TMI Tax Updates - e-Newsletter
November 10, 2017

Case Laws in this Newsletter:

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

TMI SMS

• Determination of remuneration to partners u/s 40(b) - Interest received on FDR of surplus funds cannot be considered as business income - HC

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• Validity & applicability of ICDS issued by CBDT - scope of validation laws - Specific ICDS have been struck down as ultra vires the Act - HC

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Articles

• GST UPDATE ON ISSUANCE OF DEBIT NOTES AND CREDIT NOTES
• TEST OF ‘COMMERCIAL EXPEDIENCY’ FOR DETERMINING EXPENDITURE
• Demonetisation Anniversary: Fillip the economy with the Phillips Curve

News

• Sensex closes high on GST meet outcome hopes

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• Part of the Road to GES series, NITI Aayog holds the Blockchain summit and hackathon at IIT Delhi, Nov 10 - 13

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• RBI Reference Rate for US $

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• Strengthening Start-Up India, Incubation and Skilling in India: IICA, Atal Innovation Mission and HVSU Celebrate National Entrepreneurship Day 2017;

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Notifications

Companies Law

• F. No. 1/19/2013-CL-V - G.S.R.1372(E) - dated 6-11-2017 - Co. Law
  Companies (Filing of Documents and Forms in Extensible Business Reporting Language), Amendment, Rules, 2017

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Customs

• 84/2017 - dated 8-11-2017 - Cus
  Effective Rate of customs duty on Peas (Pisum sativum) on import - Amendment in Notification No. 50/2017-Customs, dated the 30th June, 2017

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• 107/2017 - dated 9-11-2017 - Cus (NT)
  Amendment in Notification No. 106/2017-CUSTOMS (N.T.), dated 8th November, 2017

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• 106/2017 - dated 8-11-2017 - Cus (NT)
  Amendment in Notification No. 105/2017-CUSTOMS (N.T.), dated 7th November, 2017

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FEMA

• 20(R)/ 2017-RB - dated 7-11-2017 - FEMA
  Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2017

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GST - States

• 29/2017-State Tax (Rate) - dated 6-11-2017 - Delhi SGST
  Amendment in Notification No. 5/2017-State Tax (Rate), dated the 30th June, 2017

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• 26/2017-State Tax (Rate) - dated 6-11-2017 - Delhi SGST
  Recommendations of the Council, exempts intra state supply of heavy water and nuclear fuels falling in Chapter 28 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) by the Department of Atomic Energy to the Nuclear Power Corporation of India Ltd. from the whole of the State tax leviable thereon under section 9 of the Delhi Goods and Services Tax Act, 2017

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• FA-3-77/2017-1-V-(140) - dated 24-10-2017 - Madhya Pradesh SGST
  Waiver the late fee payable for the return in Form GSTR-3B.For the months of August and September, 2017

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• FA-3-76/2017-1-V-(139) - dated 23-10-2017 - Madhya Pradesh SGST
  The registered supplier shall supply the goods to the registered recipient on a tax invoice at the rate of 0.05 per cent.

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• FA-3-75/2017-1-V-(138) - dated 18-10-2017 - Madhya Pradesh SGST
  notifies the evidences which are required to be produced by the supplier of deemed export supplies for claiming refund.

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• FA-3-73/2017-V-3-(136) - dated 18-10-2017 - Madhya Pradesh SGST
  The Madhya Pradesh Goods and Services Tax (Amendment) Rules, 2017

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• FA-3-72/2017-1-V-(135) - dated 18-10-2017 - Madhya Pradesh SGST
  Notifies the state tax rate of 2.5 per cent on intra-State supplies of goods.

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• FA-3-42/2017-1-V-(134) - dated 13-10-2017 - Madhya Pradesh SGST
  Amendment in the Notification No. F-A-3-42/2017/1/V(53), dated the 30th June, 2017,

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Circulars / Instructions / Orders

FEMA

• 11 - dated 9-11-2017
  Risk Management and Inter-Bank Dealings – Simplified Hedging Facility

DGFT

• 38 /(2015-2020) - dated 9-11-2017
  Amendment in Paras 2.20, 2.21 and 2.22 of the Handbook of Procedure (2015-20)
• 39 /(2015-2020) - dated 9-11-2017
  Enlistment under Appendix 2-E of M/s. MIDC Industries Association (MIDC-IA) authorized to issue Certificate of Origin (Non-Preferential) - reg.

Highlights / Catch Notes

Income Tax

• Nature of income - Business Centre Service charges - treated as “Business Income” or “Income from house Property” - the appellant is held to be “deemed owner” of the property in question by virtue of Section 27(iiib) - AT
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• Determination of capital gain u/s 50C - where the date of the agreement fixing the amount of consideration and the date of registration regarding transfer of the capital asset in question are not the same, the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement is to be taken for the purpose of full value of consideration - AT
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• Non grant of Credit of TDS - following cash system of accounting - TDS has been claimed this year but income for the same has not been taken in gross receipts - credit of TDS allowed. - AT
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• Revision u/s 264 in favor assesse - non furnishing books of account and other relevant material - CIT rightly concurred with the view taken by the Assessing Officer and rejected the petition filed by the petitioner u/s 264 - HC
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• Denial of deduction u/s 80-IC - AO’s conclusion that the profits of the Assessee were “more than ordinary” was based on surmises and conjectures. - HC
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• Determination of remuneration to partners u/s 40(b) - Interest income earned on the FDR of surplus funds cannot be considered as part of the income of the business - HC
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Customs

• Effective Rate of customs duty on Peas (Pisum sativum) on import - Amendment in Notification No. 50/2017-Customs, dated the 30th June, 2017 - Notification
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• Classification of export goods - Ilmenite - by such process, the unprocessed ore becomes upgraded Ilmenite and hence, the impugned goods shall be classified under tariff item 26140020 as ilmenite upgraded (Beneficiated ilmenite) and chargeable to export duty at the rate of five percent - AT
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DGFT

• Export Obligation Period for Specified Inputs with Pre-import Condition - New entry:- Flat-rolled products of stainless steel covered under ITC(HS) Codes: 7219 or 7220
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• Capital Goods imported under EPCG Scheme, may be re-exported for repairs abroad within three years from the date of clearance by Customs of such goods, with permission of RA/Customs Authority.
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FEMA

• Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2017 - RBI frames New Regulations
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Corporate Law

• Companies which are required to prepare their financial statements in accordance with Companies (Indian Accounting Standards) Rules, 2015 are also required to file AOC-4 XBRL
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Case Laws:

• Income Tax

• 2017 (11) TMI 523
  Validity of reopening of assessment - mere change of opinion - Held that:- pecial Leave Petition is dismissed both the ground of delay as well as on merits. HC order confirmed [2017 (1) TMI 816 - BOMBAY HIGH COURT] HC has stated that this is a case where the Assessing Officer did apply his mind as evidenced by the query raised to the very issue which is now sought to be raised as the basis for reopening the notice and the Assessing Officer was satisfied with the response to the query during the regular assessment proceedings. Reopening notice is without jurisdiction as it is founded on a mere change of opinion is on facts covered by the decision of this Court in favour of the respondent assessee.

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• 2017 (11) TMI 522
  Allowable business expenditure - Disallowing the contribution to Primary Agricultural Credit Cooperative Society Development Fund being non business expenditure - Held that:- Held that:- The issue is now squarely covered by the decision of this Court in case of Commissioner of Income Tax vs. M/s Rajasthan State Co-operative Bank Ltd [2017 (11) TMI 453 - RAJASTHAN HIGH COURT] wherein held that as looking to the provisions of the Rule 2003 the expenses are mandatory in nature, thus, they are required to be deducted to be kept in reserve fund and they are expenses as stated under Rule 28. - Decided in favour of assessee.

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• 2017 (11) TMI 521
  Determination of remuneration to partners u/s 40(b) - Income earned in the FDR (surplus funds) - whether to be considered as part of the income of the business - Section 40(b)(v) applicability - whether ITAT is justified in considering the interest as part of the book profit in contravention of Section 40(b) i.e as per Section 40(b) the book profit has to be computed in the manner laid down in Chapter-IV D? - Held that:- The FDR which was invested by the assessee was never the part of business, in that view of the matter, the income which has been earned in the FDR cannot be considered as part of the income of the business. In that view of the matter the contention raised by learned counsel for appellant that Section 40(b)(v) of Explanation, the Tribunal and the CIT have seriously committed error and the view taken by the AO required to be allowed is not sustainable. It was never intention of the legislation to differentiate Section 40(b) falling under Chapter IV-D which income is to be considered as business income taking into consideration the purpose of Section 115J and granting benefit for initiation of the entries, it is investment of surplus funds of the respondents which is not part of the business income. Therefore, the same proviso will not apply in the facts of the case. - Decided against assessee.

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• 2017 (11) TMI 520
  Addition on account of cash payment being made for an expenditure in violation of Section 40A (3) for purchasing stock in trade by the assessee - Held that:- As decided in PACL India Ltd [2010 (3) TMI 1118 - ITAT JAIPUR] the second proviso to s. 40A(3) refers to “the nature and extent of banking facilities available, considerations of business expediency and other relevant factors,” which means that the object of the legislature is not to make disallowance of such cash payments which have to be compulsorily made by the assessee in view of absence of banking facilities at the place of payment. In the present case, even if it assumed that the payment was made at the District headquarter, the admitted position is that the sellers did not have any bank accounts at such town and they did not reside or carry on any business or farming activity at such town. It would be too much to expect that the appellant-company would be able to compel the villagers to open bank accounts at the town which ultimately they will not be able to operate as they do not reside at such town. If such a myopic view is taken regarding the interpretation of r.6DD(h), the very object of the legislature would be frustrated. There is no dispute regarding the identity of the payees and the genuineness of the land transactions in respect of which payments have been made. It is notable that r.6DD(k) provides an exception in respect of cash payment which is made on a day on which the banks were closed. This proves that the object of the legislature is to provide exception in respect of such payment which is required to be made in cash or absence of banking facilities. Rule 6DD(h) must be interpreted keeping in view this object and purpose. Therefore, the cash payments recovered under section proviso to s. 40A(3) and r.6DD(h). The AO is directed to delete the addition - Decided in favour of assessee.

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• 2017 (11) TMI 519
  Denial of deduction under Section 80-IC - profits of the Assessee were “more than ordinary” - denial by invocation of Section 80-IA (10) - what percentage of GP ratio should be considered to be ‘more than ordinary’? - Held that:- For the purposes of Section 80-IA (10) it is not enough for the AO to show that there was a close connection between the Assessee carrying on the eligible business and the other person with whom it has transactions. The AO has to further show that the business between them is so arranged that it produces for the Assessee ‘more than the ordinary profits’ which might be expected to arise in such eligible business. Section 80-IA (10) of the Act further requires the AO to compute the profits and gains of the eligible business by taking the amount of profits “as may be reasonably deemed to have been derived therefrom”. The adjective “reasonably” carries with it the responsibility of the AO to base his conclusion on some empirical data. In the present case the AO’s conclusion that the profits of the Assessee were “more than ordinary” was based on surmises and conjectures. During the course of his submission, Mr Singh sought to suggest that a 40% GP ratio by itself should be taken to be “more than ordinary”. Neither the Court nor the CIT (A) or the ITAT can take judicial notice of what percentage of GP ratio should be considered to be ‘more than ordinary’. That decision will hinge upon a variety of factors including the line business, the market conditions, the geographical location, the standard practices peculiar to the line of business and so on. To be fair, Mr Singh pointed out that by a subsequent amendment with effect from 1st April 2013, the legislature has inserted a proviso to Section 80-IA (10) of the Act to acknowledge the complexity of the exercise. It is not in every case that the CIT (A) has to ask for a remand report from the AO to make up for what was missed to be done in the first place by the AO. In the circumstances, the CIT (A) and the ITAT cannot be faulted for not undertaking themselves the required exercise under Section 80-I (10) of the Act.

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• 2017 (11) TMI 518
  Revision u/s 264 in favor assessee - CIT rejected the application - non furnishing books of account and other relevant material - GP determination - Held that:- On a perusal of the assessment order and the order passed by the (CIT) under Section 264 of the Act, we find that more than sufficient opportunity was provided to the assessee to explain his case of furnishing books of account and other relevant material. The assessee failed to avail the opportunity provided by the Assessing Officer on several occasions. Even during those instances where authorized representative of the assessee appeared, complete details were not filed. Accordingly, the profit rate of 12% to the gross receipts of the assessee was held to be quite reasonable on the basis of the material available before the Assessing Officer. Thus, the CIT finding no error in the order passed by the Assessing Officer, rightly concurred with the view taken by the Assessing Officer and rejected the petition filed by the petitioner under Section 264 of the Act. Even before this Court assessee had filed the certificate of gross profit rate and net profit rate for the Assessment years 2010-11 to 2014-2015 and there had been lot of variation in the profit rate of the assessee during these years and therefore, in the absence of production of books of account by the assessee, no benefit can be derived by him by claiming profit rate as applicable then. Moreover, the order passed by the (CIT) is dated 30.03.2015. The present petition has been filed after one year and eight months. Learned counsel for the petitioner has not been able to produce any material on record to substantiate his claim made in the petition. Consequently, finding no merit in the petition, the same is hereby dismissed.

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• 2017 (11) TMI 517
  Reopening of assessment - addition us 68 - jurisdiction of ITO over the assessee - Held that:- Considering the facts of the case in the light of decision in the case of Shri S.N. Bhargava [2013 (10) TMI 512 - ITAT AGRA] it is clear that ITO at Ghaziabad was not having jurisdiction over the assessee. Therefore, he should not have recorded the reasons for reopening of the assessment and further he did not examine any information supplied by Investigation Wing and that he was having no reasons to believe that income chargeable to tax has escaped assessment in his jurisdiction and such facts are also not mentioned in the reasons recorded for reopening of assessment. The ITO at Meerut has, therefore, not validly assume the jurisdiction to initiate the re- assessment proceedings because he has merely followed the reasons recorded by ITO at Ghaziabad who was not having jurisdiction over the assessee. The issue is therefore, covered in favour of the assessee

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• 2017 (11) TMI 516
  Eligibility to exemption u/s 11 - Held that:- It is submitted that in earlier Assessment Years the Exemption was granted by the Department which was taken into cognizance by the CIT(A) in his order. There is no need to interfere with the order of the CIT(A). As per the decision in assessee’s own case passed by the ITAT and confirmed by the Hon'ble High Court, the issue is squarely covered in favour of the assessee. There was no change in the object and purpose of the assessee. There is no adverse finding against the assessee on any matters and as such it is difficult to sustain the order of the AO denying the exemption u/s 11(1) to the assessee - Decided against revenue.

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• 2017 (11) TMI 515
  TPA - comparable selection criteria - Held that:- Assessee is a private limited company, which is engaged in the business of import of assembly of component and re-export of assembled medical disposable balloon catheters as 100 % export oriented unit (EOU). It is providing a captive production to its parent company and its parent company has helped in setting up and expansion of manufacturing facilities by providing technology, training, and finance administrative and marketing support to the assessee. Assessee imports different sub assemble parts i.e. semi finished balloon catheters which includes the purging of holes in the silicon tubing and fixing with wall, rings and the balloon. The final products are being sold only to one customer i.e. the AE of the assessee. Thus comparables functionally dissimilar with that of assessee need to be deselected from final list of comparable, thus exclude the 2 comparables namely, Hindustan syringe Ltd were and Pregna international Ltd. Grant assessee that adjustment on account of the working capital if appropriate details are provided according to our direction following the decision of coordinate bench. Not to exclude duty drawback and the DEPB from operational income of the assessee as well as of the comparable because they are operational income of the assessee for the reason given by us. Not to exclude exchange fluctuation on account of forward contract in case of eastern medicate private limited as it is pertaining to the raw material purchases and on account of risk mitigation of the operation of the comparable. To not to allow the risk adjustment to the assessee in the computation of margin.

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• 2017 (11) TMI 514
  Non grant of Credit of TDS - following cash system of accounting - TDS has been claimed this year but income for the same has not been taken in gross receipts - Held that:- The assessee would be entitled to credit of the entire TDS offered as income by the assessee in his return of income. The tax credit was allowed to the assessee of ₹ 94,60,649/- instead of ₹ 97,36,440/-. In other words, the issue remains relating to non grant of credit of ₹ 2,75,791/- i.e. the difference of ₹ 97,36,440/- less ₹ 94,60,649/-. Levy of interest u/s 234B & u/s 234 C - Held that:- The same is not leviable as the main issue is allowed.

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• 2017 (11) TMI 513
  Penalty u/s 271AAA - additional income offered by the assessee during assessment proceedings - Held that:- The issue before us is identical in nature to that of brother of the assessee’s case [2017 (11) TMI 456 - ITAT DELHI] wherein the ITAT has allowed the appeal of the assessee therein as held that as DR has pointed out that the manner of earning of the surrendered income has not been disclosed by the assessee income has not been disclosed by the assessee whereas the assessee by letter dated 21.01.2010 has disclosed the manner of earning the said income by way of trading in commodities and real estate and also stated this fact is substantiated from the seized material. Moreover this factual position is not denied by the AO and this is not the basis for imposing the penalty. In that view of the matter and in view of such facts and circumstances of the case, the CIT(A) is not justified in confirming the action of the AO and accordingly, we direct the AO to delete the penalty imposed under section 271AAA. Appeal of the assessee is allowed.

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• 2017 (11) TMI 512
  Addition in respect of ESI payment - whether the payment of ESI made after the due date prescribed under the ESI, is allowable as deduction or not? - Held that:- Assessee was entitled to claim the benefit in Sec.43-B for that period particularly in view of the fact that he has contributed to provident fund before filing of the return. See CIT Vs. Vinay Cement limited [2007 (3) TMI 346 - Supreme Court of India] - Decided against Revenue.

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• 2017 (11) TMI 511
  Non granting registration u/s 12AA - whether objectives of the assessee are charitable in nature and that it is not carrying on any activity for profit? - effect of registration granted in the subsequent year - Held that:- We find that by virtue of remand to the CIT(E)for re-consideration of the assessee’s application for registration u/s 12A of the IT Act, the assessee’s application has been revived. As on the date when the CIT(E) was considering the application for registration pursuant to the remand by the ITAT, the proviso to Sec. 12A(2) of the IT Act has come into the statute book and therefore it is very much applicable to all the pending assessments before the A.O. The SMC Bench of this Tribunal at Ahmadabad, in the case of Shri Bhanushali Mitramandali Trust Vs ITO (2016 (4) TMI 578 - ITAT AHMEDABAD) has also held so. Particularly in the case of hand, we find that there is no change in the objects of the assessee from the earlier and in the subsequent assessment years and there is no finding that the assessee has carried on any activity not in accordance with its objectives. In view of the same, we are of the opinion that the assessee is eligible for registration u/s 12A of the IT Act w.e.f 01-04-2002 and accordingly, we direct the CIT(E) to modify the order of registration u/s 12AA of the Act w.e.f. 01-04-2002 i.e from A.Y 2003-04 onwards. - Decided in favour of assessee.

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• 2017 (11) TMI 510
  Long term capital gains addition made after invoking Section 50C - addition in view of jantri price revised on 18.04.2011 i.e. falling between the date of registered agreement coming on 02.02.2011 and sale deed dated 13.07.2011 - Held that:- We notice in view of all these developments that the assessee has received his earnest money in furtherance to the registered sale agreement dated 02.02.2011 on 10.03.2011. Relevant cheques details already find mention in CIT(A)’s order page 9. We observe in these facts that the registered agreement followed by receipt of advance money by banking channel form sufficient reasons to attract the above former proviso to Section 50C of the Act stipulating in very clear terms that where the date of the agreement fixing the amount of consideration and the date of registration regarding transfer of the capital asset in question are not the same, the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement is to be taken for the purpose of full value of consideration. We therefore accept assessee’s arguments in principle. The Assessing Officer is accordingly directed to verify necessary facts as per law for the purpose of adopting the above agreement value in order to compute the consequential capital gains. - Decided in favour of assessee for statistical purposes.

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• 2017 (11) TMI 509
  Nature of income - Business Centre Service charges - treated as “Business Income” or “Income from house Property” - Held that:- Hon’ble Supreme Court in the case of Raj Dadarkar & Associates vs ACIT [2015 (5) TMI 46 - SUPREME COURT] held that wherever there is an income from leasing out of premises and collecting rent, normally such an income is to be treated as income from house property, in case provisions of Section 22 of the Act are satisfied with primary ingredient that the assessee is the owner of the said building or lands appurtenant thereto. Section 22 of the Act makes ‘annual value’ of such a property as income chargeable to tax under this head. How annual value is to be determined is provided in Section 23 of the Act. ‘Owner of the house property’ is defined in Section 27 of the Act which includes certain situations where a person not actually the owner shall be treated as deemed owner of a building or part thereof. In the present case, the appellant is held to be “deemed owner” of the property in question by virtue of Section 27(iiib) of the Act. On the other hand, under certain circumstances, where the income may have been derived from letting out of the premises, it can still be treated as business income if letting out of the premises itself is the business of the assessee. In view of the above the learned Sr. DR requested for setting aside of these three appeals to the file to the AO to deciding the issue on the receipts earned by assessee whether the same is business income or income from house property. In view of the above facts and circumstances, we are of the considered view that let the matter be restored back to the file of the AO for deciding the issue in term of the decision of Hon’ble Supreme Court in the case of Raj Dadarkar & Associates (supra). The AO will examine the factual aspects of the case and will decide the issue after considering this judgment and other judgments as cited by assessee if any. Accordingly, this issue of the Revenue’s appeal is allowed for statistical purposes. Treatment of interest on FDR earned by the assessee - Held that:- The assessee had procured loan from DHFL for its business purpose. For procuring the loan, the assessee had to compulsorily keep fixed deposit as margin money with the bank. The assessee’s bankers insisted that the assessee should keep sufficient amounts with them so as to enable them to disburse the loan to the assessee against the security of the said deposits. Thus, it is out of business compulsions that the assessee had to deposit money in fixed deposit and incidentally, earn interest thereon. According to assessee, the sole and exclusive purpose was to meet compelling business requirement. The interest income had direct and proximate connection with the business of the assessee. We find that this argument made by the learned Counsel for the assessee has neither been examined by AO nor by CIT(A) and this is not examined whether this FDRs has any nexus with loan taken for the purpose of business. Accordingly, we restore this matter back to the file of the AO to give finding on the submissions of the assessee. This issue of Revenue’s appeal is set aside to AO and consequently, allowed for statistical purposes.

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• 2017 (11) TMI 508
  Allowing the expenditure claimed on account of refund and the professional fees - allowable business expenditure - CIT(A) allowed the claim of the assessee holding that the refund of fees by the assessee is out of commercial expediency it is not a sham or colorable transaction as stated by the Assessing Officer - Held that:- The assessee in the course of his business and out of commercial expediency refunded an amount of ₹.10 Crores to UTV and this amount can be said to have been incurred whole and exclusively for the purpose of business/profession of the assessee within the meaning of the section 37(1) of the Act. In the circumstances we uphold the order of the Ld.CIT(A) in holding that the refund of fee by the assessee is an allowable expenditure. - Decided against revenue

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• 2017 (11) TMI 507
  Undisclosed income on account of bogus share transaction - addition on account of commission on such undisclosed income - AO has recorded in his finding that assessee has not furnished the report under Form 10DB in support of Security Transaction Tax - as per assessee no independent investigation was carried out by AO before making addition - Held that:- Assessing Officer has passed the assessment order without giving any finding on the submission and documentary evidences furnished by assessee. The Assessing Officer has relied upon the statement of Mukesh Choksi. No opportunity of cross-examination was provided to the assessee nor was the copy of statement given to assessee on which the Assessing Officer relied. Considering the decision of Hon’ble Apex Court in case of ITO vs. M. Pirai Choodi (2010 (11) TMI 26 - Supreme Court of India), we deem it appropriate to restore the ground no. 5,6 &7 to the file of Assessing Officer to decide the same afresh in accordance with law. Appeal filed by the assessee is allowed for statistical purpose

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• 2017 (11) TMI 506
  Deemed dividend u/s 2(22)(e) - whether there is no loan received by the Director but it is a current running account of a Director with company in normal course of business - Held that:- Assessee was having an opening credit balance of ₹ 4.28 crores in the books of M/s. Monachem Additives Pvt Ltd. There are regular transactions for movement of funds to and from between the two parties. The company is regularly providing for interest on the unsecured loans taken from the assessee. As discussed above, that the company was in urgent need of finance/credit facilities and on the insistence of the HDFC Bank, the credit facility was transferred from individual account to the company account. From perusal of all these transactions of movements of fund, we can clearly envisage that these were regular business transactions which cannot be categorized as loan and advance transactions with the intention to provide facility to the shareholder. We find that the judgment of Hon’ble jurisdictional High Court in the case of Schutz Dishman Bio-tech Pvt (2016 (1) TMI 84 - GUJARAT HIGH COURT) is squarely applicable on these facts and we are therefore of the view that the alleged transactions between the sole proprietary concern of assessee M/s. Monachem –Corporation and M/s. Monachem Additives Pvt Ltd are in the form of current accommodation adjustment entries and movement of funds are both ways on need basis and therefore, cannot be treated as loan and advance as contemplated in Section 2(22)(e) of the Act - Decided in favour of assessee. Default u/s 201(1)/201(1A) - addition on account of deemed dividend under Section 2(22)(e) - Held that:- As the business transactions of the assessee cannot be categorized as loan and advance transactions with the intention to provide facility to the shareholder and, therefore, cannot be treated as loan and advance as contemplated in Section 2(22)(e) of the Act and accordingly the addition has been deleted. In view of the matter, the question of demand under Section 201(1)/201(1A) of the Act does not arise; therefore, the same is cancelled - Decided in favour of assessee.

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• 2017 (11) TMI 505
  Validity of assessment - failure of the Assessing Officer to issue notice under section 143(2) prior to finalizing the reassessment order - Held that:- The assessment made by the Assessing Officer under sect ion 143(3)/147 without issuance of the statutory notice under section 143(2) is bad in law and the same is liable to be cancelled. The provision of section 292BB would apply in so far as failure of “service” of notice is concerned and not with regard to failure to “issue” notice. It was held that the failure of the Assessing Officer to issue notice under section 143(2) prior to finalizing the reassessment order, therefore, cannot be condoned by referring to section 292BB of the Act” and such failure is fatal to the order of reassessment The assessment made by the Assessing Officer under section 143(3)/147 without issuance of the statutory notice under section 143(2) is bad in law and the same is liable to be cancelled. - Decided in favour of assessee.

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• 2017 (11) TMI 504
  Capital gain - proof of purchase of property during the year - additions of the properties in the ‘block of asset’- depreciation claimed on the said ‘block of assets’ - Held that:- The purchase transactions in respect of both of the properties under consideration had taken place during the year under consideration, viz. A.Y. 2009-10. We thus are of the considered view that the claim of the assessee in respect of the additions made in the ‘block of assets’ towards purchase of the aforesaid properties, viz. (i). Residential property at Nagpur; and (ii). Property marked as 94, Sector 2, Koparkhairane, Navi Mumbai, is found to be in order. That in the backdrop of our aforesaid observations, we are of the considered view that neither the assessing of an amount of ₹ 93,96,127/- under the head ‘Short term capital gain’, nor the disallowance of depreciation of ₹ 12,699/- could have been made in the hands of the assessee. We thus in terms of our aforesaid observations uphold the order of the CIT(A). Appeal of the revenue is dismissed.

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• 2017 (11) TMI 503
  Addition as unexplained cash credit - share application money received from Smt. Pammi Sandesara, daughter of one of the directors of the assessee-company - Held that:- We have noticed that the relationship between the assessee-company and the shareholder is well established in the sense that the shareholder is the daughter of one of the directors of the company. It is, therefore, not a transaction between two strangers. We have also noticed that the earning statements of Smt. Pammi Sandesara’s husband and her bank accounts show prima facie evidence of the means of the shareholder. The amounts have been received through the banking channels. Bearing in mind all these factors, in our considered view, the receipts from Smt. Pammi Sandesara cannot be treated as unexplained cash credit. We, therefore, deem it fit and proper to delete the impugned addition - Decided in favour of assessee.

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• 2017 (11) TMI 502
  Bogus purchases - G.P. determination - CIT-A concluded that the profit element in all fairness was liable to be reduced from the aforesaid estimated profit rate of 17.5% as estimated earlier - Held that:- CIT(A) in the backdrop of the facts of the case should have in all fairness restricted the initial estimation of profit at 12.5% (supra), as against the profit rate of 17.5% (supra) so adopted by him. We thus substitute the estimation of the initial profit rate of 17.5% adopted by the CIT(A), by a rate of 12.5%. We are further of the considered view that in the backdrop of the order of the coordinate bench of the Tribunal in the case of Madhukant B. Gandhi (2010 (2) TMI 1211 - ITAT MUMBAI)the CIT(A) should have directed reduction of the gross profit rate declared by the assessee during the year under consideration, from the aforesaid initial profit rate so estimated by him, and not the average gross profit rate for the last three years. We have been informed by the ld. A.R that the G.P. rate for the year under consideration stood reflected at 6.32%. We thus in the backdrop of our aforesaid observations direct the A.O to reduce the estimated profit rate of 12.5% (supra) by the profit percentage of 6.32% (supra) pertaining to the year under consideration. We thus in the backdrop of our aforesaid observations sustain the consequential addition at 6.18% [i.e. 12.5% (-) 6.32%] of the aggregate value of purchases made by the assessee from the aforesaid parties, viz. (i). M/s Rajendra Impex India; and (ii). M/s Newzone Multitrade Private Limited. That before parting we direct the A.O to verify the claim of the ld. A.R that the G.P rate declared by the assessee during the year under consideration worked out at 6.32%(supra)

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• 2017 (11) TMI 501
  Disallowance u/s 40(a)(i) - non deduction of tds on payments made to Medunet Europe B.V for technical services towards copyright and printable file - Held that:- CIT(A) in his order has noted that though assessee has deducted TDS on payments under the title “Fees for Technical Services” with description “copyright and printable PDF file” in the case of other like payments, but tax has not been deducted on the sum of ₹ 50,553/- paid to Medunet Europe B.V for similarly described nature of payment. Even before us, there is no rebuttal of the aforesaid position, and in the absence of any credible explanation, we affirm the orders of the authorities below and thus, so far as invoking of Sec. 40(a)(i) of the Act with respect to payment made to Medunet Europe B.V of ₹ 50,553/- is concerned, the action of the income-tax authorities is sustained, and assessee fails. TDS on payment paid to M/s. Pfizer Corporation Hongkong Ltd. - claim of the assessee has been that the payments in question are merely reimbursement of expenses - Held that:- In terms of the invoices, the amount relatable to the Indian entity is quantified at USD 948, which has been invoiced by M/s. Pfizer Corporation Hongkong Ltd. to the assessee-company. Similar is the situation with other invoices and, in our view, the assertions being made by the assessee are borne out of record. Thus, where the payments are merely towards reimbursement of expenses incurred by M/s. Pfizer Corporation Hongkong Ltd. on behalf of the assessee, there is justifiably no reason to deduct tax at source. Thus having regard to the objection of the CIT(A) that there was non-substantiation of the payments to M/s. Pfizer Corporation Hongkong Ltd. being reimbursements, a plea which we have not found tenable on the basis of the material on record, we direct that the disallowance made u/s 40(a)(i) of the Act be set-aside. TDS on scholarship fee paid to Doctor - absence of requisite deduction of tax at source - plea of the assessee that the said amount is not taxable in India so as to require tax deduction at source because of Article 7 of DTAA in the absence of any Permanent Establishment of the recipient in India - Held that:- We have perused the order of the CIT(A) and find that though the CIT(A) has tabulated in the list of payments the amount of scholarship fee paid for Dr. Avinash Pophali of ₹ 1,90,315/-, but there is no adjudication on the same. Therefore, we restore the matter back to the file of the CIT(A) who shall examine the disallowance made by the Assessing Officer of the said scholarship fee u/s 40(a)(i) of the Act. TDS u/s 194C - Disallowance of cross charges by invoking Sec. 40(a)(ia) - Contractual relationship between the assessee-company and M/s. Pfizer Ltd. - Held that:- There was no default on the part of the assessee in not deducting tax at source on the impugned payments to M/s. Pfizer Ltd. In this view of the matter, we, therefore, find no reasons to interfere with the ultimate conclusion of the CIT(A) in setting-aside the disallowance made by the Assessing Officer by invoking Sec. 40(a)(ia) of the Act. See COMMISSIONER OF INCOME-TAX Versus SIEMENS AKTIONGESELLSCHAFT [2008 (11) TMI 74 - BOMBAY HIGH COURT]

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• 2017 (11) TMI 500
  Penalty u/s 271(1)(c) - disallowance of depreciation on the property in respect of newly purchased property - Held that:- The concealment involves knowledge on part of the assessee of the real income while giving or disclosing the particulars of income. The furnishing of inaccurate particulars of income, on the other hand includes items which have been though shown in the return of income but is not correct or has been wrongly shown or clarified. The Assessing Officer at the time of issuance of notice to the assessee must disclose to the assessee about the charge on which he proposes to initiate or levy the penalty under this section. The show cause notice issued should be without any ambiguity and has to be very specific about the charge. The Assessing Officer in the assessment order has initiated the penalty proceedings under section 271(1)(c) under both the limbs and has failed to specify in the show cause notice (u/s 274 read with section 271(1)(c) about the charge for which he wishes to initiate penalty proceedings. Finally the penalty has been levied for furnishing of inaccurate particulars. This shows that he has not applied his mind or was specific about his satisfaction under which limbs which intends to initiate or levy of penalty. - Appeal of the assessee is allowed.

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• 2017 (11) TMI 499
  Entitlement for exemption u/s 11 and 12 - claim for the Asst Year 2006-07 in view of amendment brought in by Finance (No.2) Act , 2014 w.e.f. 1.10.14 by construing the same as retrospective in operation - Held that:- The amendment brought in Finance (No.2) Act, 2014 w.e.f. 1.10.2014 in section 12A(2) of the Act should have to be construed as retrospective in operation and accordingly the assessee would be entitled for exemption u/s 11 and 12 of the Act for the Asst Years 2006-07 and 2007-08 also. Hence we allow the additional ground raised by the assessee for both the years under appeal before us. Since the preliminary ground of claim of exemption u/s 11 and 12 for the Asst Years Kolkata Metropolitan Development Authority 2006-07 and 2007-08 is allowed , the regular grounds raised by the assessee on the validity of proceedings and the merits thereon are not required to be adjudicated herein. Hence we direct the ld AO to grant exemption u/s 11 and 12 of the Act for the Asst Years 2006-07 and 2007-08 and adjudicate the merits of the addition afresh in accordance with law. We make it clear that our opinion on the merits of the addition are left open and direct the ld AO to adjudicate the same afresh in accordance with law, after grant of exemption u/s 11 and 12 of the Act for the Asst Years 2006-07 and 2007- 08 .

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• 2017 (11) TMI 498
  Unexplained expenditure u/s.69C - unexplained purchases - source of the payment - Held that:- Considering the provision of Section 69C where in it has been explained that in any financial year, an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure then the Assessing Officer may make the addition. But in this case, the assessee has produced the bank statement, sales register, purchase register etc; before the Ld. CIT(A). The bank statement clearly shows that the purchases were made through account payee cheque. In addition to this, the assessee has contended from the beginning that the source of the payment was the sale proceeds of these unrecorded purchases only which has been deposited in the bank account and thus, no addition is called for the unrecorded purchases as the GP on this unrecorded purchase has already been taxed in the original scrutiny assessment order u/s 143(3) of the Act, the ld. CIT(A) failed to controvert the same. The assessee has explained the reconciliation of purchases and sales which were not recorded and the Ld. CIT(A) has failed to find out any mistake. Therefore, sources of the purchases were explained by the assessee and hence, it is not a fit case to make the addition u/s 69C - Decided in favour of assessee.

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• 2017 (11) TMI 497
  Addition u/S 17(1)(v)as salary advance to the income of the assessee - disallowance on account of advance salary received - Held that:- Payment received by the assessee is a benefit and amenity provided to him by his employer company therefore it is not taxable in the hands of the assessee. Payment received by the assessee is fully covered by the provisions of section 17 2 (iii) (a) of the I.T. Act and Rule 3 (7) (i) of the I.T. Rules, which is benefit or amenity provided to the assessee at free cost, by his employer company. Considering the factual position, we are of the view that addition made by learned Assessing Officer of ₹ 7,27,865/- and confirmed by the ld CIT(A) needs to be deleted. - Decided in favour of assessee.

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• Customs

• 2017 (11) TMI 496
  Misdeclaration of imported goods - Valuation - mixed lots of PU leather cloth fabrics - rejection of transaction value declared by the respondents - contemporaneous imports - Held that: - the declared value has been rejected on mere assumptions and presumptions. The department has not been able to adduce any cogent evidence for holding that the declared transaction value is not correct. The Commissioner (Appeals) in para 4.6 has rightly discussed that there is no allegation in the present case that the buyer is related to seller and therefore Rule 7A cannot be invoked without first excluding Rules 5 to 8 with valid reasons - there is no evidence of contemporaneous imports put forward so as to hold that the respondents have declared incorrect transaction value. The department has failed to prove that the goods imported by the respondents are of the same quality of the goods referred in the DRI Alert Circular. That being so, the rejection of transaction value is not acceptable - appeal dismissed - decided against Revenue.

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• 2017 (11) TMI 495
  Warehousing of goods - goods found outside the bonded lockers of the vessels - seizure of goods - scope of SCN - principles of natural justice - revovation of license of appellant-company Held that: - the revenue has failed to discharge the requisite burden to saddle the Appellants with liability to confiscation and penalty. Import Duty is payable only when goods are imported into the customs barriers of India. There is no tangible evidence that goods have been improperly imported into the customs barriers of India. No tangible evidence is produced to show that the goods were removed for home consumption and crossed the customs barriers of India. There is also no tangible evidence produced to show that the goods were sold in domestic market. Further there is no liability to pay duty on goods which were sold at DFS after being cleared by the Customs and exported thereafter. Hence, on these facts the demand of duty is even otherwise erroneous. The substantiated allegations are not sustainable even on the test of preponderance of probability, the adjudicating authority issued an order cancelling the license. Therefore, this harsh action is also set aside. The license of the Appellant Company shall be restored within a period of one month - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 494
  Duty Free Import Authorisation Scheme (DFIA) - Petitioner, a transferee of DFIA, purchased the scrips and utilised the same for discharging duty liability against various Bills of Entry under N/N. 40 of 2006 and 17 of 2009 dated 19.2.2009 - demand of additional duty along with interest from the date of clearance not be recovered from it on the materials imported under various bills of entry as per N/N. 40 of 2006 as amended by condition (iiia) of N/N. 17 of 2009 Customs along with penalty u/s 114-A of the CA 1962 - demand on the ground that the petitioner had not declared at the time of clearance of the goods. Held that: - The Foreign Trade Policy for the period 2004 2009 extended a duty free import authorisation allowing duty free imports of inputs used in the manufacture of products for export. The scheme came into force from 01.05.2006. Para 4.4.7 of the scheme as it originally stood stipulated that CENVAT Credit Facility was available for the inputs either imported or procured indigenously against the DFIA. While this is so, an amendment was brought in vide Finance No.2, Finance Act (2) dated 19.08.2009 as per which DFIAs issued between the period 01.05.2006 to 31.03.2007 attracted payment of additional customs duty/excise duty with effect from 01.05.2006 if the additional condition set out in the proviso was not complied with. The condition imposed vide the amending Notification is incapable of satisfaction retrospectively. The petitioner, by virtue of the burden imposed under the amendment is required to have furnished the details relating to availment of duty by the transferor of the scrip at the original instance. Apart from being practically unworkable, the amendment imposes a condition that nullifies a right that vested in the petitioner and creates a burden that the petitioner would be incapable of discharging. While the satisfaction of the condition post date of Notification is mandatory and, accepted to be so by the petitioner we agree that the retrospective application of the same is liable to be interfered with. In our view, condition (iii)(a) imposed in Notification 17 of 2009 must be read to have been enacted from and with effect from 19.2.2009 only. The amendment applied retrospectively would no doubt destroy the vested right of the petitioner and substantively so. The Supreme Court has consistently upheld the position that any amendment should seek to correct an error that was contained in the original enactment. In the circumstances of the present case, the error can be corrected only prospectively and retrospective application of the amendment would not stand the test of law. Petition allowed - decided in favor of petitioner.

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• 2017 (11) TMI 493
  Safeguard duty - N/N. 4/2012-Cus (SG) dt. 05.10.2012 - imported Carbon Black N 330 - Held that: - the issue in question is no more res integra and stands settled by the Hon’ble Bombay High Court in the case of Balkrishna Industries Ltd. Vs. UOI [2015 (12) TMI 1390 - BOMBAY HIGH COURT] wherein it has been held that the safeguard duty imposed under Section 8C of the Customs Tariff Act, 1975, vide N/N. 4/2012-Cus is leviable, as the same is country specific, whereas the other two notifications are not country specific - The Hon’ble High Court held that inasmuch as there is no exemption from safeguard duty leviable under Section 8C, which is imposed on the goods imported from China, the importer has to pay safeguard duty, in terms of Section 8C - appeal dismissed - decided against appellant.

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• 2017 (11) TMI 492
  Smuggling - RAMs - Gold Bars - penalty - whether the provisions of Section 111(d) and 111 (m) can be invoked under the circumstances of the present case for confiscation of the goods, resulting in imposition of penalties under Section 112 and Section 114AA ibid on the appellants? - Held that: - It is an admitted fact on record that the DRI officers intercepted the goods before filing any document in respect of the imported goods by the concerned persons. Since none of the appellants had signed any document for the purpose of obtaining a licence or for the purpose of importing the goods, it cannot be said that any fraudulent practice was adopted by the appellants for illegal importation of goods, which were liable for confiscation. Thus, it is obvious that the provisions of sub-section (d) of Section 111 ibid do not get attracted for confiscation of the goods. Since the appellants are no way concerned with the goods or making any declaration in respect of the imported goods, the provisions of Section 112(a) and 114AA ibid cannot be invoked against them for imposition of penalties. Appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 491
  Imposition of ADD - color coated aluminium foil - import from China PR - whether or not printed or backed with paper, paper board, plastics or similar packing materials of a thickness ranging from 5.5 micron to 80 micron excluding Alu Alu Laminate and Ultra Light Gauge Converted and Capacitor? - Held that: - The product type, admittedly covers a vide variety of finished goods - the product specification of Chinese producers and the Domestic Industry did indicate the overall coverage of scope of the said goods. The appellants are submitting to make a fine distinction on certain qualities. As already noted, we do not appreciate that the scope of investigation and the imposition of Anti Dumping duty can be varied on such a fine distinction of certain qualities, the existence of the same itself has not been established categorically by the appellants - appeal dismissed - decided against appellant.

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• 2017 (11) TMI 490
  Misdeclaration of value of imported goods - request for amendment of the said bill of entry on the ground that goods covered by another invoice dated 16/09/2016 have not been included in the bill of entry - confiscation - redemption fine - penalty - Held that: - It is clear that initially the appellants filed a bill of entry with one invoice and thereafter requested for amendment by adding another invoice of the same date. The description and the quantity of the import consignments were also amended. However, on detailed examination it is noticed that even after amendment there were wide variations between the declared items and the actual import. There were violations of BIS/IPR regulations in respect of certain items. The findings of the Original Authority with reference to mis-declaration are categorical and revealing - It is expected that a bonafide importer will be aware of the contents of items imported by him. During the course of argument, the learned Consultant was specifically asked that in case the importer was apprehending any mix up of the consignments he should have got the matter verified and confirmed from the exporter. For this, he replied that even the exporter is not fully aware of the contents of the shipped consignments. We find such situation is totally untenable and this cannot be the basis for a claim that the appellants are not liable for any mis-declaration made in the bill of entry. On their own admission it is clear that the value declared in the B.E. is not acceptable in terms of Section 14 of the Customs Act. Quantum of redemption fine and penalty - Held that: - We note that for goods valued at ₹ 44.39 lakhs and ₹ 19.61 lakhs redemption fine of ₹ 10 lakhs and ₹ 4 lakhs have been fixed. We note the said redemption fine is on the higher side as per the standards generally adopted in respect of fixing of redemption fine - the goods have been re-exported. The appellant, apparently could not sell these items in domestic market for any profit. Considering the facts of the case, we find the fines could be fixed at ₹ 5 lakhs and ₹ 2 lakhs - penalty imposed on the main appellant is also accordingly reduced to ₹ 2 lakhs. Penalty on the second appellant, Customs Broker - Held that: - In fact, the items were mis-declared in various parameters. The appellant/Customs Broker’s role in this case cannot be considered as part of their routine activity - penalty imposed on the second appellant upheld except for reduction of the same to ₹ 1 lakh keeping in view the reduction considered for fines and penalty on the main appellant. Appeal allowed in part.

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• 2017 (11) TMI 489
  Appearance of members who ceased to hold office - whether Sh. Pruthi is eligible to appear in view of the condition of section 129(6) of Customs Act, 1962 as made applicable to Central Excise which debars Members from appearing before the Tribunal? - Held that: - only a Member of Tribunal who is confirmed to hold office in such capacity can be said to have ceased to hold the sameand therefore the provisions of section 129(6) of the Act would not be attracted in the case of a Member who was not confirmed in his post - Shri P.S. Pruthi, ex-IRS officer is entitled to appear before CESTAT as authorized representative/consultant of the clients. Classification of export goods - Ilmenite - classified under CTH 26140020 or under CTH 26140010 - whether the processes employed by the respondent amount to beneficiation so as to hold classification under 26140020? - Held that: - recourse to documents of the Ministry of Mines, Government of India would be valuable. It is seen from the same Indian Minerals Book as well as the license given by the Department of Atomic Energy for operating mines, that all the operations are subject to strict control of these Departments of Government of India. Therefore, it is apt to refer to such documents to decide the meaning of the word beneficiated - in terms of Rule 70 of Mineral Concession Rules, sand used for metallurgical process will not be treated as a minor mineral. In the present case the sand being used for metallurgical process is not therefore a minor mineral and does not fall under the exclusion clause 2(iv) of the Mineral Conservation and Development Rules. In any case, Ilmenite is the goods in question here and not the sand. Ilmenite is rare earth mineral. Even the Press Information Bureau of Ministry of Mines note dated 12.08.2015 fixing royalty rates, refers to Ilmenite as a major mineral. Hence, contrary to the reasoning of Revenue, the definition of beneficiation as given in Rule 3(d) of the Rules does apply - Board Circular 332/1/2012-TRU dated 17.2.2012 also clarifies that by beneficiation process the end product of ore is concentrate or upgraded ore with regard to the Chapter notes of Chapter 26 - the order passed by the coordinate Bench in the case of VV Minerals [2015 (10) TMI 2261- CESTAT Chennai] the process undertaken by the appellant in that case is the same as in the present case. Revenue has not put forth any evidence to indicate that the processes are not identical. VV Minerals held that the taxpayer had carried out various processes of beneficiation as stipulated under Rule 3(d) of the Mineral Conservation and Development Rules, 1988 and by such process, the unprocessed ore becomes upgraded Ilmenite and hence, the impugned goods shall be classified under tariff item 26140020 as ilmenite upgraded (Beneficiated ilmenite) and chargeable to export duty at the rate of five percent - the dictum of VV Minerals is squarely applicable in the present matter before us - appeal of Revenue rejected. Refund claim - refund filed on account of change in classification sought in respect of the Ilmenite Ore exported by them - The appellant filed refund applications claiming the benefit by considering the export duty as 5% instead of the duty at 10% already paid by them in respect of shipping bills whose details along with other details are mentioned in the chart submitted at the time of hearing - Held that: - The law and the High Court judgements referred by us clearly hold the issue in favor of the appellant - reliance placed in the case of AMAN MEDICAL PRODUCTS LTD. Versus COMMISSIONER OF CUSTOMS, DELHI [2009 (9) TMI 41 - DELHI HIGH COURT] - there is no question of unjust enrichment in the case of exports is a well-established legal principle - refund allowed. Appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 488
  Jurisdiction - power of Preventive Officers of Customs to act as ‘proper office’ - power to issue SCN - Held that: - It has been ruled by Hon’ble Delhi High Court in the case of Mangli Implex vs. Union of India [2016 (5) TMI 225 - DELHI HIGH COURT] that the D.R.I. Officers are not competent to issue the show cause notice for the imports made prior to 08.04.2011 - matter remanded to the Original Authority for deciding the issue involved in the present appeals - appeal allowed by way of remand.

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• Corporate Laws

• 2017 (11) TMI 487
  Removal from the Directorship of the Company - obligation to disclose the reasons for removing a person from Directorship of a Company prior to the EGM where such proposal is to be considered - Held that:- In our view, no manner of doubt can remain, that the reasons for removal of Plaintiff No 1, in the present case, were required to be communicated, or made known, to her, only before the proposal, for removing her from office as Director of the Company, was taken up at the EGM. A notice under Section 100, were it to be issued, could not have been injuncted by the Court. If the notice which might possibly have been issued, consequent to the decision taken at the meeting to be held on 26th August 2017, was itself immune from interlocutory interdiction, we fail to understand how any interiminjunction, staying the operation of the notice dated 8th August 2017, or the decision to be taken at the meeting dated 26th August 2017, could be granted. At the cost of repetition, it needs to be emphasized that no decision, towards removal of Plaintiff No.1 from the Directorship of the company, was to be taken, this way or that, at the meeting to be held on 26th August 2017. The interests of Plaintiff No.1 were not, therefore, in any way prejudiced by the notice dated 8th August 2017, so that the very maintainability of the application for ad interim injunction filed by her was questionable. As such, the notice dated 8th August 2017, in our opinion, was not a notice under Section 100 of the Act at all, and the learned Single Judge has, therefore, clearly fallen in error in regarding as it one. No occasion, therefore, for granting any protection against such notice could be said to have existed. The notice, which was innocuous in terms, did not pose any threat, by itself, to Plaintiff No.1 as would justify ad interim protection from the Court. Nothing really turns on the issue of whether the communication dated 8th July 2017 was a Special Notice or a Requisition, as the decision to convene the EGM would be relatable to sub-clause (1) rather than sub-clause (2) of Section 100 of the Act. We may, however, in passing, note that no specific form or format of a “requisition” is prescribed in the Act, or in any cognate legislation, so that any document issued by the requisite member of Directors as specified in Section 100(2) of the Act (which calls for convening of an EGM) would be eligible to be styled as a “requisition”. It does not appear to us, that the expression “requisition” is a term of art, as used in Section 100 of the Act. We allow the present appeal, and set aside the impugned order, dated 11th September 2013, of the learned Single Judge. Resultantly, the notice dated 8th August 2017 would stand revived, and it would open for the Board to meet, as contemplated therein, to decide on whether, or not, to convene an EGM for considering the proposal to remove Plaintiff No. 1 from Directorship of the Company. On whether such EGM should, or should not, be convened, and whether the proposal to remove Plaintiff No. 1 from Directorship of the Company, is justified or not, we, needless to say, express no opinion.

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• Insolvency & Bankruptcy

• 2017 (11) TMI 486
  Corporate insolvency procedure - Insolvency Bankruptcy process - validity of notice issued by the Law Firm ‘JUSTLAW’ on behalf of Respondents-‘Operational Creditor’ - existence of 'dispute', within the meaning of Section 8 read with sub-section (5) of Section 5 of I&B Code - Held that:- The notice has been issued by a Law Firm and there is nothing on the record to suggest that the said Law Firm has been authorised by the Board of Directors of the ‘Operational Creditor’- M/s. Synergy Property Development Services Pvt. Ltd. There is nothing on the record to suggest that any Lawyer or Law Firm hold any position with or in relation with the Respondents-‘Operational Creditor’. In view of the aforesaid facts and the decision of this Appellate Tribunal in “ M/s. Uttam Galva Steels Limited v. DF Deutsche Forfait AG & Anr [2017 (8) TMI 1198 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ]” we hold that the notice(s) issued by the Law Firm ‘JUSTLAW’ on behalf of Respondents-‘Operational Creditor’ cannot be treated as a notice under section 8 of the ‘I&B Code’ and for that the petition under section 9 at the instance of the Respondents against the appellant was not maintainable. From bare perusal of the record, it is clear that on 12th November, 2016, one Mr. Govindan Kutty M on behalf of the Appellant- ‘Corporate Debtor’ intimated the Respondent-‘Operational Creditor’ that the Respondent discontinued the service and abandoned the work.. Therefore, it is clear that much prior to the so-called notice under section 8 of the ‘I&B Code’, a dispute was raised by Appellant-‘Corporate Debtor’ regarding non-completion and abandoning of the work. In view of the aforesaid reasons and findings recorded above, we hold that the impugned order dated 9th June, 2017 is illegal and set aside the said order passed by Adjudicating Authority, Chennai Bench in CP/484 (IB)/CB/2017.

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• Service Tax

• 2017 (11) TMI 483
  CENVAT credit - input services - GTA Services - auction services - outdoor catering services - insurance services - rent-a-cab services - Clearing and forwarding agency service - scope of the term "up to the place of removal" - Held that: - the Tribunal has recorded a finding that from the verification of bills, it is found that transport charges are required to be borne out by the assessee. Therefore, that issue is also required to be decided in favor of assessee. Cargo Handling Services - Insurance Services - Held that: - reliance placed in the decision of Gujarat High Court in Commissioner of Central Excise and Customs vs. Ultratech Cement Ltd. [2014 (9) TMI 187 - GUJARAT HIGH COURT] and it is held that the issue is answered in favor of assessee. Rent a Cab Service - Held that: - reliance placed in the decision in the case of The Commissioner of Central Excise Service Tax Bengaluru-IV, Versus Ultra Tech Cement Ltd. [2016 (7) TMI 1080 - KARNATAKA HIGH COURT], where it was held that credit is allowed - the issue is required to be answered in favour of assessee. Club and association services - Held that: - it is clear that it is club activities for going for a sale or any other assigned work. It will be operational, manufacturing activity. Place of removal - Whether rule 4 (c) will come into operation or not? - Held that: - In view of Section 2(t), it is very clear that the meaning does not define under the Cenvat Credit Rules, 2004 then the meaning is to be derived from the provisions of the Act - Mr. Ranka contended that 3(2) prohibits it only for the purpose of defence services under 4(c) since no other place, the word ‘removal’ has been defined. In that view of the matter to come out to a conclusion for removal of the goods, the meaning which has been defined under 4(c) is required to take into account - the matter is answered in favor of assessee. Appeal dismissed - decided against Revenue.

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• 2017 (11) TMI 482
  C&F service - Department was of the view that the amounts covered by invoices issued towards transportation was nothing but a part of the consideration received by the appellant from YMI for clearing and forwarding services - Held that: - C&F service rendered for YMI include not only receipt and storage of the vehicle, but also despatch of the same to the destination. Under such terms of the provision of service, all consideration received by the appellant from YMI should form part of the consideration for payment of tax under C&F agent service. Since loading and unloading, handling and transportation of goods upto the destination was an integral part of C&F service, we are of the view that transportation charges alone cannot be bifurcated and charged separately to service tax under GTA service - also, the appellant does not satisfy the condition of being considered as Goods Transport Agency. The transportation charges received should form part of the consideration for C&F service - appeal dismissed - decided against appellant.

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• 2017 (11) TMI 481
  GTA service - Short payment of service tax - appellant had received soya seeds from various mandis through trucks, without issuance of the billities/LR (consignment notes) - Held that: - The term “goods transport agency” is defined u/s 65(2) (50b) of the Finance Act, 1994 to mean, “any person who provides service in relation to transportation of goods by road and issues consignment notes by whatever name called”. Thus, from the above definition, it transpires that in order to qualify a person to be goods transport agency, the mandatory requirement is issuance of the consignment notes, which in the present case has not been issued. Hence, transporters transporting the goods for the appellants are not conforming to the definition of “goods transport agency” for the purpose of payment of service tax by the appellant under “reverse charge mechanism” - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 480
  Business Auxiliary Services - whether the appellant is liable to pay service tax on commission and other amounts received from the service recipient M/s. Air India/ Indian Airlines under the taxable category of Business Auxiliary Service? - Held that: - the issue is no more res integra, in view of the decision of this Tribunal in the case of Patel Air Freight [], wherein it has been held that the commission received from the Airlines for providing services connected with air cargo, is liable for service tax under the category of BAS. Extended period of limitation - Held that: - contravention of the statutory provisions and non-payment of Service Tax was not intentional and there is no element of fraud, suppression etc., in order to evade payment of tax - in absence of the ingredients mentioned in the proviso to Section 73 (1) of the Finance Act, 1994, the Service Tax demand should be restricted to the normal period of one year only. For quantifying the adjudged demand within the normal period, the matter should go back to the original authority - appeal allowed by way of remand.

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• Central Excise

• 2017 (11) TMI 479
  Refund claim - unjust enrichment - Held that: - The first respondent considered the application for refund and passed an order dated 21.01.1999, ordering refund, but directing payment of amount to the Consumer Welfare Fund - Once again, the petitioner filed appeal before the Commissioner, who by order dated 21.06.2001, allowed the appeal, holding that since this was duty paid on demand, there was no question of the petitioner passing on the duty burden to any consumer, and therefore, the petitioner was entitled to refund in its entirety - petition allowed - decided in favor of petitioner.

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• 2017 (11) TMI 478
  Clandestine removal - job-work - Whether the total quantity of 1071.3863 MT of materials sent by Agarvanshi Ltd under job work challans in terms of Notification No 214/1986-CE were received by Alumeco Ltd? - Held that: - the department has failed to establish from the record that 380.256 MTs of materials have not been received by Alumeco Ltd. Burden of establishing the fact of receipt of material cannot be shifted upon Alumeco Ltd. Whether Alumeco Ltd performed the declared process of homogenization and cutting cannot be a criterion to decide whether they have received material for job work from Agarvanshi Ltd. We also find from the record that the Adjudicating Authority has clearly held that profiles to the tune of 1063.6222 M.Tons have been manufactured by Alumeco Ltd. However, we find that no evidence has been lead by the department to show that the said profiles were made out Alumeco's own raw material and not out of the materials sent for job work by Agarvanshi Ltd. We have, therefore, no hesitation in holding that the entire quantity of raw materials to the tune of 1071.3863 MTs sent by Agarvanshi Ltd has been received by Alumeco Ltd. Whether the job work profiles cleared by Alumeco Ltd were manufactured out of the materials supplied by Agarvanshi Ltd? - Held that: - There is nothing in the impugned order to show that the raw materials used for manufacture and clearance of profiles to Agarvanshi Ltd was procured clandestinely. There is nothing to show that profiles have been sold clandestinely in the open market. No such instance has been given in the impugned order. In fact, Agarvanshi Ltd has submitted that all the profiles received from Alumeco Ltd were cleared on payment of duty after due accountal in their books of accounts. Shri Bhaskar Rao during hearing has drawn our attention to the raw material inventory reconciliation statement annexed with the appeal paper book. According to him, every kilo of materials was accounted by Alumeco Ltd, monthly reports were also submitted to the Management. The Investigating Officers had taken all these documents and it is beyond imagination that if there are cash purchases of raw material and cash sale of profiles, the inventory would tally month to month. There was no possibility of huge quantity of invoices without receipt of raw material. We find the revenue in response thereto has failed to point out any discrepancy with the records produced by the Bhaskar Rao in his appeal. We, therefore, hold that the profiles sent by Alumeco Ltd to Agarvanshi Ltd were made out of the materials sent by Agarvanshi Ltd to Alumeco Ltd under the job work challans. Whether Alumeco Ltd is entitled to the benefit of Notification No. 214/86-CE? - Held that: - this Tribunal in the case of Moon Chemicals vs. CC [2007 (6) TMI 324 - CESTAT, CHENNA] has held that the omission of filing an undertaking cannot be a ground to deny the benefit of the exemption under N/N. 214/86-CE - The submission of the revenue with regard to the fact that Notification 214/1986-CE has to be strictly interpreted and procedural lapse cannot be condoned, cannot apply to the present case as in the present case - the benefit of Notification 214/1986-CE cannot be denied to Alumeco Ltd. They are, therefore, not liable to pay duty on the clearance of profiles to Agarvanshi Ltd. Whether appropriate duty has been paid on the profiles sent by Alumeco Ltd.? - Held that: - there is nothing in the impugned order to indicate that the profiles cleared by Agarvanshi Ltd are actually the profiles made by them using their own raw material. Revenue has also failed to show that the profiles received from Alumeco Ltd have been sold in the open market clandestinely. Not even a single buyer has been identified to show that Agarvanshi Ltd has sold the profiles in cash in a clandestine manner. Merely stating that indication of equivalent number of profile in the sale invoice of Agarvanshi Ltd does not ipso faco prove duty payment by Agarvanshi in respect of profiles is not enough to hold that profile sent to Agarvanshi Ltd by Alumeco Ltd has been cleared in the market without payment of duty. Efforts should have been made by the Revenue to disprove the invoices or documents produced by Bhaskar Rao to indicate that Agarvanshi sold the profiles in market without raising any invoice. The details produced before us by Bhaskar Rao are not only confined to invoices showing payment of duty by Agarvanshi Ltd but the same has also been co-related with Alumeco's profile nos. In the absence of any evidence to the contrary, we hold that job worked profiles received by Agarvanshi Ltd has been finally cleared on payment of duty. Thus, there has been no loss of Revenue in the present case - Alumeco Ltd is not liable to pay duty on 1063.6222 M.Ts of profiles cleared after job work to Agarvanshi Ltd in terms of N/N. 214/86-CE. As regards confirmation of duty demand on 46.0166 M.T's of aluminium extrusions to Agarvanshi Ltd, we find that there is no finding by Adjudicating Authority. The Adjudicating Authority has not even rejected the submissions made by Bhaskar Rao, former Managing Director of Alumeco Ltd. This demand is also, therefore, set aside. Appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 477
  Manufacture - iron and steel structure and parts thereof required for construction of factory building/additional factory in their factory premises at Pimpri - Held that: - M/s. TELCO contracted M/s. Shapoorjee Pallonjee Pvt Ltd for construction of shed and their premises as per designed by provided by the TELCO. M/s. TELCO has purchased structural steel material, angle, channel etc and provided the same to M/s. Shapoorjee Pallonjee Pvt Ltd who after cutting, drilling, bunching etc used the same for construction of shed - In the identical circumstances in the appellant's own case Tribunal has vide order reported [2006 (4) TMI 322 - CESTAT, MUMBAI] held that said activity does not amount to manufacture - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 476
  CENVAT credit - diversion of imported goods - Held that: - In view of the fact that on the date of presentation of the ERE on 29.07.2005, the same were in the custody of the Customs Department, the matter is proved beyond any shadow of doubt that the same were not removed from the Port of Import to the factory of the appellant for use in or in relation to manufacture of the final product - Since, without receipt of the goods covered under the Bill of Entry, Cenvat Credit was availed by the appellant, same in my considered opinion, is not permissible under Rule 3 ibid - appeal dismissed - decided against appellant.

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• 2017 (11) TMI 475
  CENVAT credit - captive consumption of electricity - the department was of the view that the appellant was required to pay an amount equal to 10%/ 5% of the price of exempted goods, i.e. electricity in terms of the provisions of rule 6 (3) (i) of the CCR, 2004 - Held that: - it is settled position of law that substantial benefit cannot be denied for procedural infractions - In as much as the proportionate credit of input and input services stand reversed in the ratio of electricity wheeled out to electricity consumed in manufacture, the requirement of Rule 6 of CCR, 2004 stands satisfied - there is no justification for demand of reversal of amount at the rate of 12%/5% of the value of electricity wheeled out - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 474
  Classification of goods - Ready-Mix-Concrete - N/N. 04/2006-CE dated 01.03.2006 (S.No. 74) - case of appellant is that since such goods have been used in construction work at such site, the benefit of notification will be entitled to them - Held that: - the issue of entitlement of “Ready-Mix-Concrete” manufactured at site of construction to the benefit of N/N. 4/2006 is no longer res Integra and stands decided against the assesee by the Apex Court in the case of M/s Larsen & Toubro Ltd. & Another, ECC Construction Group Versus Commissioner of Central Excise, Hyderabad [2015 (10) TMI 612 - SUPREME COURT], where it was held that “Ready-Mix-Concrete” is different from Concrete mix and hence “Ready-Mix-Concrete” will not be entitled to benefit of N/N. 4/2006. Extended period of limitation - Held that: - the party has willfully suppressed the material facts of manufacturing and clearing Ready Mix concrete without payment of appropriate duty from the knowledge of the Department and evidently mis-declared and mis-stated the facts with the intention to evade the payment of duty by irregularly availing the benefit of Notification - extended period rightly invoked. Appeal dismissed - decided against appellant.

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• 2017 (11) TMI 473
  CENVAT credit - pig iron - pig iron appeared to have been not received and used for the intended purposes of manufacture of final product - case of Revenue is that it is not technically feasible for the appellant to use such quantities of duty paid pig iron in the manufacture of cast iron ingot moulds during the impugned period - Held that: - there is no study conducted by NIT. It is only an opinion given based on the query raised by the Commissioner in his letter dated 9.7.2009 without referring to the name of the appellant. We are not able to appreciate how a specific study conducted by the very same expert by physical observation of three days of operation in the appellant’s unit can be brushed aside by preferring a general opinion given based on a query by the Department. In our considered opinion, we find that the Original Authority has not given due regard to the expert’s study report of the very same authority conducted in the premises of the appellant. The reasons for the same has also not been recorded. Regarding the other evidences with reference to manufacturing process in M/s. Bhawani Moulders Pvt Ltd. and usage of the appellants own lorry for movement of the pig iron, we note that the defence of the appellant with supporting documents have not been duly analyzed for a proper finding by the Original Authority. Denial of credit amount of more than ₹ 5 crore, on the principal raw material procured and used by the appellant, cannot be made based on the opinion and inferences - Original Authority shall decide the case afresh after providing adequate opportunity to the appellant to submit their defence along with all the supporting evidence - appeal allowed by way of remand.

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• 2017 (11) TMI 472
  CENVAT credit - input - Cement - Department was of the view that since the cement is used after the process of manufacture and is in no way connected with the manufacturing activities of the final products of the appellant, thus, it does not qualify as an input u/r 2(k) of CCR, 2004 for the manufacture of final products - Held that: - the identical issue has come up before the Tribunal in assessee’s own case for the earlier period M/s Hindustan Zinc Ltd Versus Commissioner of Central Excise And Service Tax, Jaipur [2015 (10) TMI 1558 - CESTAT NEW DELHI], where it was held that appellant has used cement for stabilization of hazardous waste 'jarosite' as toxic effluent at secured land fill which is part and parcel of their manufacturing activity. In these terms, we hold that appellant has correctly taken cenvat credit and consequently, they are not required to reverse the same - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 471
  Benefit of N/N. 67/1995-CE dated 16/03/1995 - intermediate product namely sugar syrup (prepared within the factory, used in manufacture of biscuits) - Held that: - the identical matter had come up before this Tribunal in the case of Lucky Biscuit Company vs. CCE, Patna [2017 (7) TMI 235 - CESTAT KOLKATA], where it was held that CBEC Circular dated 7.11.1994 relied upon by the lower authorities has been issued in respect of sugar syrup produced in the manufacture of aerated water and ayurvedic medicines. Hence, the same cannot be applied to the sugar syrup being produced for the biscuits without establishing that the two products are identical - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 470
  Rectification of mistake - the imposition of ₹ 2 lakhs as penalty is not warranted, which was imposed by the Order-in-Original No.24/2013 dated 22.3.2013 u/r 25 of the CER, 2002 - Held that: - reliance placed in the decision in the case of COMMISSIONER OF CENTAL EXCISE, BELAPUR, MUMBAI Versus RDC CONCRETE (INDIA) P. LTD. [2011 (8) TMI 25 - SUPREME COURT OF INDIA], where it was held that a mistake apparent from the record cannot be something which can be established by a long drawn process of reasoning - ROM application is dismissed as non-maintainable.

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• 2017 (11) TMI 469
  CENVAT credit - credit availed on the imported inputs wherein the countervailing duty is deducted/adjusted in the DEPB passbook - appellant's case is during the period in question September 2004 to November 2004, they are eligible to avail the cenvat credit while Revenue is of the view that since the DEPB scripts which were utilized by the appellant were issued as per Exim Policy 2002-07 they are not eligible to avail the cenvat credit. Held that: - identical issue decided in the case of Commissioner of Central Excise Commissionerate, Ludhiana Versus M/s Neel Kanth Rubber Mills [2010 (4) TMI 281 - PUNJAB & HARYANA HIGH COURT], where it was held that the EXIM Policy amended, vide Notification dated 28.1.2004 and Notification No.96 dated 17.9.2004, postulate that “an importer shall be entitled to avail the Cenvat credit of additional duty leviable under section 3 of the Act against the amount debited in DEPB. There is no such condition in the indicated notifications that the debits made in DEPB, the licenses issued under the Foreign Trade Policy only would be eligible for credit and the debits made in DEPB issued under the previous policy will not be eligible for credit. It means, the assessee was entitled to claim the benefit in this relevant connection - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2017 (11) TMI 524
  Rate of tax - sale of hosiery goods - whether taxable at 4% or 10%? - circular issued by the Government in G.O.Ms.No.39, Commercial Tax Department, dated 04.04.2005, says that the Government has granted waiver and reduced the rate of tax at 1% - Held that: - since the petitioner has approached this Court challenging a notice proposing to levy tax at 10%, the matter has to be necessarily remanded to the Assessing Officer - petitioner are directed to file their objections to the impugned notices, wherein the petitioner is entitled to place reliance upon the circular issued by the Government in G.O.Ms.No.39 dated 04.04.2005 - petition allowed by way of remand.

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• 2017 (11) TMI 468
  Revision of deemed assessments - sale of used car inside the state of Tamil Nadu - rectification of error - Jurisdiction of Stae to levy tax in inter-state sale - maintainability of petition - Held that: - Though, the appellant has contended that it was only an error apparent on the face of the record, upon consideration of the material on record, writ Court, vide common order made in W.P.Nos.21169 to 21171 of 2017, has observed that the income tax certification, holds good only for the purpose of income tax assessment. Writ Court has also observed that when the deemed assessment have taken place, at the instance of the petitioner, who had filed the returns, duly supported by Form-WW Certificates by a Chartered Accountant, writ Court cannot embark upon a fact-finding exercise to examine the correctness of the stand taken by the respondent therein, to ascertain as to whether there was an error apparent on the face of the record. Under the scheme of the taxing statutes, even the question of jurisdiction, can always be raised before the concerned authorities. Common order of the writ Court made in W.P.Nos.21169 to 21171 of 2017 dated 09.08.2017, directing the appellant to avail the alternate remedy provided under the statute, cannot be said to be manifestly illegal warranting interference - petition dismissed being not maintainable.

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• 2017 (11) TMI 467
  Reversal of input tax credit - Section 19(20) of the said Act - TNVAT Act - Held that: - as there is a duty cast upon the dealer to produce necessary documents and evidence to substantiate their stand. Even the circular states that the Assessing Officer should take into account the concrete evidence available. It is dealer's responsibility to make available the concrete evidence, which the petitioner failed to do. Petitioner have not received discounts after issuance of tax invoice without disturbing the tax component, this Court is inclined to grant one more opportunity to the petitioner to submit such documents - petition allowed by way of remand.

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• 2017 (11) TMI 466
  Levy of tax - inter-State purchase of Iron sheets into pipes in the State of Tamil Nadu - job-work - exemption under sub-section (a) of section 38 of the TNGST Act 1959 - Held that: - Decision in the case of The State of Tamil Nadu v. M/s.Sun Paper Mill Ltd. [2009 (2) TMI 750 - MADRAS HIGH COURT], is squarely applicable to the case on hand, where it was held that Stoppage and conversion do not make the transaction a local sale. After taking into consideration the facts involved, we are of the view that the transaction involved is only an inter-State sale - revision dismissed - decided against Revenue.

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• Indian Laws

• 2017 (11) TMI 485
  Additional documents after passing the summoning order - Held that:- In the instant case the additional documents pertains to a reply filed by the respondent No.2/complainant in the revision petition along with other documents, reply and documents filed before this Court, the copy of annual balance sheets of the accused company for the year 2010-11, 2011-12 and 2012-13 which were filed by the accused persons on 29.11.2014 and 29.12.2014, and the certificate issued by the Company Secretary in compliance of the statutory provisions of the Companies Act, which indicates that the petitioner was involved and was responsible in dealing with the accounts of the accused company. Since the documents in question are relevant documents for the purpose of determining whether the petitioner was the director who was dealing and responsible for the day to day affairs of the accused company and the documents so produced before the Lower Court would be the documents of the petitioner himself therefore, it is for the petitioner to explain its creation in accordance with the law.

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• 2017 (11) TMI 484
  Requirement of pre-deposit under Section 12 (3) in U.P. Entertainment and Betting Tax Act, 1979 - Held that:- Looking to the peculiar nature of the dispute and also the factum that petitioners appeal could not be entertained by appellate authority for want of compliance of Section 12 (3) and also considering interim order passed by this Court in the appeal, we provide, if petitioners have complied interim orders, appellate authority shall permit petitioners to deposit deficient one-third amount, if any, within one month and if certain condition is complied with by petitioners, their appeal shall be decided as expeditiously on merits by appellate authority. Subject to aforesaid directions, challenge by petitioners to the validity of Section 12 (3), as inserted by Amendment Act, 2009, in Act, 1979 fails.

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