TMI Tax Updates - e-Newsletter
June 20, 2019

Case Laws in this Newsletter:

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

Articles

1. Suggestions for finalizing personal accounts and ITR

   By: DEVKUMAR KOTHARI

2. Applicable TDS Rate & Tax Provisions for F.Y.2019-20 (A.Y.2020-21)

   By: Sandeep Rawat

News

1. Government to give all support and assistance to Small Traders and Retailers – Piyush Goyal

2. EAC-PM releases a detailed analysis on robustness of India’s GDP estimation methodology

Notifications

Customs

1. 24/2019 - dated 18-6-2019 - ADD

Seeks to levy anti dumping duty on jute sacking cloth under tariff heading 5310 originating in or exported from Bangladesh to prevent the circumvention of levy of anti dumping duty levied on jute sacking bags vide notification No. 1/2017-Customs(ADD) dated 5th January, 2017.

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/CDMRD/DNPMP/CIR/P/2019/71 - dated 18-6-2019

Design of Commodity Indices and Product Design for Futures on Commodity Indices

GST

2. Trade Notice No. 03/2019 .GST - dated 12-6-2019

Annual return filing compliance under GST

Customs

3. 17/2019 - dated 19-6-2019

Applicability of Additional Customs duty on goods re-imported under Customs Notification No. 94/96-Customs dated 16.12.1996 exported earlier for exhibition purpose/ consignment basis

Highlights / Catch Notes

Income Tax

• Tax Case: No Separate Disallowance for Expenses After Net Profit Rate Applied u/s 40(a)(ia.

  Case-Laws - AT : Disallowance u/s 40(a)(ia) - Rejection of books of accounts - Once x net profit is estimated by applying net profit rate after rejecting the book results, no disallowance could be made separately for other expenses, as the profit element already stands considered during the application of net profit rate
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• Section 68 Addition on Share Capital Overturned: Assessee Proves Identity and Creditworthiness of Subscribers with Documentation.

  Case-Laws - AT : Addition u/s 68 on account of share capital - assessee has filed sufficient documents e.g. PAN, bank statements, etc. to establish the identities and creditworthiness - AO has not been able to rebut or find any discrepancy about the documents submitted - If the notices issued by the A.O. to the share subscribers were not complied with or came back unserved then this could not be held against the assessee - addition not sustainable
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• Assessing Officer Fails to Prove Collusion; SEZ Unit's Deduction u/s 10AA Allowed as Declared Profit Stands.

  Case-Laws - AT : Deduction u/s 10AA - AO estimated profit of SEZ unit at 3% as against 6.95% of the turnover - the onus is on AO to prove the presence of any arrangement between the parties which have resulted in extraordinary profits to the eligible unit and he could have, at least, brought variation in price of supply of commodity from different units on record to establish collusion/arrangement - onus remains undischarged - deduction allowable
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• Income Tax Act: Commission Disallowed u/s 37(1); AO to Reassess Legality and Commercial Justification.

  Case-Laws - AT : Disallowance of commission u/s 37(1) - AO is directed to ascertain whether the payment of commission is prohibited by law or not - The assessee is directed to prove the nexus and the commercial expediency for such claim and explain whether such agents are registered with the respective government department/PSUs for which they have been paid commission with evidence - remanded to AO
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• High Court upholds penalty u/s 271(1)(c); SLP pending. Supreme Court's special leave only for exceptional cases.

  Case-Laws - AT : Penalty u/s 271(1)(c) - against quantum disallowance upheld by HC, SLP is pending - Special leave to appeal is granted by Hon’ble Apex Court in rarest of rare case, hence when issue as to the disallowance of deduction claimed by the assessee u/s 80P is pending adjudication, the assessee cannot be fastened with the liability for concealment of income or furnishing of inaccurate particulars of income u/s 27(1)(c)
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• Claim Deductions u/ss 54, 54F, and 54EC for Single Property Sale; No Restriction on Dual Claims.

  Case-Laws - AT : Deduction u/s 54, 54F & 54EC - capital gains arising out of a single transaction of sale of immovable property - there is no such bar that both the deductions, u/s 54 and 54F cannot be given on the sale of same property, only condition is investment in new property, a fact on which there is no dispute - similarly deduction u/s 54EC is also eligible on the balance investment in bond
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• Trust's 12AA(3) Cancellation Quashed: No Cross-Examination Allowed, Activities Deemed Genuine and Aligned with Objectives.

  Case-Laws - AT : Cancellation of Registration u/s 12AA(3) - cancelled based on statement of trusties of other trust without providing opportunity of cross examination - neither an allegation nor finding that any of the conditions that the activities of the trust should not be genuine or the activities of the trust are not being carried out in accordance with the objects of the trust exist - order quashed
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• Tax Deduction u/s 80IB: Court Rules Separate Phases of Housing Project Can Be Treated Individually.

  Case-Laws - HC : Deduction u/s. 80IB - composite development of housing project - assessee have obtained different commencement certificates and started on different periods of time and also separate by space and statutory approvals and even in designs, maintenance of separate books of account - the Revenue is not right in treating both the projects as one and integrated even if they were put up on the same parcel of land
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Customs

• Court Overturns Sodium Nitrite Non-Injurious Price Order Due to Natural Justice Violation in Sunset Review.

  Case-Laws - AT : Anti-Dumping duty - Sodium Nitrite - Determination of non-injurious price (NIP) in the sunset review - in the present case, neither was any information supplied to the Appellant in the disclosure statement nor do the final findings give any reason - violation of principles of natural justice not for denial to grant an opportunity to the party to show cause but also not giving reasons for arriving at conclusions - order of determination of NIP set aside
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• Court Challenges Adjudicating Authority's Use of Rule 7 for Valuation Without Applying Customs Act Section 14 First.

  Case-Laws - AT : Valuation of imported goods - non & mis- declaration - adjudicating authority has not recorded the reason as to why he has resorted to the valuation under Rule 7 without the exhausting provisions of Section 14 of the Customs Act and also without exhausting the application of Rule 3, 4 and 5 of Custom Valuation Rule - the order passed is in contrary to the Customs Valuation Rules is not sustainable
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Corporate Law

• Tribunal Reviews Mismanagement Allegations Over Premises Rental, Upholds Interim Order Despite Higher Income Potential as Banquet Hall.

  Case-Laws - AT : Oppression and Mismanagement - allegation of renting the premises on rent which would fetch higher rent if used as banquet hall - tribunal granted permission to let out - after going to report of Chartered Accountant, it was find that monthly rent of the same premises is much more than annual amount generated by the Company by giving it rent for banquet purpose - no stay of interim order
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IBC

• Tribunal Rules Section 7 Application Maintainable; Written Statement Didn't Reset Debt Limitation Period; MOU Shows Recurring Liability.

  Case-Laws - AT : Maintainability of application u/s 7 of I&B Code - time limitation - as per tribunal acceptance of money in WS in Suit did not amount to acknowledgement of the debt and reset the limitation - in term of MOU clearly shows liability getting created every 6 months for the Respondent to pay the Appellant “till the entire booking amount has not been repaid” - since the entire booking amount has not been paid - not bar by limitation
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• Resolution Applicant Eligible: No Evidence Found u/s 29A of Insolvency and Bankruptcy Code. Resolution Process to Proceed.

  Case-Laws - AT : CIR Process - RP or the COC or that the Adjudicating Authority found the ‘Resolution Applicant’ to be ineligible u/s 29A and in absence of any such evidence, it was not open to the Adjudicating Authority to observe that the Appellant has a nexus with the ‘Corporate Debtor’
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• Corporate Debtor Can Intervene in CIRP Admission; Other Parties May Appeal Adverse Orders Under IBC Sections 7 or 9.

  Case-Laws - AT : Initiation of CIRP - Except the Corporate Debtor, no other party has right to intervene at the stage of admission of a petition u/s 7 or 9. However, an aggrieved party may prefer an appeal if the order of admission affects the person - if the RP wants to take possession of the Hotel the Appellant may bring facts regarding its claim to the notice who will decide it in the light of explanation to Section 18(f) of the I&B Code
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Service Tax

• DTH operator commissions for SIM cards exempt from extra service tax if main operator pays on M.R.P.

  Case-Laws - AT : Levy of service tax - commission received from the DTH operators - On the SIM cards, recharge coupons etc., where the service tax has been paid on the M.R.P by the main operator/DTH operator the commission agent/distributor need not pay service tax on the commission received by him because commission also forms part of the M.R.P. on which service tax has already been discharged
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• Extended Limitation Period Inapplicable for Revenue-Neutral Transactions in Service Tax Cases, Credit Eligibility Maintained.

  Case-Laws - AT : Extended period of limitation - even if the Service Tax is paid as demanded by the Department on warranty claim same would be eligible to avail credit of the same - The extended period of limitation cannot be invoked alleging intention to evade payment of Service Tax when the entire transaction amounts to a revenue neutral situation
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• Refund Claims Denied Without Proper Hearing; CENVAT Credit Case Remanded for Reconsideration Due to Procedural Errors.

  Case-Laws - AT : Refund of CENVAT Credit - while deciding the refund claims, the lower authority has dis-allowed certain credits without issuing a proper SCN and without hearing the contentions of the appellants and some credits were not allowed on procedural issues - denial of Cenvat credit without giving an opportunity of being heard is not permissible - remanded
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• Power Plant Operations Focused on Electricity Generation, Not Management; Operation Fee Exempt from Service Tax.

  Case-Laws - AT : Classification of services - service tax on operation fee - the activity carried out in the power plant is not solely management of power plant, but operation of the same to generate electricity on behalf of the owner for supplying the same to TNEB and the management, if any, of the power plant is done by the appellants and is only incidental - no service tax
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Central Excise

• Director's Statement Alone Insufficient for Proving Clandestine Sponge Iron Clearance; Department Must Provide Clear Evidence.

  Case-Laws - AT : Clandestine manufacture and removal - sponge iron - clandestine clearance cannot be established merely on the basis of statement of the Director who has alleged coercion and undue influence exhorted on him for extracting confession - burden lies on the Department to prove the charge against the assessee with proper and cogent evidence - demand is not sustainable
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• CENVAT Credit Distribution by ISD Before April 2012 Not Liable for Repayment, No Extended Limitation Period Applicable.

  Case-Laws - AT : CEVAT credit - input service distribution - distributed in proportion to the overheads of units - Rule 7 of CCR 2004 during the relevant period (prior to 01.04.12) did not prescribe any formula for distribution of cenvat credit by the ISD and therefore no liability can be fastened on them - demand not sustainable - no extended period of limitation as there is no suppression of facts
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• Goods Classified as Automobile Parts Under CEA Sections 4/4A Due to Packaging and Market Perception.

  Case-Laws - AT : Classification of goods - section 4 or 4A of CEA? - goods are to be understood/ evaluated/classified as per the perception and use of the customers - Appellants themselves advertised and packed the products describing the same to be used in automobiles - hence Auto Cables, Battery Cables and Ignition cables which have a specific use only in the ‘Automobile Industry’ will be treated as automobile parts
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• Department's Investigation on Alleged Clandestine Activities Lacked Depth; No Duty or Penalty Imposed Due to Insufficient Evidence.

  Case-Laws - AT : Clandestine removal - the Department has not conducted any investigation other than recovery of these loose sheets and weighment record, from any of the buyers, suppliers, transporters etc.and also not done any forward and backward linkages of clandestine activities alleged to have been committed by the appellant - no duty and penalty on such allegation
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• Exemption Denied for Kerosene Used in Pipelines and Mixed with Diesel or Motor Spirit, Duty Rightfully Demanded.

  Case-Laws - AT : Benefit of N/N. 4/2006-CE - exempt Kerosene(SKO) for ultimate sale through PDS - - using SKO as interface for pumping it into pipelines, the product leaving the factory is intermixed MS(Motor Spirit) or HSD(Diesel), answering to the description of MS or HSD. The same is received by HPCL as MS or HSD and the same is sold as MS or HSD - the Revenue is right in demanding the duty
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Case Laws:

• GST

• 2019 (6) TMI 887
  Unable to file Trans-III under the CGST Act within period of limitation - existence of technical glitches - HELD THAT:- The impugned decision dated 22nd December, 2018 of the GST Council while holding that there are no technical glitches, does not indicate any application of mind in the context of the facts of the Petitioner. Mr. Jetly, learned Counsel appearing for the Respondent seeks time to take instructions and file affidavit, if necessary. Stand over to 12th July, 2019.

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• 2019 (6) TMI 885
  Permission for withdrawal of their individual Petition - omitting to take accrued credit in its TRAN-1 under the CGST Act - HELD THAT:- Petitions are disposed of as withdrawn with the above liberty.

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• Income Tax

• 2019 (6) TMI 888
  Revision u/s 263 - AO had failed to carry out proper inquiries with respect to assessee s on-money receipts - Tribunal, by the impugned judgment, reversed the order of Commissioner also confirmed by HC - HELD THAT:- SLP dismissed.

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• 2019 (6) TMI 881
  Nature of expenditure - Animal Breeding Co-operative Development Expenses - revenue or capital expenditure - HELD THAT:- As decided in THE PANCHMAHAL DIST. CO-OPERATIVE MILK (SIC) UNION LTD [ 2018 (12) TMI 1657 - GUJARAT HIGH COURT] expenditure incurred by the assessee was general in nature and aimed at improving the practices for better fertility amongst milch animals by addressing the issues which caused infertility. The expenditure, therefore, was for the purpose of its business and would not be co-relatable to any tangible returns which can be expected out of such expenditure. Thus, this court has held that such expenditure incurred by the assessee is not capital in nature. - Decided in favour of assessee.

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• 2019 (6) TMI 880
  Deduction u/s. 80IB - denial of claim as composite development of housing project under six different blocks - as per revenue as both the projects were put up on the same parcel of land, the same would be one composite project and therefore the assessee would not be entitled to claim the deduction under Section 80IB(10) - HELD THAT:- The legislature has nowhere provided the definition of a housing project either in the section or anywhere in the IT Act. Is it open for the Revenue to consider all the housing activities undertaken by the assessee as one project or different projects ? The Concise Oxford Dictionary (9th Edition) defines a project as a plan, a scheme, a planned undertaking, a usually long-term task undertaken by a student to be submitted for assessment. We are not impressed by the submission canvassed on behalf of the Revenue that as both the projects were put up on the same parcel of land, the same would be one composite project and therefore the assessee would not be entitled to claim the deduction u/s 80IB(10). This aspect has been well dealt with by both i.e. the CIT (Appeals) as well as the Appellate Tribunal. It is not open to the Revenue to conclude the next project as part of the earlier housing project just to deny the statutory relief which the assessee is entitled to in respect of the eligible housing project. In that way the legislative intention to give a relief to the assessee who are undertaking the low housing projects will get defeated. The assessee has segregated the same and in no way mixed in these projects either in the design or in the structural manipulation or in the provision of amenities and the assessee has not claimed any relief in respect of project which admittedly does not admit the test laid down under Section 80- IB(10) of the Act. In our view, combining these two projects into one will lead to a result which manifestly will be unjust and absurd and defeat the very provisions of the deduction sections. Unless there is a clear intention of the legislature the Revenue cannot be permitted to do so. After all the assessee have obtained different commencement certificates and started on different periods of time. They are separate by time, space and statutory approvals and even in designs, maintenance of separate books of account. The Revenue, in our view, is not right in treating both the projects as one and integrated without the facts warranting for such conclusion. - Decided in favour of assessee.

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• 2019 (6) TMI 867
  Penalty u/s 271(1)(c) - reduction of eligible claim of bad and doubtful debts u/s 36(1)(viia) - HELD THAT:- The action of the assessee being bonafide and the issue being debatable, the larger claim of deduction per se cannot be bracketed in the league of concealment of particulars of income or furnishing inaccurate particulars of income . It is not in dispute that all the relevant facts were on record to enable the AO to formulate the opinion on the issue. See VALIMKBHAI H. PATEL. [ 2005 (7) TMI 35 - GUJARAT HIGH COURT]. This being so, there was no justification to invoke the provision of Section 271(1)(c) in the facts of the case. CIT(A) in our view has rightly concluded the issue in favour of the assessee and against the Revenue notwithstanding the fact that he has not assigned any reason and passed a perfunctory order while doing so. We must say at this juncture that the CIT(A) ought to have given some elementary reasons however brief it may be while determining the issue to enable higher appellate forum to understand the perspective. The ultimate conclusion of the CIT(A) however cannot be faulted in the instant case. - Decided against revenue.

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• 2019 (6) TMI 858
  Deduction u/s 10AA - AO estimated profit of SEZ unit at 3% of the turnover by replacing 6.95% which is actual profit of the unit eligible for deduction u/s 10AA - alleged more than ordinary profits - HELD THAT:- The onus is on AO to prove the presence of any arrangement between the parties which have resulted in extraordinary profits to the eligible unit. The AO could have, at least, brought variation in price of supply of commodity from different units on record to establish collusion/arrangement. The onus remains undischarged except for presence of suspicious circumstances. As perused the decision rendered in the case of Deepak Verma [ 2015 (12) TMI 976 - PUNJAB AND HARYANA HIGH COURT] relied upon on behalf of the Revenue. The aforesaid case relates to re-allocation of expenses between eligible unit and non eligible unit. We agree with the case made out on behalf of the AO for re-allocation of expenses to the extent of Rs. 17.70 Lakhs and therefore do not delineate with the same any further. In the light of factual position and applicable law as interpreted by the judicial fiats, we are of the view that Section 80IA(8) and 80IA(10) has not applicability to the facts of the Case. Therefore, the adjustments made by the AO scaling down the deduction u/s 10AA is without sanction of law. However, once the regular profits as declared for eligible unit is restored, the re-allocation of expenses relatable to eligible unit would be necessary. This aspect was confronted to the assessee in the course of hearing. It was fairly conceded on behalf of the assessee that it does not seek to press the aforesaid re-allocation on restoring the claim of deduction of the assessee. AO directed to restore the claim of deduction u/s 10AA subject to adjustment towards re-allocation of expenses to the extent of Rs. 17.70 Lakhs. Accordingly, the issue concerning deduction of expenses under s.10AA of the Act is allowed in part. Allocation of loss towards option premium to Cochin unit on the basis of turnover - case of the assessee that the aforesaid loss of option premium has resulted from buying and selling of US currency in respect of hedging transaction done for diamond trade attributable to non SEZ unit - failure to prove nexus between hedging of US currency with the diamond business to non SEZ unit - HELD THAT:- AO as well as the CIT(A) has given the concurrent findings that assessee has failed to demonstrate the nexus between loss and non SEZ unit. The assessee, on the other hand has attempted to contend before us that the option premium was solely and exclusively incurred for diamond business relatable to non SEZ unit and therefore loss has been rightly claimed against the profits of non SEZ unit. The details of supply of diamond from non-eligible unit and its relation to option premium would be necessary to appreciate the facts in perspective. In the absence of complete documentation in this regard, it will be difficult for us to give a categorical findings of fact on the issue. We therefore consider it expedient to restore the matter back to the file of AO for de novo examination.

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• 2019 (6) TMI 857
  Registration of trust u/s. 12AA(3) denied - survey operation u/s. 133A - registration of the trust has been cancelled only on the basis of statement of one Anand Agarwal who was Managing Trustee of Govind Ram Goel Charitable Trust [GRGCT] as recorded u/s 133A - no opportunity of cross examination - HELD THAT:- As decided in RADHARAMAN BEHARI VERSUS COMMISSIONER OF INCOME TAX, (EXEMPTIONS) , KOLKATA [ 2017 (10) TMI 527 - ITAT KOLKATA] no evidence brought on record to show any connection between those brokers and the assessee. In the absence of such corroborative evidence, it is not possible to come to any conclusion that the assessee indulged in money laundering and that the donation given by the assessee to GRGCT was a bogus donation. Name of the assessee is not appearing in the statement furnished by the managing trustee of GRGCT. Therefore in such situation the opportunity of cross examination was very much required in the presence of assessee and managing trustee of GRGCT as well as the middle man namely Shri Gaurav Agarwal. CIT(Ex) in the instant case erred in not giving the opportunity of cross examination Also the grounds for cancellation for registration u/s 12AA(3) is that the activities of the trust should not be genuine or the activities of the trust are not being carried out in accordance with the objects of the trust. There is neither an allegation in the impugned order nor finding that any of the aforesaid conditions exist in the case of the assessee. The cancellation of registration granted to the assessee u/s 12A of the Act cannot be sustained and the impugned order is hereby quashed - Decided in favour of assessee.

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• 2019 (6) TMI 853
  Addition u/s 68 on account of share capital - assessee failed to prove the creditworthiness of the share holders who have invested in the company - notices under section 131 to the subscribers unserved - HELD THAT:- Assessee has filed sufficient documents e.g. Permanent Account Numbers, bank statements, etc. to establish the identities and creditworthiness of the two share applicants. The copies of the bank statements of the share subscribers wherein the transactions are reflected as well as the fact that they are assessed to income tax establish the creditworthiness of the parties concerned while the genuineness of the transaction is borne out by the fact that the transactions were through banking channels. On going through the assessment order, it is seen that the assessing officer has not been able to rebut or find any discrepancy about the documents submitted by the assessee. If that be the case, the Assessing Officer cannot make addition u/s 68 in the hands of the appellant company. In case AO had any doubt about the shareholders, nothing stopped him from taking appropriate action or proceeding against these shareholders. It is a case where the assessee has been able to meet the requirements to justify its case. If the notices issued by the A.O. to the share subscribers were not complied with or came back unserved, this could not be held against the assessee, which had discharged the initial onus which lay upon it by proving the identity of the share applicants and the genuineness of the transactions - Decided in favour of assessee Addition u/s. 14A u/s 8D - no dissatisfaction has been recorded by assessee - HELD THAT:- Before invoking the provisions of Section 14A, AO has first of all to record his or her dissatisfaction with the claim of the assessee as regards the expenditure shown (or not shown at all) by the assessee in relation to income which does not form part of the total income. However, in the assessment order, no such dissatisfaction has been recorded and the AO has mechanically applied Section 14A/Rule 8D to make the disallowance, which is not sustainable in the eyes of law. Therefore, addition in dispute is not warranted - CIT(A) has rightly directed the AO to delete the addition - Decided in favour of assessee.

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• 2019 (6) TMI 851
  Penalty u/s 271(1)(c) - furnishing inaccurate particulars of income by claiming deductions u/s 80P which was disallowed by the AO - claim accepted and allowed by CIT (A) but subsequently the Tribunal and Hon ble High Court reversed the same - SLP is pending before SC - HELD THAT:- In the instant case, the assessee is on more sound footing because the order passed by the Hon ble High Court [ 2017 (5) TMI 538 - DELHI HIGH COURT] qua disallowance of deduction u/s 80P(2)(a)(i) has been challenged by way of filing SLP in which leave has been granted vide order [ 2017 (9) TMI 1820 - SC ORDER] under Article 136 of the Constitution of India As decided in GANESH LAND ORGANISATION VERSUS COMMISSIONER OF INCOME-TAX [ 1985 (6) TMI 2 - GUJARAT HIGH COURT] special leave is granted by the Hon ble Apex Court in exceptional cases where substantial and grave injustice is shown to have been done.The grant of special leave depends on whether there is substantial question of law of public interest. So, we are of the considered view that when substantial question of law is involved in this case qua disallowance of deduction claimed by the assessee u/s 80P , penalty cannot be levied. When substantial question of law has been arisen in this particular case to be decided by the Hon ble Apex Court in the SLP filed by the assessee challenging the order passed by the Hon ble Delhi High Court, provisions contained u/s 271(1)(c) by applying Totgar s Cooperative Sale Society s case [ 2010 (2) TMI 3 - SUPREME COURT] are not attracted because issue in question is still debatable. Special leave to appeal is granted by Hon ble Apex Court in rarest of rare case as in the ordinary circumstances assessee has no right to appeal. So, we are of the considered view that when issue as to the disallowance of deduction claimed by the assessee u/s 80P is pending adjudication before the Hon ble Apex Court, the assessee cannot be fastened with the liability for concealment of income or furnishing of inaccurate particulars of income u/s 27(1)(c) Thus when issue as to deduction claimed by the assessee u/s 80P has not yet attained finality being pending adjudication before the Hon ble Apex Court, penalty levied u/s 271(1)(c) on account of disallowance of deduction claimed by the assessee u/s 80P is not sustainable in the eyes of law - decided in favour of assessee.

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• 2019 (6) TMI 850
  Addition u/s 68 - unexplained cash credit as the assessee failed to prove the identity and creditworthiness of the lender - HELD THAT:- It is well settled that in order to discharge the onus u/s 68, the assessee must prove the following:- (i) the identity of the creditor, (ii) the capacity of the creditor to advance money; and (iii) the genuineness of the transaction. After the assessee has adduced evidence to establish prima facie the aforesaid, the onus shifts to the department. In the instant case, though the onus shifted to the department, the AO has failed to make necessary enquiry to reject the contentions of the assessee. - Decided against revenue.

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• 2019 (6) TMI 845
  Capital gain u/s 45 - sum received on retirement from the partnership firm - transfer u/s 2(47) or not? - eligibility of exemption u/s 10 (2A) - HELD THAT:- Various decisions relied on the assessee CHALASANI VENKATESWARA RAO. VIJAYAWADA VERSUS INCOME TAX OFFICER. WARD-IV. VIJAYAWADA [ 2012 (9) TMI 12 - ANDHRA PRADESH HIGH COURT] , PRASHANT S. JOSHI AND DATTARAM SHRIDHAR BHOSALE VERSUS INCOME-TAX OFFICER [ 2010 (2) TMI 271 - BOMBAY HIGH COURT] support his case to the proposition that amount paid to partner on retirement does not involve an element of transfer within the meaning of section 2 (47). Thus we hold that the assessee is not liable to any capital gain tax on account of the sum received by it as a partner on retirement from the partnership firm. The order of the CIT(A) on this issue is accordingly set aside and the Assessing Officer is directed to delete the addition - Decided in favour of assessee. Disallowance of loss incurred on purchase and sale of shares - CIT(A) s power to enhance assessment by bringing a new sources of income - assessments were framed u/s 144 and since the discrepancies were found in the income computation during the appeal hearing order passed by the Ld. CIT u/s. 264 - HELD THAT:- Since the assessments were framed u/s 144 and since the discrepancies were found in the income computation during the appeal hearing, therefore, the CIT(A) in our opinion, has absolute power to issue enhancement notice to the assessee in the instant case. Therefore, the various decisions relied by assessee that CIT(A) has no power to enhance assessment by bringing a new sources of income is not tenable under the facts and circumstances of the case. Thus enhancement notice issued by CIT(A) in the instant case is justified. However, we find from the order of the CIT(A) that while enhancing the income he has given a finding that no corroborative evidences were filed by the assessee to substantiate that the loss is genuine. Considering all we deem it proper to restore this issue to the file of the AO with a direction to give an opportunity to the assessee to substantiate with evidence to his satisfaction regarding the genuineness of the loss on account of purchase and sale of shares of group companies. order passed by the Ld. CIT u/s. 264 - Assessee s ground allowed for statistical purpose.

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• 2019 (6) TMI 841
  Correct Head of income - lease rental income - Profits gains of Business or profession u/s 28 OR Income from House Property u/s 22 - HELD THAT:- It is also not in dispute that the assessee company was primarily engaged in the business of real estate. It is also not in dispute that the assessee has been leasing the property in question and collecting rent since 2010-11 which has been assessed under the head income from house property . It is also not in dispute that the assessee is owner of the property in question and has leased out the property on the basis of rental agreement. It is also not in dispute that in the subsequent year, the rental income of the assessee has been accepted as income from the house property. Following the decision rendered by the coordinate Bench of the Tribunal and also by following the rule of consistency laid down in the case of Radhasoami Satsang vs. CIT [ 1991 (11) TMI 2 - SUPREME COURT] and Raj Dadarkar Associates [ 2017 (5) TMI 586 - SUPREME COURT] , we are of the considered view that rental income earned by the assessee from leasing out the property owned by it is chargeable to Income-tax under the head income from house property under section 22 - Decided in favour of the assessee.

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• 2019 (6) TMI 839
  Bogus purchases - hawala Purchases - HELD THAT:- The assessee nowhere adduced any kind evidence on record to justify the claim. Nothing was adduced before the AO and the assessee did not maintain the stock details i.e. the details of opening stock, purchases, consumption, sales and closing stock nor has he produced any evidence of the goods being received by him except entry of self-made inward register. Considering all CIT(A) confirmed the addition to the whole bogus purchase of Rs. 6,04,182/-. The facts are not distinguishable at this stage also. Even before us, the assessee nowhere appeared and produced any evidence of any kind in support of his claim. We confirm the finding of the CIT(A) on this issue and decide this issue in favour of the revenue and against the assessee.

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• 2019 (6) TMI 838
  Addition of net profit - Rejection of books of accounts - HELD THAT:- The assessee s books of accounts were rightly rejected by A.O observing discrepancies as mentioned herein above in preceding paras and Ld. CIT(A)has rightly sustained the addition of 1% net profit rate thereby confirming the addition. Disallowance u/s 40(a)(ia) - non deduction of tax at source at testing charges paid by the assessee - HELD THAT:- Once after rejecting the book results, net profit is estimated by applying net profit rate, no disallowance could be made separately for other expenses, as the profit element already stands considered during the application of net profit rate. We accordingly delete the disallowance made u/s 40(a)(ia) - Decided in favour of assessee.

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• 2019 (6) TMI 837
  Addition u/s. 68 - assessee as beneficiaries of accommodation entries in the form of share application money from the companies of Sh. Praveen K. Jain - HELD THAT:- All the three companies have allegedly received share application money of Rs. 25.00 lakh from three bogus companies operated by Shri Praveen K. Jain. There is uniform pattern in all the three companies in which shares of face value of Rs. 10/- were allegedly issued at a premium of Rs. 40/- per share. Search and survey action on Shri Praveen K. Jain amply proved, rather it was admitted by himself, that he was engaged in providing accommodation entries through a web of his bogus companies, which were engaged in providing accommodation entries to various assesses. The assessees in appeal are also beneficiaries of such accommodation entries in the form of share application money from the companies of Sh. Praveen K. Jain. The authorities below have discussed the issue threadbare before making and confirming the additions. In the absence of assessees furnishing any further evidence to substantiate the claim of genuineness of the transactions - Decided against assessee.

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• 2019 (6) TMI 836
  Disallowance of commission u/s 40A(2)(b) - AO had allowed the commission expenditure @ Rs. 1.67% on sales which was fairly more than the commission paid to unrelated parties - CIT(A) confirmed the order of the AO - HELD THAT:- we do not find much merit in the submission of the Ld.AO. The assessee had paid commission to unrelated parties @ of 0.625% on turnover and at the same instance the assessee has paid commission to its related parties at the rate of 2.03% on the turnover which is not justifiable. Further the Ld.AO was fair enough to allow deduction towards commission expenditure to the extent of 1.67% on turnover and the same is upheld by the Ld.CIT(A). In this situation we do not find it necessary to interfere with the orders of the Ld.Revenue Authorities on the issue as those Orders are quite judicious. Disallowance u/s.40(a)(ia) towards non-deduction of TDS on interest payments - CIT(A) confirmed the order of the AO as the assessee failed to furnish any other argument in support of his case - HELD THAT:- Before us also the Ld.AR could not furnish any explanation to support his case. Therefore we do not find any other option but to confirm the orders of the Ld.Revenue Authorities on this issue. Accordingly this ground raised by the assessee is devoid of merits Unexplained expenditure u/s 69C - Before the Ld.CIT(A) also the assessee could not explain the source of repayment of loan by way of cash - HELD THAT:- On perusing the case of the assessee, we find that the assessee had declared total income of Rs. 43,95,030/-. Considering the total income declared by the assessee we are of the considered view that the addition made by the AO amounting to Rs. 1,60,124/- is not justifiable because the assessee has sufficient source of income to explain the repayment of loan of Rs. 1,60,124/-. Therefore we hereby direct the Ld.AO to delete the addition made in the hands of the assessee for Rs. 1,60,124/- invoking the provisions of Section 69C - Appeal of the assessee is partly allowed.

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• 2019 (6) TMI 835
  Deduction u/s 54, 54F 54EC - capital gains arising out of a single transaction of sale of immovable property - no such claim was made in the return of income - HELD THAT:- CIT(A) was of the opinion that this premise is not wholly correct as the assessee of its own accord had made a claim u/s 54E in the return of income. It did not foresee that the AO would not be convinced with the claim. The claim u/s 54F therefore originated only during the course of assessment proceedings during which the AO treated only part of the land as appurtenant to the building. AO made the disallowance following in the case of Asha George [ 2013 (1) TMI 545 - KERALA HIGH COURT] . Even if such decision is accepted, the assessee cannot be denied of the deduction claimed u/s 54F to which it is entitled, as long as there is no dispute on the investment in new asset. CIT(A) observed that the proposition of the AO that both the deductions, u/s 54 and 54F cannot be given on the same property is bereft of merit as there is no such bar imposed statutorily in the Act. Both the sections only speak about investment in new property, a fact on which there is no dispute. There is no double claim on the same investment as the assessee has claimed the balance/spill over investment in the new flat as deduction u/s 54F. CIT(A) has rightly directed the AO to allow deduction u/s 54EC and also to compute eligible deduction u/s 54F on the balance investment in the flat/apartment and allow the same while computing long-term capital gains arising on the sale of impugned land capital asset. So far as the fresh claim u/s 54F is concerned, the objection of the AO that the assessee has not made such claim of deduction in the original return of income. Since various Courts have held that the appellate authorities have conferred upon the power to adjudicate and allow the legitimate claim, which was not claimed in the original return of income, the claim u/s 54F admitted by the ld. CIT(A) cannot be held as illegal. - Decided against revenue.

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• 2019 (6) TMI 828
  Addition on account of difference in cash flow - HELD THAT:- Assessee has supplied the computer generated statements and it was historically derived from the figures from profit and loss account and balance sheet which are very much available on record in the form of audit report u/s. 44AB. Since the audited books of accounts were not rejected and the book results stand accepted and also the alleged discrepancy stand duly reconciled. Therefore, we have no hesitation in deleting the addition. Thus this ground of appeal is allowed. Disallowance on account of cash shortage - HELD THAT:- Assessee stated some of the amount was lying at the residence of the Director. As per impugned order Statement of Harkantbhai P. Vyas Accountant of the assessee company was recorded which revealed closing cash balance and as per prevailing system it is kept at the residence of the same director of the company. Revenue ought to have deputed to verify the statement of the Accountant but department did not deputed anyone so in these circumstances of the department cannot be accepted. Thus, this ground of appeal is allowed. Disallowance on account of stock difference - HELD THAT:- Appellant was not provided a copy of alleged survey inventory nor a statement of recorded by the survey party and assessee retracted his submission by way of letter and same statement was also referred in the order of ld. CIT(A) and following stock transaction was recorded by the survey party. We just fail to understand how in a short span of time survey party made the statement after calculating and weighing the item and addition has been made solely on the accounting and weighing of the stock. Thus addition made by the department cannot sustain. Assessee has not given any explanation with regard to discrepancies in the total stock. Therefore, we delete the addition - Decided in favour of assessee.

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• 2019 (6) TMI 827
  Addition on account of advance to subsidiary written off - Allowable business loss - claim disallowed by the AO on the ground that the same is capital in nature and is not allowable u/s 37(1) - HELD THAT:- Assessee has a subsidiary in the name of PINC Mauritius to whom the assessee provided unsecured interest free advances for incurring necessary expenses such as incorporation expenses, statutory payments and annual maintenance expenses. The business of the subsidiary company becomes unviable due to incurring of huge losses over the years and therefore company was wound up resulting into loss advanced by the assessee as interest free unsecured advances to the said subsidiary. In our opinion the said advance was given by the assessee out of commercial consideration and expediency and therefore we are in agreement with the conclusion drawn by the Ld. CIT(A) that the said loss has to be allowed as business loss. As decided in CIT vs. Amalgamation (P) Ltd. [ 1997 (4) TMI 8 - SUPREME COURT] loss incurred by the assessee on account of honouring the guarantee given to the bank on behalf of subsidiary is a business loss and therefore allowable. Also see VASSANJI SONS CO. P. LTD. VERSUS COMMISSIONER OF INCOME-TAX, BOMBAY CITY I [ 1977 (11) TMI 7 - BOMBAY HIGH COURT] wherein held that debt which became irrecoverable which was advanced by the assessee to the subsidiary company has to be treated as directly stringing from its business activity and therefore loss of debt amount was deductable as business loss. - Decided in favour of assessee.

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• 2019 (6) TMI 826
  Reopening of assessment - unexplained investment - HELD THAT:- The entire source of investment in the impugned property is out of the money received from her husband and the assessee has failed to explain the source of investment. The assessee has failed to prove the nexus between the cash available to her husband and the cash used by her for the investment in the impugned property. It was further noted that the husband of the assessee has deposited an amount of Rs. 10 lacs in cash in his bank account. In any case any money available with her husband has nothing to do with the investment made by the assessee. Since no evidence was furnished for the other half investment in the said property, the entire investment to Rs. 30,29,000/- was rightly considered to be unexplained in the hand of the assessee. Therefore, CIT(A) has rightly confirmed the addition in dispute, which does not need any interference on my part, therefore, uphold the action of the CIT(A) on the issue in dispute and reject the grounds raised by the Assessee.

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• Customs

• 2019 (6) TMI 886
  Permission to withdraw appeal - Provisional release of the seized goods - Section 110A of the Customs Act, 1962 - availability of the benefit of the duty-free export authorization - N/N. 98 of 2009 dated 11th September, 2009 - import of In shell walnuts for export of biscuits - HELD THAT:- In view of the statement made on behalf of the Respondents, Mr. Shah, learned Counsel appearing for the Petitioner, on instructions, seeks to withdraw this Petition, with liberty to urge all other contentions before an appropriate forum. Liberty as prayed for, granted. Petition disposed of as withdrawn.

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• 2019 (6) TMI 883
  Attachments of Bank Accounts - Respondent were of the view that there was an evasion of customs duty and the bills of entry were kept pending - SCN not issued in respect of two consignments or in respect of any other issue relating to the Petitioner under the Customs Act - HELD THAT:- Issue decided in the case of RAJURAM PUROHIT VERSUS THE UNION OF INDIA THROUGH DIRECTORATE OF REVENUE INTELLIGENCE AND ANOTHER [ 2018 (3) TMI 1444 - BOMBAY HIGH COURT] where it was held that We do not see how we can freeze a bank account or not allow the petitioner to deal with it until the show cause notice is issued and final orders are passed thereon. In the present case we are only quashing the impugned notice dated 1st August, 2018 as modified by letter dated 8th August, 2018. We are not disturbing any other seizure made under Section 110 of the Customs Act, 1962 to protect the interest of the Revenue. Petition disposed off.

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• 2019 (6) TMI 868
  Valuation of imported goods - non declaration mis- declaration of goods - Tungsten Carbide Tips, Tungsten Carbide Rod and Drill Bits - rejection of declared transaction value - Rule 7 of the Customs Valuation Rules - HELD THAT:- There has been mis-declared items in addition to declared goods imported by the appellant. These goods were Tungsten Carbide Tips, Tungsten Carbide Rod and Drill Bits the reason for which has been given by the appellant that these were by mistake committed on the part of the shipper and for which they are not liable to be punished. In fact, a letter has been also submitted by the appellant stating that this was mistake on the part of the shipper and not by the appellant. However, the appellant has accepted the value and paid the duty granted on the behest of shipper regarding the other item for which the Customs valuation was arrived under Rule 7 of the Customs Valuation Rules by conducting the market survey. It is on record that the market survey was conducted on 1.9.2016 in presence of importer as well as the CHA. It is also evident from the record of the case that the lower adjudicating authority has not recorded the reason as to why he has resorted to the valuation under Rule 7 without the exhausting provisions of Section 14 of the Customs Act and also without exhausting the application of Rule 3, 4 and 5 of Custom Valuation Rule. Therefore, the order passed by the lower adjudicating authority is in contrary to the Customs Valuation Rules, which was also not corrected in the impugned order by the Commissioner (Appeals). It is evident from the Corrigendum that the demand has been confirmed by Commissioner of Customs (Export, ICD) under Rule 5 of the Customs Valuation Rules read with Section 14 of the Customs Act. We find that if this Corrigendum has been issued by the Commissioner of Customs then the Commissioner (Appeals) is not competent officer to hear the appeal. Further, Rule 5 of the Valuation Rules, which deals with the transaction value on the basis of similar goods, has not been properly spelt out in the said Corrigendum. The adjudicating authority has not produced the value of the similar goods to the imported consignment which is subject matter of this proceeding. Appeal allowed - decided in favor of appellant.

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• 2019 (6) TMI 864
  Anti-Dumping duty - enhancement of Non Injurious Price determined in the sunset review - imports of Sodium Nitrite originating in or exported from China PR - Section 9A of Customs Act - HELD THAT:- The anti-dumping duty on sodium nitrite was first imposed by a notification dated 19 December 2000 issued by the Ministry of Finance. The imposition of duty was reviewed from time to time and the second sunset review final finding recommending continued imposition of the anti-dumping duty on sodium nitrite was notified by a notification dated 17 August 2011. Before the expiry of period of five years for which the anti-dumping duty was continued, the Appellant moved an application for initiating another sunset review for extension of the anti-dumping duty on imports of sodium nitrite. Finding that there was sufficient evidence submitted by the Appellant to justify initiation of a sunset review investigation, the designated authority issued a public notice. The period of investigation for the purpose of review and investigation was April 2015 to March 2016. A perusal of the section 9A of the Act indicates if any article is exported from any country to India at less than its normal value, then upon the importation of such article into India the Central Government can impose an anti-dumping duty not exceeding the margin of dumping. Margin of dumping has been defined to mean the difference between the export price and the normal value. The export price means the price of the article exported from the exporting country. Normal value has been defined to mean the comparable prices for the like article when destined for consumption in the exporting country. Determination of non-injurious price (NIP) - Principles of natural justice - HELD THAT:- The principles of natural justice not only require the designated authority to grant an opportunity to the party to show cause but the order passed by the designated authority should also give reasons for arriving at conclusions and any violation of these two facets can vitiate the order. In the present case, neither was any information supplied to the Appellant in the disclosure statement nor do the final findings give any reason. The final findings of the designated authority notified in the Government Gazette dated 19 July 2017 in regard to the determination of NIP, therefore, cannot be sustained and are set aside - matter is remitted to the designated authority to re-determine the NIP, keeping in mind the observations made in this Order. Appeal allowed by way of remand.

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• Corporate Laws

• 2019 (6) TMI 848
  Oppression and Mismanagement - allegation of renting the premises on rent which would fetch higher rent if used as banquet hall - Interlocutory Application for vacating the interim order - HELD THAT:- The Respondents have filed the Report of the Chartered Accountant (G L Harlalka Co.) dated 8th May, 2019 from which we find that income on account of hire charges for Banquet Hall (Special Event) in ground and Mezzanine Floor in respect of premises No. RAA-36, V.I.P. Road, Kolkata- 700059 is Rs. 4,75,000/- for the period from 1st April, 2017 to 31st March, 2018 - we find that for the said premises, the Company received a Term Sheet-cum-LOI from Perky General Retail (a business associate firm of Reliance Corporate IT Part Limited ) on 8th January, 2019 who wished to take the basement, ground and mezzanine floor of the aforesaid premises i.e. same area on a monthly rent of Rs. 5,75,425/. As we find that monthly rent of the same premises is much more than annual amount generated by the Company by giving it rent for banquet purpose, we are not inclined to interfere with the interim order passed by the Tribunal. Appeal dismissed - decided against appellant.

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• Securities / SEBI

• 2019 (6) TMI 843
  Annulment of certain trades executed in NIFTY Options Contract - order of the Independent Oversight Committee of the National Stock Exchange of India Limited challenged - HELD THAT:- All trading members who were doing the trades at the relevant time, therefore, were expected to be aware of the possibility of prices moving within these ranges. We are also told that along with the best five prices shown on the trading screen the quantities on offer are also available against those best prices. So traders wanting to trade in large quantities had to be conscious of the possibility of matching their trades at prices substantially varying from the five best prices shown on the screen. It is not for this Tribunal to get into the issue of how prices can vary suddenly from Rs. 100 to Rs. 10 or even Rs. 1 within a fraction of a second except restating that the automated trading system of a highly liquid options market is so complex and fast changes in prices based on various factors are expected in milliseconds or even microseconds. In a liquid market, the market moves even within the time when an order is placed and a huge order itself will move prices are known to all experienced traders like the appellant. It is an admitted fact that the traders of the appellant did not use the limit order route. It is also an admitted fact that a large quantity of NIFTY Options were placed for sell in the last few minutes of the closure of the trading day which was also the expiry day of the contract. It is also a generally known fact that on the expiry day of a contract prices tend to fall and, therefore, executing large orders will invariably gravitate towards lower prices. Here the price range was set by the Black-Scholes methodology and in the range of Rs. 0.05 to Rs. 570.10 for NIFTY put Options Rs. 6000 and between Rs. 0.05 to Rs. 687.45 for NIFTY call Options Rs. 5700. When a methodology was known to the market participants and as per the methodology price range was set we cannot interfere with such a system in arbitrarily deciding what should be far away prices from the intrinsic value. There were 101 counter parties who all were aware of the applicable price ranges and placed orders at different prices. Bye-law 5 of the Exchange NSE is essentially about upholding the sanctity of trade since it is on inviolability of trade . Accordingly, we agree with the contention that annulment of trade should be resorted to only in extreme cases as specified under this bye-law. We do not agree with the contention of the appellant that it was a material mistake from the side of the trader / dealers of the appellant and, therefore, we do not agree that the impugned trades are liable to be annulled. Exchange was not very clear when they issued advisories to the trading members that they should not be placing orders at far away prices. It is also noted that such advisories were issued even on August 14, 2013. Similarly, the Circulars dated November 16, 2010 and April 24, 2012, the issue of price range and flexing of price range from Rs. 1 to Rs. 3 etc. is ambiguous. Regulatory instruction, particularly relating to trading and settlement matters should be clear and unambiguous and also clearly stating the consequences of violations. Such violations, if any, also need to be dealt with appropriately. However, we refrain from issuing any directions to NSE in this regard at this time since by the Circular dated April 11, 2014 greater clarity and certainty have been brought in clearly stating the range within which only trading is possible in the options segment as well.

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• 2019 (6) TMI 823
  Non disclosure of material information to the shareholders of NDTV about loan agreements entered into by promoters as well as directors of NDTV with Vishvapradhan Commercial Private Limited ( VCPL ) - RRPR Holdings Pvt. Ltd. ( RRPR/Noticee no. 1 ) which is one of the promoters of NDTV, Dr. Prannoy Roy ( Noticee no. 2 ) and Ms. Radhika Roy ( Noticee no. 3 ), who are promoters as well as directors of NDTV, have violated the provisions of SEBI Act - irregular and fraudulent conduct of the promoters - HELD THAT:- As Noticees have contended that Clause 49(I)(D) of the Equity Listing Agreement came into effect only from the year 2014, therefore, in the year 2009, there was no requirement of making disclosures in respect of the loan agreements made earlier to that year. It is noted that Clause 49 of the Listing Agreement was first introduced through Circular dated February 21, 2000 and was thereafter amended from time to time. Therefore, the contention of the Noticees that Clause 49(I)(D) of Equity Listing Agreement came into effect only from the year 2014, is factually not correct. Noticees entered into three loan agreements, one with ICICI and two with VCPL. These loan agreements contained material and price sensitive information, in as much as action/decision on many important matters pertaining to NDTV were made subject to prior written consent of the ostensible lender and without the knowledge of the minority shareholders of NDTV. Under the VCPL agreements and the two call option agreements executed as supplementary to the said loan agreements, beneficial interest in 30% shares of NDTV was effectively vested in VCPL. All these information were profoundly material and price sensitive information which would have influenced the investment decision of the investors in the shares of NDTV, had they been made aware of these information at that time. Terms of the loan agreements were devised to affect the interest of shareholders of NDTV. Although various clauses in the loan agreements deceitfully created a binding obligations on NDTV, Noticees have consented to such clauses behind the back of the shareholders of NDTV to further their own private interests. Having held the dominant position and being majority shareholders of NDTV, Noticees have manifestly assured VCPL to ensure swift compliance of such clauses of the loan agreements pertaining to NDTV, thereby taking all other shareholders for granted and also compromising the interest of shareholders of NDTV. In order to conceal the said information from the investors so that the investors continue to trade in the shares of NDTV blissfully ignorant of the fact that the promoters of the company have already vested their voting rights to the extent of 30% in favour of a third external party, Noticee no. 2 and 3 have chosen to act in flagrant breach of Code of Conduct of NDTV. If the said information regarding loan agreements had been disclosed by the Noticee no. 2 and 3 to the Board of Directors of NDTV, then the company was bound to intimate the same to the stock exchanges which in turn, would have disseminated such information on their websites for information of general public. The loan agreements were unmistakably structured as a scheme to defraud the investors by camouflaging the information about the adversarial terms and conditions impinging upon the interest of NDTV s shareholders, thereby inducing innocent investors to continue to trade in the shares of NDTV oblivious to such adversarial developments in the shareholding of NDTV. Noticees i.e. the promoters and Directors of NDTV have been found to have indulged in fraudulent acts wherein they have bartered away the interests of NDTV by making them subject to prior written consent of ICICI/VCPL without disclosing the same to the company (NDTV). Noticee no. 2 and 3 have also opted to violate the Code of Conduct of NDTV which they were supposed to abide by, being the Chairman and Managing Director of the company. Noticee No. 2 and Noticee No. 3 have consciously taken such a position under the loan agreements which was directly inconsistent with their role as Chairman and Managing Director. Noticee No.1, Noticee No.2 and Noticee No.3 are grossly in violation of the provisions of Section 12A (a), (b), (c) of SEBI Act read with Regulations 3 (a), (b), (c), (d) and 4 (1) PFUTP Regulations. Further, as pointed out above, Noticee no. 2 and 3 are also in violation of Clause 49 (1)(D) of Equity Listing Agreement read with Section 21 of SCRA. Directions: (i) Noticee no. 1, 2 and 3 are restrained from accessing the securities market and are further prohibited from buying, selling or otherwise dealing in securities, directly or indirectly, or being associated with the securities market in any manner, whatsoever, for a period of two (2) years. It is also clarified that during the said period of restraint/prohibition, the existing holding, including units of mutual funds, of the Noticees shall remain frozen; (ii) Noticee no. 2 and 3 are restrained from holding or occupying position as Director or any Key Managerial personnel in NDTV for a period of two (2) years; and (iii) Noticee no. 2 and 3 are restrained from holding or occupying position as Director or any Key Managerial personnel in any other listed company for a period of one (1) year.

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• Insolvency & Bankruptcy

• 2019 (6) TMI 849
  Initiation of Corporate Insolvency Resolution Process - Corporate debtor - transfer of shares of Shareholders / Promoters - HELD THAT:- The Operational Creditors who were supplying goods or rendered services including employees are investing money for keeping the company operational. Employees are also working to keep the company operational, therefore, they are class in themselves. On the other hand, the Central Government or State Government, they do not invest any money nor render any services but derive advantage of operation by claiming of the debt on the basis of the existing law (statutory debt). Therefore, classification is made between (i) those Operational Creditors who were employees; (ii) those who were suppliers of goods or rendering services by investing money and (iii) the Central Government or State Government or local authority, who only claim the statutory debt. Resolution plan cannot be arbitrary or discriminatory amongst class of such Operational Creditors . Only the same treatment is to be made. So far as the Shareholders or Promoters are concerned because of their failure the Corporate Insolvency Resolution Process got initiated against the Corporate Debtor and Successful Resolution Applicant pays the dues to all the creditors on behalf of the Corporate Debtor / Promoters / Shareholders . In lieu of such payment, it is always open to the Successful Resolution Applicant to claim transfer of shares of Shareholders / Promoters in its favour. Section 29A is the ineligibility clause which deals with question as to who are ineligible to file resolution plan . As per said provision any persons who act jointly or in concert with such person if fall within any of the clause as mentioned therein (Clause (a) and (j) ) are ineligible to file resolution plan . It is not the case that the Resolution Professional or the Committee of Creditors or that the Adjudicating Authority found the Resolution Applicant to be ineligible under Section 29A. In absence of any such evidence, it was not open to the Adjudicating Authority to observe that the Appellant has a nexus with the Corporate Debtor . We modify the impugned order dated 19th February, 2019 and substitute the manner of distribution as shown in the Resolution Plan with the Revised distribution as noted above. Appeal allowed.

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• 2019 (6) TMI 847
  Maintainability of application - time limitation - Section 7 of the Insolvency and Bankruptcy Code, 2016 - Section 238A of the I B Code - HELD THAT:- The provisions of the Limitation Act shall apply as far as may be . Although the Adjudicating Authority has observed that admission in the written statement will not amount to acknowledgement, we need not deliberate to settle that issue looking to the Term 1 of the MOU which we have reproduced above. In the transaction, the term clearly shows liability of Rs. 8,10,000/- getting created every 6 months for the Respondent to pay the Appellant till the entire booking amount has not been repaid . When the entire booking amount has not been paid, this component keeps getting attracted and liability invoked and when Section 7 Application was filed, the amount due and outstanding was clearly more than Rs. 1 Lakh and thus, in our view, the Application under Section 7 could not have been rejected as time barred. There was a debt which was due and the default was of more than Rs. 1 Lakh and therefore, it was sufficient to trigger Section 7 proceeding. Neither the parties nor the Impugned Order shows that there was any other defect in the Section 7 Application which had been moved so as to say that the Application was not complete. In that view of the matter, the Application filed before NCLT deserves to be admitted. Matter remanded back to the Adjudicating Authority - appeal allowed by way of remand.

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• 2019 (6) TMI 844
  Admissibility of application - Section 7 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- In exercise of inherent powers under Rule 11 of the National Company Law Appellate Tribunal Rules, 2016, we allow the settlement and set-aside the impugned order dated 13th May, 2019. In the result, Company Petition No. IB-832(PB)/2018 filed by Sunrise 14 A/S, Denmark is disposed of as withdrawn. The Appellant, other Shareholders/ Directors of the Corporate Debtor and Sunrise 14 A/S, Denmark will be bound by the terms of settlement. In case, the Appellant or Shareholders/ Directors or the Corporate Debtor fails to pay the amount in terms of the settlement, it will be open to the Respondent Sunrise 14 A/S Denmark ( Financial Creditor ) to move before this Appellate Tribunal for recall of this order and to revive the Corporate Insolvency Resolution Process against M/s Metalore Overseas Private Limited. They may also file an application for initiation of contempt proceedings against the concerned Managing Director/ Directors and Shareholders including the Appellant. The application preferred by the Respondent under Section 7 of the I B Code is disposed of as withdrawn - Moratorium declared.

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• 2019 (6) TMI 833
  Admissibility of petition - initiation of CIRP - Impleadment Application filed by the Appellant was initially rejected and by subsequent order dated 18th March, 2019 the application u/s 7 was admitted - applicant claimed as purchaser of CD property - HELD THAT:- From the decision of Supreme Court in Innoventive Industries Ltd. Vs. ICICI Bank and Ors. [ 2017 (9) TMI 58 - SUPREME COURT] it is clear that the Adjudicating Authority is required to go through the record to find if there is a debt and default and while doing so it was open for the Corporate Debtor to show that there is no debt payable and no default, at the stage of admission of the petition. Except the Corporate Debtor, no other party has right to intervene at the stage of admission of a petition u/s 7 or 9. However, an aggrieved party may prefer an appeal if the order of admission affects the person. In the present case, we find that the order of admission dated 18th March, 2019 in no manner has cast any impact on the case of the Appellant. It is merely an order of admission of the application under Section 7 against the Corporate Debtor. In view of the provisions of the I B Code, in case, the Interim Resolution Professional or Resolution Professional wants to take possession of the Hotel namely Hotel Brys Fort, Jaisalmer , the Appellant may bring facts regarding its claim to the notice of the Interim Resolution Professional/ Resolution Professional. The Interim Resolution Professional/ Resolution Professional will consider it in the light of explanation to Section 18(f) of the I B Code. Even if, after that the Appellant has some grievance he can move before the Adjudicating Authority under Sub-Section 5 of Section 60 and thereafter, if his grievance is not resolved, he may prefer an appeal under Section 61 before this Appellate Tribunal. The appeal is not maintainable and is dismissed.

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• 2019 (6) TMI 832
  Initiation of Corporate Insolvency Resolution Process (CIRP) - Section 9 of the IBC, 2016 read with Rule 6 of the I B (Application to Adjudicating Authority) Rules, 2016 - orporate Debtor failed to pay the outstanding amount of Rs. 3,29,415/- - HELD THAT:- The petitioner has admittedly registered under the Micro, Small and Medium Enterprises Development Act, 2006 ( MSMED Act ) and thus services rendered by the Petitioner covers under the provisions of MSMED Act and remedy is available under the Act. In fact, the said legal notice issued under the provisions of MSMED Act and copy of the notice was forwarded to the Micro and Small Enterprises Facilitation Council of Bangalore in accordance with Section 18 of the MSMED Act, for appropriate action. Instead of prosecuting the remedy under the provisions MSMED Act , and the instant Company Petition is filed under the provisions of the Code. As per Section 8(1) of Code, an Operational creditor should deliver demand notice of unpaid operational Creditor, a copy of an invoices demanding payment of the amount in the default to the Corporate Debtor in such form and manner as may be prescribed. The petitioner is admittedly has not issued demand notice prescribed under the Code and they have issued legal notice under the Provisions of MSMED Act - The petitioner also failed to substantiate the service rendered to the Corporate Debtor so as to claim the alleged outstanding amount except demand notice and Engagement letter and it failed to furnish details of Corporate Debtor. Therefore, the instant petition is misconceived and it is liable to be dismissed by giving liberty to the petitioner to prosecute the remedy available under MSEME Act. Petition dismissed.

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• 2019 (6) TMI 831
  Initiation of corporate insolvency resolution process - defaults committed in relation to the invoices raised for supply of goods to the corporate debtor - section 9 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- An operational creditor as defined under the provisions of the IBC, 2016 should be a person as defined under section 3(23) of the IBC, 2016 in order to maintain a petition under section 9 of the IBC, 2016. In the absence of a sole proprietary concern not being included in the definition a person , this Tribunal is of the considered view that this petition cannot be maintained. The IBC, 2016 is a code by itself and a petition should succeed or fail in terms of the provisions contained judgments pronounced by judicial authorities as to the competency of a sole proprietary concern to initiate legal proceedings in its own name, as has been done herein, may not be out of context. Petition dismissed.

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• FEMA

• 2019 (6) TMI 863
  Violation of FERA - penalty imposed against dead person - both alleged accused and abettor have already expired long ago - HELD THAT:- Rendering the order against Sh. Bharat Hansraj Thakkar without any valid findings pertaining to penalties is not sustainable in law. As far as Hansraj Thakkar is concerned, the penalty was imposed against the dead party despite of having the knowledge about his death. Appeal is allowed in the case of Sh. Bharat Hansraj Thakkar of a penalty of Rs. 5.00 crores and the impugned order against him is quashed as there is no reasoning in the Adjudication Order. The show cause notice seeks to hold the Sh. Bharat Hansraj Thakkar liable on account of abetment in terms of Section 64 of FERA, sine repealed. Once the order passed against Sh. Hansraj Thakkar, the main offender, is a nullity, being passed against a dead person abettor cannot be held guilty in the absence of guilt adjudged against main offender. The matter is 32 years old. Both alleged accused and abettor have already expired long ago. Against the accused, when the order was passed he was no more and against abettor there are no discussion and reasons for imposing the penalties. The order of penalty or conviction passed against a dead person leads to acquittal of deceased person with consequence of acquittal as presumption of innocence continues till finding of guilt on account of death of main offender, the proceedings get abated and abettor cannot be thus held guilty. The order against Sh. Bharat Hansraj Thakkar is liable to also be set aside on this ground also.

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• PMLA

• 2019 (6) TMI 873
  Offence under PMLA - attachment orders - HELD THAT:- There shall be interim direction as prayed for.

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• 2019 (6) TMI 842
  Offence under PMLA - attachment orders - freezing the Appellant s bank accounts - HELD THAT:- PMLA is a Special Act. The provisions of the said Act are mandatory. They have to be applied as it. Being an independent Act, no different meaning can be given. They have to be interpreted as it is. The power to attach or seize or freeze a property can be exercised only if the officer concerned has material in his possession who has a reason to believe that property sought to be attached or seized is proceed of crime or related to the crime irrespective as to whether complaint under the schedule offence and prosecution complaint under PMLA is filed or not against the party who has in his possession of proceeds of crime. But, the situation where the investigation was being done on the basis of a mere suspicion against the party where the statute provides prescribed period of time and mandates the condition that it would continue during investigation for a period not exceeding ninety days. Having in possession of proceed of crime and period of investigation on the basis of suspicion are two different situations. The law laid down earlier where the time limit was not provided may not be applicable because of change of situation by virtue of amendment which was carried on 19.4.2018, the specific period is prescribed in the Act for the purpose of investigation. Earlier, no specific timeline was set to complete the investigation and to file the prosecution complaint. The mandates now is changed whereby it is mandated that the attachment shall continue during investigation for a period not exceeding ninety days, as provided under section 8(3)(a) or under the corresponding law of any other country, before the competent court of criminal jurisdiction outside India. The second part of the provision is not applicable in the absence of such situation. Even this Tribunal is of the view that ninety days period is a less period and the said provision is rightly further amended where the period has been substituted by Act 7 of 2019-5-22 (i) to 365 days from 90 days, however, it is yet to be notified. Thus, unless it is notified, this Tribunal is duty bound to apply the provision as existed. In the light of above, the appeal is allowed. Both the accounts are de-freezed accordingly. The impugned order against the appellant is set-aside pertaining to two bank accounts only maintained by the appellant.

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• Service Tax

• 2019 (6) TMI 866
  Valuation - inclusion of value of free supply of steels/cement was not being included by them in their gross amount charged for payment of service tax - benefit of N/N. 15/2004-ST dated 10/09/2004 and 01/2006-ST dated 01/03/2006 - Extended period of limitation - HELD THAT:- The issue has been settled in favor of the appellant by the decision of this Tribunal in case of M/S BHAYANA BUILDERS (P) LTD. OTHERS VERSUS CST, DELHI OTHERS. [ 2013 (9) TMI 294 - CESTAT NEW DELHI (LB) ] where it was held that Value of free supplies by service recipient do not comprise the gross amount charged under Notification No. 15/2004-ST, including the Explanation thereto as introduced by Notification No. 4/2005-ST. - demand set aside. Construction building for Jaipur National University and Bhagwan Mahavir Cancer Hospital - HELD THAT:- It is not in dispute that they are the educational institute recognized by the Government and is also charitable institute for health care services. Thus, the appellants have rightly placed reliance on the CBEC Circular dated 17/09/2004 which exempted the institute established for educational, religious charitable and philanthropic purposes - Reliance placed in the case of Banna Ram Choudhary vs. CCE [ 2017 (9) TMI 86 - CESTAT NEW DELHI ] - demand set aside. Construction of individual houses - HELD THAT:- These houses have been built by the individuals, namely, Shri C Sharma, Uttam Chan Jain, Dr. Hemawati Gupta (Bansal) etc., for their personal use which is clearly excluded from the definition of Construction of Residential Complex Service under the Act - Reliance placed in the case of Macro Marvel Project Ltd. vs CCE [ 2008 (9) TMI 80 - CESTAT, CHENNAI ] - demand set aside. Time Limitation - HELD THAT:- The appellant was under bonafide belief of non levy of service tax under the Act, as per the CBEC Circular dated 17/09/2004. There was no malafide intention to evade the payment of tax and hence the extended period is not invokable. Appeal allowed - decided in favor of appellant.

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• 2019 (6) TMI 865
  Classification of services - Transport of Passengers by Air or not - it appeared to the Department that such charges collected should be included in the gross amount collected by service provider for rendering the Transport of Passengers by Air Services - HELD THAT:- The identical issue has been dealt by this Tribunal in case of KINGFISHER AIRLINES LTD, JET AIRWAYS LTD. VERSUS COMMISSIONER OF SERVICE TAX [ 2015 (11) TMI 54 - CESTAT MUMBAI (LB)] , wherein it was held that since the main service is of carrying passenger which also been includes charges for carrying of Excess Baggage from passenger, and thus is integral part of main service and also incidental to main service. Further, there is no element of transport of accompanied goods under this service in absence of separate contract carrying Excess Baggage, not covered under transport of goods by air service but by the Transport of Passenger by Air Service only - appeal allowed - decided in favor of appellant.

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• 2019 (6) TMI 862
  Classification of services - management, maintenance and repair service or not? - appellants are engaged in the operations of power plants of others for generation of electricity - time limitation - HELD THAT:- The appellants are engaged in the operations of power plants of others for generation of electricity; most of their clients belong to Steel/Automobile industry; by virtue of contracts entered there-into - The appellants charged operation fee and maintenance fee separately from the customers. They have been discharging Service Tax on maintenance fee collected by them from 01.07.2003. Tribunal in the case of Operational Energy Group of India Pvt. Ltd. v. CST, Chennai [2017 (6) TMI 225 - CESTAT CHENNAI] has held that the activity would not fall under management of immovable property . That it will get covered under the definition of Business Auxiliary Service; the dominant activity carried out in the power plant being generation of electricity and maintenance of the power plant being only an incidental one. That generation of electricity amounts to manufacture of goods within the meaning of section 2(f) of the Central Excise Act, 1944. That electricity is mentioned under Chapter Heading 27.16 of the First Schedule to the Central Excise Tariff Act, 1985, with effect from 01.03.2005 and electricity being an excisable product, though with nil rate of duty. In the present case, the sole purpose of management of the immovable property. In the present case, the sole purpose is not management of immovable property. Further, the management, if any, of the power plant is done by the appellants and is only incidental to the activity of generation of electricity. The activity carried out in the power plant is not solely management of power plant, but operation of the same. The word operation is not used in the definition of Maintenance and Repair services which is relied by department as amended with effect from 16.06.2005. The said word in seen used in the definition of Business Support Services ( Operational assistance ). Thus, it is very much clear that management of immovable property does not include operation activities. In addition, it cannot be said that the appellants are doing management service for the reason that the management service is done by appellants to themselves and not to any other person. The appellants are operating the power plant to generate electricity on behalf of the owner for supplying the same to TNEB. Appeal allowed - decided in favor of appellant.

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• 2019 (6) TMI 861
  Refund of CENVAT Credit - whether the opening balance of Cenvat credit, at the beginning of the relevant period, can be claimed as refund as per Rule 5 of the Rules, as prevalent during the relevant period and as to whether Cenvat can be denied on alleged technical defects, in the invoices? - Rule 5 of CCR - Interpretation of statute - N/N. 27/2012 dated 18.06.2012. HELD THAT:- The definition of net Cenvat credit uses only one , before the word relevant period . Therefore, the word relevant period should necessarily apply to both net Cenvat credit as well as the rebate refers to in Rule 3 (5C). Moreover, the Revenue could successfully demonstrate that the appellants did not adhere to the time frame given in the amended Rule 5. Therefore, we find that the refund claims are not in order. The appellants have argued on the basis of various decisions cited by them and said that when substantial compliance is evident refunds should not be denied to the appellants, more so when 100% of the services were exported. The quasi-judicial authorities are not expected to traverse beyond the scope of established law and therefore, calculation of Net Cenvat Credit and thus eligible refund was in order. We find that the appellants have submitted that while deciding the refund claims, the lower authority has dis-allowed certain credits without issuing a proper SCN and without hearing the contentions of the appellants and some credits were not allowed on procedural issues. We find that such a denial is incorrect. It is not free for the authorities to deny Cenvat credit without giving an opportunity of being heard to appellants. Therefore, for this purpose, the issue requires to go back to the original authority for deciding the issue separately by following the principles of natural justice. The appeals allowed by way of remand, to the extent of re-determination of inadmissible Cenvat credit.

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• 2019 (6) TMI 859
  Refund of Swatchh Bharat Cess (SBC) - whether the appellant is entitled for refund of Swatchh Bharat Cess (SBC) paid on the input services used for providing export service? - HELD THAT:- The issue involved in these appeals is no more res integra as it stood covered in favour of the Appellants in view of a recent decision of the Tribunal in State Street Syntel Services Pvt Ltd vs. Commissioner of Central GST Central Excise, Mumbai [ 2019 (5) TMI 1568 - CESTAT MUMBAI ] where it was held that Swachh Bharat Cess paid on input services has to be available as Cenvat Credit and the same can be discharged by utilising Cenvat Credit and the appellant is therefore entitle for the refund of it - appeal allowed - decided in favor of appellant.

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• 2019 (6) TMI 856
  Valuation - inclusion of warranty claims in assessable value - reverse charge mechanism - Section 66A of FA - Revenue neutrality - extended period of limitation - HELD THAT:- We do not find that the appellants had paid any incentives to the Overseas Distributors for sales promotion and marketing. The entire demand is on the amount paid by the appellant to the Overseas Distributors for the warranty claims. The adjudicating authority is of the opinion that when the Overseas Distributors establish the network of Authorized Repairers for carrying out the warranty claims on behalf of the manufacturer (appellant herein), the said activity would be customer care service and also provision of service on behalf of the client. It needs to be said that though the Overseas Distributors may have carried out the repair and maintenance services and established the network of Authorized Repairers for the benefit of the manufacturer, the Overseas Distributors have not directly carried out any service to the customer. When the Overseas Distributor is establishing the network of Authorized Repairers for carrying out the warranty responsibility of the appellant, indeed, this will satisfy customer care services provided on behalf of the client contained in Sub-Clause (iii) of the definition of Business Auxiliary Service , and would be taxable. Extended period of limitation - HELD THAT:- The period involved is from October 2008 to March 2015. The documents produced show that audits were conducted in 2008, 2009 and the subsequent years. The letter dated 15.09.2009 shows that Internal Audit was conducted from 17.08.2009 to 31.08.2009. The letter dated 06.06.2013 is an intimation of CERA Audit wherein the appellant is informed that Officers would be visiting their unit from 24.06.2013 to 28.06.2013. Even though such repeated audits had been conducted, the Show Cause Notice for the period from October 2008 to March 2013 was issued only on 28.03.2014 - In the present case, even if the Service Tax is paid as demanded by the Department, the appellant would be eligible to avail credit of the same. Thus, the situation is wholly a revenue neutral one. The extended period of limitation cannot be invoked alleging intention to evade payment of Service Tax when the entire transaction amounts to a revenue neutral situation - The demand raised invoking the extended period of limitation cannot sustain and requires to be set aside. Demand for the period post 01.07.2012 - HELD THAT:- In the present case, the services of repair and maintenance are actually performed outside India. Section 66A applies only where the service is received in India. In this case, the Business Auxiliary Service, viz., providing customer care service on behalf of the appellant took place outside India. The same therefore cannot be taxable within India and hence, the demand post 01.07.2012 cannot sustain. Appeal allowed in part.

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• 2019 (6) TMI 852
  Levy of service tax - commission received from the DTH operators for sale of recharge coupons - DTH operators have discharged service tax on the M.R.P of the recharge vouchers which, logically includes the commission which the appellant has received - Notification No.25/2012-ST - HELD THAT:- It is true that the appellant is providing services to the DTH operators and is getting commission for such services. If the appellant had paid service tax on such commission, the main DTH operator could have availed cenvat credit of the same thereby proportionately reducing the amount paid in cash by the DTH operator. Therefore the entire exercise is also revenue-neutral. On the SIM cards, recharge coupons etc., where the service tax has been paid on the M.R.P by the main operator the commission agent / distributor need not pay service tax on the commission received by him because commission also forms part of the M.R.P. on which service tax has already been discharged. Appeal allowed - decided in favor of appellant.

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• 2019 (6) TMI 846
  Effect of amendment - explanation added to section 65(105)(zzq) (zzh) of the Finance Act levying Service Tax before and after construction made by the builder - HELD THAT:- Appellant firm was visited by the Respondent s department for scrutinisation of the record on 9-5-2012 and it had not filed any return in-between. Therefore, upon filing of return, payment of Service Tax and late filing fee were supposed to be paid, which Appellant did not prefer to pay and in that respect Rule 7 of the Service Tax 1994 read with u/s 70 of the Finance Act was invoked by the Appellant Department in 2 parts i.e. Rs. 2000/-upto dt. 8-4-2011 and Rs. 20,000/- for the remaining period post amendment dt. 8-4-2011 introduced to section 70 of the Finance Act. No irregularity or ir-rationality can be noticed in respect of the order of the adjudicating authority and therefore Commissioner (Appeal) s order equating fine for late filing of returns with penalty for non-payment of duty, prior to issue of show cause notice is not in conformity with the law and the same is required to be modified. Waiver of penalties - section 77, 78 of the Finance Act read with 7C of the Service Tax Rules - HELD THAT:- It is noticed from the OIO that Respondent had intimated the department on 24-9-2012 that all its tax liability have been discharged, which appears to have been done within a period of 6 months, effective date of implementation of section-80 being 28-05-2012. Therefore, no irregularity is found in the order of the Commissioner (Appeals) in waiving of penalty u/s. 76, 77 78 of the Finance Act. No irregularity or illegality that can be noticed from the order of the Commissioner (Appeals) in invoking section 80 in the case of the Appellant - the order of the Commissioner (Appeals) passed in order-in-Appeal in respect of waiving off late fee imposed under Rule 7C of the Service Tax rule read with section 70 of Finance Act is set aside - the order in waiving off penalty imposed u/s 77 78 of the Finance Act as per section 80 of the Finance Act is confirmed - Appeal allowed in part.

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• 2019 (6) TMI 840
  Classification of services - Appellant is engaged in providing and fixing of Diesel Generator Sets, Pumps to Government Departments - works contract services or Erection, Commissioning Installation services? - benefit of abatement under the Notification dated 01 March, 2006 - HELD THAT:- The Supreme Court in COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] examined as to whether WC service can be classified under Section 65(105)(zzd) relating to ECI service and held that the scope of Section 65(105) (zzd) is limited to cover contract of service simplicitor only and not composite works contract. The Supreme Court noticed that it is only w.e.f 01 June, 2007 that Section 65(105)(zzzza) was introduced to cover composite works contract and so works contract cannot be covered under any other category of services prior to 01 June, 2007. Thus, w.e.f. 01 June, 2007 composite contract covering supply of goods and service would be under the category of WC service. It is, therefore, clear from the aforesaid judgment of the Supreme Court in Larsen Toubro that a Composite Works Contract has to be taxed under WC service and cannot be taxed under ECI service under Section 65(105)(zzd). The position, therefore, that comes out is that the nature of services rendered by the Appellant was WC service and not ECI service. The show cause notice alleged that the Appellant was providing ECI service and MMR service. The demand was confirmed by the Adjudicating Authority under ECI service and MMR service, but the Commissioner (Appeals) has confirmed the demand only under ECI service. The impugned order, therefore, deserves to be set aside for this reason alone since the demand made under a particular category of service found to be incorrect in a subsequent proceeding, cannot be sustained - Appeal allowed - decided in favor of appellant.

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• 2019 (6) TMI 829
  Taxability - Business Auxiliary Service - Commission received - Commission Agent service provided to China based Company - export of service - HELD THAT:- Demand was on the Business Auxiliary Service i.e. commission received from the China based client which is in relation to facilitating the client for supply of goods from India to China. Against such service, the consideration received was in convertible foreign exchange and therefore, the fact that the service provided from India to the client based in China, the consideration received is in convertible foreign exchange, the service is qualified as export service and hence the same is not taxable. Commission income received in relation to the business of textile processing - applicability of N/N. 14/2004-ST dated 10.09.2004 - HELD THAT:- Undisputedly the commission is related to textile processing business which is clearly exempted by Notification No. 14/2004-ST, therefore, the said demand is also not payable. Demand of penalty u/s 76 and 78 - service tax alongwith interest paid - HELD THAT:- As held by the Hon ble Gujarat High Court in the case of M/S RAVAL TRADING COMPANY VERSUS COMMISSIONER OF SERVICE TAX [ 2016 (2) TMI 172 - GUJARAT HIGH COURT] , simultaneous penalty under Section 76 and 78 cannot be imposed. Accordingly, the penalty imposed under Section 76 is set-aside. As regards the penalty imposed under Section 78, we find that both the lower authorities have not extended benefit of option to pay 25% under the proviso to Section 11AC, therefore, in the light of Hon ble Supreme Court judgment in the case of COMMR. OF CEN. EXC. CUSTOMS VERSUS M/S R.A. SHAIKH PAPER MILLS P. LTD. [ 2016 (4) TMI 1076 - SC ORDER] the appellant is entitled for the option to 25% penalty. Accordingly, the penalty is reduced to 25% subject to the condition that entire amount of tax of Rs. 84,270/- along with interest and 25% penalty of said service tax is paid within one month from the date of this order. Appeal allowed in part.

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• Central Excise

• 2019 (6) TMI 879
  Condonation of delay of 188 days in filing appeal - delay on the ground of medical reasons - HELD THAT:- The Paediatric Surgeon is also a qualified doctor and is competent to issue a certificate with regard to a person suffering from back pain and advise a patient to take rest. No bar in terms of Medical Council Rules or otherwise is relied upon to disregard the view of the medically qualified person. It is true that if on these facts, the appellant had shown himself to a specialist, dealing with back pain and produced a certificate in support thereof, the Tribunal may have been satisfied with the evidence in support. The condonation of delay can only be allowed on payment of costs. This for the reason that on facts, the view taken by the Tribunal is a plausible view and we would not have interfered. But only to ensure that justice is done, we are interfering. Thus, to balance the right and equity while considering the delay, we direct the appellant to pay a cost of Rs. 20,000/to the Commissioner of Central Excise within a period of two weeks from the date on which the order is uploaded. The impugned order be set aside and the appeal is restored to the Tribunal for fresh disposal.

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• 2019 (6) TMI 876
  Process amounting to manufacture or not - process of salvaging parts from a used TBM, remanufacturing scrapped parts and components for reassembling the same into a different and unique machine designed for a project specific function - Revenue submitted that the aforesaid proceedings have in fact been placed and pressed into service by the Appellant [i.e., writ petitioner herein] before the 2nd respondent, but the same has not been adverted to in the impugned order - HELD THAT:- It follows as a natural and indisputable sequitur that the 2nd respondent has passed the impugned order, dated 31.10.2017, without adverting to the aforesaid proceedings, wherein it has been held that the aforementioned activity of the writ petitioner is in fact a manufacturing activity within the meaning of Section 2(f) of CE Act. The Commissioner (Appeals-II) (2nd respondent) has to necessarily be directed to have a relook of the entire matter, holding that the aforementioned activity of the writ petitioner qualifies as a manufacturing activity within the meaning of 2(f) of CE Act and acceptance of the same by the committee of Chief Commissioners. A direction is given to the 2nd respondent to hear the appeal afresh in accordance with law, after giving opportunity of personal hearing to the writ petitioner - Petition allowed by way of remand.

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• 2019 (6) TMI 875
  Condonation of delay in filing appeal - proof of service of order - HELD THAT:- In the case at hand though as evident from paragraph 2 of the impugned order that the department did not respond to the letter dated 28.06.2018 sent by the Tribunal seeking the date and proof of service - However, the facts on record reveal that all the notices right from 12/02/2007 were addressed at the registered address of the appellant and were received by them. The appellate order dated 30/04/2014 is shown to be served on same address. In this fact situation, since the appellant failed to discharge the onus that it was prevented by sufficient cause from filing the appeal within limitation, the Tribunal, in our considered opinion, was justified in declining to condone delay. Since no substantial question of law arises for consideration, no indulgence is caused - Appeal dismissed.

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• 2019 (6) TMI 872
  Maintainability of appeal - reversal of CENVAT credit - HELD THAT:- The reversal of CENVAT credit, which was the bone of contention was undoubtedly contested in the show cause notice. Having regard to the factual matrix, the court is of the opinion that the interest of justice lies in the petitioner s grievance being adjudicated on the merits in appeal by the Commissioner (Appeal). In these circumstances, the order of the Commissioner (Appeal) and the CESTAT is set aside. Petition disposed off.

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• 2019 (6) TMI 871
  Benefit of N/N. 4/2006-CE - clearance of SKO to various oil marketing companies for distribution under Public Distribution System (PDS) - exemption is sought to be denied on the ground that the said quantity SKO used as interface is not ultimately sold through Public Distribution System - CBEC Circular No. 636/27/2002-CX dated 22.04.2002 - HELD THAT:- The SKOPDS cleared by the appellant to HPCL. M/s. HPCL has stored in SKO PDS received from various sources in a common tank. The allegation is that part of SKO-PDS received by HPCL is mixed with MS and HSD as the same is used as interface to pump MS/HSD through pipelines to various destinations. A part of SKO-PDS cleared by the appellant is not used for distribution through Public Distribution System but used as interface and consequently, the demand of duty - At the time of clearance itself, the appellant as well as HPCL was aware that the SKO used as interface cannot be segregated from MS or HSD. In other words, the SKO cleared as interface will obviously gets mixed with MS or HSD. From the above, it is also apparent that there is no intention of selling this SKO cleared as interface as SKO. The said SKO is mixed with MS and HSD and results in excess clearance/ receipt of MS and HSD. Mixing of small quantity of SKO in MS or HSD in the factory for any reason, and clearing the same as mixture of MS and HSD, the rate of duty applicable would be of MS and HSD. By using SKO as interface for pumping it into pipelines, the product leaving the factory is intermixed MS or HSD, answering to the description of MS or HSD. The same is received by HPCL as MS or HSD and the same is sold as MS or HSD. In these circumstances, the Revenue is right in demanding the duty on the product as intermixed MS or HSD as the same is cleared and sold as MS or HSD. Time Limitation - HELD THAT:- It is apparent that they were fully aware that SKO used as interface cannot be segregated and would remain as part of MS or HSD and it would assume the character of MS or HSD and would be sold as MS or HSD, they cannot claim benefit of limitation. In view of the above, the extended period of limitation has also been rightly invoked. Appeal dismissed - decided in favor of appellant.

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• 2019 (6) TMI 870
  Adjustment of excess amount of central excise duty paid by appellant - period March 2011 to March 2013 - Short payment of duty as per ER-1 return filed by appellant for the month of February 2012 - Time limitation - HELD THAT:- The case of the appellant can be decided on the ground of limitation inasmuch as the period in dispute is March 2011 to March 2013 for which the SCN has been issued in August 2016 by invoking extended period of limitation. The fact regarding the adjustment of excess duty was always in the knowledge of the department as it appears from the audit proceedings when the audit Para was dropped. The SCN has been issued on the basis of change in opinion without taking into cognizance of the practice already followed by assessee in which case there cannot be said to be any suppression on the part of the assessee. Further, on perusal of the entire SCN, except the allegation of suppression to invoke extended period of limitation, I do not find any specific instance to show that the assessee deliberately suppressed any information from the Department. Moreover the whole issue has arisen due to lack of knowledge in complying with the central excise procedure since the levy of central excise duty was introduced for the first time with effect from March 2011 and the assessee was new to the subject. In the instant case, the appellant is a PSU and will not have any reason to evade payment of duty - the appeal on the ground of limitation. Appeal allowed.

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• 2019 (6) TMI 869
  Clandestine removal - demand based on the loose sheets recovered from the appellant s factory as well as on the basis of weighment records of the weighbridge belonging to the appellant - proper investigations not carried out - HELD THAT:- The Department has not conducted any investigation other than recovery of these loose sheets and weighment record, from any of the buyers, suppliers, transporters etc. - also no investigation has been conducted by the Department for the forward and backward linkages of clandestine activities alleged to have been committed by the appellant - appeal allowed - decided in favor of appellant.

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• 2019 (6) TMI 860
  Classification of goods - method of Valuation - section 4 or 4A of CEA? - manufacture of Cables - also manufacture of Auto (Annexure A) / Battery (Annexure B) / Ignition Cables, which are specifically used in Automobiles - classification of the goods - Sr. No.97 under Notification No.11/2006-CE/ (NT) dated 29.5.2006 - time Limitation. Appellants contention is that the items manufactured by them fall under Chapter Heading 8544 and the parts and accessories of motor vehicles are classifiable under Chapter Heading 8714; department cannot change the assessment without changing the classification - Revenue on the other hand argued that the cables manufactured by the Appellants are tailor made to be used in the automobiles. HELD THAT:- The impugned goods are tailor made to be used in automobiles and the Appellants themselves advertised and packed the products describing the same to be used in automobiles. It is pertinent to note that the retail customers understand the impugned goods to be parts of automobiles. The appellants are manufacturing Auto Cables, Battery Cables and Ignition cables , which have a specific use only in the Automobile Industry and are cleared in retail packages affixed with MRP. They do not increase the efficiency of automobiles and therefore, the whole discussion on accessories is incorrectly placed. It is prudent that the goods are to be understood/ evaluated/classified as per the perception and use of the customers. Therefore, the department s contention is correct that the auto cables and battery/ignition cables manufactured and cleared by the Appellants are to be treated as automobile parts If the impugned goods are automobile parts for the purposes of Packaged Commodity Rules, they need not be necessarily classified as same under Central Excise Tariff Act, 1944. We find that auto/battery/ignition cables manufactured by the Appellants are essential parts of automobiles and are covered as parts, components and assemblies of automobiles , under the notification No.11/2006-CE (NT) dated 29.05.2006, 14/2008 CE(NT) dated 01.03.2008 and 14/2008 CE(NT) dated 24.12.2008. Time Limitation - HELD THAT:- It is not open for the department to sit over the RT-12 returns over a period of time and invoke extended period on the completion of investigation. Department was free to raise queries on the returns filed / during the visit of audit parties to obtain necessary information from the Appellants. This having not been done extended period cannot be invoked - extended period cannot be invoked. The demand requires to be restricted to the normal period. In order to conclude the duty payable for the normal period, the issue needs to go back to the original authority. The appeals are partially allowed by way of remand for the purpose of calculation of duty for the normal period.

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• 2019 (6) TMI 855
  CEVAT credit - input service distribution - main allegation in the SCN is that the ISD has wrongly distributed the service tax credit by not following the principle of proportionate to the turnover of sales. Rule 7 of CCR 2004 as applicable during the relevant period and upto 01.04.2012 - Rule 7 of CCR 2004 - extended period of limitation - HELD THAT:- In the present case the entire demand is not sustainable on the ground that Rule 7 of CCR 2004 during the relevant period did not prescribe any formula for distribution of cenvat credit by the ISD and therefore no liability can be fastened on them. Extended period of limitation - HELD THAT:- No case has been made out by the department for invoking extended period of limitation in as much as mere not indicating the formula adopted for distribution of cenvat credit does not amount to suppression of facts as there was no obligation upon the assessee to disclose the formula adopted by them. Therefore, even on limitation we rule in favour of the assessee. There is also a force in the argument of the assessee that the cenvat credit distributed by the ISD cannot be modified by a recipient of the ISD invoices namely appellant. Appeal allowed - decided in favor of appellant.

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• 2019 (6) TMI 854
  Clandestine manufacture and removal - sponge iron - demand solely on the basis of the statement of the Managing Director who was made to admit the duty liability by using force - corroborative evidences or not - HELD THAT:- The entire case against the Appellant No. (1) was built on the basis of the statement of the Director Murari Lal Agarwal and there is no other evidence to establish the factum of clandestine clearance. Further the charge of clandestine clearance cannot be established merely on the basis of statement of the Director who has alleged coercion and undue influence exhorted on him for extracting confession. Further, consistently Courts have held that duty demand cannot be sustained solely on the basis of statement recorded during the course of investigation in the absence of corroborative evidences in the form of consumption of electricity, purchase of raw-material, electricity consumption, manpower, capacity of the factory to produce the alleged quantity, mode of transportation and sale of goods, receipt of sale proceeds and other documentary evidences. Burden to prove - HELD THAT:- It is a settled law that allegation of manufacture and clandestine clearance, the burden lies on the Department to prove the charge against the assessee with proper and cogent evidence but in the present case the Revenue has not conducted complete investigation and relied upon merely the statement of the Executive Director and confirmed the duty demand is not sustainable in law. Appeal allowed - decided in favor of appellant.

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• 2019 (6) TMI 834
  Valuation - Cement manufactured by the appellant and utilized within the factory of manufacturer - to be valued under Rule 8 of Central Excise (Valuation) Rules, 2000 or Section 4 of Central Excise Act, 1944? - HELD THAT:- The goods were not sold and the only rule that is applicable to the goods which are not sold in Rule 8 of said Valuation Rules - appeal allowed - decided in favor of appellant.

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• 2019 (6) TMI 830
  Maintainability of appeal - monetary amount involved in the appeal - HELD THAT:- The amount involved in this case is below the monetary limit of Rs. 20 lakhs which has been notified vide instruction being F. No. 390/Misc./116/2017-JC dated 11/07/2018. The prayer of the Revenue is allowed and the appeal is dismissed as withdrawn.

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• 2019 (6) TMI 825
  CENVAT credit - input services - Security Services - Renting of Immovable Property - CHA Services - Courier Services - denial of credit on the ground that the appellant having not been registered as an Input Service Distributor (ISD), the input Credit was alleged to be ineligible - HELD THAT:- The very same issue came up in the assessee s own case on an earlier occasion before this Bench LEO PRIMECOMP PVT. LTD., (UNIT-II) VERSUS COMMISSIONER OF CENTRAL EXCISE, CHENNAI-IV [ 2016 (9) TMI 193 - CESTAT CHENNAI ] where the Bench had thought it fit to remand the matter back to the file of the adjudicating authority on the doubt raised by the Ld. Department Representative as to the non-registration of the appellant as an ISD. In the present case, the Revenue has not disputed as to the maintenance of necessary records, but the Credit is denied only because of non-registration of ISD - since this Bench has remanded the matter back to the file of the adjudicating authority in the assessee s own case, I also deem it proper to remand this matter for fresh adjudication. Appeal allowed in part by way of remand.

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• 2019 (6) TMI 824
  Clandestine removal - reliability of statements - only evidence against the appellant is statement wherein, the charge of clandestine clearance through the trading firms has been admitted - retraction of statements - HELD THAT:- The said statement has not been retracted. Revenue has not investigated further taking shelter of the letter dated 26.12.2006 wherein, the appellant after paying part liability, requested not to enquire further. The said letter has not been produced by the either party before us so the exact content of the letter is not available. The letter is also not a relied upon document as can be seen from the show cause notice. There are plethora of decisions wherein it has been held that charge of clandestine clearance cannot be sustained merely on the basis of statement and there has to be some corroborative evidence to substantiate the said charge. Tribunal in the case of Shreeji Aluminum Pvt. Ltd. [ 2012 (10) TMI 418 - CESTAT, AHMEDABAD ], wherein under similar circumstances, it has been held that corroborative evidence is necessary to establish charge of clandestine clearance. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2019 (6) TMI 884
  Attachment of property - non-payment of Value Added Tax by the erstwhile owner of the property - HELD THAT:- It is likely to take a view that we would have jurisdiction to entertain this Petition as it could be said that a part of the cause of action has arisen in Mumbai. However, we note that the contesting parties are situated in Gujarat, the property which is sought to be attached, is situated in Gujarat, the Officers who have passed the impugned order under the Gujarat VAT Act, 2003 is also situated in Gujarat. In the above facts, taking into account the doctrine of forum convenience, it would be appropriate that we do not exercise our jurisdiction and as appropriate Court - petition disposed off.

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• 2019 (6) TMI 882
  Denial of downloading and issuance of C declaration forms - post GST situation - Concessional rate of tax on purchase of High Speed Diesel Oil for use in generation and distribution of electricity and other forms of power - HELD THAT:- The said issue came up for consideration before another Hon ble Judge of this Court in a batch of writ petitions in the case of M/S. THE RAMCO CEMENTS LTD. VERSUS THE COMMISSIONER OF COMMERCIAL TAXES, THE ADDITIONAL COMMISSIONER (CT) [ 2018 (10) TMI 1529 - MADRAS HIGH COURT] . In the batch, the lead matter is The Ramco Cements Ltd., and therefore, the aforesaid order shall be referred to as Ramco Cements matter . It was held in the case that the respondents are directed to permit these petitioners to download C forms, as has been done in the past for the purpose of purchasing petroleum products against the issuance of C declaration forms There is no dispute or disagreement that the instant writ petitions fall clearly within the four corners of Ramco Cements case - Petition allowed.

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• 2019 (6) TMI 878
  Principles of natural justice - the writ petitioner sought time to file requisite records namely Books of Accounts and other related documents, in the personal hearing, but the impugned Assessment orders have been passed without granting time and by recording that the writ petitioners have not produced documents inspite of opportunity being given - applicability of Circular dated 03.02.2014. HELD THAT:- Para 3 (a) (I) of the circular refers to cases, where time is requested by the dealer within a period of 15 days. Therefore, the question as to whether the aforesaid circular would apply to cases of this nature is left open as in the instant case, even without reference to the circular, there is no dispute that the writ petitioner dealer i.e., the writ petitioner assessee has sought time to produce documents in writing. No prejudice would be caused, if an opportunity is given to the writ petitioner. This Court is informed by the writ petitioner counsel that documents have already been furnished and if a date is fixed for personal hearing, they will go before the respondents - petition allowed by way of remand.

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• 2019 (6) TMI 877
  Self assessment/deemed assessment - Section 22(2) of TNVAT Act - HELD THAT:- There is violation of NJP, it may not be necessary to relegate the writ petitioner to the appeal remedy i.e., alternate remedy by way of an appeal to the Appellate Deputy Commissioner. As this Court is setting aside the impugned orders and sending it back to the Assessing Officer in the light of the facts and circumstances of this case, this Court deems it appropriate to mention that assessment afresh shall be in accordance with the principles laid down by this Court in cases of this nature more particularly in Narasus Roller Flour Mills Vs. Commercial Tax Officer (Enforcement Wing), Sankagiri [ 2015 (4) TMI 361 - MADRAS HIGH COURT ]. In Narasus Roller Flour Mill s case, this Court had held that the Assessing Officer shall not go merely by the proposal given by the Enforcement Wing Officers, but shall make an assessment independent of the proposal given by the Enforcement Wing Officers. Petition allowed - decided in favor of appellant.

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• Indian Laws

• 2019 (6) TMI 874
  Maintainability of petition - rejection of application under Section 91 of Cr.P.C. filed by the petitioner - Dishonor of Cheque - section 138 of NI Act - repayment of money - production of documents - HELD THAT:- The Court is empowered to call any documents which is necessary to fair proceeding of the case. The Court can issue summons to the person whom possession the desirable documents are kept. The powers which has given to under Section 91 of Cr.P.C. is discretionary in nature and same can be exercised judiciously and in proper manner. The superior Court can intervene only in case where the discretion exercised by the lower Court neither judiciously nor judicially and there is gross failure to exercise the discretion of the Court. The Superior Court should not interfere in the discretion of the learned lower Court in a routine fashion. In the present case, there is a dispute regarding repayment of money. The complainant has given amount to the petitioner accused and in lieu of the same he has given some cheques to the complainant which were dishonoured by the bank. The accused took the defence that earlier some money transaction was made between them and in respect of the same he had given the aforesaid cheques, but even after paying the same, complainant did not return the cheques, given by him. He has misused the same by filing this present case. It is undisputed, the order of rejection passed under Section 91 of the Cr.P.C. is an interlocutory in nature and same can not be challenged by filing a revision petition. Therefore, the learned Revisional court did not make any error in passing the said order. Petition dismissed.

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