Sum advanced to a shareholder after it ceased to be the beneficial owner couldn't be taxed as 'deeme

IT : Beneficial ownership of shares be established to treat a sum advanced by a company to its shareholder as deemed dividend under section 2(22)(e)

Appellant allowed to withdraw its 'open offer' as it had gone redundant with undue lapse of time

SEBI : Where open offer had become redundant due to long lapse of time in securing SEBI's approval, appellant was to be granted permission to withdraw its open offer in target company

Services of commission agent are not eligible for input service credit

ST : Service tax paid on commission paid to commission agents causing sale of goods is ineligible for input service credit

Preceding year's data can be used for TP study if assessee proves its influence over determination o

IT/ILT: Where assessee wants to use data of preceding year, onus lies on assessee to prove that same has influence over determination of transfer pricing under rule 10B

ACIT vs. Robert Arthur Keltz (ITAT Delhi)

ESOP to expatriate employee of foreign company not chargeable for period he was outside India even if ESOP was vested and exercised in India The assessee, an employee of M/s UTIO, USA, was granted “employee stock options” of 34000 shares on 9.01.2004 when he was outside India. The assessee was deputed to the India liaison office on 01.04.2006 and the stock options vested on 09.01.2007 when he was in India. The assessee exercised the stock options on 01.02.2007, when he was still in India. The AO held that as the assessee was in India on the date of vesting and exercise of the stock options, the entire benefit thereof was assessable as a perquisite in his hands. However, the CIT(A) held that as the employee had been in India for only for a part of the time of the vesting period, only a proportionate stock option benefit, which is attributable to the period spent in India accrued to the employee and was chargeable to tax in India. On appeal by the department to the Tribunal HELD: If a part of the activity done by the assessee-employee has no relation to any India specific job or activity it is not chargeable to tax in India. On facts, the assessee was in India only for a short period i.e. 1.4.2006 onwards. Prior to that, he has not done any service connected with any activity in India. Accordingly, as the assessee has not rendered service in India for the whole grant period, only such proportion of the ESOP perquisite as is relatable to the service rendered by the assessee in India is taxable in India (Sumit Bhattacharya 112 ITD 1 (SB) referred)

India a fully committed partner in tax info exchange: OECD

India has come in for praise by the world's top economic policy body, OECD, for putting in place a robust mechanism for exchange of information on issues related to taxation aimed at curbing black money and tax evasion.

The Paris-based world body, Organisation for Economic Cooperation and Development, has hailed India and said that top world economies consider the country "a very important and fully committed partner with long experience in exchange of information".

The OECD published a report on Wednesday for 13 juridisctions across the world which includes India.

"Later this year, most of these reviews will feed into the ratings assigned to 50 jurisdictions, backing G20 and global forum efforts to strengthen tax cooperation and stamp out cross-border tax evasion," the OECD report said.

The report, according to top sources in the Indian Finance Ministry, will act as a "shot in the arm" for the anti-money laundering and counter tax evasion regime formulated and practised in the country.

The OECD, with top economies like the US and UK as its full-time members, has released the Peer Review Report-phase 2 under the aegis of the global forum for transparency and exchange information for tax purposes.

"The Phase 2 review shows that India's exchange of information practice is in line with the international standard for transparency and exchange of information for tax purposes.

"India's legal framework and its practical implementation ensure that ownership, accounting and bank information is available and accessible by the tax administration in line with the standard," the report said.

"India now has in place appropriate organisational processes and resources to ensure effective exchange of information and greatly improved the timeliness of responses during 2011 and 2012. India is considered by its treaty partners a very important and fully committed partner with long experience in exchange of information," it said.

Under-construction building in an urban land isn’t an exception to definition of ‘urban land’

IT : Construction of building on urban land, whether partly completed or under construction would still be taxable as urban land

Income tax return: What if you miss the deadline

A lot of people miss the deadline every year due to lack of time or plain laziness. Did you miss it too? In case you have, do not worry, you can still file a belated return. As a tax payer, you are likely to fall under one of these four categories. The associated rules and implications are outlined below. Case 1: No pending tax liability Cases where all the taxes have been paid through TDS or advance tax and you don't owe any more to the tax department. This is the safest situation. The income tax return for any assessment year can be filed till the end of that assessment year without any penalty. If it is filed after the end of the assessment year, there is a lump sum penalty of Rs. 5,000. Case 2: Tax liability exists This is the case where you still owe taxes to the government. It can happen due to many reasons. For example: if you have income from other sources, if you have worked in more than one company, etc. In such cases, the basic rule remains the same, i.e., the income tax return for any assessment year can be filed till the end of that assessment year without any penalty. You will be liable to pay a penalty of 1 per cent interest on the balance tax payable. Case 3: You have a tax refund If you have any tax refund then you can file the return even after the deadline without any issue. The only disadvantage will be that your return may be processed late, which may delay the refund process. Case 4: You have to carry forward losses Irrespective of the fact whether you have tax liability or not, if you do not file your income tax return by the deadline then you cannot carry forward the losses of that year to the next year. Thus, you would lose the benefit of setting off of these losses against the income of next year. However, there is an exception to this rule. This rule doesn't apply to loss from house property, which means this loss can be carried forward even if the income tax return is filed after the deadline.

Refined Palm Oil Imports Could Jump 69% To Record: Sea

31 Jul, 2013

NEW DELHI: India's refined palm oil imports could surge almost 69 percent to a record high in the year ending October, a key industry official said, as consumption picks up pace ahead of the festival season starting next month.



Higher purchases will heighten calls to raise import duties to protect local oilseed growers and refiners, many of whom are operating at about a third of capacity as they battle cheap supplies from top exporters Indonesia and Malaysia.



"If the trend that favours the imports of refined palm oil continues, then domestic refiners would turn into packers of imported refined oil, instead of being processors of the crude palm oil," said B. V. Mehta, executive director of the Mumbai-based trade body Solvent Extractors' Association.



Imports of refined palm oil by the world's top buyer of vegetable oils could be as high as 2.7 million tonnes in the year to Oct. 31, up 1.1 million from a year ago, Mehta said.



India's imports of refined, bleached and deodorised (RBD) palmolein hit a record 373,837 tonnes in May, prompting industry experts to see a continuing trend. A dip in June to 296,230 tonnes was mostly due to weakness in the rupee, which made imports more expensive.



The SEA will publish July import figures in mid-August.



India's refiners have lobbied for government intervention to make imports of refined palm oil more expensive, but Delhi's worries about inflation, now running at around 5 percent, have stalled any action.



The country now levies a 2.5 percent duty on crude palm oil imports and 7.5 percent on refined palm oil imports.



Narrow spread to support imports



Refined palm oil imports could come in at 250,000-300,000 tonnes per month in the four months to Oct. 31, supported by the spread between crude and the refined variant that has dropped to around $5 per tonne, traders said.



On some days, there is no difference in price, traders added. A year ago, the differential was $30 to $40 per tonne.



Refined palm oil's premium to crude has been shrinking since last year because high output has prompted the world's top two producers of the edible oil to adopt export measures to promote sales of the refined product.



Demand for refined palm oil will also get a boost as India gears up for its festival and wedding season, which starts next month and sees out the year, with an accompanying rise in consumption.



India imports about 60 percent of its cooking oil demand of 17 million to 18 million tonnes, with palm oil's share at about 80 percent of the imports.



India's total 2012/13 palm oil imports could be 8.7 million tonnes, up 13 percent from a year earlier, said Govindbhai Patel, a managing partner at GG Patel & Nikhil Research Co.



Projected total palm oil imports include 6.2 million tonnes of the crude variant, said Patel, a crop statistician who has been in the edible oil trade for three decades.

Source:-economictimes.indiatimes.com

India: Cotton Textile Exports "Should Do Better"

31 July 2013

While the Indian cotton textile industry has increased its global competitiveness over the last decade, its exports have not shown similar results a new study shows.



According to the report compiled by Zurich-based consultancy agency Gherzi, in 2012 the Indian clothing and textile industry employed 35m people and its average wages were almost half of China's but still about double those of Bangladesh and Vietnam.



India's export competitiveness against China has improved due to 23% depreciation of the Indian rupee between 2000 and 2012, said the report.



However, India's market share in global textile and clothing trade could only increase from 3% to 4% during the period, while China managed to double its share from 17% to 35%.



The report blamed ad hoc policy interventions that harmed the overall performance of the Indian textile industry.



For instance, in 2010, a popular Technology Upgradation Fund Scheme (TUFS) was discontinued for 11 months due to lack of funds, which postponed several textile industry investment projects. And that year, the government capped cotton exports at 720,000 tonnes, harming the expanding spinning sector.



It also pointed out that the fact Indian cotton prices are now close to global norms would help sustain development of the clothing and textile sector throughout the value chain, reducing the risk of cotton price change shocks.



Entitled 'Cost Benchmarking Study - India vis-à-vis Bangladesh, Indonesia, Egypt, China, Pakistan and Turkey', it was commissioned by the Indian Cotton Textiles Export Promotion Council and released in New Delhi last week.



Source:-www.just-style.com

New Tariff Guidelines For Major Port Projects

Jul 31, 2013

MUMBAI: Union minister for shipping G K Vasan announced new tariff guidelines for major port projects in Mumbai Wednesday. The ministry claims the simplified procedures will increased investment flows into the sector.



Various stakeholders had complained that the existing tariff authority for major ports' regulations was detrimental to growth. There was no level playing field between major ports and non-major ports. The new tariff guidelines will not cover projects that have already been awarded.



The tariff authority for major ports (TAMP) will first set the reference tariff (RT) for a particular commodity at a major port. This will typically be the highest prevailing rate that was set along 2008 guidelines. If that commodity is not handled at that port, the highest tariff at the nearest major port will be used as RT.



RT will be applicable for five years and will be indexed to inflation up to 60 of wholesale price index. TAMP will notify performance standards of facilities and services offered at the port project. Both RT and performance standards will be mentioned in the bid document and bids will be evaluated on the basis of RT.



Indexed reference tariff will be the ceiling tariff in the first year of operation though the operator can propose a higher tariff from the second year subject to a cap of 15%. Upward revision will be allowed once in the financial year.



The ministry has set an ambitious target to award 30 port projects during 2013-14 which will add 288 million tons per annum (MTPA) with an investment of approximately Rs 25,000 crore. This includes the Rs 8,000 crore big-ticket project of the fourth container terminal at JNPT in Navi Mumbai.



Source:-timesofindia.indiatimes.com

Govt Raises Import Tariff Value Of Gold To $430 Per 10 Gms

31 Jul, 2013

NEW DELHI: The government today raised the import tariff value of gold at $ 430 per ten grams and that of silver to $ 639 per kg as prices of the precious metals have risen in the global market.



Tariff value -- the base price on which the customs duty is determined to prevent under-invoicing -- of gold and silver stood at $ 416 per 10 gram and $ 638 per kg, respectively earlier.



The notification, issued by the Central Board of Excise and Customs, has come on a day when gold prices regained the Rs 29,000 level after nearly four months by surging Rs 755 to Rs 29,200 per 10 grams in the national capital.



Gold in Singapore, which normally sets the price trend on the domestic front, rose by one per cent to $ 1,339.74 an ounce and silver by 1.4 per cent to $ 20.01 an ounce.



India, the largest gold consumer in the world, imported 860 tonnes of gold in 2012. In the first three months of 2013 calendar year, import stood at 215 tonnes. Gold import stood at about 335 tonnes in the April-June quarter.



Meanwhile, Finance Minister P Chidambram today said: "We hope to contain gold imports at a level of well below last year's total imports of 845 tonnes and save a considerable amount of foreign exchange which will have a positive impact on CAD."



"Imports were low in June but in July it has turned again...in July the imports have risen, therefore those measures (to contain imports) continue," Chidambaram had said earlier.

Source:-economictimes.indiatimes.com

Rupee Weakens To 60.83 Against Dollar

The Indian rupee weakened to 60.83 in early trades on Wednesday dashing hopes of a sustained recovery after yesterday's dramatic rebound. The partially convertible currency traded at 60.79 as of 09.10 a.m. against Wednesday's close of 60.40.



The rupee closed higher yesterday after recovering from a near-record low hit earlier in session, as policy makers pledged renewed efforts to defend the currency, while traders also cited RBI intervention.



Finance Minister P Chidambaram suggested the government was considering options, including bringing in more foreign inflows, in a bid to narrow a record high current account deficit which has been a key factor in the rupee's weakness.



RBI Governor D Subbarao dispelled some of those doubts on Wednesday, saying the central bank would stick to its defence of the rupee until exchange rates stabilise, and easing uncertainty just a day earlier after his remarks about a potential rollback of cash-draining steps led the rupee to fall 1.8 percent.



Traders also cited dollar sales from the central bank on two occasions to prop up the rupee.



The rupee has slumped 1.7 percent for the month, its third successive month of losses, even after the Reserve Bank of India unveiled steps to defend the currency by draining cash, as the efficacy of the moves were put into question by doubts about the central bank's resolve.



Source:-profit.ndtv.com

Even a co. with profit making apparatus and leading BOD can’t escape charge of oppression

CL: If company was profit making or with eminent Board of Directors it ought not to presumed that same could not indulge in oppression and mismanagement

AE’s financial results are irrelevant to determine ALP of international transaction entered into wit

IT/ILT : AE’s financial results irrelevant for determination of ALP of international transaction entered into by assessee

FIIs investment in ARC: Fetter of 10% investment on each tranche has been removed; Cap on investment

FEMA/ILT : FEM (Transfer or Issue of Security by a Person Resident Outside India) (Amendment) Regulations, 2013 - Amendment in Regulation 5, Schedule 1 & Schedule 5

AO can't initiate re-assessment without an allegation of failure of assessee to disclose material fa

IT : Where Assessing Officer in reassessment proceedings treated share application money received by assessee as unexplained cash credit under section 68 and added same to its income, since in reasons recorded there was no specific allegation that assessee had failed to truly disclose any material facts at time of assessment, reassessment proceedings were illegal and without jurisdiction

Commitment charges are in nature of interest and not liable to service tax

ST : Commitment charges for guarantee facilities not availed are in nature of interest and are not liable to service tax

SC-Failed candidate could endanger lives of PSC Interviewer; their personal details out of ambit of

RTI Act: Disclosure of names and addresses of members of Interview Board of PSC would ex facie endanger their lives; such disclosure would serve no fruitful public purpose

Gain from sale of shares held as investment to be taxed as capital gains and not as business income

IT : Fact that assessee was trading in shares would not estop assessee from dealing in shares as investment and to offer such gain for tax under head 'capital gains'

Granting an NOC to appoint the stockist and fixation of trade margins is anti-competitive

Competition Act: Where opposite party -AIOCD was engaged in practice of grant of NOC for appointment of stockist, fixation of trade margins, collection of PIS charges and boycott of products of pharmaceutical companies, actions of AIOCD were anti-competitive in nature

Forward contracts claimed as a hedging transaction should have direct nexus with domain of assessee

IT : For hedging transactions it is necessary that commodity in respect of which forward transactions have been made by assessee must have a direct connection with goods manufactured or sold by assessee

Assessment of damage to motor vehicle by a third party isn’t an ‘insurance transaction’

ST/ECJ : Motor vehicle damage assessments carried out, on behalf of its members, by an association whose members are insurance companies are neither insurance transactions nor services related to insurance transactions that are performed by insurance brokers or insurance agents

ITO vs. Sun Pharmaceutical Industries Ltd (ITAT Mumbai)

S. 195 TDS: Application for refund of TDS due to cancellation of contract with non-resident can be made vide s. 154 application The assessee remitted consulting charges/fees to a Taiwan based company called ‘Scandinavian Health Ltd’ on which it did not deduct tax at source u/s 195. The AO passed an order u/s 201 & 201(1A) by which he held the assessee to be in default. The assessee filed an application u/s 154 in which it pointed out that the agreement with the Taiwanese company had been subsequently cancelled and that there was no obligation to deduct TDS as per the CBDT’s Circular No.7 of 2007 dated 23.10.2007. The AO rejected the application on the ground that there was no mistake apparent from the record. On appeal, the CIT (A) upheld the claim and directed the AO to verify whether the conditions laid down in Circular No. 7 of 2007 for a refund of tax already collected had been satisfied. The department filed an appeal before the Tribunal claiming that there was no apparent mistake in the AO’s order and that the CIT(A) had admitted new evidence without granting any opportunity to the AO. HELD by the Tribunal dismissing the appeal: Before the CIT(A) the assessee filed copies of various invoices raised on it in pursuance to the contract by the Taiwanese company and also filed copy of credit note issued pursuant to the cancellation of the contract and documents showing inward remittance of the amount earlier paid. The CIT(A) held that the case of the assessee is covered by sub-clause (b) of clause 2 of Circular No. 7 dated 23.10.2007 and clause 2(b) of Circular No. 790 dated 20.04.2000. In para 2.1 of Circular 7 dated 23.10.2007, it is clearly provided that once the amount already remitted in pursuance of a contract has been refund back to the remitted after cancellation of the contract, no income accrues to the non-resident. It is also provided in the circular that the amount of tax paid u/s195 can be refunded to the deductor with prior approval of the CCIT. The detailed procedure is provided in the said circular and certain pre-conditions are to be satisfied, suitable undertaking from the deductor has to be obtained before the refund can be issued. It is also specified that refund can be given only if the non-resident has not filed any return and the time limit for filing of return has already expired. It was held that as the contract has been cancelled and the money has been received back, no tax is payable by the non-resident assessee. The CIT (A) directed the AO to verify that the conditions laid down in Circular No.7 of 2007 have been satisfied. There is no infirmity in the order of the CIT(A) and it cannot be said that AO was not allowed any opportunity as he has to verify the details before granting any refund of tax if any.

CIT vs. Vector Shipping Services (P) Ltd (Allahabad High Court)

S. 40(a)(ia) disallowance applies only to amounts “payable” as of 31st March and not to amounts already “paid” during the year. Merilyn Shipping (SB) approved The assessee engaged Mercator Lines Ltd to perform ship management work on behalf of the assessee for which it paid an amount of Rs. 1.17 crore. The assessee claimed that the amount paid by it to Mercator was a ‘reimbursement of salaries’ and that as Mercator had deducted TDS on the payments made by it to the employees, the assessee was not required to deduct TDS. The AO disagreed and disallowed the entire payment u/s 40(a)(ia). The Tribunal upheld the assessee’s claim and held that no TDS was required to be deducted on a reimbursement. It also relied on Merilyn Shipping and Transport Ltd 136 ITD 23 (SB) where it was held that s. 40(a)(ia) applied only to amounts that were “payable” as at the end of the year and not to amounts that had already been “paid” during the year. On appeal by the department, HELD dismissing the appeal: The revenue cannot take any benefit from the observations made by the Special Bench of the Tribunal in Merilyn Shipping and Transport Ltd 136 ITD 23 (SB) to the effect that s. 40 (a) (ia) was introduced by the Finance Act, 2004 w.e.f. 1.4.2005 with a view to augment the revenue through the mechanism of tax deduction at source. S. 40(a)(ia) was brought on the statute to disallow the claim of even genuine and admissible expenses of the assessee under the head ‘Income from Business and Profession’ in case the assessee does not deduct TDS on such expenses. The default in deduction of TDS would result in disallowance of expenditure on which such TDS was deductible. On facts, tax was deducted as TDS from the salaries of the employees paid by Mercator Lines and the circumstances in which such salaries were paid by Mercator Lines for the assessee were sufficiently explained. It is to be noted that for disallowing expenses from business and profession on the ground that TDS has not been deducted, the amount should be payable and not which has been paid by the end of the year.

CIT's nod to suggestion given by audit party won't be deemed as approval under sec. 151 for reassess

IT: Approval of Commissioner to suggestions given by audit party could not be taken as substantial compliance under section 151 for reopening of assessment after expiry of four years from end of relevant assessment year

HC upheld prosecution for non-filing of return when SetCom didn't grant specific immunity therefrom

IT: Since Settlement Commission had not granted specific immunity in respect of prosecution for non-filing of return, same was valid

INCOME TAX APPELLATE TRIBUNAL : KOLKATA BENCHES : KOLKATA CONSTITUTION OF KOLKATA BENCHES FOR THE PERIOD FROM 29-07-2013 TO 01-08-2013

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Supply of bought goods by service provided is 'sale' and not service

ST : Where services provided by assessee are utilized only for SEZ operations, they must be regarded as consumed within SEZ and eligible for exemption under Notification No. 4/2004-ST

Indian Co. can't be treated as an agent of a foreign Co. if no opportunity of being heard is extende

IT/ILT: Indian company cannot be treated as agent of foreign company without giving opportunity of hearing and passing order under section 163

If books aren’t accessible, CA’s audit report is as reliable as actual books in assessment proceedin

IT: Where accounts were audited by Chartered Accountants on basis of books of account and assessee's books were not rejected during assessment, assessing authority should rely upon auditor's report

India's Iron-Ore Imports Seen Soaring This Year

30-Jul-2013

NEW DELHI—India, a leading iron-ore exporter just a few years ago, will see its imports of the key raw material jump as much as eightfold during the current financial year due to domestic mining restrictions, the Federation of Indian Mineral Industries said Tuesday.



This would mark a dramatic reversal for India, which was the world's third-largest iron-ore exporter until two years ago. But domestic output has plummeted by around half since then after environmental concerns prompted legal restrictions on mining in certain areas.



India's imports of iron ore, a key ingredient in steel, are likely to reach 20 million-24 million metric tons this year, up from around 3 million tons during the year that ended March 31, FIMI said.



This is likely to benefit Australia and Brazil, the world's two largest iron-ore exporters, who have been hit by lower prices, slowing global demand and spiraling costs, FIMI President H.C. Daga said.



India's Supreme Court ordered a halt to production at mines in the southern state of Karnataka in early 2012 due to concerns about the environmental impact of illegal mining. The court recently lifted the ban for most of the mines but imposed conditions on the resumption of operations that could take mines up to a year to meet.



Production at iron-ore mines in western Goa state and exports from eastern Odisha have also been halted by similar court ordered-probes into illegal mining.



India's iron-ore exports are likely to fall to around 10 million tons this year from 18.37 million tons in the previous financial year, FIMI Secretary-General R.K Sharma said.



He said iron-ore production is likely to fall to around a 100 million tons from 115 million tons in 2012-13.



India's iron-ore exports are likely to fall to around 10 million tons this year from 18.37 million tons in the previous financial year.



Mr. Daga said the decline in exports resulted in a loss of potential earnings of around $17.5 billion since 2010-11.



Despite a small bounce in recent weeks, international iron-ore prices remain well below their 2011 peak of $191.90 and down by around a fifth from their 2013 high.

Source:-online.wsj.com

Amnesty Scheme For Service Tax Defaulters Fails To Take Off

MUMBAI: The amnesty scheme for Service Tax defaulters, christened Service Tax Voluntary Compliance Encouragement Scheme, has not taken off, as the trade and industry await more clarity.



A major hurdle that precludes service tax defaulters from disclosing under the scheme is the fear that if their disclosures are rejected by service tax officials, the information in the disclosure could be used against them, in the form of a notice demanding interest and penalties on the basis of the undisclosed income offered in their disclosures. Sachin Menon who heads the Indirect Tax division at KPMG said: "There is an apprehension that if the disclosure is rejected by the service tax authorities, the amount paid can be forfeited by the authorities. So, there is great need for the government to revisit some of the provisions of the scheme to make it successful".



Industry and trade fear that in its existing structure, the scheme provides vast discretionary powers to the service tax officials, in the matter of accepting or rejecting the disclosures. For example, the scheme makes it ineligible for those facing inquiry or served audit notice, from subscribing to the scheme but leaves it to the service tax officials to interpret what constitutes a "pending investigation " or "initiation of Audit".



The scheme does not explain what constitutes a pending investigation. Routinely notices have been served to assessees, asking for information. Do such notices be construed as a pending investigation" or at what stage of a process it can be presumed that an audit has been initiated, an official affiliated to an industry association asked.



"It needs to be appreciated that the service tax department routinely calls for information / documents from the assessees for various purposes. There is no mechanism in place either under the law or by practice to make the assessee aware whether or not an inquiry or investigation has been initiated against it on the basis of such information or documents having been provided to the department," Ficci in its memorandum to the Finance Ministry said. Service tax has become a major component of the government's tax collection exercise since 1994 when it brought under the service tax net four service sectors, from which it raised over Rs 4,000 crore.



What began with a Rs 4,000 crore collection in the year of inception has now evolved into a Rs 1.8 trillion service tax collection projected for the current fiscal.



A senior service tax official in Mumbai said: "We are expecting the ministry to clarify certain provisions in the scheme to encourage maximum disclosures. The ministry is expected to clarify soon what constitute a 'pending investigation' and 'initiation of audit'. These are the two issues trade and industry are wary about.

Source:-economictimes.indiatimes.com

Company’s failure to reply to statutory demand notice leads to admission of winding up petition agai

CL: Where company did not reply to statutory notice of demand, it should be deemed unable to pay its debt and, thus, winding up petition filed by creditor would be admitted

Epch To Present Export Awards To 65 Exporters Today

30-Jul-2013

Considering Handicrafts an important segment of the India's export basket, the Export Promotion Council for Handicrafts (EPCH), nodal body for handicraft exports, will distribute the 19th Export Awards to 65 companies at an event in New Delhi on July 30.



Apart from 65 awards, three Life Time Achievement Awards, two Special Commendation & one Institutional Award will be distributed for their outstanding contribution to promote Handicrafts Sector.



Dr. K.S. Rao, Union Minister of Textiles, Govt. of India will distribute the awards. Shiela Dixit, Chief Minister of Govt. of NCT, Delhi will preside over the ceremony. Panabaaka Lakshmi, Union Minister of State for Textiles will be the Guest of Honour.



Zohra Chatterji, Secretary (Textiles), Ministry of Textiles, S.S. Gupta, Development Commissioner (Handicrafts) and other senior officials of the Govt. will be present at the award ceremony, leading luminaries of the handicrafts business, prominent personalities and representative of diplomatic core will also witness the ceremony.



The awards to 65 companies from different states of the Country will be distributed for their export performance during the year 2011-12.



C. L. Gupta Exports Ltd, J.P. Nagar(Moradabad) is receiving Top Export (All Handicrafts). 25 trophies including 03 women entrepreneur and 20 merit certificates shall be given for top export in different product categories, 14 merit certificate be given for excellent export growth and 6 regional awards to the exporters for highest export in each region. HAT-TRICK TROPHY is being given to M/s Hem Corporation for their consistent export performance.



Five types of awards are given to exporters under 22 qualified product categories in addition to merit certificates, regional export awards, life time achievement award and woman entrepreneur award. All these awards are decided by a committee headed by Addl. Development Commissioner (Handicrafts), Ministry of Textiles, Govt. of India.



The export awards were instituted by EPCH in the year 1989 under the overall supervision, guidance and control of the Development Commissioner(Handicrafts) in the Ministry of Textiles. The objective was to create a sense of healthy competition within the exporting community to achieve more and more so that ultimately exports of handicrafts continue to grow year after year.



The Export Promotion Council for Handicrafts(EPCH) is an apex body to promote exports of Handicrafts worldwide. The EPCH undertakes many important steps to facilitate production bases in the country in terms of technology, finishing, designs, packing etc and the Council also takes measures for developing International market. In fact, EPCH is an important catalyst between the producers, exporters, importers and government agencies.



The exports of handicrafts which were Rs. 386 crore in 1986 have now touched the stage of Rs.17970.12 crores in the year 2012-13.



In dollar terms, the exports have shown increase of USD 3304.90 million (2012-13) from USD 2705.66 million (2011-12) a growth of 22.15 % during the period April-March 2012-13.

Source:-www.smetimes.in

Rupee Opens At 60.84 Per Dollar

Indian rupee opened weak by 36 paise at 60.84 per dollar against 60.48 Tuesday. "With no new measures forthcoming from the central regulators and with policies that are hurting economic growth, the rupee has again revived its downward trend after consolidating for a couple of trading sessions, says Pramit Brahmbhatt, Alpari India.

On Wednesday the Indian rupee continues its downtrend as it opened weak by 36 paise at 60.84 per dollar against 60.48 Tuesday.

Pramit Brahmbhatt, Alpari India said, "With no new measures forthcoming from the central regulators and with policies that are hurting economic growth, the rupee has again revived its downward trend after consolidating for a couple of trading sessions. Moreover, month-end dollar demand will put more pressure on the rupee. The range for the day is seen between 60.10-60.90/USD."

The euro steady above 1.32 to the dollar. The dollar index was around 81.80 levels. The dollar yen was at 98.

Source:-www.moneycontrol.com

Agri Ministry Proposes Rise In Import Duty On Refined Oil

July 30, 2013

The ministry of agriculture has recommended for increasing the import duty on refined oil. As per the proposal, the ministry has suggested to increase the import duty from existing rate of 7.5% on imported refined edible oil to 10%.



This will make import of refined edible oil expensive in comparison to the crude edible oil. These recommendations will be placed before the cabinet committee.



At present, the imported cost of refined edible oil is cheaper than importing crude oil due to inverted duty structure adopted by exporting countries like Indonesia and Malaysia.



These countries have imposed tariff on export of crude edible oil to encourage export of refined edible oil and thus incentivise the domestic edible oil refining in their respective countries - Indonesia and Malaysia.



Reportedly, Since October 2011, in the exporting countries the export tax on crude palm oil export is much higher than refined oil. The export duty rates are changed each month in line with market prices of palm oil. Higher the palm oil prices, higher is the export duty, and consequently higher is the difference between export tax on crude palm oil and refined palm oil / palmolein, explained industry sources.



Due to such inverted duty structure, the differential between the Crude palm oil (CPO) and Refined Palmolein which was around $90-100 pmt stands currently only at around US$10 -20pmt. Therefore the Indian traders are favouring import of refined edible oil rather than importing crude oil and then refining it for selling in the domestic market.



On the other hand, in January 2013, the government imposed a duty of 2.5% on CPO from zero import duty earlier, thereby lowering the duty differential between imported and refined palm oil to five% from earlier 7.5 %. In May 2013, the proportion of refined oil to India's vegetable oil imports rose to a staggering 42%, compared with just 16% in March, according to data compiled by the Solvent Extractors' Association (SEA).



Meanwhile, the share of crude oil in the overall imported vegetable oil basket declined from 84% two months ago to 58%. Currently, domestic edible oil crushing and refining units are operating at 30-35% capacity, against about 50% a year ago, industry sources said.

Source:-www.business-standard.com

Pharma Export Growth From India Declines With Slow Down In Us, European Markets, Exporters Seek Govt Support

Faced with slowdown in some key markets like North America and Europe coupled with increasing competition from China in the international markets, pharmaceutical exporters in India are seeking some urgent short-term measures from the Union Government, if not any subsidies or funds.



Representing the exporters, industry leaders and Pharmaceuticals Export Promotion Council of India (Pharmexcil) have already suggested short-term, medium-term and long term measures to revive the exports and sought the intervention of the Commerce Ministry.



As the short-term measures, they have asked for some rebates and cuts in duties for the exporters while suggesting that proposed venture funds and financial assistance can be launched as long-term measures. Immediate reliefs in the form of duty cuts would improve the morale of the exporters, they suggested.



The growth rate of pharmaceutical exports is expected to fall below 10 percent this year due to the slowdown in markets like North America and Europe. “Going by the initial reports in the first quarter of the current financial year, the rate cannot go beyond nine per cent,” pointed out Pharmexcil SME panel chairman Nipun Jain.



The growth of Indian pharma exports during 2012-13 halved to 10.55 per cent over previous year to $14.6 billion. During 2011-12 the exports stood at $13.2 billion registering a growth of 23.7 per cent over 2010-11, according to the figures from the Pharmexcil.



What has added pressure on Indian exporters is the increasing competition from China. “India has been the leader in supplying paracetamol world-wide. In the first three months of the current year, Indian company has not won even one contract for global supply and Chinese companies have bagged the orders instead,” an industry leader said, pointing out the trend.

Source:-www.pharmabiz.com

Unlisted shares of Public Cos covered by definition of 'securities'; provisions of SCRA are applicab

SCRA: Shares of public limited company not listed in stock-exchange are covered within ambit of Securities Contracts (Regulation) Act, 1956

SEBI specifies operational, prudential and reporting norms for Alternate Investment Funds

SEBI : Operational, Prudential and Reporting Norms for Alternative Investment Funds (AIFS)

Cos with odd events like merger or demerger to be excluded from list of comparables

IT/ILT : Where there were extraordinary events like merger or demeger during relevant financial year having effect on financial results of companies, they could not be taken as comparables

Remand order can’t be challenged for an issue which could be addressed with execution of such remand

IT: Where Tribunal by passing an open remand order directed Assessing Officer to re-consider issue relating to exclusion of miscellaneous income for allowing deduction under section 80HHE, objection raised by revenue that said order would impliedly mean that Tribunal had held all other incomes intimately connected with business of assessee, did not require separate adjudication

Maintenance and insurance of rented property are input services

ST : In case of a provider of services engaged in renting of immovable property, maintenance and insurance of such property are eligible as input services

Sum advanced to a shareholder after it ceases to be a beneficial owner ins't a 'deemed dividend'

IT: Beneficial ownership of shares be established to treat loan advanced by a company to its shareholder as deemed dividend

NBFCs shall engage only registered telemarketers for promotional activities, RBI reiterates

NBFC : Unsolicited Commercial Communication- National Do Not Call Registry

Interest on Rupee Denominated Bonds not to exceed 500 bps over base rate of SBI, CBDT notifies

IT : Section 194LD of The Income-Tax Act, 1961 - Income by Way of Interest on Certain Bonds and Government Securities - Notified Rates of Interest on Rupee Denominated Bond of An Indian Company

Application of TNMM requires adjustments for capacity utilization in profit margin of comparables

IT/ILT : Rule 10B requires that, for TNMM, profit margin of comparables be adjusted for capacity utlilisation

Prior to 1-5-2006, only firms and not companies were liable to ST under Consulting Engineer’s Servic

ST : Prior to 1-5-2006, word "firm" as appearing in section 65(31) does not include a 'company' or 'any other body corporate'; hence, a company cannot be made liable to service tax under 'Consulting Engineer's Service'

Unexplained credit held valid as no reasons were given by assessee for retraction from his confessio

IT: Where assessee admitted a certain sum as his undeclared investment in two confessional statements and thereafter he retracted from said statements, but did not assign any reason for same, addition in hands of assessee was to be made

Income tax returns: 9 tax saving options other than Section 80C

Before you calculate your tax liabilities, remember to analyze the various sections of tax deductions under the Income Tax Act as tax planning does not end with Section 80C. (Calculate your tax liability here) 80D: Tax deduction under section 80D qualifies for mediclaim policies. The premium, which is paid for medical insurance policy for self and family members to protect them from sudden medical expenses, comes under this section. The maximum amount allowed for exemption annually for self, spouse and dependent parents/children is Rs. 15,000. In case of a senior citizen, the maximum amount extends up to Rs. 20,000. If you are paying the premium for your parents (whether dependent or not), you can claim an additional maximum deduction of Rs. 15,000. 80DD: According to the Income Tax Act, if you are paying a premium to LIC or any other insurance company (approved by the Income Tax board) for the medical treatment of a dependent physically disabled person, you can avail exemption under the section 80DD. Here, the dependent should be none other than your spouse, children, parents or sibling. If the person is suffering from 40 per cent of any disability, a fixed sum of Rs. 50,000 can be claimed in a year. Similarly, if the disability is 80 per cent, the fixed sum goes up to Rs. 1,00,000 per year. For initiating the process of deduction you need to submit the medical certificate issued by a medical authority along with the return of income. 80DDB: If you have incurred expenses for the medical treatment of self or your dependents, you can claim a deduction of up to Rs. 40,000 or the actual amount paid, whichever is less, under the section 80DDB. For a senior citizen, the maximum exempted amount is Rs. 60,000, or the amount actually paid for medical expenses. To claim a deduction under this section, you need to submit a medical certificate from a doctor working in a government hospital. 80E: The interest paid on loan taken for pursuing higher education of self or any dependent is exempted from tax under section 80E. An education loan can be taken for wife, children and minors for whom you are the legal guardian. This deduction is applicable for a period of eight years or till the interest is paid, whichever is earlier. The deduction is only approved for higher studies, which means full-time graduate or postgraduate courses in engineering, management or applied sciences, pure sciences including mathematics or statistics. However, from 2011 onwards, the scope of this exemption has been extended to cover all fields of studies including vocational studies pursued after completing the senior secondary examination or equivalent. No exemption is applicable for part-time courses. 80G: One often donates on philanthropic grounds to help the destitute. Such an amount can be donated to trusts, charitable institutions and approved educational institutions, and qualifies for deduction under Section 80G. The exemptions can be up to 50 per cent or 100 per cent of the donations made. Funds in which the donations are eligible for tax exemptions include the National Defence Fund, Prime Minister Drought Relief Fund, National Foundation for Communal Harmony, National Children's Fund, Prime Minister's National Relief Fund, etc. 80GG: If a salaried or self-employed person staying in a rented house does not receive any kind of HRA, they can claim a deduction under this section. However, you cannot avail any such benefit if you, your spouse and/or your child owns any residential accommodation in India or abroad. You can claim the least of the following under Section 80GG: 25 per cent of the total income, or Rs. 2000 per month, or excess of rent paid over 10 per cent of total income. 80GGC: Any monetary contribution to any political party or electoral trust is eligible for tax exemption. Thus, your contribution, as a matter of appreciation for their work, will serve both the purposes. 80U: A resident of India suffering from any kind of specified disability is eligible to claim tax deduction under this section. In order to enjoy this opportunity, one should be suffering from not less than 40 per cent of the following diseases: blindness, low vision, mental illness, mental retardation, hearing impairment. The deduction provided is flat Rs. 50,000, irrespective of the expense incurred. If the disability is severe, the deduction can be up to Rs. 1 lakh. One needs to provide a copy of all the certificates issued by a medical authority in order to avail this benefit. 80CCG: The Finance Act 2012 introduced a new Section 80CCG to offer 50 per cent tax break to new investors who invest up to Rs. 50,000 and whose GTI is less than or equal to Rs. 10 lakh. It has been introduced for budding investors entering the equity markets for the first time and is a once-in-a-lifetime benefit. Hence, there are several sections apart from 80C that can help an individual benefit from tax exemptions. It is time to start looking beyond 80C for tax savings.

Service Tax on under construction property – To Pay or Not?

As per the new rules, Service Tax will be calculated at the rate of 12.36 percent of the gross value of the property. But, because there is a Government abatement of 75 percent (increased from 67 percent), tax will be levied only on 25 percent of the gross value of the property. The effective rate of service tax is therefore 2.575 percent.

Also read: CBEC to target 12 lakh non-filers of service tax: FM

The 2010-11 budget imposed service tax on all under-construction properties from July 1, 2010. Now, according to the Service Tax Act [Section 65(105)], the developer or builder of an under-construction property has to pay service tax when he sells a property to a buyer. There is only one situation in which the builder does not have to pay service tax when he sells an under-construction property: When he sells a building after a completion certificate is obtained from local authority and entire consideration is obtained from the buyer only after building completion certificate is obtained.

Therefore, although paying Service Tax is mandatory, it can be avoided if:

a. The builder has obtained a completion certificate from the issuing authority.

b. The buyer has paid the entire consideration only after the building completion certificate had been obtained by the builder.

Please note that you can even get the completion certificate from an architect or chartered engineer or licensed surveyor. It is not necessary to go to a Government authority to get the completion certificate. You may rely on the notification issued by the Government of India (D.O.F.No.334/03/2010-TRU) which reads as follows:-

“Before the issuance of completion certificate if agreement is entered into or any payment is made for sale of complex or apartment in residential complex, service tax will be leviable on such transaction since the builder provides the construction service. Completion certificate issued by a Government authority was prescribed as demarcation by introducing an Explanation in the Finance Act. During the post budget discussions, it was pointed that practice regarding issuance of completion certificates varies from state to state.

Considering the practical difficulties, the scope of the phrase ‘authority competent’ to issue completion certificate has been widened by issuing an order for removal of difficulty (Refer M.F.(D.R) Order No.1/2010 dated 22nd June 2010). Completion certificate issued by an architect or chartered engineer or licensed surveyor can be now taken to determine the service tax liability.”

However, this exemption above is only from paying Service Tax. You will have to pay Stamp Duty on the sale value of the property if you purchase property after construction.

Individuals holding fractional shares won’t make them a separate class; amalgamation scheme couldn’t

CL : Decisive factor for determining class of shareholder is not shareholding pattern but category of shares that one held; merely because some individuals held small fraction of shares would not make them a separate class

Transfer of life insurance contracts is a supply of service

ST/ECJ : A transfer for consideration of a portfolio of exempted life reassurance contracts constitutes a supply of services, but, it does not amount to provision of exempted insurance services and is, therefore, not exempt

Central Excise Notification No 22/2013 dated 29-07-2013

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

Notification No.22 /2013-Central Excise

New Delhi, the 29^th July, 2013

G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the scheduled formulations as defined under the Drugs Price Control Order (DPCO), 2013 published vide S.O. 1221 (E) dated the 15^th May, 2013, falling under Chapter 30 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) and which are subjected to re-printing, re-labeling, re-packing or stickering, in a premises which is not registered under the Central Excise Act, 1944 (1 of 1944) or the rules made thereunder, in pursuance of the provisions contained in the said Drugs Price Control Order (DPCO), 2013, from whole of the duty of excise leviable thereon under the said Central Excise Act subject to the following conditions, namely :-

(i) The scheduled formulations, in respect of which the manufacturer is liable to ensure that the Maximum Retail Price (MRP) of such formulation does not exceed the ceiling price within forty-five days of the date of notification of the ceiling price by National Pharmaceuticals Pricing Authority (NPPA), have been removed from the place of removal on payment of appropriate duty ;

(ii) The re-printing, re-labeling, re-packing or stickering, of the scheduled formulations results in downward revision of the MRP;

(iii) In respect of a given scheduled formulation, the exemption shall be valid for a period of forty-five days from the date of publication of the notification of the ceiling price in respect of such scheduled formulation by NPPA or such extended period not exceeding thirty days as may be permitted by the Department of Pharmaceuticals;

(iv) The manufacturer shall submit a prior intimation to the jurisdictional Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, containing a list of scheduled formulations requiring re-printing, re-labeling, re-packing or stickering alongwith the notification vide which these have been notified by NPPA, various locations and addresses thereof where the scheduled formulations are proposed to be re-printed, re-labelled, re-packed or stickered and the details such as description of the scheduled formulation, present MRP, proposed MRP, batch no., quantity and date of manufacture in respect of each such location. In the case of importer and marketer, they shall submit the intimation to the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, having jurisdiction over their registered office;

(v) Subsequent to the aforesaid operations being carried out, the manufacturer shall submit the details in respect of the said scheduled formulations within a period of one month of such re-printing, re-labeling, re-packing or stickering.

Explanation. - For the purposes of this notification, manufacturer shall include any person defined as manufacturer under paragraph 2(n) of the Drugs Price Control Order, 2013.

[F.No.354/118/2013-TRU]

(Akshay Joshi)

Under Secretary to the Government of India

Relinquishment of rights in property in family settlements in lieu of cash is 'transfer'; chargeable

IT: Relinquishment of right over property in case of a family settlement falls under definition of 'transfer' and exigible to capital gains tax

Scrutiny assessment can't be held invalid on ground that best judgment assessment was called for

IT : Scrutiny assessment completed only on basis of documents found during survey due to non-compliance of notices under section 143(2) and 142(1), cannot be held as invalid on ground that best judgment assessment was called for

DGFT Public Notice No.20/(RE 2013)/2009-14 dated 29-07-2013

GOVERNMENT OF INDIA

MINISTRY OF COMMERCE & INDUSTRY

DEPARTMENT OF COMMERCE

DIRECTORATE GENERAL OF FOREIGN TRADE

PUBLIC NOTICE No. 20 (RE-2013)/2009-2014

NEW DELHI, DATED THE 29 July, 2013

Sub:- Inclusion of Kattupalli Sea Port as a Port of Registration under Para 4.19 of HBP (Vol. I)

In exercise of powers conferred under Paragraph 2.4 of the Foreign Trade Policy 2009-2014, the Director General of Foreign Trade hereby amends para 4.19 of Handbook of Procedures (v1):, 2009-14(RE 2012) to include “Kattupalli Sea Port, Tamil Nadu” as Port of Registration.

Kattupalli Sea Port (Tamil Nadu) shall be added at the end of Sea Ports in paragraph 4.19 of HBP Vol.1 related to Port of Registration.

(In the revised edition of HBP Vol.1 name of this Port would be placed in correct alphabetical order).

Effect of this Public Notice: Kattupalli Sea Port, Tamil Nadu is included under para 4.19 of HBP v.1 for availing export promotion benefits under Chapter 4 of Foreign Trade Policy.

(Anup K. Pujari)

Director General of Foreign Trade

E-mail: dgft@nic.in

(Issued from File No. 01/94/180/ 454/AM11/ PC 4)

INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES AHMEDABAD CONSTITUTION FOR THE WEEK FROM 29/07/2013 TO 08/08/2013

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BIOCON Biopharmaceuticals Pvt. Ltd vs. ITO (ITAT Bangalore)

S. 195(2) TDS: AO has no power to issue Nil TDS certificate The assessee entered into a Joint Venture agreement with CIMAB SA, Cuba, to set up a JVC in India. It was agreed that CIMAB would provide technology to the JVC in consideration for which it would be allotted 49% of the equity capital of the JVC. The assessee filed an application u/s 195(2) claiming that the technology was not chargeable to tax in India and that the shares should be permitted to be allotted without TDS. The AO passed an order u/s 195(2) in which he accepted the assessee’s contention that no TDS was required to be deducted on the allotment of shares. However, later the AO took the view that the allotment of shares in consideration of the technology transfer was chargeable to tax and that the assessee was in default u/s 195 & 201. This was upheld by the CIT(A). Before the Tribunal the following issues arose: (i) whether u/s 195(2) the AO has the jurisdiction to issue a certificate that no tax need be deducted at source, (ii) whether s. 195(1) applies where payment is made in kind and not in money terms & (iii) whether the consideration (in the form of shares) for technology transfer can be said to be “transfer of a capital asset” outside India so as to be exempt from tax? HELD by the Tribunal: (i) S. 195(2) presupposes that the person responsible for making the payment to a non-resident is in no doubt that tax is payable in respect of the some part of the amount to be remitted to a non-resident, but is not sure as to what should be portion so taxable or is not sure as to the amount of tax to be deducted. Consequently, in an application made u/s 195(2), the AO cannot assume jurisdiction to hold that the entire payment is not chargeable to tax and the payer need not deduct tax at source. As the AO had no power u/s 195(2) to hold that no tax is deductible at source, the order passed by him holding that no tax is deductible at source on the technology transfers is non est in law. As there is no estoppel against the law, the assessee cannot take advantage of such an order (GE India Technology Centre 327 ITR 456 (SC) referred) (ii) The argument that s. 195(1) does not apply to a case where shares are allotted is not acceptable because the expression “any other sum chargeable under the provisions of the Act” in s. 195(1) has to be read in conjunction with the words “at the time of credit of such income …. in cash … or by any other mode”. Thus payment in terms of the money is not the only mode contemplated u/s 195(1) of the Act. The use of the expression “or by any other mode” makes the intention of the legislature clear that s. 195(1) applies even to cases where payment is made otherwise than by money. (iii) The definition of “royalty” in Explanation 2 to s. 9(1)(vi) excludes consideration which would be income of the recipient chargeable under the head ‘capital gains’. For application of the above exclusion clause, it is necessary that (a) technical know-how should be a capital asset in the hands of CIMAB, (b) the said technical know-how should be capable of being transferred and should have been transferred by CIMAB, (c) the machinery provisions viz., the computation of capital gain as given in s. 48 should be capable of being applied & (d) the transfer of technical know-how should have taken place outside India. On facts, the assessee has not shown that the transfer of technical know-how took place outside India. Further, the terms make it clear that there was no transfer of the know-how by CIMAB to the assessee but the assessee had a mere right to use the know-how, though the nomenclature used in the Agreement is ‘transfer of technology’. Consequently, the consideration for the know-how constitutes “Royalty” under Explanation 2(iv) to s. 9(1)(vi).

Stay order must be passed in writing and served to the assessee as per section 37C of Excise Act

ST : Any order directing party to make any pre-deposit should be in writing and has to be tendered as per provisions of section 37C of Central Excise Act, 1944, failing which, such order cannot be sustained

Step-by-step guide to file your income tax return online

ET provides a step-by-step guide to help you file tax returns electronically before the July 31 deadline using the official website of the I-T dept or private sites.

July 31, the last day to file income tax returns, is almost here. Sure, you can file returns even after that, but it comes with complications. So, don't count on it.

If you earn above Rs 5 lakh, you have to file returns electronically this year. That means you can file your returns even in the last two days from your home computer. You can seek the help of a professional or do it yourself by using the official website of the Income-Tax department or a host of private websites.

Before we proceed to how to use these portals effectively , let us address a major source of ambiguity this year regarding the applicability of forms ITR-1 and ITR-2 to salaried individuals or pensioners with one house property and interest income. Tax consultants are divided on the interpretation of new provision on exempt income , introduced this year.

According to this provision, those with exempt income exceeding Rs 5,000 cannot file their return using ITR-1 (Sahaj). While some feel that all salaried individuals who have tax-exempt income like House Rent Allowance (HRA), Leave Travel Allowance (LTA) and transport allowance have to use ITR-2 this year, others argue that they can continue to use the much simpler ITR-1 (Sahaj).

"My view is that the exempt income here refers to sources like dividends and not tax-free salary components like HRA and conveyance allowance," explains Divya Baweja, senior director at Deloitte in India. The Income-Tax department is yet to issue a clarification on the matter.

Using the official website

Before you start the process, keep your bank statements, Form 16 issued by your employer and a copy of last year's return at hand. Next, log on to www.incometaxindiaefiling .gov.in. Follow these steps:

Step1: Register yourself on the website. Your Permanent Account Number (PAN) will be your user ID.

Step2:View your tax credit statement — Form 26AS — for the financial year 2012-13 . The statement will reflect the taxes deducted by your employer actually deposited with the I-T department. The TDS as per your Form 16 must tally with the figures in Form 26AS. If you file the return despite discrepancies, if any, you could get a notice from the I-T department later.

Step 3: Under the 'Download' menu, click on Income Tax Return Forms and choose AY 2013-14 (for financial year 2012-13 ). Download the Income Tax Return (ITR) form applicable to you. If your exempt income exceeds Rs 5,000, the appropriate form will be ITR-2 . If the applicable form is ITR-1 or ITR 4S, you can complete the process on the portal itself, by using the 'Quick e-file ITR' link.

Sec. 11 exemption allowed to educational institution providing continuing education and diploma prog

IT: Sec. 11 exemption allowed to educational institution providing continuing education and diploma programs

Agreement for selling packaged drinking water isn’t anti-competitive if other players also exist in

Competition Act: Where informant had many options when it entered into franchise agreement with opposite party for selling packaged drinking water and soda, no case of abuse of dominance by opposite party was made out

Gold Imports Rise In July: Chidambaram

Jul 29, 2013

Gold imports in India, the world's biggest buyer of the metal, rose in July, Finance Minister P. Chidambaram said on Monday, from 31.5 tonnes shipped in June.



The measure to curb imports had effect in June, but imports had risen in July, said the finance minister, without giving details for the gold imports in tonnage or value terms for July.



Last week, India, which imported 304 tonnes of the yellow metal in April and May, tied the imports of the yellow metal for domestic consumption to exports.

Source:-in.reuters.com

Cotton Exports Decline 36% To 9.14M Bales In Aug-June

Jul 28 2013

Eactly when a study by Gherzi, a Zurich-based consultancy agency, has suggested that India’s competitiveness in the cotton textile sector had improved over the last decade against six rivals including China, Bangladesh and Thailand, the latest US Department of Agriculture (USDA) report points out that cotton exports from India have dropped by as much as 36 per cent to 9.14 million bales in the current marketing year’s first 11 months, ended June.



The cotton-marketing year runs from August to July. While the first report dwelt on the cotton textile sector and India’s increased competitiveness in areas like technology up-gradation and manufacturing costs and exports, the second talks about raw cotton.



The USDA’s preliminary estimates say cotton exports from India reached 9.1 million bales (one bale contains 170 kg of cotton) by end-June against 13.91 million bales in the August-June period of the 2011-12 marketing year. Around more or less the same time, another report, this one by the Organisation for Economic Co-operation and Development- Food and Agriculture Organisation (OECD-FAO), projected that India would replace China as the world's largest cotton producer by 2022 propelled by a higher output growth over the next decade.



This report said while China’s cotton production was expected to decline 17 per cent, India’s would go up by 25 per cent, making India the world’s largest producer of cotton. The report attributed this projected rise in production to increasing yields.



However, the growth rate of yield would be slower compared to the previous decade.



Significantly, cotton production in India, according to union agriculture ministry statistics, stood at 338 lakh bales in the 2012-13 crop year (July-June), which is marginally lower than the last year’s level of 353.75 lakh bales (Cotton Association of India figures).



Despite this marginal fall, production is expected to move up. Not just production, according to most studies, consumption too is expected to grow more in India than in any other country. As and when India replaces China as the largest cotton producer and emerges more competitive in cotton textile sector, the consumption will grow further.



One issue that keeps surfacing in the cotton sector is that of hoarding by a section of large traders, which in turn sends cotton prices up. Different stakeholders in the cotton sector keep taking up the issue with the centre, seeking release of stock by the Cotton Corporation of India to domestic mills. The Cotton Association of India, however, thinks that the rise in cotton prices in India in most cases is a reaction to higher cotton prices in the international market. If the price gap between international and domestic cotton narrows, that’s a good sign and that’s in the interest of the farmers, the CAI feels.



When there is good sowing activity and favourable weather, prices fall. Analysts and traders say sowing activity across the country’s cotton producing regions, including Gujarat, is now good. The weather too is behaving nicely. This may bring cotton prices down in the coming weeks

Source:-www.mydigitalfc.com

Rupee Opens Weak At 59.62 Per Dollar

The Indian rupee opened weak by 21 paise at 59.62 per dollar against 59.41 Monday. According to Jayesh Mehta, Bank of America, the rupee is expected to trade on a weaker note on RBI's hawkish comments

The Indian rupee opened weak by 21 paise at 59.62 per dollar against 59.41 Monday.

Jayesh Mehta, Bank of America said, "The rupee is expected to trade on a weaker note on RBI's hawkish comments. Key policy rates are likely to be unchanged in today's policy. The range for the day is seen between 59.40-59.70/USD."

The euro stays above 1.32 to the dollar. The dollar index was around 81.70 levels and the dollar yen was at 98 mark

Source:-www.moneycontrol.com

Textile Exports To Iran Set For A Rupee Push

July 29, 2013

Textile exporters have spotted an opportunity in the crisis in India-Iran trade caused by sanctions on the latter by the West. The textile industry is eyeing the rupee settlement mechanism between the two countries to push textile exports to Iran. D. K. Nair, Secretary General of the Confederation of Indian Textile Industry, says India’s payments to Iran for oil imports are kept in India in the rupee fund administered through UCO Bank (45 per cent of the payments for oil are made to the rupee account).

Textile and clothing buyers in Iran can open Letters of Credit against this fund after obtaining the required clearances from their government. Indian exporters will get the payment in Indian rupees from the bank account. And, there is no dearth of funds in this account, he says. In fact, rice exporters are already using the system.



In an initiative by the Union Ministry of Textiles, a delegation visited Iran in January-February this year, and a trade show was organised in Iran in May. The response to the trade show was encouraging and India’s textile exports to Iran are all set to increase. Nearly 60 textile and clothing exporters participated and are expected to realise business worth $22.5 million. “The impact of deeper engagement with Iran can translate into more than $100 million Indian textile exports to Iran,” says an official of the Ministry. The demand is more for cotton and manmade fibres and textile machinery.



Last financial year, India’s textile and clothing exports to Iran were nearly $108 million. However, Iran should reduce the import duty so that Indian products are competitive, Mr. Nair says.



Iran’s total annual exports to India are $11.5 billion, and India’s exports to Iran are worth about $3.3 billion. The official said that the adverse trade balance between India and Iran was one of the reasons for the special focus on Indian textiles exports to Iran.



Manickam Ramaswamy, Chairman, Cotton Textiles Export Promotion Council, says Iran can become an important market for Indian textile exporters. The exporter negotiates the order with the Iranian buyer in dollars, and also seeks the buyer’s consent to make the payment in rupee under the rupee payment mechanism.



According to Anil Rajvanshi, Vice-Chairman, Synthetic and Rayon Textiles Export Promotion Council, “It looks like Iran will be a big market for exporters of acrylic yarn and fibre, synthetic and manmade fibre and jute.” Since the rupee payment mechanism is a new mode of payment, there are initial hassles. But, “we need to look at the potential of the market.” For the Indian exporters, it will be risky to depend on the U.S and European markets, and they need to look at alternatives.

Source:-www.thehindu.com

Agreement for selling packaged drinking water ins’t anti-competitive if other players also exist in

Competition Act: Where informant had many options when it entered into franchise agreement with opposite party for selling packaged drinking water and soda, no case of abuse of dominance by opposite party was made out

DRP to assign reasons before adjudicating claim of assessee; ITAT sets aside non-speaking order of D

IT/ILT: It is obligatory for DRP, a quasi-judicial authority, to ascribe cogent and germane reasons for its order

Unjust enrichment won’t target refund of service tax paid during investigation stage

ST: Where assessee has deposited demand during investigation stage and contested issue before higher judicial for a including Tribunal, principle of unjust enrichment is inapplicable to refund of such 'deposit' made

No reassessment merely on the basis of statement recorded during survey, unless its authenticity is

IT : In absence of any independent material, statement of assessee's son recorded during survey would not form a valid basis for reopening assessment of assessee

No addition under sec. 68 in respect of jewellery admitted under voluntary disclosure of income sche

IT : Where possession of requisite jewellery by assessee was accepted under VDIS and same was sold through valid channel, no addition could be made in hands of assessee in case of search of purchaser

Reassessment couldn’t be deemed as change of opinion if original assessment was made without applica

IT : Since there is no application of mind in section 143(1) assessment, reopening of such assessment for disallowing expenditure previously allowed, is not mere change of opinion, and is valid

Third Proviso to sec. 194H has retro effect

IT: BSNL was not required to deduct tax at source under section 194H pertaining to assessment years prior to insertion of third proviso to section 194H with effect from 1-6-2007 as said amendment is a clarificatory amendment and would be applicable even in respect of assessment years prior to insertion of said amendment

Services of veterinary surgeons are exempt from service tax

ST/ECJ : Activities carried out by veterinary surgeons in exercise of their profession amount to provision of services; but, they are exempt from service tax

Conditions for claiming sec. 80-IB deduction to be complied with on yearly basis and not in initial

IT : Where deduction was claimed under section 80-IB as a small scale industrial undertaking, conditions prescribed for qualifying as a small scale industry must be fulfilled on year to year basis

Sum paid as rent is a business exp.; can’t be treated as interest by taking cost of leased assets as

IT: Lease rentals paid are allowable as business expenditure and not as interest by treating cost of leased assets as loan amount

Valuation report of DVO is an estimation and it can't form the basis for addition of undisclosed inv

IT : In respect of valuation of land and building, DVO's report may be a useful tool in hands of Assessing Officer, nevertheless it is an estimation and without there being anything more, it cannot form basis for addition under section 69B

Cenvat credit can be utilized for payment of service tax on GTA services under reverse charge

ST : CENVAT credit can be utilized for payment of service tax payable as recipient of service under reverse charge for period from April 2006 to March 2007

Company which discharges all its liabilities can’t be held liable for any loss under rehabilitation

CL: Where a company managed sick company under a scheme of rehabilitation and had discharged its liabilities and commitments, no liability arises for any losses after expiry of period of scheme

High incentives to directors merely on pretext of higher earning in particular year isn’t justified

IT: Payment of high incentives to directors was not justifiable, merely because assessee company had earned high profits in current year

Hpcl Slams Door On Iran For Crude Oil Imports

July 28, 2013

In a sign that Western sanctions weigh heavily on it, Hindustan Petroleum Corporation Limited (HPCL) has virtually slammed the door on Iran for crude oil imports during 2013-14 and has instead increased imports from Iraq.



The HPCL’s strategy paper for crude imports during 2013-14 — a copy of which is available with The Hindu — states that because of the sanctions the U.S. and the European Union imposed on Iran, it is proposed to have only an optional contract of one million tonne with the National Iranian Oil Company (NIOC); and it will be used on a need basis, if only there is no negative impact on HPCL business. The existing term contract for April 2012-March 2013 was 2 million tonne (40,000 barrels a day), with an optional contract of 1 million tonne (20,000 barrels a day) for 2013-14. But NIOC turned the proposal down, saying it did not have a policy to make a mere optional contract. “Hence, there is no crude-lifting contract with NIOC for 2013-14. This is due to the ongoing US/EU sanctions on Iran,” the paper says.



The HPCL’s stand runs counter to the Petroleum and Natural Gas Ministry’s stand that it is not guided by the Western sanctions while making crude imports from Iran and that it would follow the sanctions if only they were sponsored by the United Nations.



However, the HPCL has stepped up its engagement with Iraq. The paper says the existing term contract with Iraq’s State Oil Marketing Company (SOMO) for 2.25 million tonne (45,000 barrels a day) of Basra light crude has been revised to 3 million tonne (60,000 barrels a day). It will be in effect till December 2013. Iraq has emerged as the second highest crude oil exporter to India, after Saudi Arabia, which still stands first. The contract for 2013-14 with Saudi Arabian Oil Company (Saudi Aramco) is worth 2.5 million tonne (50,000 barrels a day).



The HPCL’s total crude oil requirement for 2013-14 is estimated at 18 million tonne. The availability of indigenous crude is expected to be 3.75 million tonne (the actual allocation of domestic crude from the Petroleum and Natural Gas Ministry for 2013-14 is 3.93 million tonne, with Mumbai High accounting for 3.24 million tonne and Ravva for 0.69 million tonne). So, 14.25 million tonne of crude will be imported under a combination of term and spot contracts.



Listing strategic objectives, the document says that securing supplies by diversifying the pool of suppliers and insulating consignments against disruption due to geo-political reasons are the factors that will guide the oil purchases during 2013-14.



Indian refiners imported 171.41 million tonne of crude in 2011-12. Of this, 32.63 million tonne came from Saudi Arabia, 24.51 million tonne from Iraq, 17.67 million tonne from Kuwait, and 15.79 million tonne from the UAE. India imported 2,71,200 barrels per day from Iran between April 2012 and February 2013, which was below the government’s target of 3,10,000 barrels per day for the fiscal ended on March 31. Imports from Iran decreased to 7.3 per cent from April last to February 2013, from 11 per cent.

Source:-www.thehindu.com

India To Drastically Reduce Duty On Pakistan Textile Imports

In an unprecedented move, India is planning to drastically slash tariff on import of textiles from Pakistan in an effort to normalise trading relations between both countries. Currently, India imposes 30-45 per cent duty on textile products from Pakistan. The government is planning to bring it down to five per cent and has not ruled out the option of allowing duty-free access too.



This would be done by reducing the sensitive list of items India maintains for Pakistan, under which certain items are not allowed from there. This list is maintained under the South Asian Free Trade Agreement (Safta). In 2011, India allowed duty-free access to Bangladeshi garments and apparel products.



Pakistan’s global exports basket has been dominated by products from the textiles and clothing sector, which, however, is not consistent with its exporting pattern to India. The said products are found listed in India’s sensitive list, thus restricting the possibility of Pakistan being able to formally export these products. The main items of informal trade from Pakistan to India are textiles and garments.



Recently, the new Pakistani government under Prime Minister Nawaz Sharif has renamed the official name of their Ministry of Commerce to Ministry of Commerce and Textile Industry, probably to highlight the importance of the industry to the world. While Sharif is himself handling the commerce portfolio, Qasim M Niaz has been appointed the new commerce secretary.

Source:-www.fashionunited.in

Exporters Look To Us To Renew Duty Sop

Calcutta, July 28: Domestic exporters are betting big on an early renewal of the Generalised System of Preferences (GSP) by the US to strengthen bilateral trade.



The GSP programme, which was renewed by the US in October 2011, will expire on July 31.



Under GSP, which is a preferential trade programme, the US allows duty-free entry to around 3,000 products, which include engineering goods, industrial machinery, chemicals, agricultural foods and electrical equipment, from about 130 developing countries, including India.



Besides giving a fillip to the exporters of developing countries, the scheme helps American business to lower the cost of imported goods that are primarily used as inputs in value-added production.



“The GSP implemented by the US is a very important programme for Indian exporters as it offers tariff saving on various commodities from India to the American market. Its timely implementation is significant for our exporters,” Rafique Ahmed, president of the Federation of Indian Export Organisations (Fieo), told The Telegraph.



According to the US government data, total GSP imports into the country stood at $19.9 billion in 2012, registering a growth of 7.5 per cent over 2011. India was the top exporter under the GSP programme, contributing $4.5 billion in 2012.



Market observers suggest that the average duty advantage to Indian exporters is about 6.5 per cent.



“Engineering exports from India to the US were a major part of the total exports from the country. We hope that the programme is renewed early so that it benefits our exporters,” said Arun Garodia, eastern region chairman of the Engineering Export Promotion Council (EEPC).



Sanjay Budhia, chairman of industry body CII’s national committee on exports and imports, said a timely renewal of GSP was crucial to maintain stability in bilateral trade.



“The timely renewal of GSP is very important for maintaining stable bilateral trade and to avoid uncertainty in quoting/bidding for new business, which will adversely affect the trade of both countries,” he said.



Budhia pointed out that the renewal of GSP by the US was delayed by about three months.



“Though the time gap was covered by ‘retrospective effect’, it had put both overseas exporters and US importers at a disadvantage for some time,” he said.

Source:-www.telegraphindia.com

Man Shot Dead In Port Clash

Jul 29, 2013

HALDIA: A person was shot dead and another injured in a clash between two rivals over control of territory near Haldia port on Sunday. No complaint has been filed yet. The ambulances that picked up the victims cannot be traced.

According to sources, Gokul Mondal and Rajesh were rivals and both worked for Trinamool Congress strongman in the port area, Shyamal Adak. Rajesh had reportedly taken Gokul's place after the latter went to jail, triggering a rivalry. On being released on bail, Gokul was trying to win back his lost territory.

"On Sunday, Rajesh and an accomplice came to Rani chowk on a bike and sent for Gokul. He said he wanted to negotiate.

As Gokul and his aide approached him, the duo opened fire. A bullet hit Gokul's aide on the head and killed him. Gokul was hit too. Rajesh fled the scene after the shooting ," said a police official.

Local Trinamool leaders refused to comment.

SP (East Midnapore) Sukesh Jain said: "A shootout took place near the port and Haldia policemen rushed to the spot. There has been no written complaint yet. Locals are being questioned."

Source:-timesofindia.indiatimes.com

ESOPs from foreign employer are taxable in India if related to services rendered by employee in Indi

IT/ILT : In case of assessee being an employee of a foreign company, only such proportion of ESOP perquisite is taxable, which relates to service rendered by such assessee in India

To Check Diversion, Govt Makes 3% Value Addition Must For Gold Exports From Sezs

29-Jul-2013

NEW DELHI: The government has said any gold export from the special economic zones (SEZ) must be done only after a certain minimum value has been added, a measure that is expected to further dampen demand for the precious metal.

All gold exports from SEZs will need to have at least three percent value addition on the imported gold to check instances of gold diversion from these zones to the domestic market because of duty differential.

SEZs can import gold at zero duty to make jewellery for export against 8% duty on gold imported for domestic consumption, creating a powerful incentive for export units to divert imported gold to the domestic market.

"As part of measures to check widening current account deficit and diversion of gold from SEZs, we have imposed a 3-5% value addition on all gold exports from these zones to ensure only genuine gems and jewellery manufacturers operate through SEZs. We have communicated this to all the development commissioners", a commerce department official told ET.

The move is In addition to the ban on gold trading imposed on SEZs in April, which led to a sharp reduction in gold exports from these duty free zones.

A number of units were found to be indulging in gold trading instead of manufacturing, taking the advantage of the zero duty in the tax-free zones.

SEZ units earn arbitrage profits as high as 9.5% (8% customs duty plus 1.5% excise duty).

Plain gold jewellery and articles and ornaments like mangalsutra containing gold and black beads/imitation stones, except in studded form of jewellery, needs to have a minimum of 3% value addition.

All types of studded gold jewellery and articles thereof, need to have a minimum of 5% value addition.

"There will be stringent checks on gold transactions in SEZs", the official said.

The department of commerce had suspended gold trading and medallion manufacturing in the special economic zones in May after complaints of diversion of gold from some SEZs by the revenue department.

With concerns over falling rupee, RBI and government have taken a series of measures in the last three months to check gold imports, the primary factor for the widening current account deficit, which touched a record high of 4.8% of the GDP in 2012-13.

The official said genuine gems and jewellery manufacturing involves a change in composition of gold and thus the imposition of value addition norm will not impact such exports.

Source:-economictimes.indiatimes.com

HC not to entertain writ petition challenging a show cause notice if assessee hasn't filed replies t

IT : Assessee cannot challenge in writ petition Show Cause Notice issued under section 153C without exhausting remedy of filing replies to it . It is settled law that where an alternate remedy is available to aggrieved party, it must exhaust the same before approaching the Writ Court. If assessee approaches HC by filing writ petition without exhausting the alternate remedy of filing replies to SCN, HC ought not to entertain writ petition but direct assessee to file replies to SCN first

Abhinav Bindra strikes gold in I-T appeal as well; being an amateur sportsperson awards received by

IT : Awards, rewards, prizes received by amateur sportsperson are not "income" as per CBDT Circular No.447 and hence free from income-tax. These cannot be taxed by invoking the provisions of section 56(2)(v)/(vi)/(vii)

ADs can give guarantee for service import upto USD 1 lakh on behalf of Govt. undertaking and USD 5 l

FEMA/ILT : FEM (Guarantees) (Amendment) Regulations, 2013 - Amendment in Regulation 4

ADs can give guarantee for service import up to USD 1 lakh on behalf of Govt. undertaking and up to

FEMA/ILT : FEM (Guarantees) (Amendment) Regulations, 2013 - Amendment in Regulation 4

Cap on Indian currency for Indian residents going on foreign visits raised from Rs. 7,500 to Rs. 10,

FEMA/ILT : FEM (Export and Import of Currency) (Amendment) Regulations, 2013 - Amendment in Regulation 3

Cos with high operating margin due to extraordinary events to be excluded from comparables list

IT/ILT: Where high operating profit of company was reflected due to extraordinary event, such company cannot considered as comparable

Custom House Agent’s services in relation to export of goods are eligible as input services

ST : Service tax paid by CHA for export of goods is eligible to be availed as Cenvat credit by exporter

AO can’t reject books of account unless defects are found in books or method of accounting of assess

IT: Where Assessing Officer failed to point out any defect in method of accounting or any inherent defect in books of account maintained by assessee, section 145 could not be invoked for rejecting books of account

Reassessment to disallow bad debts held not justified

IT : Reassessment to disallow bad debts held not justified

Prior to 18-4-2006, royalty provided for technical know-how by foreign collaborators weren't liable

ST : Royalty for technical know-how provided by foreign collaborator/trade mark owner was not liable to service tax under reverse charge prior to introduction of section 66A from 18-4-2006

Notional variation in maintenance exp due to change in accounting system couldn't be adjusted to com

IT: Notional difference in maintenance expenditure on account of change in accounting procedure could not be adjusted in book profits, since same does not fall within adjustments as provided in Explanation 1 to section 115JB

Sub-agents may claim service tax exemption available to agents

ST/ECJ : Even if an insurance sub-broker/sub-agent does not have a direct relationship with parties to insurance or reinsurance contract, he may claim exemption available to insurance agents

MCA issues check list of docs and info to be submitted for filing of application relating to manager

CL : Check List for Filling of Applications of Managerial Personnel

Amended SAT provisions for salaries, pension, PF and travelling allowances of presiding officers and

SEBI : SAT (Salaries, Allowance and Other Terms and Conditions of The Presiding Officer and Other Memebrs) Amendment Rules, 2013 - Substituton of Rules 4, 5 & 6

CBDT revises allocation of work amongst various branches of its investigation division

IT : Revised Alloction of Subjects Amongst Five Branches of Investigation Division of CBDT

Assessee's failure to furnish complete details regarding donors leads to denial of trust's registrat

IT: Failure to furnish complete details regarding donors would result in denial of registration as a charitable trust

Reassessment to disallow capital loss allowed earlier not justified

IT : Reassessment to disallow capital loss allowed earlier not justified

Assessee engaged in extension of runway at airports is eligible to claim sec. 80-IA deduction

IT : Where assessee was engaged in activity of extension of runway at airport, it was to be regarded as developer within meaning of section 80-IA(4) and, thus, its claim for deduction under section 80-IA was to be allowed

Delayed refund of sale proceeds of seized goods is eligible for interest: Bombay HC

ST: Where department had refunded sale proceeds of seized goods after reasonable period from date of direction of Settlement Commission to that effect, High Court ordered department to pay interest at 9 per cent in exercise of writ jurisdiction

Income of Indian branch computed on basis of commercial activities rendered by it to its foreign HO

IT/ILT : Receipt arising on account of commercial services to American head office would be considered for determining total income of Indian branch

Sec. 54F exemption allowed on mere investment even if transactions not completed within stipulated t

IT : Assessee would be entitled to benefit under section 54F if he had invested amount of capital gain in purchasing or constructing residential house, even though transaction is not complete within period stipulated

Loss to liquidating Co. due to pilferage to be compensated by security agency for being negligent: H

CL : Where pilfering of assets of company-in-liquidation continued unabated during time when security agency was in charge of security of premises, there was gross negligence on part of security agency and it was to be directed to pay for value of missing assets

AAR can't decline a ruling on an assumption that applicant has illegally circumvented SEBI guideline

IT/ILT : Application for modification/rectification under Rule 18 and Rule 19 of Advance Ruling Rules wouldn't lie against AAR's order declining a ruling

No disallowance of salary paid outside India if tax withheld therefrom is deposited before return fi

IT/ILT: If tax deducted at source on salary payable outside India is paid before due date for filing return, amount cannot be disallowed under section 40(a)(iii)

In Re Orient Green Power Pte. Ltd (AAR)

Gift” by company to subsidiary appears to be “Dubious tax avoidance scheme” The Applicant, a Singapore company, “gifted” the shares of Bharath Wind Farm Ltd, an Indian company, to its 99.61% subsidiary Orient Green Power Ltd, another Indian company. As the gift was made prior to the enactment of s. 56(2)(viia) and there was no consideration received, it was claimed that there was no taxable income and that the transfer pricing provisions did not apply. The department opposed the applicant on the ground that it did not appear to be genuine. HELD by the AAR: U/s 82 of the Companies Act, shares in a company is moveable property transferable in the manner provided by its Articles of Association. The applicant has not shown the gift was authorized by its Articles. It is difficult to imagine the Articles of Association of a company providing for gifting away of the assets in the form of shares in another company by what is attempted to be described as oral gift. A “gift” by one company to another company of shares in a public company appears to be strange, unless it be one which has been set up for some purpose. The revenue’s contention that the purpose of the gift is to avoid tax and s. 56(2)(viia) is not far-fetched. Also, s. 47(i) & (iii) appear to apply to gifts by individuals and HUFs and not by companies. The Authority has the right & the duty to consider the reality of the transaction and genuineness of the transaction, in addition to its validity. When such transactions are entered into involving substantial assets the applicant has to prove to the hilt the factum, genuineness and validity of the transaction, the right to enter into the transaction and the bona fides of the transaction. To postulate that a corporation can give away its assets free to another even orally can only be aiding dubious attempts at avoidance of tax payable under the Act. The AO is in a better position to make a proper enquiry into the question of the genuineness and validity of the transaction. Hence, a ruling is declined.

IT dept. issues notice to another batch of non-filers; urges taxpayers to disclose true income

IT : Income Tax Deptt. Sends Letters to Another Batch of 35,000 Non-Filers Tax Payers Urging them to Disclose their Ture Income and Pay Due Taxes

HC invokes writ jurisdiction to set-aside adjudication order even after expiry of allowable condonat

ST: In extraordinary cases where an assessee : (i) explains delay in filing appeal before Commissioner (Appeals); and (ii) also shows that gross injustice has done by adjudicating authority, High Court may invoke writ jurisdiction and set aside adjudication order even after expiry of permissible period of condonation

COMMISSIONER OF INCOME TAX -XIII Vs. RAJINDER KUMAR

$~3. *IN THE HIGH COURT OF DELHI AT NEW DELHI + INCOME TAX APPEAL NO. 65/2013 Date of decision: 1st July, 2013 COMMISSIONER OF INCOME TAX -XIII ..... Appellant Through Mr. N.P. Sahni, Sr. Standing Counsel. versus RAJINDER KUMAR ..... Respondent Through Mr. M.P. Devanath & Mr. R. Ramachandran, Advocates. CORAM: HON'BLE MR. JUSTICE SANJIV KHANNA HON'BLE MR. JUSTICE SANJEEV SACHDEVA SANJIV KHANNA, J. (ORAL): Having heard learned counsel for the parties, we frame the following substantial question of law: "Whether the Income Tax Appellate Tribunal was right in deleting addition of Rs.78,51,800/- under Section 40(a)(ia) of the Income Tax Act, 1961?" 2. With the consent of the counsel for the parties, we have heard arguments and proceed to dictate our decision on the aforesaid question. ITA No. 65/2013 Page 1 of 20 3. The respondent-assessee is an individual and an architect by profession. It is an accepted position and it is recorded and noted in the assessment order itself that the assessee is following cash system of accounting. 4. The assessment year involved is 2007-2008. 5. The Assessing Officer referred to the TDS payable account for professional payments as on 31st March, 2007 and noticed that an amount of Rs.8,52,034/- had not been paid by 31st March, 2007. The assessee was asked to explain why disallowance should not be made under Section 40(a)(ia) as amended by Finance Act, 2008 with retrospective effect from 1st April, 2005. The assessee filed written submissions that they had not claimed any expense on accrual basis and were following cash system of accounting. However, for better control and record maintenance, they were maintaining a memorandum in the books. This memorandum was of no consequence as the assessee was claiming expenses on cash system and there were no sundry creditors or liabilities at the end of the year. In the month of February, 2007, Rs.8,33,064/- was shown in the TDS account on account of professional charges amounting to Rs.1,48,49,500/-. Rs.69,92,000/- was paid in the month of February, 2007 and TDS of Rs.3,92,221/- thereon was deposited on 7th March, 2007. The balance amount of Rs.78,51,800/- was paid/released in the month of March, ITA No. 65/2013 Page 2 of 20 2007 and TDS was deducted and was paid on the said amount before the due date in the month of April, 2007. Deduction, therefore, was due and made in the month of March, 2007 and the TDS was deposited in the Government account in April, 2007, i.e., within the stipulated time. 6. The Assessing Officer after noticing the submission did not deal with it but observed that there was violation of Section 40(a)(ia) as TDS should have been paid on or before 31st March, 2007 and as expenses of Rs.78,51,800/- had been debited to the professional charges account in February, 2007, i.e., prior to March, 2007. 7. The Commissioner of Income Tax (Appeals) upheld the said addition under Section 40(a)(ia) observing that Section 194J required deduction of tax at source either at the time of payment or at the time of credit of such sum to the account of the payee, whichever is earlier. It did not make any difference whether the assessee was following cash system or mercantile system. Reference was made to Explanation (c) to Section 194J which stipulates that credit to suspense account or account by any other name in the books of accounts required deduction of TDS. 8. On further appeal by the respondent-assessee, ITAT by their order dated 1st August, 2012 has deleted the said addition relying upon decision dated 23rd November, 2011 of the Calcutta High Court in ITA ITA No. 65/2013 Page 3 of 20 No. 302/2011 GA No. 3200/2011, Commissioner of Income Tax versus Virgin Creations. In the said decision, it has been held that the proviso to Section 40(a)(ia) of the Act amended by Finance Act, 2010 has retrospective effect. 9. Learned counsel for the appellant submits that the decision of the Calcutta High Court in the case of Virgin Creations (supra) should not be applied and the ratio laid down in the said decision is debatable. Amendments were made to the proviso to Section 40(a)(ia) of the Act by Finance Act, 2010 and these are not retrospective but applicable to and from assessment year 2010-11 onwards. He has referred to Full Bench decision of the tribunal in Bharati Shipyard Limited versus Deputy Commissioner of Income Tax, (2011) 11 ITR Tribunal 599 in support. Reference is also made to the decision of the Bombay High Court in Commissioner of Income Tax versus Shyam Narayan and Brothers, (2012) 349 ITR 145. 10. Respondent assessee, on the other hand, relies upon the decision of the Calcutta High Court in Virgin Creations (supra) and reference is also made to the decision of the Supreme Court in Allied Motors (P) Limited versus Commissioner of Income Tax, (1997) 224 ITR 677 and Commissioner of Income Tax, Bombay and Others versus Podar Cement Private Limited and Others, (1997) 5 SCC 482. 11. At the outset, we notice and record that the decision of the ITA No. 65/2013 Page 4 of 20 Bombay High Court in Shyam Narayan and Brothers (supra) does not lay down or propound any ratio applicable to the question of law raised in the present case. The said decision does not examine or affirm the ratio by the Full Bench decision of the tribunal in Bharati Shipyard Limited (supra). Bombay High Court records that the earlier decision of the tribunal in the case of Bansal Parivahan (India) Private Limited versus ITO, (2011) 9 ITR Tribunal 565 stands overruled by Bharati Shipyard Limited (supra), which is a factual assertion. It did not examine on merits the ratio and reasoning of the tribunal in Bharati Shipyard Limited (supra) and/or affirm or disapprove the same. The order of the tribunal in the case of Shyam Narayan and Brothers (supra) was set aside for re-examination as the tribunal had followed the decision in the case of Bansal Parivahan (India) Private Limited (supra) which stood overruled by the Full Bench. Thus, the said decision does not deal with the legal question raised before us. 12. The decision of the Calcutta High Court in Virgin Creations (supra) is a short one and is as under:- "The Court: We have heard Mr.Nizamuddin and gone through the impugned judgment and order. We have also examined the point formulated for which the present appeal is sought to be admitted. It is argued by Mr.Nizamuddin that this court needs to take decision as to whether section 40A(ia) is having retrospective operation or not. The learned Tribunal on fact found that the ITA No. 65/2013 Page 5 of 20 assessee had deducted tax at source from the paid charges between the period April 1, 2005 and April 28, 2006 and the same were paid by the assessee in July and August 2006, i.e., well before the due date of filing of the return of income for the year under consideration. This factual position was undisputed. Moreover, the Supreme Court, as has been recorded by the learned Tribunal, in the case of Allied Motors Pvt. Ltd. And also in the case of Alom Extrusions Ltd., has already decided that the aforesaid provision has retrospective application. Again, in the case reported in 82 ITR 570, the Supreme Court held that the provision, which has inserted the remedy to make the provision workable, requires to be treated with retrospective operation so that reasonable deduction can be given to the section as well. In view of the authoritative pronouncement of the Supreme Court, this court cannot decide otherwise. Hence we dismiss the appeal without any order as to costs." 13. Section 40(a)(ia) of the Act was introduced with effect from 1 st April, 2005 by Finance (No. 2), 2004 Bill. Explaining the rationale behind insertion of the said Section, the Memorandum elucidated:- "With a view to augment compliance of TDS provisions, it is proposed to extend the provisions of section 40(a)(i) to payments of interest, commission or brokerage, fees for professional services or fees for technical services to residents, and payments to a resident contractor or sub- contractor for carrying out any work (including supply of labour for carrying out any work), on which tax has not been deducted or after deduction, has not been paid before the expiry of the time prescribed under sub-section (1) of section 200 and in accordance with the other provisions of Chapter XVII-B. It is also proposed to provide that where in respect of payment of any sum, tax has been deducted under Chapter XVII-B ITA No. 65/2013 Page 6 of 20 or paid in any subsequent year, the sum of payment shall be allowed in computing the income of the previous year in which such tax has been paid. The proposed amendment will take effect from the 1st day of April, 2005 and will, accordingly, apply in relation to the assessment year 2005-06 and subsequent years. (clause 11)." (emphasis supplied) 14. Thereafter, by Finance Act, 2008 an amendment was made to Section 40(a)(ia) with retrospective effect from 1st April, 2005. Section 40(a)(ia) as amended by Finance Act, 2008 was as under: "40. Notwithstanding anything to the contrary in Sections 30 to 38, the following amounts shall not be deducted in computing the income chargeable under the head "profit and gains of business or profession"... (ia) any interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services payable to a resi-dent, or amounts payable to a contactor or sub-contractor, being resident, for carrying out any work (including supply of labour for carrying out any work), on which tax is deductible at source under Chapter XVII-B and such tax has not been paid,- (A) in a case where the tax was deductible and was so deducted during the last month of the previous year, on or before the due date specified in sub-section (1) of section 139; or (B) in any other case, on or before the last day of the previous year; Provided that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted- ITA No. 65/2013 Page 7 of 20 (A) during the last month of the previous year but paid after the said due date; or (B) during any other month of the previous year but paid after the end of the said previous year, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid." (emphasis supplied) 15. Section 40(a)(ia) was further amended by Finance Act, 2010 with effect from 1st April, 2010 and the amended provision now reads as under: "(ia) any interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services payable to a resi-dent, or amounts payable to a contractor or sub-contractor, being resident, for carrying out any work (including supply of labour for carrying out any work), on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or; after deduction, has not been paid on or before the due date specified in sub-section (1) of Section 139: Provided that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted during the previous year but paid after the due date specified in sub-section (1) of section 139, such sum shall be allowed as a deducted in computing the income of the previous year in which such tax has been paid." (emphasis supplied) 16. The note on clauses and the memorandum explaining the amendments to Section 40(a)(ia) reproduced in (2010) 321 ITR Statutes 79 reads: ITA No. 65/2013 Page 8 of 20 "Notes on Clauses: Clause 12 of the Bill seeks to amend section 40 of the Income-tax Act relating to amounts not deductible. Under the existing provisions contained in sub- clause (ia) of clause (a) of the aforesaid section, non-deduction of tax or non-payment of tax after deduction on payment of any sum by way of interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services payable to a resident or amounts payable to a contractor or sub-contractor, being resident, results in the disallowance of the said sum, in the computation of income of the payer, on which tax is required to be deducted under Chapter XVII-B. It is proposed to amend sub-clause (ia) of clause (a) of the aforesaid section to provide that disallowance under the said sub-clause will be attracted, if, after deduction of tax during the previous year, the same has not been paid on or before the due date of filing of return of income specified in sub-section (1) of section 139. The proviso to the said sub-clause provides that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted during the last month of the previous year but paid after the due date of filing of return or deducted during any other month of the previous year but paid after the end of the said previous year, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid. This amendment will take effect st retrospectively from 1 April, 2010, and will, accordingly, apply in relation to the assessment year 2010-11 and subsequent years." 17. We have noticed the facts of the present case. It is an accepted ITA No. 65/2013 Page 9 of 20 and admitted position that the assessee was following cash system and not mercantile system of accountancy. Neither the Assessing Officer nor the CIT (Appeals) have disputed the said factual position. The assessment order itself specifically records that the assessee was following cash system. It is not disputed in the assessment order or in the first appellate order that the assessee had paid a sum of Rs.78,51,800/- in the month of March, 2007 and had accordingly deducted TDS of Rs.4,40,843/- and the same was deposited within the due date from the date of said deduction in the month of April, 2007. Prior to that, the assessee had deducted TDS of Rs.3,92,221/- on professional charges of Rs.69,92,700/- in February, 2007. TDS on the said amount which was deducted in the month of February was deposited on 7th March, 2007, within the due date. 18. The aforesaid facts show that the assessee had made payment of Rs.78,51,800/- in the month of March, 2007 only and not in the month of February, 2007. The assessee has throughout stated and it is not disputed either in the assessment order or in the order passed by the first appellate authority that they were for convenience maintaining a Memorandum relating to pending bills but this Memorandum did not get reflected and was not shown in the annual accounts as sundry creditors or liabilities, which were payable. It was not booked as an expense or liability. The assessment order nowhere records or ITA No. 65/2013 Page 10 of 20 specifically holds that the account of the payee was credited with Rs.78,51,800/- or with Rs.1,48,49,500/-. The first appellate order again does not specifically state so. In such circumstances, we feel a pragmatic and a practical approach has to be adopted. The respondent assessee had deducted tax at source when the payment was made in the month of March, 2007 and thereafter deposited the payment in the month of April, 2007. It is an accepted position that in case tax was deductible in the month of March, 2007 the due date of payment was in April, 2007 and before due date payment, Rs.4,40,843/- deducted as TDS in the month of March, 2007 was duly paid. It has to be accepted and it is logical that there would be some time gap between date of deduction of tax at source and when payment is deposited. Section 40(a)(ia) and the proviso as amended by Finance Act, 2008 with retrospective effect from 1st April, 2005 notices and acknowledges the said position and, therefore, clause (A) states that where tax "was" deductible and was so deducted during the last month of the previous year but stands paid before the due date specified under sub-section (1) to Section 139, deduction shall be allowed in the said year. 19. Proviso applies when tax was deducted in a subsequent year; when TDS has been deducted during any month of the previous year but paid after the end of the previous year; or TDS was deducted during the last month of the previous year but paid after the said due ITA No. 65/2013 Page 11 of 20 date. When proviso applies deduction is to be allowed in the year in which the payment is made. Clause A of the proviso has to be read with clause A of the main Section and not in isolation. Clause A of the main Section and clause A of the proviso will apply in different factual matrix or situations. Clause A of the main Section applies when the tax was deductable and was so deducted during the last month of the assessment year and was paid on or before the due date for filing of the return under Section 139(1). The proviso applies when tax has been deducted in any subsequent year or has been deducted as per clause A thereto during last month of the previous year, but has been paid after the said due date. The expression "said due date" cannot mean the date on which TDS as per the Chapter XVIII B should have been paid. It refers to the due date for filing of the return under Section 139(1) of the Act. Any other interpretation would lead to difficulties, incongruities and conflict between clause A of the main Section and clause A of the proviso. Both would be applicable to the same factual matrix/situation with contradictory stipulations or consequences. Under clause A of the main Section, the TDS deductable and so deducted during the last month should be paid on or before the due date for filing of the return under Section 139(1) but as per the Revenue under the proviso clause A, TDS should be deducted during the last month of the previous year but paid before the "said due date" ITA No. 65/2013 Page 12 of 20 i.e. the date by which TDS is payable under the Act. This interpretation if accepted means that clause A of the proviso and clause A of the main Section would become irreconcilable and mutually contradictory. Clause A of the proviso does not postulate the obvious but seeks to relax the rigor when tax deducted stands paid. This is the reason why the proviso in clause A does not use the expression "tax was deductable and was so deducted" but uses the expression "tax has been deducted ...... during the last month of the previous year". The expression "said due date" in the clause A to the proviso does not mean and refer to the date on which tax should have been deposited without interest or penalty under Chapter XVII-B. This is obvious. Clause A to the proviso applies when the deduction is post the period specified by law but in the last month of a previous year. In such cases under the proviso clause A, TDS should be paid before "the said due date" i.e. the date on which return under Section 139(1) of the Act is to be filed. 20. Therefore, when the respondent assesse deducted TDS in March 2007, i.e. last month of the previous year and paid the same before in April 2007 before the said due date i.e. the date on which return of Income U/s 139(1) of the Act is to be filed. Section 40(a)(ia) could not have been invoked. 21. Reference to Explanation clause (c) which states that credit to ITA No. 65/2013 Page 13 of 20 suspense account or any other account in book would be deemed to be credit in account of the payee is inappropriate. The said clause in the explanation is meant to curtail possibility or chance of non-deduction if an assesse credits a third account/head, instead of crediting the account of the payee to await deduction of TDS. It would not be appropriate to apply clause (c) of Explanation to section 194J to factual matrix of the current case. The amount was credited to the account of the payee, payment was made and TDS was deducted in March, 2007 and paid/deposited in April, 2007. 22. Now, we refer to the amendments which have been made by the Finance Act, 2010 and the effect thereof. We have already quoted the decision of the Calcutta High Court in Virgin Creations (supra). The said decision refers to the earlier decision of the Supreme Court in the case of Allied Motors (P) Limited (supra) and Commissioner of Income Tax versus Alom Extrusions Limited, (2009) 319 ITR 306 (SC). In the case of Allied Motors (P) Limited (supra), the Supreme Court was examining the first proviso to Section 43B and whether it was retrospective. Section 43B was inserted in the Act with effect from 1st April 1984 for curbing claims of taxpayers who did not discharge or pay statutory liabilities but claimed deductions on the ground that the statutory liability had accrued. Section 43B states that the statutory liability would be allowed as a deduction or as an expense ITA No. 65/2013 Page 14 of 20 in the year in which the payment was made and would not be allowed, even in cases of mercantile system of accountancy, in the year of accrual. It was noticed that in some cases hardship would be caused to assessees, who paid the statutory dues within the prescribed period though the payments so made would not fall within the relevant previous year. Accordingly, a proviso was added by Finance Act, 1987 applicable with effect from 1st April, 1988. The proviso stipulated that when statutory dues covered by Section 43B were paid on or before the due date for furnishing of the return under Section 139(1), the deduction/expense, equal to the amount paid would be allowed. The Supreme Court noticed the purpose behind the proviso and the remedial nature of the insertion made. Of course, the Supreme Court also referred to Explanation 2 which was inserted by Finance Act, 1989 which was made retrospective and was to take effect from 1st April, 1984. Highlighting the object behind Section 43B, it was observed that the proviso makes the provision workable, gives it a reasonable interpretation. It was elucidated: "12. In the case of Goodyear India Ltd. V. State of Haryana this Court said that the rule of reasonable construction must be applied while construing a statute. Literal construction should be avoided if it defeats the manifest object and purpose of the Act. 13. Therefore, in the well-known words of Judge Learned Hand, one cannot make a fortress ITA No. 65/2013 Page 15 of 20 out of the dictionary; and should remember that statutes have some purpose and object to accomplish whose sympathetic and imaginative discovery is the surest guide to their meaning. In the case of R.B. Judha Mal Kuthiala v. CIT, this Court said that one should apply the rule of reasonable interpretation. A proviso which is inserted to remedy unintended consequences and to make the provision workable, a proviso which supplies an obvious omission in the section and is required to be read into the section to give the section a reasonable interpretation, requires to be treated as retrospective in operation so that a reasonable interpretation can be given to the section as a whole. 14. This view has been accepted by a number of High Courts. In the case of CIT v. Chandulal Venichand, the Gujarat High Court has held that the first proviso to Section 43-B is retrospective and sales tax for the last quarter paid before the filing of the return for the assessment year is deductible. This decision deals with Assessment Year 1985-85. The Calcutta High Court in the case of CIT v. Sri Jagannath Steel Corpn. has taken a similar view holding that the statutory liability for sales tax actually discharged after the expiry of the accounting year in compliance with the relevant statute is entitled to deduction under Section 43-B. The High Court has held the amendment to be clarificatory and, therefore, retrospective. The Gujarat High court in the above case held the amendment to be curative and explanatory and hence retrospective. The Patna High court has also held the amendment inserting the first proviso to be explanatory in the case of Jamshedpur Motor Accessories Stores v. Union of India. The special leave petition from this decision of the Patna High Court was dismissed. The view of the Delhi High Court, therefore, that the first proviso to Section 43-B will be available only prospectively does not appear to be correct. As observed by G.P. Singh in his Principles of ITA No. 65/2013 Page 16 of 20 Statutory Interpretation, 4th Edn. At p. 291: "It is well settled that if a statute is curative or merely declaratory of the previous law retrospective operation is generally intended." In fact the amendment would not serve its object in such a situation unless it is construed as retrospective. The view, therefore, taken by the Delhi High Court cannot be sustained." 23. Section 43B deals with statutory dues and stipulates that the year in which the payment is made the same would be allowed as a deduction even if the assessee is following the mercantile system of accountancy. The proviso, however, stipulates that deduction would be allowed where the statutory dues covered by Section 43B stand paid on or before the due date of filing of return of income. Section 40(a)(ia) is applicable to cases where an assessee is required to deduct tax at source and fails to deduct or does not make payment of the TDS before the due date, in such cases, notwithstanding Sections 30 to 38 of the Act, deduction is to be allowed as an expenditure in the year of payment unless a case is covered under the exceptions carved out. The amended proviso as inserted by Finance Act, 2010 states where an assessee has made payment of the TDS on or before the due date of filing of the return under Section 139(1), the sum shall be allowed as an expense in computing the income of the previous year. The two provisions are akin and the provisos to Sections 40(a)(ia) and 43B are to the same effect and for the same purpose. ITA No. 65/2013 Page 17 of 20 24. In Podar Cement Private Limited (supra), the Supreme Court considered whether term ,,owner would include unregistered owners who had paid sale consideration and were covered by Section 53A of the Transfer of Property Act. The contention of the assessees was that the amendments made to the definition of term ,,owner by Finance Bill, 1987 should be given retrospective effect. It was held that the amendments were retrospective in nature as they rationalise and clear the existing ambiguities and doubts. Reference was made to Crawford: ,,Statutory Construction and ,,the principle of Declaratory Statutes, Francis Bennion: ,,Statutory Interpretation, Justice G.P. Singhs ,,Principles of Statutory Interpretation, it was observed that sometimes amendments are made to supply an obvious omission or to clear up doubts as to the meaning of the previous provision. The issue was accordingly decided holding that in such cases the amendments were retrospective though it was noticed that as per Transfer of Property Act, Registration Act, etc. a legal owner must have a registered document. 25. In view of the aforesaid discussion in paras 18,19 and 20, it is apparent that the respondent assesse did not violate the unamended section 40(a)(ia) of the act. We have noted the ambiguity and referred their contention of Revenue and rejected the interpretation placed by them. The amended provisions are clear and free from any ambiguity ITA No. 65/2013 Page 18 of 20 and doubt. They will help curtail litigation. The amended provision clearly support view taken in paragraphs 17 ­ 20 that the expression "said due date" used in clause A of proviso to unamended section refers to time specified in Section 139(1) of the Act. The amended section 40(a)(ia) expands and further liberalises the statue when it stipulates that deductions made in the first eleven months of the previous year but paid before the due date of filing of the return, will constitute sufficient compliance. 26. Before we close, we must deal with another contention raised by the counsel for the Revenue to the effect that Finance Bill, 2010 increases the rate of interest from 12% to 18% for failure to deposit TDS in time. This increase in rate of interest, it is submitted, is directly connected and associated with the concession or benefit which was extended to the assessee by amending the proviso. We do not find any merit in the said contention. Even prior to the amendment made by Finance Bill, 2010, Section 40(a)(ia) had stipulated that in case where the tax was deductable and so deducted during the last month of the previous year but was paid on or before the due date specified in Section 139(1) of the Act, deduction/expenditure will be allowed in the previous year notwithstanding the main Section. The section as well as the proviso before the amendment in 2010 had ambiguities and doubts. The proviso as amended by Finance Act, 2008 with retrospective effect ITA No. 65/2013 Page 19 of 20 from 1st April, 2005 was not free from interpretative difficulties and problems. This aspect is highlighted above. The intention behind Section 40(a)(ia) is to ensure that TDS is deducted and paid. The object of introduction of Section 40(a)(ia) is to ensure that TDS provisions are scrupulously implemented without default in order to augment recoveries. It is not to penalise an assessee when payment has been made within the time stated. Failure to deduct TDS or deposit TDS results in loss of revenue and may deprive the Government of the tax due and payable. The provision should be interpreted in a fair, just and equitable manner. It should not be interpreted in a manner which results in injustice and creates tax liabilities when TDS has been deposited/paid and the respondent who is following cash system of accountancy has made actual payment to the third party for services rendered. If the said object and purpose is kept in view, we do not think the Assessing Officer was justified in disallowing and in invoking Section 40(a)(ia) in the present case. The question of law is accordingly answered in negative, i.e., in favour of the respondent- assessee and against the Revenue. The appeal is accordingly disposed of. No costs. SANJIV KHANNA, J. SANJEEV SACHDEVA, J. JULY 01, 2013/VKR ITA No. 65/2013 Page 20 of 20