TMI Blog2018 (9) TMI 1722X X X X Extracts X X X X X X X X Extracts X X X X ..... n ground for alleging that the transaction would fall within the “Business Auxiliary Service” is that the shares of face value of ₹ 10/- has been sold by the appellants at a premium of ₹ 21.80/- per share, when the company was reeling under financial loss - Held that:- Whatever be the circumstances under which the shares were sold or the premium of the shares was fixed between the parties, the transaction of sale of share in no way can be considered as an activity promoting the business of the purchaser of the shares. It is indeed Sale of Shares and, therefore, the demand on this count cannot sustain - demand set aside. Input tax credit - input services used in the construction of buildings - denial on account of nexus - Held that:- This issue has been settled in the case of M/s. Sai Samhmita Storages (P) Ltd. [2011 (2) TMI 400 - ANDHRA PRADESH HIGH COURT] where the Hon'ble High court in the said decision held that the credit of input services used for setting up a warehouse for providing the Output Service of “Storage and Warehousing Services”, was admissible - disallowance of credit of input service used for Construction of buildings is unjustified. Appeal allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has become taxable only w.e.f. 01.06.2007. He submitted that the appellants have discharged service tax under this category on the rent received by them from 01.06.2007 onwards. However, the department has an attempt to levy the service tax for the rentals collected by appellant after 01.06.2007, which pertains to the rent for months prior to 01.06.2007. The rent, which was due prior to 01.06.2007, was received by appellants belatedly after 01.06.2007. Such amounts cannot be subject to levy of service tax under this category, which has come under the tax net only with effect from 01.06.2007. It is also submitted by him that the appellants had furnished details regarding the amount which pertains to period prior to 01.06.2007 but the same has not been considered properly by authorities below. He requested to remand this issue, so that the appellants may be given a further chance to produce necessary details. (ii) The department has confirmed an amount of ₹ 1,40,53,320/- under Real Estate Agents Service . The learned counsel adverted to para 12 of the show-cause notice as well as para 8 of the impugned order and submitted that the appellants have not engaged themselves in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellants discharged income-tax on the Capital Gains arising out of sale of shares under the provisions of Income-Tax Act, 1961. The department has now demanded service tax on the consideration received from sale of shares under the category of Business Auxiliary Service , alleging that the appellants have rendered services for promotion or marketing of services of the purchaser of shares. He argued that none of the ingredients set out in Section 65(19) of the Finance Act, 1994 would be applicable to the said transaction of sale of shares. (iv) With regard to the disallowance of Cenvat credit on input service of ₹ 1,36,91,151/-, the learned counsel submitted that appellants had availed credit of input services, namely, which were used for constructing the buildings that were later rented out. The building constructed was used for the Output Service, namely, Renting of Immovable Property Service . The credit availed for proving Output Services, therefore, cannot be denied. He relied upon the decision of the Hon'ble High Court of Andhra Pradesh in the case of Commissioner of Central Excise, Visakhapatnam -II Vs M/s. Sai Samhmita Storages (P) Ltd. reported in 2011 (217) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, the appellants on termination of agreement should have asked to return the advance of ₹ 80,00,000/- along with interest or probable loss of money due to the aborted deal. From the course of the events that took place, it is clear that the appellants have negotiated with M/s. CCCL, for purchase of the property from M/s. Rainbow Inc., and in return they got their service charges of ₹ 12.17 crores. It is not a simple case of relinquishment of the right over the property but is a Commission Received for Real Estate Service. He argued that the demand confirmed is correct and proper. (iii) In regard to Business Auxiliary Service , he adverted to para 9 of the impugned order and submitted that though the transaction is in the nature of sale of shares, it is brought out that pursuant to an agreement, the appellants have transferred a percentage of shares to their own group company, namely, M/s. Rattha Citadels OMR Apart Hotel Pvt. Ltd. In this process, they gained an amount of ₹ 40,92,93,235/- during the years 2006-07 and 2007-08. They have shown the same as profit on sale of shares in their books of accounts. The face value of a share is ₹ 10/-, whereas, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow-cause notice, it is seen that the demand is raised on the amount received by the appellants consequent to the deed executed by them relinquishing their right in the property in favour of M/s. CCCL Undisputedly, the appellants have entered into an agreement with M/s. Rainbow Inc., for purchase of property and they have paid advance of ₹ 80,00,000/-. It is also not disputed that subsequently, the appellants have relinquished their right over the property. According to department, since the amount is received from M/s. CCCL, the buyer of property, it is a Commission Received for Real Estate Agent Services. The deed by which they received ₹ 12.17 crores is a deed for relinquishment of right of appellant in the property. The appellants have paid Income-tax on Capital Gains for the amount received from M/s. CCCL. Thus, it can be seen that it is a transfer of right/interest in property by the appellants to purchaser M/s. CCCL. In our view the said transaction cannot in any way take the colour of Real Estate Agents Service . In the light of the discussions made above and appreciating the facts, we are of the opinion that the amount of ₹ 12.17 crores received by the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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