lacks Legal Basis.

  Case-Laws - AT : Transfer of cases - Jurisdiction - prior requirement of the law for having the valid order on basis of positive Agreement between two competent authorities is missing - transfer made without valid/required order u/s 127 is invalid
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• Firm's Depreciation Claim Denied for Misrecorded Payments to Heirs as Tenancy Rights.

  Case-Laws - AT : The firm was not a tenant/had not paid for acquisition of tenancy right but has made payments to the legal heirs of the deceased partners and has reflected the same as payment made for acquisition of tenancy rights in its books of account - Depreciation on tenancy rights denied.
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• Unrecorded income classified as business income u/s 80-IB(10) for deductions on housing project profits.

  Case-Laws - AT : Deduction u/s.80-IB(10) - unrecorded income towards on money - income disclosed by the assessee treated as income of the assessee from the business and not as from other sources
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Customs

• Anti-Dumping Duty extension issued after expiration deemed invalid; no duty can be demanded from petitioner.

  Case-Laws - HC : The Notification imposing ADD, dated 16.12.2010 had lapsed on 07.12.2014. Therefore, the extension Notification, dated 05.01.2015, issued after the lapse of the said period is not sustainable, and no ADD can be demanded from the petitioner, based on such extension Notification. - HC
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• Classifying Yeast: Autolysed Yeast under CTH 2106 vs. Unchanged Yeast under CTH 2102.

  Case-Laws - AT : Classification - Once it is evident that in the process of autolysation merely results in enzymatic digestion of the cell by enzymes and their destruction, the resultant degenerated cell per se would possibly merit classification as 'Autolysed Yeast' under CTH 2106. However, when the Yeast Cell Wall on its own does not get autolysed or undergoes any change, the same would only be classifiable as yeast under CTH 2102.
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FEMA

• Court Orders Reconsideration of Petitioners' FCRA Registration Application; No Misuse of Foreign Contributions Found.

  Case-Laws - HC : Registration u/s 12 of FCRA - There is no material which would justify the conclusion that the petitioners were likely to divert the foreign contribution for personal gains or utilise it for any undesirable purposes - respondent directed to reconsider the application - HC
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Corporate Law

• Power of Attorney Holder Cannot File u/s 7 of Insolvency and Bankruptcy Code; Only Authorized Persons Can.

  Case-Laws - AT : A 'Power of Attorney Holder' is not empowered to file application under section 7 of the 'I&B Code' - However an authorised person has power to do so.
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Service Tax

• Manpower Recruitment Services: Taxability Requires Compliance with Clause (k) of Section 65(105) for Import Services.

  Case-Laws - AT : Import of services - manpower recruitment supply agency service - Unless the critical requirements of clause (k) of Section 65(105) are fulfilled, the element of taxability would not arise
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Central Excise

• SSI Exemption Case: Common Individual Across Units Doesn't Justify Clubbing Clearances for Tax Purposes.

  Case-Laws - AT : SSI exemption - clubbing of clearances of three units - The constitution of firms is Private Limited and Partnership Firm, therefore, merely being a one person is common in all the units cannot be a ground for clubbing the clearances of all units.
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• Cenvat credit for capital goods allowed for manufacturers, even if installed at job worker's premises.

  Case-Laws - AT : Cenvat credit in respect of capital goods cannot be denied to the manufacturing unit if the same is installed at the job working premises
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VAT

• High Court Rules Residual Coal in Paper Manufacturing Taxed at 4% Under UPVAT Act, Not 10% as Debated.

  Case-Laws - HC : Rate of tax on burnt coal - taxable at 4% or 10% - UPVAT Act - in the process of manufacturing paper and at the end of the manufacturing operation a residue of coal is left over which is then sold - revenue failed to establish that the residual commodity had lost all its combustible properties - to be taxed at 4% - HC
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• Court Rules Tax Imposed Solely on Circular Unsustainable Without Evidence of Underpricing and Ignoring Available Material.

  Case-Laws - HC : Merely on the basis of the circular without there being any specific evidence to show under price and ignoring the material available on record any action done for imposing tax in duty is unsustainable - HC
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Case Laws:

• Income Tax

• 2017 (10) TMI 944
  Application of income u/s 11(1)(a) - expenses incurred outside India on ‘Global Trade Development Programme’ - Held that:- The aforementioned question stands answered against the Assessee in DIT v. National Association of Software and Services Companies [2012 (5) TMI 204 - DELHI HIGH COURT]

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• 2017 (10) TMI 943
  TPA - comparable selection - exclusion and inclusion of comparables for the purpose of determination of arm’s length price of the international transactions entered into by the Assessee with its associated enterprises - Held that:- The Court finds that the ITAT has given cogent reasons for the exclusion and inclusion of comparables and therefore, no substantial question of law arises on this issue. As far as the issue concerning Section 14A apart from the tax effect being inconsequential, ITAT has relied on its orders for the earlier AYs. Consequently, no subsequent question of law arises on this aspect as well.

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• 2017 (10) TMI 942
  Levy of interest under Sections 234 (A) and 234 (B) - Held that:- In the light of the decision of the Constitution Bench of the Hon'ble Supreme Court in the case of Brij Lal and Others Vs. CIT [2010 (10) TMI 8 - SUPREME COURT] interest under Section 234(B) can be charged only upto to the stage under Section 245 (D)(1) of the Act. However, in the impugned order, the Commission has charged interest upto the stage of 245 (D)(4). So far as the interest under Section 234 (A) is concerned, the learned counsel appearing for the petitioner would submit that the assessee does not dispute their liability but would contend that there is some computation error committed by the Commission. However, for such a matter, the case cannot be sent back to the said Commission as the Commission has no power to review its order. Nevertheless, the assessing officer of the petitioner is well within his jurisdiction to examine the correctness of the stand taken by the assessee, as regards the error in computation. With regard to the interest under Section 220 (2) of the Act, the learned counsel appearing for the petitioner would submit that the petitioner will workout their remedies under the Act.

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• 2017 (10) TMI 941
  Review petition - assessee’s challenge to the justifiability of initiation of re-assessment proceedings under Section 147/148 - Held that:- This Court in para 25 has clearly observed that it remains an academic issue in view of the conclusions arrived at by this Court. Obviously, the judgment of this Court will be applicable only on the question of deduction at the rate of 100% under Section 80-P(2) of the Act to the assessee petitioner and it does not discuss the other issues or grounds for questioning the re-assessment proceedings under Section 147/148 of the Act.

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• 2017 (10) TMI 940
  Penalty u/s. 271(1)(c) - disallowance of exemption u/s. 54 - ITAT deleted penalty levy - Held that:- Tribunal outlined three objections of the Revenue against granting the exemption to the assessee under section 54 of the Income Tax Act. The Tribunal thereafter proceeded to deal with each one of them threadbare and overruling each of the Revenue's objections. There is no element of any suppression on part of the assessee of material facts. The assessee had neither withheld the source of income nor provide accurate particulars about the income. Appellate Tribunal was right in law and on facts in deleting the penalty u/s. 271(1)(c) - Decided in favour of assessee.

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• 2017 (10) TMI 939
  Addition in respect of deduction u/s. 80IC - profit expenditure relatable to the marketing division and the brand value owned by foreign collaboration should have been disallowed - Held that:- CIT (Appeals) as well as the Tribunal both came to a concurrent conclusion that there was no separate marketing division and therefore, there was no transfer of goods from eligible to non-eligible undertaking. Thus, in absence of any separate marketing division, there could not be separation of profit and expenditure. It was also found that the brand was owned by the foreign collaboration and there cannot be any profit attributable to such brand. More importantly, the Tribunal noted that in the preceding assessment year 2007-08, the assessee had set up such a claim. The Assessing Officer had framed scrutiny assessment during which no disallowance was made. No attempt was made on part of the Revenue either to take such order in revision nor process of reopening of exemption was resorted to.

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• 2017 (10) TMI 938
  Penalty u/s 271(1)(c) - allowable business expenditure or capital expenditure - Held that:- We are of the considered view that such an expense was an allowable expense and hence the addition made by the AO was in itself not on right footing. Without prejudice, as the stand of the AO has been upheld by the earlier Ld. CIT(A) while deciding the appeal for the current year, it is evidently clear that the issue is certainly debatable as making distinction between the capital and revenue expenditure itself requires appreciation of full range of facts, which may bring in subjectivity in the matter. Therefore, by no set of standards, two individuals can hold similar views for capital or revenue nature of expenditure. In the case of the assessee, evidently, the stand taken by the AO is in contrast to my stand. Moreover, in the light of various decisions cited above, such a claim cannot be held as capital in nature. It is also a settled law that penalty proceedings are independent assessment proceedings and therefore, merely because the addition made by the AO has been upheld by the Ld. CIT(A), does not imply that the assessee had filed 'inaccurate particulars of income'. We further note that the Tribunal in the case of the assessee for the assessment year 2007-08 title GE Capital Business Process Management Serves Pvt. Ltd. vs. ACIT [2015 (11) TMI 68 - ITAT DELHI] has deleted the quantum addition on account of license fee to the extent of Rs. 2,19,60,467/-. Therefore, we uphold the order of the Ld. CIT(A) of deleting the penalty in dispute and reject the grounds raised by the Revenue. Appeal filed by the Department stand dismissed.

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• 2017 (10) TMI 937
  Assessment of rental income - income from house property or business income - Held that:- We note that the assessee is in the real estate business and also in the jewellery business and as such the income of the assessee is to be assessed as business income. Moreover, if the action of the AO is confirmed the assessee will be claiming additional deduction u/s 24 @ 30% in addition to the business and administrative expenses as the assessee is in the real estate business and the income of the assessee will be assessed lower than the returned income. In view of the above, we are of the view that that there is no proper justification for changing the head of income which will result in reduction of return income and accordingly the Ld. CIT(A) has rightly directed the AO to assess the rental income as business income as claimed by the assessee, which does not need any interference on our part. Disallowance under the head interest expenses, under the head salary and wages as business expenses, under the head Director’s remuneration and under the head depreciation - Held that:- It is an admitted fact that assessee is evidently in the real estate business and also in jewellery business and as such the assessee is eligible for deduction of all the business expenses and the depreciation etc. and accordingly, Ld. CIT(A) has rightly deleted all the additions/disallowances made by the AO, which does not need any interference on our part, hence, we uphold the same and reject the ground no. 2 raised by the Revenue. Unexplained cash credit u/s. 68 - Held that:- We note that in this case the share capital money has been received through the banking channel and all the details and confirmations of the parties were submitted before the AO but the AO has selectively made the addition of Rs. 30,00,000/- in the case of two share holders only without any valid reasons, which is not permissible under the law. We further note that no material evidence has been collected against the assessee for making the selective addition of the two shareholders of the share capital of Rs. 30,00,000/-only out of total share capital of Rs. 68,30,000/- and accordingly the addition made by the AO was rightly deleted by the Ld. CIT(A), which does not need any interference on our part, hence, we uphold the same and reject the ground no. 3 raised by the revenue.

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• 2017 (10) TMI 936
  Loss due to exchange fluctuation on foreign currency working capital loan - Held that:- The issue is squarely covered in favour of the assessee by the decision of Hon’ble Supreme Court in the case of Woodward Governor India Pvt. Ltd.(2009 (4) TMI 4 - SUPREME COURT) and also by the decision of ITAT in assessee’s own case for AY 2005-06 - Decided against revenue Assessee’s tax liability in respect of capital gain on sale of property by applying tax rate prescribed u/s. 112 - Held that:- We find that the property in question was admittedly a depreciable asset and therefore came within the ambit of Section 50 of the Income Tax Act, 1961 when the sale proceeds exceeded the opening WDV of the building block. At the same we also note that the property in question was acquired by the assessee in March 1956 and therefore its character was long term in nature. Sec. 50 is the special provision for computation of capital gain in case of depreciable assets and the deeming provision of sec. 50 is only for the purpose of section 48 & 49 relatable to computation of taxable gain and not for other purposes. Since the capital asset in question was held for a period exceeding three years, it was in the nature of long term capital asset and, therefore, gain realized on transfer of long term capital asset is qualified for concessional tax rate provided in Section 112 of the Act - Decided against revenue Deduction on account of amortization of upfront fees - Held that:- CIT(A) has deleted the disallowance by observing that in the past assessments also the assessee’s claim for pro-rata deduction was consistently allowed and assessee's such claim was in conformity with the decision of Hon’ble Supreme Court in the case of Madras Industrial Investment Corporation Limited Vs CIT (1997 (4) TMI 5 - SUPREME Court ). Since the issue is identical with the issue raised in AY 2005-06, which is squarely covered in favour of the assessee and the Ld. DR could not controvert the aforesaid finding of the Tribunal by producing any material before us and there is no change in law or facts, we respectfully following the aforesaid order of the Tribunal, cited supra, dismiss this ground of appeal of the revenue

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• 2017 (10) TMI 935
  Penalty levied u/. 271ÀAA - income disclosed u/s. 132(4) - Held that:- As rightly noted by the Ld. CIT(A) that as apparent from the assessment order there is no finding of the AO that in the case of the assessee there was anything found in the course of search which was not recorded in the books of account. Just because the assessee has admitted additional income in the course of search it cannot be said that such additional income was undisclosed income within the meaning of undisclosed income provided under explanation to section 271AAA of the Act to impose the penalty. We agree with the Ld. CIT(A) that when the income disclosed u/s. 132(4) of the Act in the course of search itself cannot be treated as undisclosed income within the meaning of undisclosed income as provided in explanation to 271AAA the same cannot be treated as undisclosed income to impose the penalty under that section. We note that Rs. 4 lacs seized has been offered by the assessee in the disclosure petition to be taxed in the hands of M/s. Rahee Infratech Ltd. so, without the AO pointing out that the assessee had undisclosed income in the nature as given in explanation to section 271AAA of the Act, the penalty ought not to have been imposed and that has been rightly deleted by the Ld. CIT(A). - Decided in favour of assessee.

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• 2017 (10) TMI 934
  Revision u/s 263 - proof of order of the AO to be erroneous and prejudicial to the interest of the revenue - deemed dividend addition - Held that:- It should be remembered that every loss of revenue as a consequence of an order of AO cannot be treated as prejudicial to the interest of revenue. When the AO adopted one of the course permissible in law and it has resulted in a loss to the revenue; or where two views are possible and AO has taken one view with which Pr. CIT does not agree, it cannot be stated an erroneous order prejudicial to the interest of revenue unless the order of AO is unsustainable in law as held by the Hon’ble Supreme Court in the case of Malabar Industrial Co. Ltd. Vs. CIT (2000 (2) TMI 10 - SUPREME Court). In this case original assessment order passed with the approval of JCIT u/s. 153D of the Act cannot be viewed as unsustainable in law. Further, when all the facts and the laws governing the issues were brought to the notice of the Pr. CIT for which show cause notice was issued by the Pr. CIT, while conveying his intention to invoke revisional jurisdiction u/s. 263 of the Act, we note that he has not discussed as to whether sec. 2(22)(e) of the Act is attracted and the transaction can be characterized or be termed as a loan/advance. We note that the Ld. Pr. CIT did not even care to discuss and pass a speaking order, has simply set aside the original assessment order, which action of Pr. CIT cannot be countenanced. Therefore, we are inclined to allow the appeal of the assessee and quash the impugned order of the Ld. Pr. CIT. - Decided in favour of assessee.

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• 2017 (10) TMI 933
  Non - payment of tax by the HUF - Co-parceners claim to the share of HUF properties/assets/income - Held that:- None of the HUFs, having only agricultural income was filing any return of income under the Income Tax Act and was never assessed to tax, being not liable to tax. Thus the question of any ITO passing any order u/s.171 of the Act does not arise, nor is applicable to Agricultural families, having no income under the Income Tax Act. Non filing of returns under the Income Tax Act by the HUF was bonafide belief that agricultural income was not liable to tax under the Income Tax Act. What has been ignored/omitted is the fact that interest on enhanced compensation was taxable and the HUF should have filed its return of income for AY 2012-13, showing income from interest on enhanced compensation. The belief is bonafide and cannot in any manner be attributed to any malafide, merely because the individuals having their independent income from self acquired properties or other activities, had not included the income of the HUF in their return of income, which per se is contrary to law. No individual/Karta is authorized to appropriate and show the income of the HUF in his hands, debarring the other co-parceners of their right claim to the share of HUF properties/assets/income. Effort was thus made by the assessee to tax the HUF u/s.144A, but was declined by the Id. JCT. Luckily the IDS came into operation and taking advantage of the same, the two HUFs filed a declaration before the Commissioner of Income Tax, Noida declaring the interest on enhanced compensation and paid the tax as per pages 11-23 of the paper book. Obviously this evidence being subsequent could not be filed either before the AO or the Id. CITA, although the fact of offer made before the JCIT u/s.144A has duly been discussed by both. Thus the factual reason to disallow the claim of the HUF is that no such return was filed and no such tax had been paid by the HUF. The issue gets settled by the payment of taxes by the HUF through the declaration made before the Pr. CIT under IDS, which has been accepted, as all taxes have been paid. Therefore, in such circumstances, and facts of the case, since the HUF has already paid tax due alongwith interest, etc and correct share had been declared at Rs. 27,79,279/- as against lesser amount of Rs. 22,50,413/- taken by both the authorities below, the Assessing Officer is directed to delete the addition so made. Thus, the grounds of appeal raised by the assessee are allowed.

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• 2017 (10) TMI 932
  Revision u/s 263 - unexplained sources of cash deposits appearing in the bank accounts - Held that:- A.O. didn't make any enquiry/verification of the sources of cash deposits appearing in the bank accounts, so the assessment order passed by him has become erroneous and pre-judicial to the interest of the Revenue. Accordingly, the Ld. Pr. CIT has rightly set-aside the assessment order dated 12.08.2013 passed by the A.O. in this case and directs the A.O. to do the assessment afresh after considering all the facts/issues discussed above. Further the A.O. was also directed to allow reasonable opportunities of being heard to the assessee before passing the assessment order in this case, vide order dated 04.02.2016 passed u/s. 263(1) of the Act. AO was found to be erroneous and prejudicial to the interest of revenue since at the time of the assessment the AO was duty bound to call for such details and examine/ verify them. We also find that in the case of M/s Malabar Industries [2000 (2) TMI 10 - SUPREME Court] the Hon’ble Apex Court has held that incorrect assumption of facts or incorrect application of law will satisfy the requirement of the order being erroneous. We further note that in the same category fall order passed without applying the principles of natural justice or without application of mind. We are of the view that it is incumbent on the officer to investigate the facts stated in the return, when circumstances would make such an enquiry prudent and the word ‘erroneous’ in section 263 includes the failure to make such an inquiry. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated there are assumed to be correct. - Decided against assessee.

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• 2017 (10) TMI 931
  Computation of LTCG - admission of additional evidence - Held that:- When Ld. CIT(A) could have admitted the additional evidences in preceding A.Y. 2008-09 though on some other issue, the assessee would have the reason to explain that the additional evidence were necessary for disposal of the appeals and no sufficient opportunity have been given to the assessee to produce these documents at assessment stage. The above reason clearly apply to the facts and circumstances of the case. We, therefore, set aside the order of the Ld. CIT(A) and admit the additional evidence for the purpose of disposal of the appeal of assessee, with regard to computation of long term capital gains. Since these additional evidences have not been admitted by Ld. CIT(A) and A.O. has no occasion to examine the same in accordance with law, we are of the view that the entire matter of issue of long term capital gains and the claim of acquisition of indexed cost for long term capital gains, be restored to the file of the A.O. for deciding the issue afresh, in accordance with law. Appeal of assessee is allowed for statistical purposes. Income from transaction of sale of shares - Capital gain or business income - Held that:- A.O. in preceding assessment year 2008-09 has assessed the income from sale of share transaction as business income. Therefore, on rule of consistency, the A.O. should not take a different view on identical facts. The Ld. CIT(A) in detail considered this issue by considering various tests i.e., intention of the assessee at the time of purchase of shares, borrowed funds used by assessee, frequency of the transaction in assessment year under appeal and holding of the shares as stock-in-trade etc., and thus, he has come to the conclusion that transactions are in the nature of business transactions and the income as business income. The cumulative effect of the fact was thus, for treatment of income from transaction in shares, as business income.

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• 2017 (10) TMI 930
  Disallowance of interest chargeable on interest free advances to its group company - Held that:- It is not in dispute that the advance in question have been given to M/s. DLF Limited in earlier years. It is also not in dispute that various companies who have advanced amount to M/s. DLF Limited have ultimately merged with the assessee-company. The advances were given for the purpose of business. The amount is coming up from earlier year on which no interest have been charged. Since the amount is coming up from the earlier years and given for the purpose of business, therefore, no notional interest could be charged on the same. The advances are not given out of interest bearing funds. The Ld. CIT(A) has recorded the findings of fact that these advances were given purely for the purpose of business i.e., for acquisition of land and cannot be termed as interest bearing advance. The A.O. did not charge any notional interest in earlier year. Therefore, no income accrued to the assessee-company as was held by the A.O. CIT(A) on proper appreciation of the facts and material on record, correctly deleted the addition. The ground raised by the Department has no merit. Disallowance of loss on compulsory acquisition - Held that:- It is not in dispute that land belonging to the assessee-company was acquired in earlier year. The land acquired were owned by assessee-company through the group companies which were amalgamated with the assessee-company. The compensation was released to the assesseecompany on 4th December, 2006 amounting to Rs. 27,95,550. The assessee-company has shown the cost of the land at Rs. 1,30,30,176 in the books of account. Therefore, difference was considered as loss to the assessee-company because assessee-company is in the business of real estate development. The assessee-company is following the mercantile system of accounting. The assessee-company produced sufficient evidence before the Ld. CIT(A) to show that matter was considered by the legal department of the assessee-company and on the basis of the letter dated 17th April, 2007, the compensation was accounted for in the books of account in assessment year under appeal and it was offered for tax and the loss was also booked on account of difference in the cost of land which have been acquired. The assessee-company, therefore, rightly claimed the loss in assessment year under appeal because the assessee-company has accounted for the compensation on the basis of crystallization of the claim during assessment year under appeal and the cost of the same has been written-off in the assessment year under appeal. The Ld. CIT(A) therefore, on proper appreciation of facts and material on record, correctly deleted the addition.

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• 2017 (10) TMI 929
  Characterization of the payment received by the assessee as royalty or Fee for Technical Services (FTS) - PE In India - Held that:- As decided in assessee's own case AO erred in holding that income received by the appellant from the non-resident companies is taxable in India under Article 12(4) read with Article 12(2) and 12(8) of India Netherlands DTAA. AO erred in not discharging the burden of proving that the appellant’s non-resident customers had a Permanent Establishment in India in connection with which the alleged Royalty was paid; and the alleged Royalty payments were borne by such Permanent Establishment of the non-resident customers. AO has erred in arbitrarily attributing the entire receipts from the customers falling on the beam covering India either fully or partially and not apportioning receipts which were India specific. - Decided in favour of the assessee.

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• 2017 (10) TMI 928
  Unexplained Purchases - accommodation bills of purchases - additions based on information was received by the A.O from the investigation wing - Held that:- We are not persuaded to be in agreement with the contention of the assessee that the A.O had merely proceeded on the basis of human probabilities and suspicion, as we find that the assessee had after duly appreciating the evidence available on record carried out the exercise of estimation of the trading results in the hands of the assessee, which we are of the considered view can safely be characterised as a well reasoned one. That as regards the objection of the assessee to the reference of the G.P. rate of certain parties, we are of the considered view that the same were duly confronted to the assessee by the A.O during the course of the assessment proceedings and no objections at any stage was raised as regards the same by the assessee. Still further, we find that it is not a case that the A.O had transposed the trading result of any concern as against that of the assessee, but had merely benchmarked the trading results of the assessee in the backdrop of that of certain concerns operating in the trade line of the assessee, keeping in view the turnover parameter. We further find that the assessee had assailed the addition of Rs. 41,37,804/- made by the A.O for the reason that he had referred to the same as an addition made on account of ‘Unexplained expenditure’ while culminating the assessment. We are unable to accept the aforesaid contention of the assessee, for the reason that though it remains as a matter of fact that the A.O had used the term ‘Unexplained expenditure’ in the body of the assessment order, but then he had qualified the same by specifically using the term ‘as discussed above’, which we find was used in context of the observations recorded by the A.O at Para 3.11, which clearly revealed that the addition of Rs. 41,37,804/-(supra) was made in the hands of the assessee on account of ‘Unexplained Purchases’.

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• 2017 (10) TMI 927
  Validity of assessment order passed by income tax officer, Ward II(3), Gurgaon - transfer of cases - time barred notice under section 143(2) - Held that:- As far as time barred notice under section 143(2) is concerned, the person who initiated proceedings under section 143(2) that is ITO 2(1) Ghaziabad himself admitted that jurisdiction lies with ITO Ward II(3) Gurgaon who has ultimately passed the impugned order, then it was must be proved that correct jurisdictional officer, ITO Ward II(3) Gurgaon, timely issued the notice u/s 143(2) which is patently missing on the face of the record. On parity of facts/reasoning above we hold that present assessment framed is void ab initio. As far as transfer of jurisdiction under section 127 is concerned, the mandatory and prior requirement of the law for having the valid order on basis of positive Agreement between two competent authorities, which is admittedly missing in the present facts, as explained in aforesaid Hon’ble Supreme Court decision in Norul’s case [2016 (10) TMI 982 - SUPREME COURT], the transfer made by one ITO to another ITO operating under different CCIT’s, cannot be sustained and accordingly, the resultant assessment order passed is held to be nullity. Thus hold that notice under section 143(2) on 15/05/2013 by ITO Ward II(3) Gurgaon was time barred and transfer made by Ghaziabad ITO to Gurgaon ITO without valid/required order under section 127 is invalid. - Decided in favour of assessee.

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• 2017 (10) TMI 926
  Depreciation on tenancy rights - whether the tenancy rights fall within the definition of intangible assets for the purpose of depreciation allowance u/s 32(1)(ii)? - Held that:- In the present case, it is undisputed that the amount of Rs. 21,65,629/- was paid to the legal heirs of a former partner as a consequence to an arrangement to settle the dispute between the firm and the deceased partner. The payment so made was capitalised under the head goodwill and tenancy rights in the books of the assessee firm and depreciation was claimed on such amortised amount. However, it is very much apparent that the payment was made to the legal heirs of the deceased partner and thus, the payment was towards the capital/outstanding dues of the deceased partner. It is also apparent that the firm was not a tenant/had not paid for acquisition of tenancy right but has made payments to the legal heirs of the deceased partners and has reflected the same as payment made for acquisition of tenancy rights in its books of account. In such a situation, it cannot be said that the payment was made for acquisition of tenancy rights and accordingly, the question as to whether tenancy rights would fall under the definition of intangible assets for the purpose of claiming depreciation u/s 32 of the Act does not arise in the present appeal - Decided against assessee.

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• 2017 (10) TMI 925
  Addition on long term capital gain - valuation of assets - conversion of partnership firm into company - Held that:- Since the partnership firm was succeeded by the assessee company, the cost of acquisition was determined as on 1.4.1981 in terms of provisions of section 49(1)(iii)(a) read with section 55(2)(b)(ii) as the partnership firm acquired the land prior to 1.4.1981. Further, the ld AR drawn our attention to the show-cause notice issued by ld CIT u/s 263 and subsequent order dropping the said proceedings and submitted that the valuation as on 1.4.1981 so determined by the assessee at Rs. 1,18,77,264/- has been accepted by the ld CIT and there is nothing in the reassessment order where the AO has again disputed the said value. The valuation so determined as on 1.4.1981 based on the valuation report has thus not been disputed by the Revenue nor any other DVO valuation have been brought on record. and we accordingly confirm the findings of the ld CIT(A) in this regard. Further, since the stock-in-trade has been finally sold, the profit on sale of such stock-in-trade is to be brought to tax as business income in the year under consideration. As per the sale deed dated 18.07.2005, the land was sold to M/s Suncity Projects Pvt. Ltd. for a consideration of Rs. 7,57,00,000/- which was duly credited in the profit/loss account and offered to tax in the return of income after taking into consideration stock-in-trade of Rs. 5,65,58,400 and other business expenses. The ld. CIT(A) has also returned a finding that the assessee has offered a net profit of Rs. 1,13,02,091/- as business income in the return of income which has been accepted by the Revenue in the original assessment proceedings. In light of above discussions and in the entirety of facts and circumstances of the case, we donot see any infirmity in the order of the ld CIT(A) and the same is hereby confirmed. The ground of appeal of the Revenue is thus dismissed. Disallowance of amount paid to JVVNL on account of compounding charges - Held that:- As per letter dated 4.1.2006 of JVVNL, the assessee has paid an amount of Rs. 6,90,922 through cheque and an amount of Rs. 4,39,262 has been adjusted against bank guarantee, in total Rs. 11,30,184 has thus been paid by the assessee. It consists of Rs. 470,184 towards past dues at on the date of disconnection and fuel surcharge arrears and interest on late payment and balance towards the compounding charges relating to theft case. Accordingly, electricity dues totaling to Rs. 470,184 is hereby allowed as settled and crystallized during the year and the balance is sustained on account of infraction of law.

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• 2017 (10) TMI 924
  Addition made u/s 40A(2)(a) - assessee has purchased spare parts from its associated concern M/s JJA at a price higher than the prevailing market rate - Held that:- AO has determined the rate of profit earned by JJA on the sales made to outside parties without giving effect to the opening and closing stock of the goods held by JJA. In such situation, we are of the considered view that the rate of profit determined by the Assessing Officer is not based on actual figures. After giving effect to the opening and closing stock, we find that profit earned by JJA on the sale of outside party is coming @ 9.42% only whereas the profit margin earned by JJA on the sales made to the assessee is coming @ 10%. As such, there is no significant difference in the amount of profit earned by JJA on the sales made to the assessee as well as the outside party. In view of above, we hold that the addition has been made by Authorities Below on wrong figures of the goods sold by JJA. It was also observed that the ld. DR has not brought anything on record contrary to the argument of ld. AR. Thus, we reverse the order of Ld. CIT(A) in this regard and direct the AO to delete the addition - Decided in favour of assessee Addition of entertainment expense - Held that:- Assessee before us failed to bring any evidence suggesting that the impugned expenses were incurred in connection of assessee’s business. The ld. AR simply produced the credit card statement and copies of ledger to justify the expense incurred by it. However, no business connection was established by Ld. AR. In this view of the matter, we hold that the order of the Ld. CIT(A) is correct and in accordance with law and no interference is called for. We order accordingly. This ground of assessee is dismissed. Disallowance on account of inflated purchase - Held that:- AO has not pointed out any difference in the opening and closing balance of the party. Thus, the submission of Ld. AR that the difference has arisen on account of opening and closing balance do not hold good. As per the books of the assessee it has shown purchases during the year worth of Rs. 49,45,610/- whereas Pugalia Automobile has shown sales in its books during the year to the assessee worth of Rs. 47,92,625/-. Thus, it is clear that the difference was observed by the AO on account of difference in the amount of purchase shown by the assessee in its books as well as the amount of sale shown by Pugalia Automobile. Thus, the argument of Ld. AR that the difference pertains to the opening and closing balance of the party is not maintainable. In the background of the above discussions we do not find any infirmity in the order of Ld. CIT(A) and accordingly we uphold the same. Hence, this ground of assessee is dismissed.

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• 2017 (10) TMI 923
  Deduction u/s.80P(2)(a)(i) - whether the appellant is entitled to claim deduction under section 80P(2)(a)(i) in respect of the interest earned on the deposits placed with Bank? - Held that:- Considering the binding decisions of the Hon’ble High Court in the case of SBI [2016 (7) TMI 516 - GUJARAT HIGH COURT]interest income earned on surplus fund as dealt by the CIT(A) (supra) is hereby upheld to be taxed under the head income from other sources. However, we find that the Hon’ble High Court is silent on the issue of allowability of proportionate expenses from the interest income, therefore, we direct the AO to consider the same afresh.

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• 2017 (10) TMI 922
  Non granting deduction u/s.80-IB(10) - unrecorded income towards on money - income disclosed was income of the assessee from the business or from other sources - assessee failed to prove the genuineness of undisclosed income of Rs. 1.1 crores earned from 80IB projects disclosed at the time of survey u/s.133A - Held that:- We find that the statement of the assessee was recorded on 08/10/2009 during the course of survey action carried out at the project of the assessee Laxmi Residency. We have also noticed from the contents of the assessment order that during the year the assessee firm has constructed a project called Laxmi Residency at Katargam,surat which was eligible for deduction u/s 80IB(10) of the act. In the assessment order the assessing officer has not demonstrated that apart from construction of Laxmi Residency the assessee was indulged in any other activities. The extracts of the statement indicate that the declared amount was earned from the project Laxmi Residency which was covered for survey action. In the statement as supra the assessee had stated that these amounts have been received as "on money" in respect of booking of above flats of Laxmi Residency and this amount was unrecorded income of Laxmi Residency for F.Y.2009-10. The affirmation of the assessee was not rebutted during the time of recording his statement and during the course of assessment proceedings by the assessing officer with any cogent material to prove that amount declared was earned from any other activities. In view of the above mentioned facts and findings, we considered that the income disclosed was income of the assessee from the business and not from other sources. - Decided in favour of assessee.

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• Customs

• 2017 (10) TMI 921
  Anti Dumping Duty - issuance of a writ of mandamus - N/N. 125/2010 - Populated Circuit Board Assemblies (PCBAs) - clearances from Flextronics Special Economic Zone (FSEZ Unit) into Domestic Tariff Area (DTA Unit) - effect of amendment to Notification No.125 of 2010, which was brought about, by Notification dated 15.01.2015, after a lapse of first Notification, i.e., with effect from 07.12.2014 - extension of duty upon initiation of sunset review under second proviso to Section 9A(5) of Customs Tariff Act, 1975. Whether the Writ Petition is maintainable against a show cause notice? - Held that: - there can be no quarrel over the said proposition, but the Courts have carved out certain exceptions to this Ruling. In the considered view of this Court, the case on hand would fall within one such exceptions, in the light of the law being settled by the Hon'ble Supreme Court. Therefore, the first issue is answered in favor of the petitioner. Whether the impugned show cause notice, insofar it relates to the levy of ADD based on the amendment Notification, which was issued after the lapse of principal Notification is valid and proper? - Held that: - the amendment Notification, dated 05.01.2015, having been issued after the lapse of principal Notification No.125 of 2010, dated 16.12.2010, the show cause notice is not sustainable - the demand of ADD during the period of review is not automatic, but, has to be imposed before the expiry of five years, which is life of the Notification, imposing ADD. As noticed above, the Notification imposing ADD, dated 16.12.2010 had lapsed on 07.12.2014. Therefore, the extension Notification, dated 05.01.2015, issued after the lapse of the said period is not sustainable, and no ADD can be demanded from the petitioner, based on such extension Notification. The demand of ADD under the show cause notice dated 28.10.2015, for the period from 08.12.2014 to 26.04.2016, i.e. after the lapse of the Notification No.125 of 2010 is not sustainable. Petition allowed.

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• 2017 (10) TMI 920
  Validity of N/N. 3/2015-2020 dated 25.4.2016 - import of dogs - Chapter 01 of ITC (HS), 2012 – Schedule-1 (Import Policy) - dog imported to be a pet dog - Held that: - Since the case of the petitioner herself is that she does not want to import dog(s) for the commercial purpose and only requires to import the dog(s) as pet dog(s), therefore, I do not find any kind of restriction imposed in the impugned notification especially in view of Clause 7(i) of the notification . Since, the import license of the petitioner is stated to have expired, therefore, the petitioner may, if so advised, apply for the import license for the pet dog(s), which shall be issued to the petitioner, in accordance with law. Petition disposed off.

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• 2017 (10) TMI 919
  Classification of imported goods - Yeast Cell - whether the product declared as "Yeast Cell Wall" is in the nature of Autolysed Yeast which would merit classification as "Aytolysed Yeast" under CTH 2106 or whether the classification under CTH 2102 declared by the appellant is more appropriate? - Held that: - no contradictory evidence has been adduced by the department to show that the Yeast Cell Wall is autolysed and undergone change in any such autolysation - during the process of autolysis, the cells get destructed and the outer covering would also not remain integrated. Having made such an observation, we are not able to fathom how lower appellate authority finds that the impugned goods are autolysed yeast, in spite of his confusion. Once it is evident that in the process of autolysation merely results in enzymatic digestion of the cell by enzymes and their destruction, the resultant degenerated cell per se would possibly merit classification as 'Autolysed Yeast' under CTH 2106. However, when the Yeast Cell Wall on its own does not get autolysed or undergoes any change, the same would only be classifiable as yeast under CTH 2102. Appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2017 (10) TMI 918
  Directions to the Official Liquidator to issue instructions to Axis Bank to release in favour of the applicant 98.181879% of the amount received from Madhya Pradesh Excise Department (MPED) lying in Escrow account - Held that:- The circumstances reveal the work was actually completed by the applicant herein and the role of the respondent company was merely to obtain the contract from Madhya Pradesh Government and to hand it over to the applicant. The principal employer recognized the applicant to be responsible for completion of the contract and even the Income Tax Authority did not attach the share of the applicant lying in the escrow account as the respondent could hold on to the money lying in the escrow account only to the extent of its legal title being 1.181821%; the Axis Bank being a trustee was thus obliged to release the balance amount lying in the escrow account in favour of the applicant herein. The liquidation would not come in the way of the applicant to receive the amount to the extent of its share to which it is entitled, per the teaming agreement(s) referred to above. In view of the above observations, the application is disposed of. The amount to the extent of 98.181879% lying in the escrow account be released to the applicant within a period of four weeks from today.

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• 2017 (10) TMI 917
  Bid determination - formulation of tender conditions - whether the BSNL’s decision that the petitioner did not possess the necessary eligibility is arbitrary? - Held that:- This court is of opinion that there is no infirmity with the BSNL’s approach and stand. Besides, clause 4.1.1 which emphasizes that bidders must be companies, special information to Bidders, Clause 1.3 (which says ““Bidder” shall mean Bidding Company submitting the Bid. Any reference to the Bidder includes Bidding Company.”) and Clause 1.4 (which says “Bidding Company” shall mean the single registered corporate entity that has submitted a Bid in response to this document.”), have to all be read as a part of the eligibility criteria. In the present case, it is not one, but several conditions, that emphasize and reiterate that the bidder company should possess the essential experience and fulfill the turnover criteria, in its own right. The only exception carved out, is with respect to subsidiaries. That ipso facto sheds light on BSNL’s clear intent that the bidder and the bidder alone- save if it were a subsidiary- had to fulfill the turnover and essential experience criteria. The other conditions (reproduced earlier) substantiate this intention. Therefore, this court holds that the rejection of the petitioner’s tender conditions cannot be interfered with; it holds that BSNL’s position is neither arbitrary nor a misinterpretation of the tender terms. The court is also of the opinion that the materials brought on record, nowhere indicate that the sole proprietorship’s business was entirely subsumed or taken over by the petitioner company. There is no document establishing that goodwill was parted; nor was a separate consideration paid. Furthermore, the sole proprietorship continued to function for a while, even after incorporation of the petitioner company. The latter did not reflect any provident fund contributions and appears to have registered early in 2016 and shown its first contributions thereafter. On the other hand, Pratap Technocrats, the sole proprietorship, with its different registration number, continued to make contributions even in June and July 2016. These facts show that the assertion by the petitioner that the sole proprietorship’s business ceased after its incorporation, is not free from doubt; in any case, it cannot be termed as an established fact. Courts, in exercise of judicial review jurisdiction are in a sense second guessing decisions made by the executive, which is tasked by the Constitution to make those decisions, in the first instance. The lens that courts necessarily adopt is narrow rather than wide; they are to permit greater latitude to the public agencies. The determinations of such agencies are not like quasi judicial decisions but with economic and expectedly commercial objectives. Unless a constitutional value is shown to have been undermined, or a law violated, or fair procedure avoided, the outcome of processes adopted by the state agency, or its decisions should not be interdicted.

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• 2017 (10) TMI 916
  Corporate insolvency process - process triggered in case there is valid dispute - Held that:- The quality issue in respect of the huge quantity and value of the raw material has been raised though the respondent has refrained itself from filing claim for damages suffered on account of the quality of goods, as made out from the record relied upon by the respondent. The petitioner in the rejoinder has denied various documents relied upon by the respondent and mainly relies on the balance confirmation received from the respondent on 01.09.2015. It is of the view that the balance confirmation dated 01.09.2015 can at best be the settlement of the account statement in respect of the invoices for which the goods were accepted, but in the account books, there cannot possibly be entries of the damages suffered on account of return of defective material of huge value. The serious determination is required for the losses caused in respect of goods of inferior quality remained lying in the premises of the respondent for quite some time. It is averred by the respondent that due to defective raw material, it affected the business of the respondent. The insolvency resolution process cannot be triggered in case there is dispute of even part of the claim i.e. with regard to the three of the invoices of the year 2013. The present is a case where there was an existing dispute even before the issuance of the demand notice thus disentitling the petitioner to an order of admission. Neither in the petition nor in the rejoinder, the petitioner has indicated about the previous dispute whereunder the petitioner accepted return of the damaged material, though reference is made to various entries from the ledger book of the petitioner showing adjustment in respect of the goods returned. In fact the petitioner even denied the documents from Annexure R-1 to R-9 relied upon by the respondent in the written statement, which are of the year 2014. These facts indicate that the matter needs to be tried in a Civil Suit or by some other appropriate remedy. Thus the instant petition is rejected.

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• 2017 (10) TMI 914
  Oppression and mismanagement - Held that:- Tribunal is of the considered view that no act of oppression and mismanagement is established. However, the fact remain the petitioner invested huge amount of money in the first respondent company and in Nagina Processors Pvt. Ltd. From the facts and circumstances of the case there is no possibility of the petitioner actually participating in the affairs of the first respondent company by joining hands with the respondents. Therefore, even in the absence of proof of acts of oppression and mismanagement, in order to do substantial justice and on the principle of equity, this Tribunal is of the considered view that the petitioner must be allowed to have fair market value of the shares which he is holding in the first respondent company, if he is ready to walk out of the first respondent company. In absence of any material to hold that there were acts of oppression and mismanagement, petitioner is not entitled to ask relief of salary, appointment of Independent Directors and investigation of the affairs of the first respondent company. This Tribunal hereby direct respondents No. 2 and 3 to purchase the shares of the petitioner and his wife if they are willing to sell their shares for a fair market value fixed by an independent valuer appointed by this Tribunal. Petitioner and his wife if they are willing to sell their shares, they shall file an application before this Tribunal within two months from the date of this order for appointment of independent valuer to assess fair market value of the shares of the first respondent company as on the date of filing of petition. In case if the petitioner and his wife file such application, this Tribunal shall appoint independent valuer to determine the fair market value of shares of the first respondent company as on the date of filing of petition and further decide the mode and manner of transfer of shares.

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• 2017 (10) TMI 910
  Oppression or mismanagement - period of limitation - Held that:- In the instant case, admittedly the dispute arose some time in 2005 i.e. 9 years’ back and in between the petitioner upheld his grievances before the civil court as well as also in the Hon’ble High Court and then filed the instant application under Sections 397 and 398 of the Companies Act, 2013 and thereby has adopted a forum shopping. However, otherwise also the instant petition is hopelessly barred by limitation as per the provisions of Limitation Act. The delay and laches do apply which started from the date of knowledge. Admittedly, the date of knowledge is from the year 2005 as reflected in the petition. The doctrine of laches is based on equitable consideration and depends on general principle of justice and fairplay. Therefore, on the point of delay and laches, the petition is also liable to be dismissed.

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• Insolvency & Bankruptcy

• 2017 (10) TMI 915
  Corporate Insolvency Resolution Process - main contention is relating to pendency of execution of award obtained by Sundaram Finance Ltd. against the Applicant Company and the pendency of Securitisation Application against the Corporate Applicant Company - Held that:- The initiation of proceedings under the SARFAESI Act or the pendency of proceedings before the DRT and execution of Arbitral Award are no grounds for not commencing the ‘Insolvency Resolution Process’, in view of the overriding effect given to Section 238 of the Code. The pendency of other proceedings in respect of the debts due by the Corporate Debtor is not a ground not to admit this Application. Moreover, in view of Section 14 of the IB Code, all the proceedings pending before any other forum including the Debt Recovery Tribunal and City Civil Court will be stayed, if the Application is admitted. The object of the Code is, no doubt, to protect the genuine Corporate Debtors with a view to maximise their value of assets and find out a ‘Resolution Plan’ to revive the Companies. Incidentally, in the process of evolving a Resolution Plan, there is an opportunity for the Corporate Debtor to have a moratorium and thereby delay the other recovery proceedings. But, that is only for a prescribed period of 180 days or for a further period of 90 days, if extended by the Adjudicating Authority. Therefore, to say that Corporate Debtor with a view to have the benefit of moratorium or with a view to delay the proceedings under the SARFAESI Act filed this Application do not merit acceptance. Another objection raised by the BOI is that the Corporate Applicant did not disclose about the pendency of proceedings in the Debt Recovery Tribunal, factually it is not correct. The Applicant along with the Application gave a list of all the proceedings pending in various Courts and enclosed all the documents pertaining to the litigation filed by or against the Corporate Applicant. Therefore, it cannot be said that Corporate Applicant suppressed the material facts and approached this Tribunal with unclean hands. The Application filed by the Corporate Applicant is complete in all respects. The option to recommend the name of IRP is given only to Applicant. No material is placed on record to indicate that IRP is interested in the Applicant Company. There is a right to Financial Creditors to replace IRP in the 1st meeting of Committee of Creditors. In view of the above discussion, this Application is admitted under Section 10(4)(a) of the Code.

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• 2017 (10) TMI 913
  Corporate Insolvency Resolution Process - whether the 'Power of Attorney Holder' given power of attorney prior to enactment of 'I&B Code', is entitled to file an application under Section 7 or 9 or 10 of the 'I&B Code'? - The 'Financial Creditor'-Bank has pleaded that by Board's Resolutions dated 30th May, 2002 and 30th October, 2009, the Bank authorised its officers to do needful in the legal proceedings by and against the Bank? - Held that:- If general authorisation is made by any 'Financial Creditor' or 'Operational Creditor' or 'Corporate Applicant' in favour of its officers to do needful in legal proceedings by and against the 'Financial Creditor' / 'Operational Creditor'! 'Corporate Applicant', mere use of word 'Power of. Attorney' while delegating such power will not take away the authority of such officer and 'for all purposes it is to be treated as an 'authorization' by the 'Financial Creditor'! 'Operational Creditor'! 'Corporate Applicant' in favour of its officer, which can be delegated even by designation. In such case, officer delegated with power can claim to be the 'Authorized Representative' for the purpose of filing any application under section 7 or Section 9 or Section 10 of 'I&B Code'. As per Entry 5 & 6 (Part I) of Form No. 1, 'Authorised Representative' is required to write his name and address and position in relation to the 'Financial Creditor'/Bank. If there is any defect, in such case, an application under section 7 cannot be rejected and the applicant is to be granted seven days' time to produce the Board Resolution and remove the defect. This apart, if an officer, such as senior Manager of a Bank has been authorised to grant loan, for recovery of loan or to initiate a proceeding for 'Corporate Insolvency Resolution Process' against the person who have taken loan, in such case the 'Corporate Debtor' cannot plead that the officer has power to sanction loan, but such officer has no power to recover the loan amount or to initiate 'Corporate Insolvency Resolution Process', in spite of default of debt. If a plea is taken by the authorised officer that he was authorised to sanction loan and had done so, the application under section 7 cannot be rejected on the ground that no separate specific authorization letter has been issued by the 'Financial Creditor' in favour of such officer designate. In view of reasons as recorded above, while we hold that a 'Power of Attorney Holder' is not empowered to file application under section 7 of the 'I&B Code', we further hold that an authorised person has power to do so.

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• 2017 (10) TMI 912
  Proceedings under Insolvency and Bankruptcy Code, 2016 - whether as the matter being subjudice before the Hon'ble High Court, hence no parallel proceedings under I however, no payment was made. Having no option left, the Petitioner filed the Petition before the Hon'ble High Court under the old provisions of the Companies Act. As a result the “Debt” as also the “Default” has duly been established by the Petitioner. Considering the totality of the facts and circumstances this Petition now under consideration deserves to be “Admitted”. The Petitioner has proposed the name of the Interim Resolution Professional Mr. Hemant Mehta, Registration No. IBBI/IPA-001/IP-P00027/2016-17/10060. The appointed IRP shall perform the duties as defined under section 18 of the Code. He shall also submit the resolution plan for approval as prescribed under section 31 of the Code. Since the Petition is “Admitted”, hence the Moratorium shall commence as prescribed under section 14 of the I&B Code

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• 2017 (10) TMI 911
  Corporate Insolvency Resolution Process - default committed by corporate debtor - Held that:- The default has been committed by the Corporate Debtor in making payment of the outstanding debt to the Financial Creditors/Applicants. The default committed by the Corporate Debtor is not denied. Thus, the Financial Creditor has fulfilled all the requirements of law and has also proposed the name of IRP after obtaining the written consent in Form-2. We are satisfied that Corporate Debtor has committed default in making payment of the outstanding debt to the Financial Creditors. Therefore, CP/551/(IB)/CB/2017 is admitted and we order the commencement of the Corporate Insolvency Resolution Process which ordinarily shall get completed within 180 days, reckoning from the day this order is passed. We appoint Mr. Venkataramanarao Nagarajan, as IRP as proposed by the Financial Creditors. There is no disciplinary proceedings pending against the IRP as evidenced from Form-2 and his name is reflected in IBBI website. The IRP is directed to take charge of the Respondent Corporate Debtor's management immediately. He is also directed to cause public announcement as prescribed under Section 15 of the I&B Code, 2016 within three days from the date the copy of this order is received, and call for submissions of claim in the manner as prescribed. We declare the moratorium which shall have effect from the date of this Order till the completion of corporate insolvency resolution process, for the purposes referred to in Section 14 of the I&B Code, 2016

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• FEMA

• 2017 (10) TMI 909
  Registration under Section 12 of the Foreign Contribution (Regulation) Act, 2010 (“FCRA”) rejected - Grant of certificate of registration under FCRA - the respondent is not satisfied that the foreign contribution is not likely to be used for personal gains - petitioner is a society registered under the Societies Registration Act, 1860 and has been registered under Section 12A of the Income Tax Act - Held that:- The question whether a society established for charitable/religious purpose is one of the principal considerations for grant of exemption under Section 11 and 12 of the Income Tax Act, 1961. One of the pre-condition for availing exemption from charge of Income Tax is that the charitable society/trust would utilise all funds for the purposes of its object and no part of it can be distributed as dividends or profits. Any society/trust which is run for the commercial benefits of its founders or trustees would plainly be ineligible for being accorded the certificate under Section 12A of the Income Tax Act. This is also the principal consideration, which is set out in Section 12(4)(vi) of the Act. Notwithstanding the registration granted to the petitioner under the Income Tax Act, the permission sought by the petitioner could have been refused if there was any evidence to show that the foreign contribution is likely to be used for personal gains or diverted for undesirable purposes. But, as stated earlier, there is no material to indicate that these conditions were satisfied. There is no material which would justify the conclusion that the petitioners were likely to divert the foreign contribution for personal gains or utilise it for any undesirable purposes. In this view, the impugned orders cannot be sustained and are consequently, set aside. The respondents are directed to process the petitioner's application for registration under Section 12 of the FCRA, as the only ground on which the same was denied is unsustainable.

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• 2017 (10) TMI 908
  Review application - Held that:- It is pertinent to mention that the order dated 16.07.2016 has not been challenged by the appellant/applicants in the higher court. It has become final. The amount fixed in the said order has not been deposited and it is apparent that the appellants have no intention to deposit the same. We are of the view that the review application filed by the appellant/review applicant is not maintainable as the applicant has failed to demonstrate any error apparent on the face of the record on the order passed by this court and is trying to re-argue its case as if it was an appeal which is beyond the scope of the Order XLVLL Rule 1 CPC and as such the review application is liable to be dismissed. An application for review cannot be entertained only for the purpose of rehearing of the case [See K.A. ANSARI & ANR Versus INDIAN AIRLINES LTD [2008 (11) TMI 668 - SUPREME COURT]

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• PMLA

• 2017 (10) TMI 907
  Offense under PMLA Act - Not following the statutory requirements - authorisation for search and seizure - Held that:- The authorisation for search and seizure was wholly illegal as it did not authorize a specific officer and specific premises to be searched as mandated under Section 17(1) of the PMLA read with Rule 3(1). Additionally, it was not even in the form prescribed in Rule 3(1)/Form I. Even, there was no communication of reason to believe to the appellant as per record. The search did not follow the Prevention of Money Laundering (Forms, Search and Seizure or Freezing and the Manner of Forwarding the Reasons and Material to the Adjudicating Authority, Impounding and Custody of Records and the Period of Retention) Rules, 2005, mandated by Section 17(1) of the PMLA. No reasons to believe have been recorded or disclosed for authorizing the officers for search and seizure at the appellant s premises prior to the search as mandated under Section 17(1) of the PMLA. “Reason to believe” dated 6.7.2015 does not specify any reasons with respect to the appellant. Even no reasons can be supplied/disclosed by the respondent for the first time in its application made to the Adjudicating Authority under Section 17(4) of the PMLA. Reference may be made to the “Reason to Believe” document annexed by the respondent with its Section 17(4) application and the OA. It is well settled that if a statute prescribes a particular manner of doing a thing it must be done in that manner alone, and no other. Not following the statutory requirements makes the action null and void. Under these circumstances, the order against the present appeal is set aside. The application filed pertaining under section 17(4) of PMLA against the appellant is accordingly dismissed. The documents seized from the premises of the appellant shall be returned forthwith. The file summoned from the Adjudicating Authority be returned back by the registry to the Adjudicating Authority as early as possible.

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• Service Tax

• 2017 (10) TMI 904
  Import of services - Explanation to Sec. 65(105) of the Finance Act, 1994, read with amended Rule 2(1)(d)(iv) of the Service Tax Rules, 1994, coming into effect from 16-6-2005 is ultra vires Sections 64, 65, 66, 67 and 68 of the Finance Act, 1994 - Held that: - the issue is squarely covered by the decision in the case of POLYSPIN EXPORTS LTD. Versus UNION OF INDIA [2010 (11) TMI 187 - MADRAS HIGH COURT], where it was held that It is admitted that after the introduction of Section 66A the explanation to Section 65(105) was also deleted. Hence, the show cause notice issued, on the basis of explanation Section 65(105) of the Finance Act, 1994, read with amended Rule 2(1)(d)(iv) of the Service Tax Rules, 1994 are not valid in law and liable to be quashed - petition allowed.

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• 2017 (10) TMI 903
  Import of services - manpower recruitment supply agency service - Levy of service tax on salaries and perquisites of the employees and expats - Held that: - the employees have been deputed by BMW, AG and they are under direct control and supervision of BMW India. The employees are paying income-tax in India and making EF contribution in India. Also, the employees remained on the payroll of BMW India and there is employment agreement between individual employee and BMW India - similar issue came up before the Hon’ble Allahabad High in the case of Computer Science India Pvt.Ltd. [2014 (11) TMI 125 - ALLAHABAD HIGH COURT], where it was held that Unless the critical requirements of clause (k) of Section 65(105) are fulfilled, the element of taxability would not arise - taking into account that BMW AG is not a manpower supplier, the demand on the issue is not sustainable and is liable to be set aside. Non-payment of service tax - commission received on account of services rendered in relation to sale of cars in India by BMW AG, Germany - Held that: - the Noticee speaks of evaluation of prospective customers. If it is so, then sub-clause (vii) of clause (19) of Section 65 of the Act comes into play, which defines business auxiliary service to mean any service in relation to evaluation or 'development of prospective customer'. Thus, in this manner, Business Auxiliary Service under sub-clause (vii) of clause (19) of Section 65 of the Act would be applicable instead of Support Services of Business or Commerce - the SCN was issued on the basis of an order passed by the Principal Bench of CESTAT on a stay application in Microsoft Corporation (I) Pvt. Ltd. Vs. CST, New Delhi [2009 (7) TMI 105 - CESTAT, NEW DELHI]. However, in the same appeal, the matter relating to the provision of business auxiliary service as export of service has finally been settled by above quoted judgment in Microsoft Corporation (I) Pvt. Ltd. Vs. CST, Delhi [2014 (10) TMI 200 - CESTAT NEW DELHI (LB)] in favor of assessee and is thus no longer res integra. Hence, the demand on this ground is liable to be set aside. Non-payment of service tax - charges received from BMW,AG Germany on account of services rendered in relation to international purchasing office in India - Held that: - the appellants are engaged in providing details of local vendors which meet requirements laid down by BMW, AG. The quantum of consideration is not dependent on any action subsequent to the said use of information by BMW, AG. We find that the above issue is no longer res integra and is covered by the judgment of this Tribunal in the case of Paul Merchants Limited [2012 (12) TMI 424 - CESTAT, DELHI (LB)], where it was held that service tax is a value added tax, which in turn is a destination based consumption tax in the sense that it is levied on commercial activities, and it is not a charge on the business but a charge on the consumers. There is nothing in Export of Service Rules, 2005 which can be said to be contrary to the principle that a service not consumed in India is not be taxed in India - demand set aside. Appeal allowed - decided in favor of appellant.

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• 2017 (10) TMI 902
  Time limitation - CENVAT credit - sub-contract service - Held that: - the cenvat credit of service tax being demanded from the appellant was available as cenvat credit to the appellant themselves. Therefore, the appellants are clearly covered by the decision in the case of Jay Yushin Ltd. [2000 (7) TMI 105 - CEGAT, COURT NO. I, NEW DELHI], where it was held that once an assessee has chosen to pay duty, he has to take all the consequences of payment of duty. No intention to evade duty can be alleged. Demand is therefore clearly barred by limitation. Appeal dismissed - decided against Revenue.

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• 2017 (10) TMI 901
  Classification of various services - demand has been made in respect of 26 work orders and the same have been sought to be classified under various services - Held that: - the Commissioner has himself observed that many of the claims made by the appellant are genuine though not supported by documentary evidence. In these circumstances, it was duty of the Commissioner to call for the document specifically and pass a speaking order - matter remanded to the original adjudicating authority for fresh adjudication after examining of the defences of the appellant - appeal allowed by way of remand.

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• 2017 (10) TMI 900
  Stevedoring/Port Services - only contention put forward by appellant is that their main contractor M/s. VSPL is liable to pay the service tax - Held that: - When the appellant has received charges from the clients for the rendering of stevedoring services, the appellant is liable to discharge service tax, unless it is established that the counterpart / main contractor has discharged service tax on the very same services. Since no evidence is put forth in this regard, there are no ground to interfere with the demand raised in the impugned order. However, taking into consideration that the appellant was under bonafide belief that the main contractor would be liable to discharge the service tax and also taking note of the fact that the said services were outsourced as brought out from the contention put forward by the appellant, the penalties imposed both u/s 76 and 78 would be harsh as well as unsustainable - rest of demand upheld - appeal allowed in part.

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• 2017 (10) TMI 899
  Penalty u/s 78 - malafide intent or not? - Held that: - the said non-payment was detected by the department on investigations made against them. It cannot be held that such non-payment of service tax or even non-disclosure of the value of the same in the return was on account of the non-receipt of compensation from the clients. The appellant has not placed any evidence on record to show that they had not received the value of the said services from their customers for such a long period - the payment of service tax is the legal obligation of the service provider, irrespective of the fact of receipt of value of the service from service recipient. All these factors lead to an inevitable conclusion that there was malafide on the part of the appellant to suppress the value of the services and not to pay service tax on the same - penalty u/s 78 upheld. Service tax alongwith interest paid before issuance of SCN - 73(3) of the Finance Act, 1994 - Held that: - sub-section 4 of section 73 is to the effect that sub-section 3 shall not apply in a case where service tax has not been levied or paid on account of fraud; willful mis-statement; or suppression of facts. As already held that non-payment in the present case was on account of suppression and with malafide, the provisions of section 73 (3) would not get attracted. Invocation of section 80 - Held that: - there was no reasonable cause on the part of the appellant to believe that the service tax was not required to be paid. Accordingly, the said section is also not applicable to them. Reduction of penalty to 25% in terms of the proviso to section 78 - Held that: - the benefit of reduced penalty can be extended only if the entire service tax along with interest and along with 25% penalty is deposited within 30 days of the passing of the order of determination of service tax. Such being not the case, penalty cannot be reduced. Penalty upheld - appeal dismissed - decided against appellant.

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• 2017 (10) TMI 898
  Refund of CENVAT credit - non-registration of the appellant's premises - Rule 5 of CCR 2004 - Held that: - reliance placed in the decision in the case of Commissioner of Service Tax, Chennai-II Versus M/s. Hypertherm (India) Thermal Cutting Pvt. Ltd., M/s. BNP Paribas Sundaram Global Securities Operations Pvt. Ltd. [2017 (5) TMI 1463 - CESTAT CHENNAI], where it was held that refund could be granted to the assessee even if the premises in issue were not registered - appeal dismissed - decided against Revenue.

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• Central Excise

• 2017 (10) TMI 897
  Principles of Natural Justice - the petitioners received a notice in the year 2016, alleging that a show cause notice was issued to the petitioner, way back in the year 2010 and, as such, the respondent No.3 wanted to proceed with the decision on such a show cause notice - the case of petitioner is that they were served with the SCN in the year 2010 and, thereafter, notice for personal appearance was served in January, 2016. Held that: - it is not in dispute that there is no consideration by the Authority of the stand taken by the petitioner after receipt of the show cause notice. This itself shows that the respondent No.3 has proceeded to pass the impugned order without considering the reply or objections raised by the petitioner to the show cause notice issued in the year 2010. It is also admitted position that the show cause notice was issued in the year 2010 and further, for more than six years no steps were taken by the respondent No.3 to proceed to decide the show cause notice. In this back ground of the facts, granting of some opportunity to the petitioners to file adequate reply to meet the alleged demand by the respondent-Revenue would be justified. It is well settled that any order passed in breach of principles of natural justice, which would substantially affect the rights of the parties, is a nullity in law. Petition allowed.

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• 2017 (10) TMI 896
  Clandestine manufacture and removal - parallel invoices - Held that: - at the time of follow up action the proprietor of the appellant firm initially denied having received any writing and printing paper from M/s. Rana Mahendra Papers Limited. But subsequently, when they were confronted with deposits/pay slips of ICICI Bank, they admitted that they had received writing and printing paper on the parallel invoices from M/s. Rana Mahendra Papers Limited and also had made payments for the same. It clearly shows that the appellant were fully aware that they had received goods on which the duty had not been paid and which were liable for confiscation - also, the role of M/s.Mehra Copy House becomes clear that they were indulged in clandestine activity - appeal dismissed - decided against appellant.

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• 2017 (10) TMI 895
  SSI Exemption - use of Brand name of others - case of Revenue is that it is fact on record that brand name PRIMA is owned by M/s. Rajeev Metal Industries and is registered in their name since 1975 - whether the assessees namely, M/s. Rajeev Metals Pvt. Limited and M/s. Sayal Manufacturing and Trading Corporation are entitled for the benefit of SSI exemption under the notification or not on being using the brand name PRIMA-RMPL and PRIMA respectively? Held that: - as per the certificate issued by the Trade Mark Registry, Trade Merchandise Mark Act, 1958 dated 29.11.1985, the owners of brand name PRIMA is Shri Mohinder Lal Syal, Surinder Kumar Syal and Shri Hoshiar Singh Syal of Rajeev Metal Industries, Ludhiana - As the Revenue has not come up with any contrary evidence that Shri M.L. Sayal is not owner of brand name, therefore, it cannot be said that the assessees are using the brand name of others - demand set aside. In the case of M/s. Rajeev Metals Pvt. Limited, the brand name is being used is PRIMA-RMPL. The allegation of the Revenue is that PRIMA-RMPL is similar to PRIMA and therefore, PRIMA-RMPL is brand name of other person. That allegation is not sustainable as trade mark authorities have recognised PRIMA-RMPL as a different brand name from PRIMA brand name and after recognising, they have registered with the name of the assessee, which is evident from the registration certificate - As the Revenue has not proved that assessees are not owner of brand name PRIMA-RMPL, therefore, it cannot be alleged that appellant is using the brand name of others - demand set aside. With regard to denial of SSI exemption in the case of M/s. Sayal Manufacturing and Trading Corporation, as Shri M.L. Syal is partner of the assessee firm and owner of the said brand name, as is evident from the certificate issued by the Registry of Trade Mark dated 29.11.1985, allegation of the Revenue that assessee is using brand name of another person does not stand proved and the benefit of SSI exemption cannot be denied - benefit remains allowed. Penalty on Shri M.L. Syal - Held that: - Shri M.L. Syal has expired on 26.08.2016 and to that effect, the death certificate has been placed on record - penalty imposed on Shri M.L. Syal stands abated. With regard to appeal filed against M/s. Rajeev Engineering Works, it is fact on record that M/s. Rajeev Engineering Works has purchased goods from M/s. Rajeev Metals Pvt. Limited and M/s. Sayal Manufacturing and Trading Corporation under the brand name PRIMA and PRIMA-RMPL respectively and no contrary evidence has been produced by the Revenue to substantiate the allegation that M/s. Rajeev Engineering Works is manufacturing the goods under the brand name PRIMA/ PRIMA-RMPL - demand set aside. Appeal allowed - decided in favor of assessee.

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• 2017 (10) TMI 894
  SSI exemption - clubbing of clearances of three units namely, M/s. Sterlite Chemicals Pvt. Limited (SCPL), M/s. Emulsion Products and M/s. Anurag Dyes and Chemicals Pvt. Limited (ADCL). - The allegation of the Revenue is that M/s. SCPL and M/s. Emulsion Products are dummy units and manufacturing activities being undertaken by M/s. ADCL as the appellant did not have entire machinery for manufacturing of their final products - time limitation. Held that: - all the three units were established way back in 1970s and all the units were registered with Central Excise department and having separate registrations. All the units have surrendered their Central Excise registration in the year 2002. As the facts of establishment of these units were in the knowledge of the department and have been granted registration under Central Excise Acts, after due verification and it is fact on record machineries were not disputed while granting registration to them. It is also on record that all the units are located in Plot No. 40 but Plot No. 40 is having different shades and the units were located in different sheds. Therefore, it cannot be said that all the units are located in a same building. Moreover, they are having different entry gates for them. It is fact that in all the units, Shri Atul Gulati is a common person who is managing affairs of all the three units but same cannot be taken a ground for clubbing the clearances of all units, in the light of decision in the case of Renu Tandon vs. UOI [1992 (1) TMI 126 - HIGH COURT OF JUDICATURE FOR RAJASTHAN], where it was held that Mere blood relationship or sharing of staff, some temporary common employment, similarity of product is also not sufficient to draw an inference that the two units should be clubbed together. All the three units have been registered separately after completing investigation. In that circumstance, the clearances made by three units cannot be clubbed in the light of the decision in the case of Plasto Containers (India) Pvt. Limited vs. CCE, Nagpur [2011 (1) TMI 806 - CESTAT, MUMBAI], where it was held that as both the units are having separate directors, separately registered with Registrar of Companies, separate sales tax registration, income tax, bank account, and separate lease deed with MIDC and are having separate premises also. In that event the clearance of both units cannot be clubbed. M/s. ADCL is manufacturing Poly Vinyl Acetate Emulsion which is raw material for M/s. SCPL and M/s. Emulsion Products who are manufacturing Synthetic Adhesive and therefore M/s. ADCL and other two units are not manufacturing the same goods and in fact, one is the raw material for the other and the goods manufactured by M/s. ADCL cannot be manufactured by M/s. SCPL and M/s. Emulsion. The constitution of firms is Private Limited and Partnership Firm, therefore, merely being a one person is common in all the units cannot be a ground for clubbing the clearances of all units. Further, all the units were having separate registration with Central Excise department, different Sales Tax registration, ESIC etc. and having different trademarks and filing their IT Returns separately. In these circumstances, merely surrendering the Central Excise registration in the year 2002, the clearances of all the units cannot be clubbed - clearances made by all the three units cannot be clubbed altogether. Extended period of limitation - Held that: - all the three units have separate registration with the Central Excise department was well within the knowledge of department while granting the registration and surrendering the registration in the year 2002. In that circumstance, charge of suppression cannot be alleged against the appellants - extended period of limitation is not invokable. Appeal allowed - decided in favor of appellant.

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• 2017 (10) TMI 893
  Manufacture - job-work - Rule 10A(ii) of Central Excise Valuation Rules, 2000 - it was alleged that M/s ISGEC is selling the goods as such as the appellants have manufactured the goods in complete form, therefore, in terms of Rule 10A(ii), the appellants are required to pay the duty on the value at which M/s ISGEC sold the goods - Held that: - Although we hold that the appellants are required to pay duty as per the Rule 10A(ii) of the Valuation Rules, 2000 but on the amount on which duty have been demanded from the appellants, duty has already been paid by the M/s ISGEC on the said amount. If the duty has been demanded from the appellant, in that circumstances, it will be the case of demand of duty twice on the same product which is not permissible in law - demand set aside. Penalty - Held that: - as duty has been paid on the transaction value of the said goods, in that circumstances, it cannot be said that the appellants were having any intention to pay less duty on the said goods - penalty also set aside. Appeal allowed - decided in favor of appellant.

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• 2017 (10) TMI 892
  SSI Exemption - N/N. 08/2003-CE dated 01.03.2003 - use of brand name of others - The case of the Revenue is that, one Shri Pran Nath Khanna was the owner of brand name for the intended goods. As the same was registered in his name with effect from 15.07.2004 vide registration certificated dated 13.02.2006, therefore, it was proposed in the show cause notice that as the brand name Everest is owned by the 3rd party. Held that: - As per the settlement agreement, all the parties to that agreement having the right to use the brand name individually or working together for manufacturing the same product of earlier EEW. Further, Smt. Asha Khanna, partner of respondent was the party to the settlement who was entitled to use the brand name EVEREST for manufacturing the product manufactured by earlier EEW. In that circumstance, the respondents are using their own brand name. Admittedly, the partners of EEW are having the right to use brand name EVEREST individually or working together. Therefore, benefit of N/N. 8/2003 dated 01.03.2003 cannot be denied to the respondents. As in the case in hand, as per settlement agreement dated 21.05.1989, the respondent were having the equal right to use the brand name EVEREST, in that circumstance, it cannot be said that respondents are using the brand name of another person. Therefore, the respondent are entitled to avail the benefit of exemption N/N. 08/2003-CE dated 01.03.2003 - appeal dismissed - decided against Revenue.

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• 2017 (10) TMI 891
  Benefit of N/N. 6/2002-CE dated 1.3.2002 as amended r/w Condition No. 14 thereof - it was alleged that that the appellant has not fulfilled the first requirement / condition in the notification which is that the paper manufactured should start from the stage of pulp in the factory - scope of SCN - Held that: - the controversy has been put to an end by the Board by clarifying that if pulp is manufactured of the required specification whether or not pulp itself is manufactured in the same factory, the benefit of the notification would be available to the manufacturer. However, it is observed by the Commissioner that the concessional rate of duty of 8% / nil during the years 2004 05 to 2007 08 cannot be extended to the appellant in the absence of proof of that pulp contains not less than 75% by weight of pulp made from materials other than bamboo, hard wood, soft wood etc. Thus, the Commissioner has proceeded to confirm the demand on the ground which is absent in the show cause notice. It is indeed correct that the Commissioner has travelled beyond the show cause notice. Demand set aside - appeal allowed - decided in favor of appellant.

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• 2017 (10) TMI 890
  CENVAT credit - steel items used for structure to support capital goods - Held that: - the appellants have used the steel items on which credit has been availed as supporting structure for the capital goods - with effect from 07.07.2009 the definition of “input” appearing in Rule 2(k) of the Cenvat Credit Rules, 2004 has been amended and it specifically excludes cement, angles, channels, Centrally Twisted Deform bar (CTD) or Thermo Mechanically Treated bar (TMT) and other items used for construction of factory shed, building or laying of foundation or making of structures for support of capital goods from the ambit of definition of inputs - appeal dismissed - decided against appellant.

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• 2017 (10) TMI 889
  Refund of duty wrongly paid - rejection of refund on the ground of time limitation - Held that: - the Hon'ble High Court of Delhi in Arya Exports and Industries [2005 (4) TMI 90 - HIGH COURT OF DELHI] has held that The assessee had admittedly submitted the application within the prescribed time and if it suffers from any procedural irregularity the Department was under an obligation to require the assessee to submit the requisite documents - Revenue will examine the refund claim considering it to be filed on 06.12.2010 - appeal allowed.

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• 2017 (10) TMI 888
  CENVAT credit - goods returned to the factory - Rule 16 or CER - Held that: - as per Rule 16 of the Central Excise Rules, appellant is entitled to take credit of the goods brought back into the factory for reprocessing. The register shown by the appellant clearly indicates that the goods were received and the same were processed and cleared - the invoice have nothing to do with the availability of credit in the instant case - appeal allowed - decided in favor of appellant.

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• 2017 (10) TMI 887
  Refund claim - Section 11B of the Central Excise Act - rejection on the ground that they have deposited Rs. 10,00,000/- towards liability of duty but they have not debited any amount from their PLA account - Held that: - An amount of Rs. 10,00,000/- deposited through GAR-7 challan is only towards the duty and not for anything else and cannot be said that the amount paid through GAR-7 is not towards excise duty but for something else. It is settled position that any amount which is refundable the only provision applicable is Section 11B of the Central Excise Act - the refund cannot be denied only on the ground that the amount deposited through GAR-7 challan was not shown as credit in PLA and not debited as duty therefrom - appeal dismissed - decided against Revenue.

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• 2017 (10) TMI 886
  CENVAT credit - transfer of capital goods to another unit - denial of credit on the ground that the said power press has not been found to be physically present at the appellant’s premises but was installed at their Unit-II - case of appellant is that unit-I is also their own Unit doing exclusively job work for them and the goods manufactured at Unit-I are cleared by Unit-II on payment of duty - Held that: - the issue is no more res integra and stand settled by decision in the case of S.G. Zaveri Pharmapack Vs. CCE, Mumbai [2007 (3) TMI 156 - CESTAT, MUMBAI], where it was held that Cenvat credit in respect of capital goods cannot be denied to the manufacturing unit if the same is installed at the job working premises - As there is no dispute that Unit-I and unit-II belong to the same assessee, and the goods after having been manufactured by the job worker are shifted to Unit-II from where they stand cleared on payment of duty, credit cannot be denied. Extended period of limitation - Held that: - Having held that the issue involves legal interpretation and in the absence of any evidence reflecting upon the suppression or mis-statement on the part of the assessee that malafide intention, the extended period was not available to the Revenue. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2017 (10) TMI 885
  Taxability - burnt coal - UPVAT Act - in the process of manufacturing paper and at the end of the manufacturing operation a residue of coal is left over which is then sold by the revisionist - classification of the residual item - taxable at 4% or 10%? - Held that: - the Department does not rest its decision on any evidence which may have established that the residual commodity had lost all its combustible properties. It is pertinent to note that it was the Department which was proceeding to reject the stand taken by the assessee that coal dust was not liable to be taxed at the rate of 4%. While it is true that the principles of res judicata may not strictly apply to taxation assessments, insofar as generic issues inter partes are concerned, they must bind. In issues of classification, the Department cannot be permitted to vacillate unless there be new material and evidence which may justify or warrant a change in stance. Revision allowed - decided in favor of assessee.

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• 2017 (10) TMI 884
  Valuation - soft coke/ special smokeless fuel - Assessing Officer imposed tax on the petitioner under the VAT Act by treating the price of coal to be of Rs. 7000/- per Metric Ton instead of assessing the tax based on the actual sale price and the price of coal indicated in the Sale order @ Rs. 1740/- per M.T. - Held that: - if the transporter or the trader carries the identified goods at lesser price than the quoted minimum price, i.e. as indicated in the circular then an enquiry is conducted and if authenticity of rate claimed by the assessee is established then the price or rate claimed by the assessee can be accepted for imposition of duty/tax - In this case, if we go through the assessment order in question we find that merely because the price quoted in the invoice and the document produced by the assessee were lesser than the minimum price fixed in the circular the amount of excess tax was imposed. When the evidence as is available on record shows that the coal is purchased @ 1740 per M.T. merely because of a circular issued by the State of Bihar fixing the minimum price of certain commodity, which is not the foundation price or the price of the commodities but is only a price indicated on the basis of some exercise done to stop evasion of duty, in the absence of any material or cogent evidence available to show that the petitioner has tried to evade duty by under-pricing the price of coal the State Government cannot act in an arbitrary manner and impose duty based on such a circular. The circular may be used for the purpose of verification and curtailing evasion of duty and for checking under-valuation of goods in the check-post but merely on the basis of the circular without there being any specific evidence to show under price and ignoring the material available on record any action done for imposing tax in duty is unsustainable. Petition allowed - decided in favor of petitioner.

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• 2017 (10) TMI 883
  Principles of Natural Justice - validity of assessment order - delay in communicating the impugned order - Held that: - the matter is remanded to the respondent for fresh consideration, who shall issue notice not only to the petitioner but also to the other end dealers, through the respective Assessing Officer, and conduct an enquiry and redo the assessment in accordance with law - appeal allowed by way of remand.

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• 2017 (10) TMI 882
  Validity of assessment order - penalty u/s 9(2) of the CST Act - Held that: - the respondent has found fault with the petitioner in having produced the letter from the buyers, rectifying the defects in Form C. The petitioner explained that the defect has occurred on account of the purchasing dealer, and it is they, who have to rectify the defect. In that regard, the petitioner produced a letter from the dealer. Further, the petitioner explained that, however, had opportunity been granted to them, they would have been in a position to produce records to show that, whatever turnover, which was not reported in the return as transit sale, were assessed to tax and requisite amount of tax has already been paid. There has been violation of principles of natural justice, and the petitioner did not have adequate opportunity to putforth their plea in spite of specific request made to the respondent for being heard in person. This Court is convinced that the matter should be remitted back to the Assessing Officer for redoing the assessment in accordance with law - petition allowed by way of remand.

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• Indian Laws

• 2017 (10) TMI 906
  Stay of the winding up proceedings - petitioners are relatives of the ex-directors of the respondent company and have filed this petition on the allegations that the company owe an amount of Rs. 22.63 Lac to them which the company could not pay - Held that:- The grievance of the applicant herein is duly taken care of (a) by filing of criminal complaint No.40/1/2016 against the ex-directors of respondent company; (b) by filing various complaints under Section 138 of the NI Act; and (c) by obtaining an award dated 31.05.2010 in its favour. Further, admittedly on 06.09.2010 when the provisional liquidator was appointed as also on 02.03.2012 when the respondent company was directed to be finally wound up, the applicant’s counsel was very much present in the Court. The filing of this application after five years of passing of such orders despite having knowledge of the same would be nothing but an act of frustration, hence, the application being highly belated is dismissed. The applicant, even otherwise, is not devoid of remedy and may file claim before the Official Liquidator and once the claim is filed, the Official Liquidator to examine and verify the claim of the applicant herein and to deal with as per law.

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• 2017 (10) TMI 905
  Right of power of attorney - offence under NI Act - Held that:- Power of attorney holder has a right to file, appear and depose for the purpose of issuance of process for an offence under section 138 of the Negotiable Instruments Act. The complainant thus seems to have personal knowledge of the transaction and as has been stated above, he was representing the company being the constituted power of attorney holder and therefore the order of the learned court below dismissing the complaint under section 203 of Cr.P.C. holding therein that the complainant did not have the locus standi to file a complaint is wholly contrary to the principles of law laid down by the Hon'ble Supreme Court in the case of A.C. Narayanan Vs. State of Maharashtra and another. [ 2013 (9) TMI 948 - SUPREME COURT ] As a consequence to the discussions made herein above, this application is allowed and the impugned order dated 14.5.2012, passed in Complaint Case (C.P.) No. 271 of 2012, by the learned Judicial Magistrate, Dhanbad, whereby and whereunder complaint petition preferred by the petitioner was dismissed under section 203 Cr.P.C., is hereby set aside and the matter is remitted back to the learned court below to proceed with the complaint case instituted by the petitioner in accordance with law.

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