TMI Tax Updates - e-Newsletter
February 5, 2020

Case Laws in this Newsletter:

GST Income Tax Customs Securities / SEBI Service Tax CST, VAT & Sales Tax

Articles

• EIGHT CUSTOMS NOTIFICATIONS HAVE BEEN RESCINDED
• BUDGETARY CHANGES IN CUSTOMS LAW
• BUDGETARY CHANGES IN ‘GST’ LAWS
• Clause- wise Analysis of Changes in Goods & Services Tax vide Finance Bill 2020
• WIDER REPORTING OF INFORMATION COLLECTED BY INCOME TAX DEPARTMENT will be handy informative tool for assesse and return preparers if they take proper care.

News

• DGFT portal to enable States/ UTs to develop all districts as Export Hub

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• De-criminalisation of penalties for Companies Law breaches

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• Financial support to private banks and NBFCs

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• Funding NBFCs under Credit Guarantee Scheme

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• APEDA organizes first ever awareness programme on Agri Exports in A&N Islands

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• CFC in kolkata for G&J sector by April 2020, to benefit one Lakh artisans

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Notifications

Companies Law

• G.S.R. 81 (E) - dated 3-2-2020 - Co. Law
  Nidhi (Amendment) Rules, 2020

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• G.S.R. 80 (E) - dated 3-2-2020 - Co. Law
  National Company Law Tribunal (Amendment) Rules, 2020

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• G.S.R. 79 (E) - dated 3-2-2020 - Co. Law
  Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2020

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• G.S.R. 525 (E) - dated 3-2-2020 - Co. Law
  Central Government appoints the 03rd day of February, 2020 as the date on which the provisions of sub-sections (11) and (12) of section 230 of the Companies Act, 2013 shall come into force

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Customs

• 10/2020-Customs (N.T./CAA/EXTENSION/DRI) - dated 31-1-2020 - Cus (NT)
  Appointment of Common Adjudicating Authority by DGRI

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GST

• 07/2020 - dated 3-2-2020 - CGST
  Seeks to amend Notification No. 44/2019 – Central Tax, dated the 09th October, 2019

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• 06/2020 - dated 3-2-2020 - CGST
  Seeks to extend the last date for furnishing of annual return/reconciliation statement in FORM GSTR-9/FORM GSTR-9C for the period from 01.07.2017 to 31.03.2018.

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GST - States

• 65/2020/3(120)/XXVII(8)/2019/CT-72 - dated 17-1-2020 - Uttarakhand SGST
  Quick Response code of invoice for dealers having ₹ 500 crores or more turnover

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• 6573/CSTUK/GST-Vidhi Section/2019-20/CT-73 - dated 30-12-2019 - Uttarakhand SGST
  Seeks to amend Notification No. 4387/CSTUK/GST-Vidhi Section/2019-20/CT-44 dated 16th October, 2019

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• 1117/2019/10(120)/XXVII(8)/2019/CTR - dated 30-12-2019 - Uttarakhand SGST
  Seeks to amend Notification No. 518/2017/9(120)/XXVII (8)/2017 dated 29th June, 2017

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• 1116/2019/10(120)/XXVII(8)/2019/ON-09 - dated 30-12-2019 - Uttarakhand SGST
  Uttarakhand Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019

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• 912/2019/4(120)/XXVII(8)/2019 - dated 17-12-2019 - Uttarakhand SGST
  Amendment in notification no. 796/2017/9(120)/XXVII(8)/2017 dated 11th October, 2017

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Circulars / Instructions / Orders

SEBI

• SEBI/HO/MRD2/DCAP/CIR/P/2020/17 - dated 3-2-2020
  Currency Future and Options Contracts (involving Indian Rupee) on Exchanges in International Financial Services Centres (IFSC)

Highlights / Catch Notes

Income Tax

• Rectification u/s 254 - period of limitation of 6 months - For one reason or the other, the Tribunal may not be in a position to pass the order u/s 254(2). For the inability of the Tribunal to pass such an order within the period provided, neither the assessee nor the revenue should suffer.
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• Special audit u/s 142(2A) - in the absence of pre-decisional hearing, the decision to have special audit was invalid and consequentially, all the proceedings conducted thereafter stood vitiated
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• Treating the status of the assessee Trust as "AOP" - there has been some concerted and coordinated action on the part of the beneficiaries in completing the securitization process, has not travelled beyond the stage of suspicion and surmise and therefore in our view Revenue has not discharged the onus of establishing the existence of an AOP in the case on hand.
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• Enhancement of Income - Accrual of interest income - it is crystal clear that the interest for a particular month accrues on the first day of the next month as laid out in para 3.5 of the Loan Agreement and recital in the Deed of Assignment. - Additions deleted.
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• Reopening of assessment u/s 147 - service of notice - there is no power of attorney of CA given by the assessee, therefore, in such circumstances even if any notice was served on CA u/s 148 but the same is of no consequence in the absence of any valid authority/authorization given by the assessee company to the said CA.
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• Addition u/s 68 - Failure to discharge onus - Though proviso to section 68 which has been inserted w.e.f. 1.04.2013, that is, from A.Y. 2013-14 provides that Investee Company in whose name such credit is recorded should also offer explanation about the nature and source of such credit. Here in this case though proviso may not strictly apply but facts and circumstances as discussed above does require that the investee company has to explain the source of its investment and creditworthiness.
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• Reopening of assessment u/s 147 - Entire proceedings were based on the change of view. Further, having entertained a view as early as 05.02.2014 that amount was a business income, the respondent ought to have issued the notice on or before 31.03.2014. Instead, the respondent waited till 31.03.2016 to issue notice to the petitioner. Therefore, the impugned order cannot be sustained
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• Reopening of assessment u/s 147 - The CIT(A) recorded a finding of fact that there was no failure on the part of the assessee to disclose fully and truly all the material facts necessary for the assessment. Such finding of fact could not have been disturbed by the appellate tribunal without any basis for the same.
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Customs

• The offending goods were not notified under Section 11 ibid at the material time of import. Thus, the adjudicating authority under the Customs statute was not empowered to relax the conditions provided in the Act, 1940 to offer redemption of goods on payment of fine.
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SEBI

• Providing Investment advisory services in the name of other name / fake name - Complain by Finvasia Securities Private Limited - Website of the accused company illegally using its SEBI registration to conduct business of investment advisory services - Direction issued.
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• May be there was some remiss on the part of SEBI to act as a regulator, but casting aspersion was not warranted in the facts and circumstances of the case. As such, the adverse observations made in Paragraph No. 20 are hereby diluted.
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Service Tax

• Works Contract Service - The revenue has argued that in some cases the appellant have acted as sub-contractor and not as main contractor. We find that the said argument is of no use as the demand has been raised solely under the category of ECIS
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• CENVAT Credit - Job work - Once the appellant have received the goods under Annexure-II Challans indicating rule 4(5)(a) of Cenvat Credit Rules, 2004. It is sufficient to establish that the final product of the principal manufacturer is chargeable to excise duty.
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• The expression “body of persons” may subsume within it persons who come together for a common purpose, but cannot possibly include a company or a registered cooperative society. Thus, Explanation 3(a) to Section 65B(44) does not apply to members' clubs which are incorporated.
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VAT

• Levy of Purchase tax - Cotton Kappas - The demand for levy of purchase tax in the impugned order is upheld - The Petitioner may however proceed to avail credit of such Tax under the Provisions of Section 12 (2) of the TNVAT, 2006 and utilize the same
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• The order of provisional attachment is one year from the date of the order made under sub-section (1) of Section 45 of the VAT Act, 2003 - In such circumstances, the three bank accounts as well as the residential house cannot be said to be in any sort of attachment. This fact should be brought to the notice of the three banks.
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Case Laws:

• GST

• 2020 (2) TMI 128
  Provisional release of confiscated goods alongwith conveyance - FORM-GST MOV-10 - HELD THAT:- We are not inclined to interfere at this stage. Ultimately, if a final order of confiscation is passed, the same would be appealable under Section 107 of the Act. Application disposed off.

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• Income Tax

• 2020 (2) TMI 131
  Special audit u/s 142(2A) - non-compliance to the principles of natural justice at the stage of making the proposal - whether the AO before sending a proposal for conducting special audit under Section 142(2A) of the Act, was required to provide an opportunity of hearing to the assessee and in absence of the same, can the proceedings conducted thereafter be held to be vitiated in law ? - HELD THAT:- Following the amendment, it is now a statutory requirement that the Assessing Officer has to provide reasonable opportunity of hearing to the assessee before directing the assessee to get the accounts audited under the said provision. Reverting back to Sahara India [2008 (4) TMI 4 - SUPREME COURT] Supreme Court held that special audit is more or less in the nature of an investigation and in some cases, may even turn out to be stigmatic. Therefore, even after the obligation to pay the auditor's fees by the assessee, civil consequences would still ensue on the passing of an order for special audit. We have no hesitation in holding that in the absence of pre-decisional hearing, the decision to have special audit was invalid and consequentially, all the proceedings conducted thereafter stood vitiated. - Decided in favour of assessee.

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• 2020 (2) TMI 130
  Long term capital gain - invocation of the provisions of Section 50C - levying tax on the transaction which already stood transferred in the AY 2008-09 - sale of property which is disputed and litigation of ownership is pending before the Civil Court - HELD THAT:- Appellant wishes to withdraw the present appeal with liberty to file an application under Section 254(2) of the Act before the Tribunal. Accordingly, the present appeal stands dismissed as withdrawn.

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• 2020 (2) TMI 129
  Rectification u/s 254 - period of limitation of 6 months - order recalled beyond the then prescribed period - HELD THAT:- Tribunal is vested with the power to rectify any mistake apparent from the record to amend any order passed by it under sub-section (1) of Section 254 at any time within six months from the end of the month in which the order was passed, provided the mistake is brought to its notice by the assessee or by the Assessing Officer. The use of the expression may in the aforesaid provision is clearly indicative of the legislative intent that the limitation period of six months from the end of the month in which the order was passed is not to be construed in such a manner that there can not be any extension of time beyond the said period of six months. This is so because the assessee or the AO can only bring the mistake to the notice of the Tribunal. The assessee or the AO has no control over the Tribunal. For one reason or the other, the Tribunal may not be in a position to pass the order under Section 254(2). For the inability of the Tribunal to pass such an order within the period provided, neither the assessee nor the revenue should suffer. What therefore becomes relevant is that the assessee or the Assessing Officer should bring the mistake to the notice of the Tribunal within the limitation period. On a conjoint reading of the two provisions, there appears to be no contradiction between Section 254(2) of the Act and Rule 24 of the Rules as extracted above. Both the provisions can be and should be read harmoniously to advance the objective that a decision on merit should be avoided in the absence of the aggrieved litigant. It is an established principle of natural justice that a litigant should be heard before a decision is taken. By the said order Tribunal has recalled the ex-parte order and fixed the appeal for hearing afresh, which has been filed by none else than the assessee. Ultimately, what the Tribunal has done is only to provide an opportunity of hearing to the assessee. No prejudice has been caused to the revenue by such order of the Tribunal. Having regard to the discussions made above and on due consideration, we are of the view that the challenge made by the revenue in this writ petition is misconceived. Consequently we find no merit in the writ petition.

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• 2020 (2) TMI 122
  Reopening of assessment u/s 147 - failure on the part of the assessee to disclose fully and truly all the material facts - deduction u/s 53(b) and 54(1)(i) - ITAT allowed the appeal of the Revenue - HELD THAT:- It cannot be said that there was no full and true disclosure at the end of the assessee of the material facts. In such circumstances, it could be said that there was no tangible material with the Assessing Officer for the purpose of reopening the assessment except the change of opinion that the deductions could not have been claimed and allowed under Sections 53(b) and 54(1)(i) of the Act. The conveyance deed; permission of the appropriate authority to sell the property and other documents were filed by the appellant at the time of original assessment proceedings. Nothing was suppressed. The Form 37-I as referred to above speaks for itself. It is not in dispute that the notice under Section 148 of the Act came to be issued beyond the period of four years. The CIT(A) recorded a finding of fact that there was no failure on the part of the assessee to disclose fully and truly all the material facts necessary for the assessment. Such finding of fact could not have been disturbed by the appellate tribunal without any basis for the same. - we hold that the impugned order passed by the appellate tribunal is not sustainable in law. Decided in favour of assessee.

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• 2020 (2) TMI 121
  Reopening of assessment u/s 147 - failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment - profit arising from the agreement as capital gain or business income - HELD THAT:- The amount which has been made liable to tax in the impugned order dated 29.12.2016 was subject matter of discussion with the respondent prior to passing of the impugned notice dated 31.03.2016 vide communications exchanged pursuant to letter dated 05.02.2014 seeking clarification from the petitioner. After the scrutiny assessment order dated 21.12.2011 came to be passed, the said letter dated 05.02.2014 was issued to the petitioner calling upon the petitioner to furnish explanation regarding computation of income. In the said notice dated 05.02.2014, it was stated that noncompete covenant on its own cannot amount to transfer of any right and therefore the amount received by the petitioner was to be taxed under Section 28(va) of the Income Tax Act, 1961. Having entertained a view that the amount received under the said Clause in the agreement was to be taxed under Section 28 (va) of the Income Tax Act, 1961, the respondent ought to have issued a notice within 4 years from the relevant date under Section 148 r/w. Section 147 of the Income Tax Act, 1961. After notice dated 31.03.2016 was issued after invoking the jurisdiction under Section 148 read with proviso to Section 147 of the Income Tax Act, 1961, on 08.12.2016, the petitioner was asked to explain the profit arising from the agreement and why it should be treated as business profit and not as Long Term Capital Gain as shown by the petitioner. The petitioner replied to the same on 14.12.2016. From a over all reading of the facts, it is clear that the respondent has sought to re-surrect a stale issue which had already been examined during the course of regular assessment pursuant to which assessment order was passed on 21.12.2011 but was also a subject matter of discussion pursuant to letter dated 05.02.2014 of the respondent. The last date of the assessment year 2009-10 was 31.03.2010. Therefore, the respondent was entitled to issue such a notice under Section 148 on or before 31.03.2014 i.e within 4 years for the purpose of Section 147 of the Act. Instead, the respondent failed to issue a notice in time and obtained permission from the Pr. Commissioner of Income Tax 5, Chennai on 30.03.2016 at the eleventh hour by giving an altogether different reason for issuing notice under Section 148 . The reasons given that the respondent had a belief that the income had escaped assessment for invoking Section 148 on 31.03.2016 is in complete variance with the reasons given in the impugned order dated 29.12.2016. It shows that the impugned order has been passed due to change of opinion of the respondent which was entertained on 05.02.2014. After missing an opportunity which came to the respondent within the period of 4 years seeking clarification from the petitioner, Section 148 was invoked. Since the invocation of jurisdiction under Section 148 for the purpose of proviso to Section 147 of the Income Tax Act, 1961 on 31.03.2016 was in variance with the so called recommendation/ concurrent permission of the Assistant Commissioner of Income Tax Pr. Commissioner on 29.03.2016 30.03.2016, the impugned order cannot be sustained. It also does not state that there was failure on the part of the petitioner to disclose fully and truly all material facts necessary for the purpose of the assessment for the assessment year. Entire proceedings were based on the change of view. Further, having entertained a view as early as 05.02.2014 that amount was a business income, the respondent ought to have issued the notice on or before 31.03.2014. Instead, the respondent waited till 31.03.2016 to issue notice to the petitioner. Therefore, the impugned order cannot be sustained.- Decided in favour of assessee.

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• 2020 (2) TMI 116
  Characterization of income - treatment to interest receipt - business receipt or income from other sources - HELD THAT:- As decided in own case funds obtained by the assessee for its infrastructure project has been temporarily parked to reduce interest burden thereon and accounted for in accordance with Accounting Standard 16 of ICAI The principle that the interest earned out of term deposits made out of the business funds available with the assessee before they are utilized for actual business, is incidental to business activity of the assessee and accordingly, should be considered as business income and not income from other sources. Disallowance u/s 14A - HELD THAT:- Disallowance under section 14 A is to be restricted to the exempt income earned. This view is supported by various decisions referred in the appellate order referred above. Hence this ground is also dismissed. MAT - Disallowance under section 14 A cannot be imported for adjusting the book profit under section 115 JB

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• 2020 (2) TMI 115
  Penalty u/s 271(1)(c) - Defective notice - make out the case of concealment of income or furnishing inaccurate particular of income - disallowance of credit card expenses claimed by the assessee as well as on account of failure of the assessee to explain the source of acquisition of the jewellery - HELD THAT:- Following the decisions rendered in the cases of CIT vs. Manjunatha Cotton and Ginning Factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] , CIT vs. SSA s Emerald Meadows [ 2016 (8) TMI 1145 - SC ORDER] and Pr. CIT vs. Sahara India Life Insurance Company Ltd. [ 2019 (8) TMI 409 - DELHI HIGH COURT] we are of the considered view that when the notices issued by the AO are bad in law being vague and ambiguous having not specified under which limb of section 271(1)(c) of the Act, the penalty proceedings initiated u/s 271(1)(c) are not sustainable. AO has failed to apply his mind at the time of recording satisfaction at the time of framing assessment to initiate the penalty proceedings u/s 271(1)(c) of the Act as to under which limb of section 271(1)(c) i.e. for concealing particulars of income or furnishing inaccurate particulars of such income penalty proceedings have been initiated rather written vague and ambiguous satisfaction by recording that, penalty proceedings u/s 271(1)(c) are initiated . So, very initiating penalty proceedings on the basis of vague and ambiguous satisfaction rather no satisfaction are bad in law and as such not sustainable. Not only this even at the time of initiating the penalty proceedings the Assessing Officer was not aware enough as to whether he is initiating the penalty proceedings for concealment of particulars of income or for furnishing inaccurate particulars of income rather sought to initiate the penalty against the assessee We are of the considered view that when at the time of initiating penalty proceedings Assessing Officer was not aware as to under which of the limb of Section 271(1)(c) he is intiating the penalty proceedings subsequent proceedings u/s 271(1)(c) are futile exercise making levy of penalty is not sustainable in the eye of law - Decided in favour of assessee.

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• 2020 (2) TMI 114
  Transfer pricing adjustment in respect of marketing support services - Comparable selection - HELD THAT:- Inclusion of Quadrant Communications - in our opinion when the data is not available in public domain, for comparability of business support system segment be that of said company does not arise at all. Therefore, we reverse the direction of DRP to include the same as comparable resulting into the adjustment made by the AO is therefore deleted. Therefore, we hold that the Quadrant Communications cannot be compared. Asian Business Exhibition Conference Ltd - Tribunal examined the profit and loss accounts of the said company and held the direct income of said company is from exhibition and events. Therefore, agreement between Renishaw plc and RMSPL is an internal affiliate agreement of the said two companies to co-ordinate and exchange the communication and correspondence between them relating to the clients based in India. We note that the financial statements for the period ended on 31-03-2010 placed at page No. 19 wherein the sales and services income of ₹ 45,02,00,743/- out of which the marketing support services is only ₹ 5,14,37,962/-. Therefore, bifurcation of sales and service income the income earned from marketing support services is only to meager, therefore, which cannot be compared with Asian Business Exhibition Conference Ltd. Transfer pricing adjustment in respect of management services - HELD THAT:- We reverse the order of DRP and direct the AO to accept the value of managerial services as claimed by the assessee at Nil. Thus, ground No. 3 raised by the assessee is allowed. Transfer pricing adjustment as directed by the DRP on account of payment of royalty - HELD THAT:- The new and improved technology helps the RMSPL in minimizing its risk of producing sub-standard products and maintaining the highest manufacturing quality. The assessee does not incur any expenses on the research and development and no expenditure was debited to profit and loss accounts as on 31-03-2010. It is observed from the pages Nos. 587 and 589 of the paper book that the research and development which reveals that the Renishaw it incurred huge cost for updation of the technology which supports the view of assessee paying royalty on the export sales effected to its Renishaw affiliates, a third party. Payment of royalty has been accepted by the respondent-revenue from 2006 onwards the details of which filed and the TPO did not accept contentions of the assessee for the year under consideration. The TPO accepted the arm s length price on manufacturing activity but however treated the transactions on account of royalty at Nil without applying any method. In view of the discussion made here-in above, we direct the AO to accept arm s length price adopted by the assessee in international transactions on export of sales on account of royalty. Therefore, transfer pricing adjustment made by the AO in pursuance of directions of DRP is deleted. Thus, ground No. 4 by the assessee is allowed.

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• 2020 (2) TMI 113
  Revision u/s 263 - CIT set aside the assessment order to examine the issue of source of cash deposit by the assessee and for initiating the penalty u/s 271D - HELD THAT:- The order of the A.O. may be or may not be wrong. CIT cannot direct reconsideration on this ground but only when the order is erroneous. An order of remit cannot be passed by the CIT to ask the A.O. to decide whether the order was erroneous. This is not permissible. An order is erroneous, unless the CIT held and records reason why it is erroneous. An order will become erroneous because on remit, the A.O. may decide that order is erroneous. Therefore, CIT must after recording reasons, hold that order is erroneous the jurisdictional pre-condition stipulated is that CIT must come to the conclusion that the order is erroneous and is unsustainable in law. It was further observed that the material, which the CIT can rely includes not only the records as it stands at the time when the order in question was passed by the A.O. but also record as it stands at the time of the examination by the CIT. Nothing appears/prohibits CIT from collecting and relying new/additional material which evidence to show and state that the order of the A.O. is erroneous. We find that Ld. CIT in the present case has not carried out any enquiry of his own has merely set aside the assessment to the file of the A.O. to re-examine issue of source of cash deposited by the assessee. Therefore, it is contrary to the guidelines as mandated in the Hon'ble Delhi High Court in the case of ITO Vs. DG Housing Projects Ltd. [ 2012 (3) TMI 227 - DELHI HIGH COURT] coupled with the fact that the assessee during the assessment proceedings had submitted evidences in support of sale of jewelleries and receipt of gift. Moreover, the issue of examination of source of gift was not subject matter of the scrutiny. Therefore, the decision of the Ld. CIT invoking provisions of section 263 of the Act is not justified and cannot be sustained under the facts and circumstances of the present case. We therefore, set aside the impugned order and allow the grounds raised by the assessee.

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• 2020 (2) TMI 112
  Treating the assessee as Trust OR AOP - income liable to be taxed at the maximum marginal rate in view of section 161(1 A) as the captioned income is evidently business income - Computation of income of an assessee by AO under a head of income other than what was claimed - HELD THAT:- As decided in own case [ 2017 (2) TMI 1122 - ITAT MUMBAI] AO is competent to compute the income of an assessee under a head of income, other than what was claimed by the assessee, of course, after marshalling the facts properly and furnishing proper reasons. Merely by computing the interest accrued as income of the assessee instead of non taxable as claimed,, the inter-se rights of the assessee under any other statutory framework does not get affected. There is no requirement under the Income Tax Act that the AO has to get an order of the court for income determination. The requirement u/s 281 of the Act to get a suit initiated to annul a transfer of property before effecting attachment is totally different and has no connection to this issue. The Income Tax Act is a self-contained Act and the AO is entitled to determine the head of income under which the income of a particular assessee is to be assessed. The decision of the Hon'ble Supreme Court in the case of Southern Technologies Ltd (2010 (1) TMI 5 - SUPREME COURT OF INDIA ) squarely applies to the facts of this case. The assessee's appeal on this issue is dismissed. Validity of trust - Holding the trust to be not a valid trust and consequently that section 161(l) of the Act is not applicable - whether all the transactions related to securitization are a facade worked out by the Bank and the assessee trust is not a valid trust? - The procedures and processes involved in the formation of a trust have been followed is not in doubt. RBI Guidelines itself contemplate the securitization process to be carried out by the originator; Yes Bank in this case. Therefore, no adverse inference can be drawn of the point strenuously put forth by the Revenue that the originator has been the guiding force of the securitization process. Most of the infirmities/defects pointed out in the documents by the Revenue is mainly on the point that all the securitization transactions were carried out between 16.05.2008 and 20.05.2008 whereas the loan agreement was signed on 21.05.2008. All the procedures and documents related to the securitization process was carried out on 20.05.2008. The insistence of Revenue that only the standard format agreement has to be reckoned and not the agreement dated 15.05.2008 does not appear to be tenable. Even assuming that the agreement dated 15.05.2008 was only in the nature of a letter of intent, it cannot be disputed that the lender, Yes Bank had full knowledge of the loan and had disbursed the amount. Therefore, it is very likely that Yes Bank had initiated the securitization process, pending signing of the standard format agreement. These are all standard documents that are signed up in such transactions. The reference to the agreement in the documents related to the securitization process needs to be understood in this perspective. Even assuming that minor infirmities exist in the documents, those can at best be characterized as procedural defects and this alone is not enough to disregard the documents totally. It is a settled principle that a legal document has to be viewed in its entirety and mistakes in some of the clauses cannot, by itself, negate the existence of the documents. CIT(A) was wrong in holding that the assessee trust was not a valid trust. All the necessary ingredients for the formation and existence of the trust have been fulfilled and all these documents, processes and money trail cannot be disregarded, only due to the marginal mistakes in the clauses in the documents and also the timing of signing of these documents. Accordingly we hold that the assessee Trust is a valid Trust. Ground of appeal No. 1 decided in favour of the assessee. Holding the trust was not a revocable trust/ contribution by beneficiaries was not a revocable transfer - In view of the discussion above and respectfully following the principles laid down in the above referred decision in the case of India Advantage Fund-VII [ 2015 (4) TMI 259 - ITAT BANGALORE] and Milestone Army Navy Trust 2015 (12) TMI 1647 - ITAT MUMBAI] we hold that the assessee Trust is a revocable Trust and contribution by beneficiaries is a revocable transfer. Having held thus, it follows that the income shall be taxed in the hands of the beneficiaries, i.e. the Mutual Funds who purchase the PTCs from the assessee trust. In this view of the matter, we allow this ground raised by the assessee Diversion by overriding title - amounts received by the assessee from Yes Bank under the Deed of Assignment - As held by the Hon'ble Apex Court in the case of CIT vs. Tollygunge Club Ltd. [ 1977 (3) TMI 1 - SUPREME COURT] every receipt in the hands of the assessee need not be its income and it is only when it bears the character of income at the time when it reaches the hands of the assessee that it becomes exigible to tax. In the case on hand, even at the initial stage, even before the money flows to the assessee, it was always clearly intended to be passed on to and only to the beneficiaries, i.e., the PTC holders in proportion to their interest in the receivables (underlying assets). Thus merely because the moneys flow through the assessee, it cannot be automatically inferred that it is income in the hands of the assessee. The money was always intended to be passed on to the PTC holders and therefore, it can be said that only the PTC holders had a claim on the money, if not an absolute charge. Hence, the principle of diversion of income at the source by overriding title is attracted in this case. In view of the above finding of fact rendered by us, we are of the considered opinion that by the principle of diversion of income by overriding title, the receivables are the income of the PTC holders, in this case the beneficiaries of the assessee trust and therefore, whether the status of the trust is to be characterized as Trust or AOP, the income passes on to the beneficiaries. In this view of the matter, the ground of appeal at III raised by the assessee is allowed. Treating the status of the assessee as AOP - Revenue s main contention is that all the players in the securitization process have acted together and in unison and have carried out an adventure in the nature of trade to earn income, which is in the nature of business , thus all the stake holders have to be assessed together as AOP - All the Mutual Funds beneficiaries are shown to have purchased the PTCs separately and not together by a concerted action to earn income jointly. We find that the various averments made by Revenue that there has been some concerted and coordinated action on the part of the beneficiaries in completing the securitization process, has not travelled beyond the stage of suspicion and surmise and therefore in our view Revenue has not discharged the onus of establishing the existence of an AOP in the case on hand. Even otherwise, since we have already held that the assessee trust is a valid trust, the controversy regarding treating the assessee as AOP does not arise. Consequently, this ground raised by the assessee is allowed. Invalidity of assessment and the confirmation by the CIT(A) - Since we have held the assessee to be a valid Trust, there is no question of the assessee being assessed in the capacity of an AOP , and therefore there is no requirement for adjudicating this ground No. V as the same has been rendered infructuous and is accordingly dismissed. Enhancement of Income - Loan Agreement states that interest has to be computed on number of day basis using 365 days as a year basis. The above wordings cannot be stretched to mean that the interest has to be charged on day to day basis. Also, the Deed of Assignment under which the assessee is to receive the amount clearly provides that the assessee is entitled to receive the amounts on the 1st of the next month and to be passed on to the PTC holders in the proportion to the amount of their investments on the very next day. In view of the above clear provisions laid out in para 3.5 of the Loan Agreement and Deed of Assignment, we are of the considered view and hold that it is crystal clear that the interest for a particular month accrues on the first day of the next month as laid out in para 3.5 of the Loan Agreement and recital in the Deed of Assignment. Accordingly, ground No. VI of assessee s appeal is allowed. Disallowance of expenses on accrual basis (if enhancement is upheld) - In this ground, the assessee has raised an alternate ground that if the enhancement to the income is allowed, then the corresponding outgo (expenditure) for March, 2009 be allowed. Since we have already held that the enhancement of the assessee s income on the interest income made by the learned CIT(A) is not tenable, the claim for disallowance of expenses on actual basis is now rendered infructuous, as it does not survive for consideration. The ground of appeal No. VII being infructuous is accordingly dismissed.

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• 2020 (2) TMI 109
  Reopening of assessment u/s 147 - notice issued u/s 148 of the IT Act was not served upon the assessee - HELD THAT:- There are certain undisputed facts in this case i.e. the AO has not admittedly sent any notice issued u/s 148 to the registered office address of the assessee company either through registered post or speed post and further the AO has made no efforts to serve notice through Affixture at the above registered office address. Although the assessee has categorically raised the objection about non service of notice under section 148 of the Act but still no copy of notice issued under section 148 of the Act was served upon the assessee at any subsequent point of time but before completing the order of assessment on 24.03.2015. From the record, we also notice that there is no power of attorney of Shri Anand Sharma, CA given by the assessee, therefore, in such circumstances even if any notice was served on Shri Anand Sharma under section 148 but the same is of no consequence in the absence of any valid authority/authorization given by the assessee company to the said Shri Anand Sharma, CA. The ld. CIT (A) has also pointed out that in the completed order sheet there no indication of the fact that any point of time any Power of Attorney or Authorization was filed by the assessee company in favour of Shri Anand Sharma on or before 14.03.2014 for the year under consideration. D/R submission before us that the service of notice was effected on Shri chandan but the fact remains that the said Shri Chandan was neither the employee of the assessee nor was authorized to received such notice and, therefore, in such a situation we cannot treat the said alleged service on Shri Chandan to be a valid service in view of the provisions of section 282 of the Act read with Order 5 of the Code of Civil Procedure 1908. Service of notice issued under section 148 of the Act is a mandatory as well as jurisdictional requirement and thus without valid service of notice, the reassessment order passed is liable to be quashed. Even in the order passed by Hon ble Delhi High Court in case of CIT vs. Chetan Gupta [ 2015 (9) TMI 756 - DELHI HIGH COURT] it has been held that section 292BB is prospective in nature and the main part of section 292BB was not applicable and thus participation by the assessee or some other person on his behalf not duly authorized in the reassessment proceedings, will not constitute a waiver of the requirement of effecting proper service of notice on the assessee under section 148 of the Act. - Decided in favour of assessee.

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• 2020 (2) TMI 108
  Revaluation of gold jewellery sized by ADIT team, Kolkatta - as per assessee no valuation of the seized jewellery carried out in the presence of assessee who is, Owner of the seized jewellery - HELD THAT:- We are of the view that admittedly no valuation of the seized jewellery was carried out in the presence of Shri Chandra Prakash Soni who according to the assessee is, Owner of the seized jewellery and the ld. CIT(A) has not dealt with the specific grounds raised by the assessee for seeking the revaluation of the seized jewellery which is contained in the order of the ld. CIT(A). AO had also not made any independent inquiry in the jewellery market about the gold contents of studded jewellery during the remand proceedings whereas the assessee has submitted the report of independent jewelers of the market during the assessment proceeding. The assessee had also submitted three applications for seeking the revaluation of seized jewellery. It is important to mention here that application for seeking the revaluation of seized jewellery was not only moved by the assessee but also by the alleged owner i.e. Shri Chandra Prakash Soni. Even otherwise, it is the legitimate and legal right of the assessee or Shri Chandra Prakash Soni to get the revaluation of the jewellery in their presence and no prejudice shall be caused to the Department because said seized jewellery is still in the possession of the Department from the date of seizure whereas in this case the specific points/grounds raised by the assessee are not adjudicated upon. Hence, the rights of the assessee had been prejudiced. Therefore, keeping in view the interest of natural justice for seeking revaluation of the seized jewellery, we allow this ground of the assessee and direct the Department to get the seized jewellery revalued by the Registered Valuer of the Department and also to get the valuation report while keeping in view all the points raised by the assessee as mentioned above. Hence, this issue is restored back to the file of the AO for afresh adjudication as directed above. Thus Ground No. 1 of the assessee is allowed for Statistical purposes.

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• 2020 (2) TMI 106
  Reopening of assessment u/s 147 - addition u/s 68 - Failure to discharge onus - HELD THAT:- Here it is not a case that there is any lack of inquiry by the Assessing Officer or he is merely gone by the information received from the Investigation Wing, in fact, at all the stages Assessing Officer kept on asking the assessee to provide the requisite details and to produce the directors of the investee companies and the director of the assessee company, because it is assessee s claim that it has received share capital/share premium from these companies. If a company is making such a huge investment, then assessee should have at least made endeavor to produce such parties before the AO when they were not responding to the notices and summons issued by the AO. Not only there was non-attendance from the side of the investee companies, but analysis of the financial credibility of these companies goes to show that they did not had any kind of creditworthiness to make such a huge investment in the assessee company. Mere furnishing of bank statement and documents does not fulfill the requirement of Section 68 because it is essential that business activities of the share subscribers and the financial health needs to be established. Assistance of Principal Officer of the subscribing companies is required and who was/should be present before the Assessing Officer to explain the said position. Otherwise also it is not a case that Assessing Officer has not made any inquiry or where he has issued notices u/s. 133(6) and all the subscribing company have duly responded and submitted and the documents relating to the transaction and confirming the same through evidences. In that case, onus shifts upon the Assessing Officer to prove that these are not correct. Here in this case it is just an opposite, as none of the notices and summons have been complied with, therefore, all the documents submitted by the assessee does not discharge the onus specifically in the light of the material information on record. On merits also, we are of the opinion that on the facts and circumstances of the case ingredients of Section 68 to establish the genuineness of the transaction were not met. Though assessee may have filed certain papers and documents, however, when there is a specific information that the subscribing / investee companies have been found to be providing accommodation entries, and later on none of these investee companies responded to the inquiry made by the Assessing Officer, then onus shifts upon the assessee to rebut such finding and this can only be done when either in response to notices u/s.133(6) parties have responded to the Assessing Officer by furnishing all the details or assessee has produced the parties before the Assessing Officer to be examined. Here in this case the Assessing Officer has given an adverse finding regarding the creditworthiness and there profit making capacity which needs to established. The nature of deposit received by these companies before issuance of cheque has neither been explained nor has been proved either of the companies or by the assessee. The source of the money from where investment has been made needs to be explained by the investee companies or by the assessee, especially when entire transaction has been found to doubtful. Though proviso to section 68 which has been inserted w.e.f. 1.04.2013, that is, from A.Y. 2013-14 provides that Investee Company in whose name such credit is recorded should also offer explanation about the nature and source of such credit. Here in this case though proviso may not strictly apply but facts and circumstances as discussed above does require that the investee company has to explain the source of its investment and creditworthiness. Thus, in the interest of justice we restore this issue to the file of Assessing Officer with direction to the assessee to explain the source and creditworthiness of the investee companies and if required by the Assessing Officer, assessee shall produced the principal officers or directors of these companies to explain the nature and source of investment made in the assessee company. Accordingly the issue on merits is restored back to the file of the Assessing Officer. - Decided against assessee.

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• 2020 (2) TMI 103
  Disallowance of interest - HELD THAT:- Considering the consistent decision of co-ordinate bench, wherein similar interest disallowance was directed to be deleted, therefore, we direct the Assessing Officer to delete the disallowance Disallowance of bad-debt - HELD THAT:- Statement of fact filed before the ld. CIT(A), the assessee has specifically stated in the fact related to ground no.2 that interest accrued on the advance to Arcot Finance Ltd. was offered to tax. In our view, the assessee has fulfilled the condition and discharge its onus by specifically pleading that interest accrued on the write off amount was shown in earlier years. We have also noted that the assessee has clearly stated that the write off amount relates to interest and that principle amount was already paid. It is settled law that no suit lie for recovery of interest. We have further noted that the assessee was allowed write off of claim in respect of other debtor. Therefore, in view of the aforesaid discussion, we direct the Assessing Officer to delete the disallowance Disallowance out of interest on account of interest free advances - HELD THAT:- When in earlier year also, the interest has not been allowed, the action of Assessing Officer was not justified in disallowance of interest in respect of Cifco Travel Cifco Properties. In view of the aforesaid discussion and keeping in view that substantial interest disallowance has been deleted by Assessing Officer while giving effect to the order of ld. CIT(A). Therefore, we direct the Assessing Officer to delete the entire disallowance. Depreciation by treating the lease agreement with Kores India Ltd. as a financial agreement - HELD THAT:- We have noted that the lower authority has not disputed the ownership of leased asset. In AY 1995-96, there was a limited dispute about the date of put to use. Even otherwise, the dispute for AY 1994-96 was settled under KVSS, and it would not take any right of the assessee for taking up the issue in subsequent years. We have further noted that the assessee has placed on record sufficient material showing ownership of leased asset. The Hon ble Supreme Court in ICDS Ltd. vs. CIT [ 2013 (1) TMI 344 - SUPREME COURT] held that when assessee purchased vehicles from manufacturers (asset) and leased out those asset to customers, it was entitled to claim depreciation in respect of vehicles so leased out. Considering the decision of Hon ble Supreme Court, we direct the Assessing Officer to allow the depreciation on leased asset i.e. Induction Melting Furnace leased to Kores India Ltd. Depreciation on leased asset - HELD THAT:- As perused the record including various documentary evidence furnished in respect of lease asset including lease agreement, transportation, installation, insurance policy and photographs of leased equipments. We have further noted that this issue is similar to the ground taken in Ground No. 5a to 5c, which we have allowed by following the decision of Hon ble Supreme Court in ICDS Ltd. [ 2013 (1) TMI 344 - SUPREME COURT] . Therefore, this ground of appeal is also allowed with similar observation. Taxing profit on sale of shares of Panchmahal Cement Ltd. - HELD THAT:- Assessee itself offered the profit on sale of shares of Panchmahal Cement Ltd., for taxation. Before the ld. CIT(A), the assessee raised the ground that in case of Oceanic Investment Ltd. the transaction of shares of Panchmahal Cement, which was treated as bogus transaction, is upheld in appeal, the amount offered by assessee should be taken away from the income of assessee. The ld. CIT(A) rejected the ground that the assessee never claimed this profit of this amount as offered by mistake and that the assessee cannot be said to have been aggrieved by the action of Assessing Officer. In our considered view, the action of ld. CIT(A) is reasoned one. There is no adverse treatment of the profit shown on sale of shares either by Assessing Officer or by First Appellate Authority. Therefore, we do not find any justification for interfering with the finding of ld. CIT(A). Disallowance of amounts written off - Addition as assessee has not furnished evidence that any action was taken for recovery of these amount - HELD THAT:- We have noted that the Hon ble Supreme Court in TRF Ltd. vs. CIT [ 2010 (2) TMI 211 - SUPREME COURT] held that after 01.04.1989 it is not necessary for the assessee to establish that debt, infact has become irrecoverable. It is enough, if the bad is written off as irrecoverable in the accounts of assessee. We have noted that the assessee has specifically pleaded that interest income from the advance was offered in earlier years, which has not been disputed by Assessing Officer. Therefore, we do not find any merit in the ground of appeal raised by revenue. In the result, the ground of appeal raised by revenue is dismissed. Disallowance of interest advanced to Oceanic Investment Ltd - revenue submits that assessee not furnished any agreement for waiver of interest on the advance to Oceanic Investment Ltd. - CIT(A) deleted the disallowances to the extent of reopening balance - HELD THAT:- On appeal before the ld. CIT(A), the assessee made detailed submission as explained before us and also explained that no disallowance was made in earlier year. The ld. CIT(A) accepted that no disallowance of interest was made in earlier year and in view of the decision of Hon ble Karnataka High Court in CIT vs. Sridev Enterprises [ 1991 (1) TMI 52 - KARNATAKA HIGH COURT] . The ld. CIT(A) directed the Assessing Officer to grant the relief to the assessee to the extent of disallowance of interest related to the debit balance carried over from the preceding year. No contrary fact or law is brought to our notice to take the different view. Therefore, we do not find any reason to interfere with the finding of ld. CIT(A), which we affirmed. In the result, Ground No.2 is dismissed. Estimation of higher lease rental received - bifurcate lease rent into repayment of principal amount and interest component - HELD THAT:- We have granted full relief to the assessee on Ground No. 5 6 in assessee s appeal by following the decision of Hon ble Supreme Court in ICDS Ltd. vs. CIT [ 2013 (1) TMI 344 - SUPREME COURT] . Therefore, this ground of appeal raised by revenue has become infructuous

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• 2020 (2) TMI 99
  Deduction u/s 80P(2)(a)(i) - whether activity of the appellant is that of finance business and cannot be termed as cooperative society? - assessee society is registered under the provisions of the TNCS Act - definition of the word 'members' - HELD THAT:- Special leave petition and pending applications are dismissed as withdrawn due to low tax effect, leaving question(s) of law open.

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• Customs

• 2020 (2) TMI 102
  Import of prohibited goods - Power of customs officers to relax the conditions - Valuation of imported goods - mis-declaration in terms of quantity, value and description - enhancement of value of goods - HELD THAT:- It is an admitted fact on record that the subject goods in the present case were imported, resorting to mis-declaration in terms of quantity, value and also most of the goods were not in conformity with the CDSCO Certificate. This fact is evident from the impugned order - Further, the appellant had not submitted any plausible evidence either before the original authority or the Tribunal, in disproving the correctness of the examination report furnished by the department. On the contrary, it is observed from the submissions recorded from the appellant at paragraph 6 in the impugned order that it had agreed with the fact of mis-declaration of goods and noncompliance of the CDSCO requirement as per the provisions contained in the Drugs and Cosmetic Act, 1940. Thus, we are of the considered view that rejection of the declared value by resorting to the provisions of Rule 12 ibid and re-determination of the same under Rule 9 ibid read with Section 14 ibid is in conformity with the statutory provisions. In case of non-compliance of the prohibitions/restrictions contained in Section 11 ibid, the discretion vested with the adjudicating authority under Section 125 ibid is to be exercised in the prescribed manner; In case if the restriction or regulation relating to import of goods is violated, then no discretion can be exercised by the Commissioner in offering an option for payment of redemption fine in lieu of confiscation of the goods. In the present case, regulations for import of perfumes are provided in the Drug Cosmetics Act, 1940. Since, the appellant did not import the subject goods under the cover of valid CDSCO certificate, the provisions of the said statute have been violated. Thus, the goods are liable for absolute confiscation under the provisions of Section 111(d) ibid. Further, the offending goods were not notified under Section 11 ibid at the material time of import. Thus, the adjudicating authority under the Customs statute was not empowered to relax the conditions provided in the Act, 1940 to offer redemption of goods on payment of fine. Therefore, there are no infirmity in the impugned order, so far it has ordered for absolute confiscation of goods. The impugned order is sustained as far as goods held liable for absolute confiscation - impugned order sustains, so far as it has redetermined the assessable value under Rule 9 ibid read with Section 14 ibid and absolutely confiscated the goods under Section 111(d) ibid - quantum of redemption fine and penalty reduced - appeal allowed in part.

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• Securities / SEBI

• 2020 (2) TMI 133
  Dilution of adverse observations - HELD THAT:- Certain observations made in Paragraph No. 20 of the impugned order were not called for, such as the computer generated disposal of a serious complaint speaks volume on the conduct of the respondents as well as the part of the order relating to vested interest in not deciding the matter were not at all called for. May be there was some remiss on the part of SEBI to act as a regulator, but casting aspersion was not warranted in the facts and circumstances of the case. As such, the adverse observations made in Paragraph No. 20 are hereby diluted. As prayed for, time is granted to deal with the complaints positively and objectively within four months from today in accordance with law. Appeal is disposed of.

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• 2020 (2) TMI 105
  Non-listing of an Exclusively Listed Company ( ELC for convenience) namely Schneider Electric President Systems Ltd. ( Schneider for convenience) and valuation of its shares - HELD THAT:- Listing is the first option and only in the event of failing to get listed an exit option should be adopted. Further, the guidelines relating to the exit option as provided under the October 10, 2016 Circular at 'Annexure A' lists a number of obligations cast upon the designated stock exchanges as well as on the management of the company to discharge. Nothing on record has been brought before us whether all these steps have been followed or monitored by the concerned stock exchange. What is produced on record by one of the respondents (Metropolitan Stock Exchange of India Limited) is that the appellant-company had never approached them with a request for listing. Moreover, the appellants contention that the company was eligible to be listed in BSE Limited is not even disputed by any of the respondents except by the company. Investor protection being one of the basic mandates of SEBI, we are of the considered opinion that issues relating to continued listing, exit and valuation of shares of the ELCs cannot be treated as minor individual investor complaints by SEBI. Therefore, when substantive questions on these issues are raised by minority/public shareholders SEBI shall examine those issues and pass a reasoned order. This is not done in the instant matter. We also note that SEBI has delegated lot of responsibility to the stock exchange(s) which also does not seem to have discharged any responsibility assigned to them in terms of the various Circulars issued by SEBI. What appears on record is that the company prepared a plan of exit, got a valuation done and provided an exit option. No authority seems to have discharged any of their responsibilities including monitoring. Set aside the order/communication dated September 20, 2017 passed by SEBI and in the interest of justice we direct SEBI to pass a reasoned order in the matter. The said order shall also address the issue relating to the stand of SEBI on the need for the ELCs to make a serious effort in continued listing and the procedure and monitoring of their endeavour in listing and/or the exit process when failing to get listed.

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• 2020 (2) TMI 104
  Valuation of the shares of 'Target Company arising out of open offer for acquisition of 25.02% - HELD THAT:- Having heard all the parties and upon appreciating the ratio of Sultania [ 2007 (5) TMI 334 - SUPREME COURT] and Cadbury [ 2014 (5) TMI 1189 - BOMBAY HIGH COURT] according to us, after remand of the matter to the respondent SEBI had rightly obtained the response of the appellant. It has also examined the submission of the intervener i.e. present appellant Chandra Prakash Tripathi. It also sought response from Haribhakti and thereafter made the observation vide the impugned direction. The objection of the appellant that respondent SEBI has merely cut and paste the observation of Haribhakti after the hearing was concluded, though appears to be attractive, the same will have to be repelled for the reasons that Haribhakti has not given any fresh response, but had merely relied on its earlier report. In the case of Sultania as well and in Cadbury it had been observed that the valuation being not a precise science and though all the parameters are required to be considered, the weightage to be given to each of the parameters may depend upon the facts and circumstances of each of the case, we do not find any defect in the approach of SEBI. For the similar reason the objection of Mr. Chandra Prakash Tripathi and Bhavook Tripathi will have to be rejected. The control of Indian Company cannot be transferred without completion of the open offer process or without deposit of 100% funds required for the open offer in an escrow account. This issue is also beyond the scope of the present appeal. Appellant Bhavook Tripathi would be at liberty to raise the same issue before the respondent SEBI. If such an application is filed before SEBI, the same will be disposed off expeditiously in accordance with law. The acquirer had deposited 25% of the consideration under the open offer in terms of Regulation 17 of the SAST Regulations, 2011. Since the offer price has now increased to ₹ 608.46, the acquirer is required to make good the deficiency. However considering the fact that on account of dispute being raised by the acquirer and others, the consideration towards the offer price is still being enjoyed by the acquirer. Thus in the peculiar circumstances we direct the acquirer to deposit the total consideration towards the offer price in the escrow account under Regulation 17 read with 21 of the SAST Regulation within four weeks from today after adjusting the amount already deposited so as to complete the payment of consideration to shareholders who have tendered their shares in acceptance of the open offer.

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• 2020 (2) TMI 101
  Responsibility of Legal Representatives to refund the money collected from investors by the deceased - fund mobilising activity from the public - violation of provisions of respective provisions of the SEBI Act, 1992, the Companies Act, 1956, and Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000 (DIP Guidelines) read with SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 (ICDR Regulations) and SEBI (Merchant Bankers) Regulations, 1992 ( SEBI Merchant Banker Regulations) - HELD THAT:- In exercise of the powers conferred under section 19 of the Securities and Exchange Board of India Act, 1992 read with sections 11, 11(4), 11A and 11B of the SEBI Act, hereby issue the following directions, without prejudice to the force and effect of directions issued in respect of other entities mentioned in the order - (a) Legal Representatives of Late Sh. Y.N.Saxena, in discharge liability under section 73(2) of Companies Act,1956, jointly and severally with SICCL and other directors as per the Order dated October 31, 2018, forthwith refund the money collected by the Company through the issuance of OFCDs including the application money collected from investors, pending allotment of securities, if any, with an interest of 15% per annum, from the eighth day of collection of funds, upto the extent of the assets inherited, to the investors till the date of actual payment to the extent of assets inherited by the LRs. (b) Legal Representatives of Late Shri Y.N.Saxena, in discharge liability under section 62 of Companies Act,1956 are, jointly and severally with SICCL and other directors as per the Order dated October 31, 2018, directed to deposit the money collected by the Company through the issuance of OFCDs along with the interest on the foresaid amount calculated with an interest of 15% per annum, from the eighth day of collection of funds, till the date of actual payment, in an Escrow Account opened with a nationalized Bank, upto the extent of the assets inherited by them. Legal Representatives of Late Shri Y.N. Saxena are directed to compensate from the said deposit, the investors in accordance with their subscription money along with interest. (c) The repayments and interest payments to investors shall be effected only through Bank Demand Draft or Pay Order both of which should be crossed as Non-Transferable . (d) Legal Representatives of Late Shri Y.N.Saxena are directed to provide a full inventory of all the assets and properties including details of all the bank accounts, demat accounts and holdings of mutual funds/shares/securities, if held in physical form and demat form, inherited from Late Shri Y.N.Saxena. (e) Legal Representatives of Late Shri Y.N.Saxena are jointly and severally with SICCL and other directors mentioned in the order dated October 31, 2018, directed to issue public notice, in all editions of two National Dailies (one English and one Hindi) and in one local daily with wide circulation, detailing the modalities for refund, including the details of contact persons such as names, addresses and contact details, within 15 days of this Order coming into effect. (f) After completing the aforesaid repayments, Legal Representatives of Late Shri Y.N.Saxena, shall file a report of such completion with SEBI, within a period of three months from the date of this order, certified by two independent peer reviewed Chartered Accountants who are in the panel of any public authority or public institution. For the purpose of this Order, a peer reviewed Chartered Accountant shall mean a Chartered Accountant, who has been categorized so by the Institute of Chartered Accountants of India ( ICAI ) holding such certificate. (g) In case of failure of Legal Representatives of Late Shri Y.N.Saxena to repay as per applicable law as per the aforesaid applicable directions, SEBI, on the expiry of three months period from the date of this Order may recover such amounts to the extent of assets inherited by the Legal Representatives from Sh. Y. N. Saxena in accordance with section 28A of the SEBI Act including such other provisions contained in securities laws.

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• 2020 (2) TMI 100
  Providing Investment advisory services in the name of other name / fake name - Complain by Finvasia Securities Private Limited - Website of accused company illegally using its SEBI registration to conduct business of investment advisory services - HELD THAT:- No activity of Fingravy of holding itself to be giving trading tips, stock specific recommendations, etc., to the investors and general public, and payment receipts of the complainant indicating the payment was made for receiving investment advice, the bank statement, prima facie, showing the credit for payment of fees, indicates that there is a preponderance of probability that Fingravy has acted as an investment advisor for consideration. Apart from holding itself out and acting as an investment adviser, Fingravy, through its website, had earlier falsely represented itself as having a SEBI registration number, which belonged to another intermediary, as evidenced from the archive web pages, while presently it has represented that it has applied for a license from SEBI in order to deal in various fields of securities market. Therefore, it is, prima facie, held that Fingravy is claiming/asserting to the general public of facts which it knows are not true i.e., Fingravy knows that the registration number mentioned on its website did not belong to it and that presently, it has not applied for any registration with SEBI and is also actively concealing the truth that it is not authorized to deal in the securities market in any capacity on behalf of investors, so as to lure investors to deal in securities based on their advice. M/s. Fingravy Wealth Creation Services Pvt. Ltd. and its present directors namely, Mr. Dhiraj Gupta and Mr. Sumit Kumar, are directed to: i. Cease and desist from acting as an investment advisor including the activity of acting and representing through any media (physical or digital) as an investment advisor, directly or indirectly, and cease to solicit or undertake such activity or any other activities in the securities market, directly or indirectly, in any matter whatsoever, until further orders. ii. Not to divert any funds raised from investors, kept in bank account(s) and/or in their custody until further orders. iii. Not to dispose of or alienate any assets, whether movable or immovable, or any interest or investment or charge on any of such assets held in their name, including money lying in bank accounts except with the prior permission of SEBI. iv. Immediately withdraw and remove all advertisements, representations, literatures, brochures, materials, publications, documents, websites, communications etc., in relation to their investment advisory activity or any other unregistered activity in the securities market until further orders.

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• Service Tax

• 2020 (2) TMI 132
  Non-payment/short payment of service tax - mismatch in the value of services - demand of documents for audit - HELD THAT:- The writ applicant should file a detailed reply to the impugned Reminder dated 2nd December, 2019. The grounds which are urged before this Court, shall be put forward before the concerned Authority. This Writ Application is disposed off with a direction to the respondent No.3 to furnish a copy of the letter of the even no. dated 27th June, 2019 at the earliest. Once the writ applicant is in receipt of such office letter dated 27th June, 2019, as referred to in the Reminder-I, the writ applicant shall look into the same and file an appropriate reply making good his case that the demand is not justified in law. Let this exercise be undertaken at the earliest. Application disposed off.

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• 2020 (2) TMI 119
  Interpretation of statute - members' clubs - Club or Association service - body of persons - HELD THAT:- The expression body of persons occurring in the explanation to Section 65 and occurring in Section 65(25a) and (25aa) does not refer to an incorporated company or an incorporated cooperative society. As the same expression has been used in Explanation 3 post-2012 (as opposed to the wide definition of person contained in Section 65B(37)), it may be assumed that the legislature has continued with the pre-2012 scheme of not taxing members' clubs when they are in the incorporated form. The expression body of persons may subsume within it persons who come together for a common purpose, but cannot possibly include a company or a registered cooperative society. Thus, Explanation 3(a) to Section 65B(44) does not apply to members' clubs which are incorporated. From 2005 onwards, the Finance Act of 1994 does not purport to levy service tax on members' clubs in the incorporated form. Petition allowed - decided in favor of petitioner.

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• 2020 (2) TMI 111
  CENVAT Credit - Providing Job work services - Business Auxiliary Service - benefit of N/N. 8/2005-ST - Manufactured goods liable to duty of excise - HELD THAT:- The notification does not prescribe any condition of submission of proof of payment of excise duty by the principal manufacturer. The only condition is prescribed that on the final products manufactured by the client of the job worker, the excise duty is payable. Once the appellant have received the goods under Annexure-II Challans indicating rule 4(5)(a) of Cenvat Credit Rules, 2004. It is sufficient to establish that the final product of the principal manufacturer is chargeable to excise duty. If at all the adjudicating authority is not satisfied with this evidence, it is up to him to cross verify with the concerned Central Excise Jurisdiction offices of the principal manufacturers that are paying excise duty. Therefore the finding in this regard given by the adjudicating authority is absolutely incorrect and not acceptable. Time Limitation - HELD THAT:- In the present case the appellant admittedly received the raw material under the cover of Annexure-II Challans, which also indicates the supply of raw material in terms of Rule 4(5)(a) of Cenvat Credit Rules, 2004. All the transactions were duly recorded by the principal manufacturer as well as the appellant. Therefore, the demand for the extended period is not sustainable on the ground of time bar also. Since the adjudicating authority has not carried out any verification as regard payment of excise duty by the principal manufacturer and also with respect to the fact of revenue neutrality, the matter needs to go back - appeal allowed by way of remand.

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• 2020 (2) TMI 110
  Erection, installation and commissioning services - benefit of N/N. 25/2012-ST dated 20.6.2012 - exemption under Works Contract Service - the primary defense of the appellant is that the activity under taken by them does not fall under the category of ECIS - HELD THAT:- The Hon ble High Court of Madras relied on the decision of Larger Bench of tribunal in M/S. LANCO INFRATECH LTD. AND OTHERS VERSUS VERSUS CC, CE ST, HYDERABAD [ 2015 (5) TMI 37 - CESTAT BANGALORE (LB)] where it was held that the assessee was entrusted with the task of laying a long distance pipeline to enable the Tamil Nadu Water Supply and Drainage Board to supply water. It was an activity in public interest, to take care of the civic amenities liable to be provided by the State. Therefore, the Tribunal was right in holding in favour of the assessee - thus, the activities under taken by the appellant cannot be classified under ECIS. The other arguments of revenue regarding classification of services under Works Contract Service or Commercial or Industrial Construction Service become irrelevant as no demand under the said head has been raised by revenue. No charge for classification of the serviced provided by the appellant under the head of Works Contract or Commercial or Industrial Construction Service has been made against the appellant. In these circumstances we are unable to uphold the demand raised against the appellant in respect of activities relating to laying of pipelines for Surat Municipal Corporation, Gujarat Water Supply and Sewerage Board ( GWSSB), Canal Division, NHAI And M/s. Surat Urban Development Authority. The revenue has also argued that in some cases the appellant have acted as sub-contractor and not as main contractor. We find that the said argument is of no use as the demand has been raised solely under the category of ECIS The specific clarity of charge has been made to levy Service Tax under the category of Business Auxiliary Service and no prejudice is caused to the appellant on account of this the demand under the head of Business Auxiliary Service is confirmed. The interest and penalty in respect of Business Auxiliary Service is also upheld. The demand of duty, interest and penalties in respect of demand under ECIS category is set aside. Appeal allowed in part.

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• 2020 (2) TMI 107
  CENVAT credit - input services - Tour Operator Service used for pick-up and drop of employees of the Appellant to and fro Andheri and Kurla to their office premises - HELD THAT:- The issue about the interpretation of amended Rule 2(l) qua rent-a-cab service came up for consideration before the Principal Bench of the Tribunal in the matter of M/S. MARVEL VINYLS LTD. VERSUS C.C.E. INDORE [ 2016 (11) TMI 1126 - CESTAT NEW DELHI] where the Tribunal held that the Appellant therein are entitled to the service tax paid on the said service. The appellants are entitled for the Cenvat credit for rent a cab/ Tour Operator Service even for the period 2011-12 also - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2020 (2) TMI 127
  Levy of CST - HSD - issuance of Form C - HELD THAT:- In the case on hand, when the authority itself has granted amendment by adding HSD in the CST as well as in the VAT registration of the writ applicant No.1 for the purpose of using the same in the mining electricity generation activity of the writ applicant No.1-Company, the respondent No.2 could not have declined to grant permission to issue C Form under the provisions of the CST Act. Issue decided in the case of GAURAV CONTRACTS COMPANY VERSUS STATE OF GUJARAT [ 2019 (6) TMI 802 - GUJARAT HIGH COURT] where it was held that there being no power vested in the authority to review its order under section 7 of the CST Act or to keep such order in abeyance, the stand of the second respondent in the impugned letters dated 27.2.2019 informing the petitioners that their on-line applications had been approved through oversight and that High Speed Diesel would be included in CST commodity after obtaining guidance of the higher authority cannot be countenanced even for a moment. Application allowed.

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• 2020 (2) TMI 126
  Principles of natural justice - provisional attachment of bank accounts - Gujarat VAT Act - HELD THAT:- It appears that on 01.09.2016, the business premises of the writ-applicant was searched. The authority concerned proceeded to pass an order of provisional attachment of the three bank accounts - It appears that simultaneously the order of provisional attachment of the residential premises of the writ-applicant also came to be passed. Thus, the writ-applicant is aggrieved by such action on the part of the respondent authorities. The life of the order of provisional attachment is one year from the date of the order made under sub-section (1) of Section 45 of the VAT Act, 2003 - In such circumstances, the three bank accounts as well as the residential house cannot be said to be in any sort of attachment. This fact should be brought to the notice of the three banks. Application disposed off.

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• 2020 (2) TMI 125
  Levy of sales tax - inter-state sales or not - Stock Transfer/Branch Transfer made by the Assessee during the relevant period - HELD THAT:- The issue decided in the case of M/S. ADVANCE PAINTS (P) LTD. VERSUS THE COMMERCIAL TAX OFFICER, THE SALES TAX APPELLATE TRIBUNAL (ADDL. BENCH) [ 2019 (12) TMI 540 - MADRAS HIGH COURT] where it was held that merely on the assumption or presumption of any such kind of pre-existing contract, the Assessing Authority could not have imposed the tax under the provision of Central Sales Tax Act. Since necessary documents and evidence were already furnished before the Assessing Authority himself, furnishing of the same again before the Appellate Authorities was not at all called for. And therefore, on this premise, the Appellate Authority should not have confirmed the finding of the Assessing Authority that the Assessee is liable to pay tax under the Central Sales Tax Act. There are no merit in the petition - petition dismissed.

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• 2020 (2) TMI 124
  Levy of sales tax - sale of medicines - defence given by the revisionist was that he is not selling medicines from the said dispensary, but the said medicines, surgical equipments bandages etc. are used for inhouse patients and therefore there being no element of Sale of the medicines - HELD THAT:- On a categorical finding of fact have been recorded, from whereby it is found that they have held that the medicines from the medical store were actually being sold by the revisionist for which no sales tax has been deposited to the department, thereby there is clear evasion of tax for which the revisionist has rightly been put to tax and penalty thereon. Revision dismissed.

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• 2020 (2) TMI 123
  Recovery of the dues of the company from the Director - outstanding dues of Sales Tax - HELD THAT:- Under Section 18 of the Central Sales Tax Act burden is placed upon a director to show that non-recovery cannot be attributed to him for his gross negligence, misfeasance or breach of duty. The notices state that the dues of the company have remained unpaid. The Petitioner is not in a position to controvert this assertion as according to the Petitioner, he was not aware of the position after he ceased to be the director. Therefore, we have to go by the case of the Respondents that the dues of the private limited company regarding sales tax have remained unpaid. Whether the non-recovery can be attributed to the Petitioner will be determined in the enquiry which the Respondents have stated will complete within three months. The Petitioner has invoked writ jurisdiction of this Court. There is no warrant to lift the embargo placed by the letter dated 15.11.2018 regarding non-issuance of No Objection Certificate - Petition disposed off.

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• 2020 (2) TMI 120
  Levy of Sales Tax - inter-state transfer or not - Branch/Stock/Consignment transfer of goods - CST Act - HELD THAT:- The learned Tribunal erred in reversing the cogent findings of the First Appellate Authority merely because the agent sold the goods in question immediately after the receipt of the goods from the Principal. This court explained the position and pre-requisites of an inter state sales in the case of M/S. ADVANCE PAINTS (P) LTD. VERSUS THE COMMERCIAL TAX OFFICER, THE SALES TAX APPELLATE TRIBUNAL (ADDL. BENCH) [ 2019 (12) TMI 540 - MADRAS HIGH COURT] where it was held that there being no power vested in the authority to review its order under section 7 of the CST Act or to keep such order in abeyance, the stand of the second respondent in the impugned letters dated 27.2.2019 informing the petitioners that their on-line applications had been approved through oversight and that High Speed Diesel would be included in CST commodity after obtaining guidance of the higher authority cannot be countenanced even for a moment. The present writ petitions filed by the Assessee deserve to be allowed and the impugned order passed by the Sales Tax Appellate Tribunal deserves to be set aside - decided in favor of petitioner.

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• 2020 (2) TMI 118
  Levy of Purchase tax - Cotton Kappas - the contention of the Petitioner is that Purchase Tax under Section 12 (1) (a) will apply only on purchase from the registered dealer who fails to pay tax and not on purchase of goods from unregistered dealers - HELD THAT:- The arguments of the learned counsel for the Petitioner that no purchase tax is payable under Section 12 (1) of the Act appears to be incorrect in as much as the tax is payable on such purchase. Section 12 (1) is an exception to Section 3 of the Act. Further, a special dispensation has been provided to avail credit of such Tax as Input Tax Credit and to utilise the same under Section 12 (2) of the Act. Thus, the Petitioner was liable to pay tax. The demand for levy of purchase tax in the impugned order is upheld - The Petitioner may however proceed to avail credit of such Tax under the Provisions of Section 12 (2) of the TNVAT, 2006 and utilize the same under the Provisions of the Tamil Nadu Goods Service Tax Act, 2017 if there are no other adjustment of Tax to be made under the TNVAT act, 2006 - petition disposed off.

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• 2020 (2) TMI 117
  Levy of works contract tax - requirement of obtaining Exemption Certificate from the sales tax authority as applicable in case works contract tax - HELD THAT:- The activity undertaken by the Petitioner attracts central sales tax under the provisions of the Central Sales Tax Act, 1956. The definition of the expression sale in 2 (g) includes works contract . Such sale attract central sales tax under the provisions of the aforesaid Act alone. There is no mechanism provided for any exemption or for payment of such tax liability on reverse charge basis by the recipient under the scheme of the aforesaid Act. Since the work order was placed on the Petitioner s Head Office by the Fourth Respondent, it attracts tax under the provisions of the said Act only. Therefore, tax if any is payable by the Petitioner s Head Office at Hyderabad alone. The work order is outside the purview of the Tamil Nadu VAT Act, 2006 unless supply of goods were made from Tamil Nadu. Therefore, the Third Respondent was justified in refusing to grant certificate to the Petitioner. Fourth Respondent was also not obliged to deduct tax under the provisions of the Tamil Nadu Value Added Tax Act, 2006 and remit the same - petition disposed off.

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