CL : In order to attract provisions of section 397/398 it is necessary that alleged acts of oppression/mismanagement and illegality of conduct of majority shareholders are pleaded and proved with sufficient clarity and precision; acts resulting out of mere lack of confidence amongst members cannot be held to be oppressive
Thursday, 13 June 2013
Delay in filing appeal by trust condoned as delay occurred due to the ignorance of law and wrong adv
IT : Where assessee was a charitable institution and delay in filing appeal happened due to wrong advice and ignorance of law, delay in filing appeal should be condoned
Tax scrutiny of multinational companies to increase
In what could further spook multinational companies (MNCs) operating in India, the income-tax (I-T) department has notified a revised form to check for transfer pricing infractions, something that could intensify the scrutiny on their books.
The new form explicitly requires companies to disclose specific international transactions even if they do not have any impact on profits.
Analysts said this will force companies to disclose all business transactions such as the issue or buy-back of shares or details of restructuring.
Transfer pricing refers to the practice of arm’s length pricing for transactions between group companies based in different countries to ensure that a fair price—one that would have been charged to an unrelated party—is levied. It has been an area of increasing dispute in India with the tax department aggressively pursuing such cases.
The government had attempted to widen the definition of transfer pricing in last year’s budget by including domestic transactions and making it clear that it wasn’t necessary that international transactions should have a tangible impact on income to come under the purview of transfer pricing provisions.
However, the tax department had not effected any changes in the reporting requirements last year, which enabled many companies to avoid disclosing such transactions. Taxpayers are required to obtain and file an annual transfer pricing certification in Form 3CEB by 30 November.
The tax department, through its revised reporting requirements, has now tried to plug this loophole.
The revision in the format comes in the backdrop of the tax department’s increased scrutiny on share valuation cases in its audits last fiscal. The I-T department issued notices to 26 companies, including Shell India Pvt. Ltd, HSBC Securities and Capital Markets (India) Pvt. Ltd and Standard Chartered Securities (India) Ltd, in 2012-13 for under-pricing an intra-company share sale, according to the I-T department.
“Most of the companies were taking a stand that purchase or sale of shares between group companies did not lead to any taxable income and refrained from reporting such transactions. Now, the income-tax department has inserted this specific disclosure requirement in this form. Companies will have no option but to disclose such transactions,” said Karishma Phatarphekar, partner and practice leader (transfer pricing services) at Grant Thornton India LLP. “The companies will even have to file business structuring agreements along with this revised transfer pricing form, something that was not required till last year.”
Many firms undertake business reorganizations that may lead to a reduction in the profits of the Indian entity. They will now have to file their detailed business structuring agreements with the tax department.
As per a 10 June notification from the Central Board of Direct Taxes regarding international transactions, separate requirements have been introduced for guarantees, issue of equity shares, business restructuring or reorganizations and deemed international transactions.
With respect to domestic transactions, a separate section has been introduced in the form, seeking information on details of the associated enterprises, including business description, the nature of the relationship, description of the transaction, along with quantitative details and the transfer pricing methodology, PricewaterhouseCoopers said in a note.
Acquisition of a new flat in exchange of an old flat is deemed construction and allows sec. 54 benef
IT: Where possession of new flat is received within 3 years from date of transfer, in exchange of old flat under development agreement, it amounts to construction of property under section 54
Rupee Up 35 Paise Vs Dollar In Early Trade
MUMBAI:The rupee on Friday strengthened by 35 paise to 57.63 against the dollar in early trade on the Interbank Foreign Exchange market on the back of banks and exporters selling the US currency amid strong local equities.
Besides, dollar's weakness against some Asian currencies also supported the local unit, forex dealers said.
The rupee had weakened by 19 paise to close at 57.98 per dollar on Thursday.
Source:-timesofindia.indiatimes.com
Spices Exports Cross Rs 10,000 Crore Despite Global Slowdown
KOCHI: Mint products gained the most while cardamom fared the worst as spices exports crossed the Rs 10,000-crore mark for 2012-13. Spices exports for the year were at 6,99,170 tonne valued at Rs 11,171.16 crore despite recessionary trends in overseas markets, according to Spices Board.
Data show a 22 per cent increase in quantity and a 14 per cent rise in value over the year. Mint products at 19,980 tonne valued at Rs 3321.79 crore topped exports, showing 35 per cent and 49 per cent rise in quantity and value respectively. Chilli was the single largest exported item at 2,81,000 tonne valued at Rs 2,261.44 crore. The shipments were 17 per cent higher in quantity and 5 per cent in value over the year. Cumin at 79,900 tonne worth Rs 1,093.17 crore too logged a high growth.
However, in terms of growth, garlic was the star performer with the highest growth of 991 per cent in quantity and 426 per cent in value at 24,000 tonne worth Rs 74.49 crore due to a shortage in the global market. Small cardamom fared the worst falling 52 per cent in quantity and 49 per cent in value at 2,250 tonne worth Rs 185.05 crore.
Source:-economictimes.indiatimes.com
Import And Export Prices Drop For Third Straight Month
13-Jun-2013
Import and export prices are both down for the third month in a row, according to a May Labor Department report (link opens in PDF) released today.
After falling a revised 0.7% in April, import prices made the biggest splash, with a 0.6% decline for May. A 1.9% fall in fuel prices was the primary reason for this month's decline, with just a 0.3% drop in nonfuel import prices. In the past year, overall import prices are down 1.9%, mostly due to a 4.4% drop in fuel prices
Export prices fell 0.5%, not quite keeping up with import prices. Analysts had expected import prices to stay steady, with predictions for a 0.1% decline in export prices. Unlike imports, nonagricultural industrial supplies and materials provided the primary pull, with a 1.8% decline in May . Agricultural export prices headed 1% higher. Over the past year, export prices have fallen 0.9%, even as agricultural prices have increased 4.7%.
Source:-www.fool.com
Srw Wheat Export Premiums Steady To Weaker
13-Jun-2013
Soft red winter wheat export premiums at the US Gulf Coast were steady to lower on Tuesday amid a looming US harvest and increasing competition from less expensive Black Sea wheat, traders said. Hard red winter wheat export premiums held mostly steady amid concerns that stressful weather in the southern Plains in recent months damaged a larger share of the crop than anticipated, although export demand was slow, traders said.
Tunisia's state grain agency bought 75,000 tonnes of optional-origin wheat on Tuesday, which was likely to be supplied from the Black Sea region's crop. US Gulf soft wheat prices were about $25 to $30 per tonne higher than the traded price, according to traders. Corn export premiums at the Gulf were mostly steady to weak on light export demand, although tight old-crop supplies underpinned nearby basis values, traders said.
World demand for US corn was blunted by high prices and ample available supplies of cheaper feed grains, including Black Sea feed wheat and competitively priced nearby shipments of South American corn. Buyers in Thailand bought around 55,000 tonnes of feed wheat in past days to be soured from the Black Sea region. Traders said the delivered price was $30 or $0 per tonne lower than US corn.
South Korea's MFG bought 134,000 tonnes of optional-origin corn via a tender that closed on Tuesday. US soyabean export premiums at the Gulf were unchanged amid muted demand from top importer China where markets were closed until Thursday for a national holiday. Nearby US soyabean prices were not competitive with South American shipments, but port congestion has delayed vessels at ports there.
A Brazilian soyabean cargo was scheduled to arrive at the US East Coast port of Wilmington, North Carolina, next week, according to a sailing schedule on the port's website. But Reuters vessel tracking data showed the ship remains at anchor off the Brazilian port of Sao Luis, where it arrived on May 29. Traders are monitoring a looming commercial strike in Argentina. The week-long strike is scheduled to occur during a national holiday and a weekend so the impact on grain movement was expected to be minimal, but traders remain concerned that further strikes could occur and delay shipments. The US Department of Agriculture will issue its June supply and demand estimates on Wednesday.
Source:-www.brecorder.com
India Inc's Reliance On Imports Set To Mellow
The rupee's fall to new all-time lows over the past two weeks might have come as a shock to many analysts and policymakers. But a deeper look into India Inc's finances seems to suggest that this was waiting to happen. A ground for the currency's depreciation was being built over the past few years, during which Indian companies' import intensity rose sharply. A devaluation of the currency, in a way, acts as a natural adjustment tool, changing the relative price of locally manufactured goods against their imported substitutes.
Compared to 18.6 per cent in 2002-03, the share of imports in Indian firms' operating expenses surged to 30 per cent in 2011-12. During the same period, however, exports failed to keep pace. As a result, from being a net earner of foreign exchange ten years ago, India Inc turned into a net spender of forex.
A Business Standard analysis of a sample of 559 non-oil and non-financial BSE-500, BSE Mid-Cap and BSE Small-Cap companies reveals that forex expenses of these firms (on profit & loss account, including direct imports, royalty payments, etc) grew at a compound annual rate of 26 per cent between 2002-03 and 2011-12. Corporate forex earnings during this period rose at 20.4 per cent CAGR (see chart).
Contrary to popular perception, a rise in import intensity is not restricted to capital goods or energy-intensive industries. Except a few sectors, such as IT services, pharmaceuticals, agro chemicals, hotels and textiles, all others are now net consumers (or importers) of foreign exchange.
A weakness in the local currency makes imported goods expensive in the domestic market, while domestically produced goods become cheaper in dollar terms. So, Indian consumers get an economic incentive to lower demand for imported products, and Indian producers to export more. Taken together, the process is likely to bridge the gap between Indian firms' forex expenses and earnings.
"Depreciation is surely an adjustment mechanism for an economy with persistent and rising trade deficit. But I am not sure if this alone will be sufficient to narrow India's current account deficit," says Indranil Pan, chief economist, Kotak Institutional Equity.
Hindustan Unilever (HUL), the country's largest FMCG firm, has turned a net spender of forex from being an earner until four years back. In 2011-12, HUL's forex expense stood at around Rs 1,366 crore - nearly three times its forex earnings during the period. The trend is similar at other foreign-owned consumer goods majors like Nestle, Colgate-Palmolive and P&G, too. The only exception to the preference for imported consumer goods seem to be home-grown firms - ITC, Godrej Consumer, Marico, Dabur, ITC and Emami, among others. These firms have remained net exporters through this period. This gives them an edge over MNCs in a scenario where the rupee remains weak, making imports dearer.
The forex gap is even wider in the case of consumer durable companies like Videocon, Havells, Bajaj Electricals and Whirlpool. The combined import bill of these companies has risen at 35.5 per cent CAGR over the past decade. Their forex expenses now account for nearly 26 per cent of their total expenses, against 11 per cent in 2001-02.
The trend is little different for capital goods firms. In 2011-12, BHEL's import bill was nearly seven times its forex earnings; forex expenses accounted for a quarter of its manufacturing expenses. In the same year, Siemens India's forex expenses stood at three times its forex earnings. The situation at ABB, Alstom India and Bharat Electronics, too, was quite similar. Construction and infra major Larsen & Toubro also turned a net importer from a net exporter a few years ago.
Even India's traditional exports, such as textiles, have not been untouched by the changing phenomenon. The forex earnings for 23 textile companies in our sample rose at 19.5 per cent CAGR, while their forex expenses rose at a higher rate of 25.5 per cent CAGR during the period.
This could have been a result of India's growing competitiveness due to a relative over-valuation of the rupee against the dollar in the past decade. India's cost of living during the decade, as measured by Consumer Price Index (CPI) for industrial workers, cumulatively rose 113 per centm while that in the US rose just 24.4 per cent.
However, this loss of rupee purchasing power was not fully reflected in the rupee-dollar exchange rate. In the ten years ended March 2013, the rupee depreciated only 12.5 per cent against the dollar, while the total weakness after taking into account the recent fall works out to 23 per cent. This was made possible by foreign capital inflows, such as those from FIIs, external commercial borrowings, FDI, etc. FIIs have cumulatively invested $120 billion in Indian equities in the decade. Many economists expect capital inflows to come to the rescue.
"There is no immediate risk to the capital flows into India. This will provide support to the rupee. It might remain volatile, as has been the case in last two years, but downside risks look limited from the current level," says CARE Ratings Chief Economist Madan Sabnavis.
However, if foreign investors don't come to the aid, the rupee-dollar exchange rate could soon start reflecting the gap between the rates of retail inflation in India and its major trading partners. There is evidence that depreciation has already started effecting the adjustment. There has been a small decline in India Inc's import intensity over last two years and the forex earnings in sectors like pharma, IT and agro chemicals have begun to accelerate. This would need to gather pace if the rupee's troubles have to end anytime soon.
Source:-www.business-standard.com
India’S Two Big State-Run Ports Set For Maiden Overseas Venture
A strategic and diplomatic exigency has presented two of India’s biggest state-owned ports with an opportunity to venture overseas for the first time.
Kndla porat, India’s biggest port by cargo handled—mostly dry and liquid bulk—and Jawaharlal Nehru port, or JN port, the country’s busiest container port, are all set to develop multi-purpose and container terminals, respectively, at Chabahar port in southwestern Iran.
Chabahar is an important port along the Makaran coast and offers Iran easy access to the Indian Ocean.
India has decided to invest some $100 million in developing Chabahar port, which is considered strategically and economically important for the country’s exports to landlocked Afghanistan.
Last week, a delegation led by shipping secretary Pradeep Kumar Sinha visited Chabahar port to take the proposal forward after it was cleared by the Indian cabinet.
India has been eying Chabahar port for nearly a decade to get easier access to Afghanistan.
India, Iran and Afghanistan have an agreement on preferential treatment and low tariffs for goods moved through Chabahar port, which also has a free trade and industrial zone in its vicinity.
The current move is also seen as a strategy to counter China’s recent takeover of the deep-sea port at Gwadar in south western Pakistan, which is some 72 nautical miles away from Chabahar.
Gwadar is a vital sea link for China to West Asia.
Given India’s often hostile relations with Pakistan, India views the Chabahar port as an alternative route not only to Afghanistan, but also to resource-rich Central Asia.
India’s bilateral trade with Iran stands at more than $15 billion (Rs.84,000 crore), of which Indian exports make up less than $3 billion.
If and when the plan materializes, it will be the first overseas investment by any of the 12 ports controlled by the Indian government.
India’s shipping ministry had proposed to set up an entity called Indian Ports Global for making overseas investments by India’s state-owned ports on the lines of global heavyweights such as Singapore’s PSA International Pte Ltd, Dubai’s DP World Ltd and Belgium’s Antwerp Port Authority, according to a 10-year plan unveiled in 2011. The plan, however, has not made any headway so far.
PSA is owned by Temasek Holdings Pte Ltd, the sovereign wealth fund of Singapore, while DP World is majority-owned by the Dubai government. Both have a large presence in India.
Antwerp port is 100% owned by the City of Antwerp. Antwerp Port Authority, which manages the port, has set up Port of Antwerp International, a vehicle to pursue development activities beyond Europe, particularly in growth regions. Port of Antwerp International has invested in Essar Ports Ltd, the entity that runs ports at Hazira, Vadinar and Paradip in India.
While PSA and DP World run container terminals worldwide, Antwerp port is mainly focused on managing ports overseas without any direct involvement in operating individual berths or terminals. Even at Antwerp port, cargo handling operations are outsourced to private specialists.
New Delhi maintains Chabahar port is in the common interest of India, Iran and Afghanistan, as well as Central Asia. Chabahar is also closer to India than the existing port at Bandar Abbas, which is about 380 nautical miles away from Chabahar.
Circumventing Pakistan, Chabahar port can serve as India’s entry point to Afghanistan, Central Asia and beyond. The port can be connected to the Zaranj-Delaram road in Afghanistan’s Nimroz province via Milak, built with India’s assistance.
Chabahar will provide Kandla and JN ports the opportunity to develop cargo terminals without any of the restrictions they face at home, where private firms are increasingly being tapped to construct and run facilities.
The investment in Chabahar will in all probability be routed through a company in which Kandla and JN ports, which operate as trusts in India, would hold equity stakes.
Kandla and JN ports should seize the opportunity to at least make a beginning on the global stage, which can be leveraged for a larger role later on.
Globally, government-owned ports are seeking investment opportunities overseas to forge stronger commercial links between maritime regions that have the potential to generate cargo for their own ports. So, clearly, the aim is to attract more cargo.
This strategy is based on the premise that more cargo would mean more ships calling at ports, creating more employment opportunities—both direct and indirect—for locals.
Secondly, it would mean having strategic control over logistics of key raw materials.
Kandla and JN ports have cash surpluses, a part of which can be deployed to develop port assets abroad and expand their businesses. These two entities can even sell tax-free bonds by tapping a low-cost fund-raising plan for infrastructure development announced in India’s annual budget for 2013-14 to finance overseas investment.
India’s private business groups such as Adani group and GVK group have already bought port assets abroad, mainly in Australia, as part of a larger plan to invest in coal mines and related infrastructure in that country.
It’s time for India’s state-owned ports to follow in their footsteps.
Source:-www.livemint.com
Govt Revises Export Target Of $25 Bn By A Year To 2016 As Industry Seeks Solutions From Govt On Various Issues
The union ministry of commerce, which had set a target of $25 billion for pharmaceutical exports to be achieved in 2015, has now extended the same to 2016. The deadline is deferred because the pharma industry has categorically stated its inability to increase the exports in a scenario which is marred by impediments and inefficiencies.
The pharma industry has categorically pointed out that the government would need to take immediate steps to speed up clearances spanning from regulatory approvals to customs and pollution control departments.
Although Pharmaceuticals Export Promotion Council of India (Pharmexcil) has been on an aggressive mode to increase the Indian pharma companies’ footprint globally, it has now conceded to the need for an extension to achieve the target.
The global recession, including the subdued economic environment in India, stringent regulatory controls and the inordinate delays in clearances from Ministry of environment, DCGI office besides other related departments are stalling the export orders. This would not allow us to achieve the target by 2015 and therefore deferring the 2015 deadline to 2016 is seen more or less acceptable to achieve $25 billion target, industry sources said.
There are hurdles at every stage beginning from the lackadaisical attitude of the government officials. This has led to disillusionment amongst the pharma industry to expand operations including setting up plants or catering to export orders from many countries. It is a serious issue but the government is just not concerned, said industry sources.
Indian pharma which clocked $14 billion in exports ending March 2013, has expressed that it would be able to garner the required momentum in international sales only if the government comes forward to tackle some of the key issues facing the industry. These include highlighting the export promotional schemes across the micro small medium enterprises (MSME) and increase in Marketing Development Assistance to companies doing the turnover up to Rs.50 crore from the current Rs.15 crore.
Further, there are grave issues like pollution control clearances which requires minimum time frame of six months to two years. Besides industry is confronted with constant allegations on non-compliance to effluent treatment norms or chemical discharges. In addition, the industry is also bogged down by the archaic labour laws and shortage of skilled workforce which makes hiring impossible.
Industry sources said that export orders are time bound. The customers require on-time delivery within a short span. But sometimes it takes a long time to get several clearances from the concerned government departments, making it difficult to execute the orders and in view of that the Indian companies lose credibility.
These critical problems have been brought to the notice of the government departments including the Drugs Control General of India (DCGI). The end result has been the loss of export orders. In such a state of affairs, it makes no sense for the Ministry of Commerce to look at the pharma industry to increase the export earnings by $10 billion from the current $14 billion to 25 billion. The government needs to work out a strategy to help pharma industry to achieve the $25 billion target, Industry sources said.
Source:-www.pharmabiz.com
India Aims To Boost Lng Imports
NEW DELHI, June 13 (UPI) -- India aims to import up to 20 million tons a year of liquefied natural gas, a government official said.
India has already secured deals to import about 14 million tons of LNG a year and is in discussion with suppliers for an additional 20 million tons per year, Indian Oil Minister Veerappa Moily told an International Energy Forum conference this week, Press Trust of India reports.
He didn't disclose the sources of the supplies.
However, the cost of the imported gas -- at least $10 million to $12 per million metric British thermal units -- represents a challenge for India, as consumers are accustomed to government-fixed prices of $4-$5 million mmBtu, he said.
"Making this LNG a cheaper comparable fuel option is a great task," the minister said.
Government data show that India relies on imports for about a quarter of its natural gas consumption."
There are three LNG import terminals operating in India: Shell's Hazira terminal, which is being expanded to 5 million mt/year capacity from 3.6 million mt/year; a 10 million mt/year terminal at Dahel, owned and operated by Petronet India and the 5 million mt/year-capacity Dabhol terminal, partly owned and operated by GAIL, India's largest state-owned natural gas processing and distribution company.
India is the fifth largest importer of LNG after Japan, South Korea, the United Kingdom and Spain and accounts for 5.5 percent of the total trade, Moily said.
"With LNG demand expected to grow at 5-6 percent a year till 2020 and 2-3 percent thereafter, India, along with other Asian counterparts, is driving this growth,'' he added.
But India is facing a widening gas shortage mostly because of falling output from Reliance Industries' offshore block, where the company says it is encountering geological difficulties, The Wall Street Journal reports.
And state-owned Oil and Natural Gas Corp. said last month that its natural gas production declined to 5.58 billion cubic meters from 6.03 bcm a year earlier.
Indian Ambassador to the United States Nirupama Rao, in an April editorial in The Wall Street Journal said that boosting LNG exports from the United States to India "would provide a steady, reliable supply of clean energy that will help reduce our crude oil imports from the Middle East and provide reliable energy to a greater share of our population."
Noting that India relies on imports to meet 73 percent of its oil needs, Moily said in his IEF speech that he wants to reduce imports 50 percent by 2020, 75 percent by 2025 and for India to eventually achieve self-sufficiency and energy independence by 2030.
Source:-www.upi.com
India’S Refined Palm Oil Imports Hit Record High In May
NEW DELHI: India's imports of refined bleached deodorised (RBD) palmolein last month hit 373,837 tonnes, the highest in any single month since edible oil was allowed under the open general licence in 1994, compared with 253,489 tonnes in March.
The Solvent Extractors' Association of India attributed the surge to the reduced duty difference between crude palm oil and refined palmolein, as well as the palm oil exporting countries' inverted duty structure.
Malaysia and Indonesia are the world's largest palm oil producers.
“This has encouraged larger exports of RBD palmolein to India. In the last two months, the share of refined oil (RBD palmolein) has jumped to over 40% from 16% in March 2013,” the association said in a statement in New Delhi yesterday.
The overall imports of RBD palmolein from November 2012 to May 2013 stood at 1,248,024 tonnes compared with 1,084,933 tonnes previously.
Imports of vegetable oils increased 2.35% to 917,964 tonnes in May versus 896,921 tonnes a year earlier, consisting of 892,066 tonnes of edible oils and 25,898 tonnes of non-edible oils, the association said.
The stock of edible oils at June 1 at various ports was estimated at 675,000 tonnes, comprising crude palm oil at 340,000 tonnes, RBD palmolein (230,000 tonnes), degummed soybean oil (35,000 tonnes) and crude sunflower oil (70,000 tonnes).
With about 1.3 million tonnes in the pipelines, the total stock is 1.975 million tonnes compared with 1.820 million tonnes the previous month. - Bernama
Source:-biz.thestar.com.my
Gold Imports To Taper As Government Curbs Dent Demand
KOLKATA: Finance minister P Chidambaram, who has appealed to Indians to stop buying gold for a year to bring down the widening current account deficit (CAD), can heave a sigh of relief because gold traders say imports will drop drastically this month and next with a decline in demand.
Bullion dealers and jewellers say shipments will be less than the average $36-million imports witnessed in the last fortnight of May. Talking to ET, Haresh Soni, chairman of All India Gem and Jewellery Trade Federation, said, "Demand has already tapered off beginning June and this trend is likely to continue till the middle of August. However, we do not think Indians will stay away from gold as wished by the FM. We know CAD is a major issue before the government. We think the government should put a restriction of using gold as an investment product."
The finance minister on Thursday reiterated his appeal that people control their craving for gold. He was addressing a press conference to detail the steps being taken by the government to bring the economy back on track. "If we can have for six months or one year almost minimal gold imports into the country, it will dramatically change the situation on CAD and we will see its positive impact on every other index that majors the economy, stock market, exchange rate and interest rates," he said.
Quoting statistics, Chidambaram said: "Net gold imports, averaged $135 million a day, in first 13 business day in May till May 20. However, in the subsequent 14 business days, it averaged on ly $36 million."
Gold traders say the country's monthly imports may decline to 40-50 tonne each during June and July, a sharp dip from 142 tonne in April and 162 tonne in May. "Looking at the trend in the first few days, June imports may come down to 40-50 tonne. In fact, imports will be lower as demand has come down and jewellers are not restocking because they are watching the situation," said Amit Sampat, director of Mumbai-based Pushpak Bullions.
In 2012, India imported 864.2 tonne of gold and according to World Gold Council's initial estimates, shipments will cross 900 tonne in 2103. The fall in gold imports could come as a huge relief to the government, battling a record high current account deficit of 6.7 per cent of GDP, which in turn has pushed the rupee to a record low.
Samir Sagar, director of Mumbai-based Manubhai Jewellers, however, said India's appetite for gold will not decline despite the government's repeated efforts to curb the demand. "We have seen Indians buying even when gold was at a high of Rs 32,000 - Rs 33,000 per 10 gm. The government should come up with innovative measures to unlock the 22,000 tonne of unproductive gold locked up in Indian households. Once the rupee becomes stronger against the dollar, gold prices in India will drop and there will be a mad rush for gold again."
Source:-economictimes.indiatimes.com
Planning for retirement? National Pension Scheme may be worth a second look
The National Pension System (NPS) is creating a positive buzz in the financial circles lately. The Pension Fund Regulatory and Development Authority (PFRDA) recently announced that some of NPS' funds have delivered double-digit returns of between 12% and 14% for the financial year 2012-13.
Other developments such as additional tax relief to employers as well as their NPS contribution for employees, too, have helped. "One of the biggest push for this product has come from the corporate NPS option, which makes it very convenient and tax-efficient if an employer enrolls under the corporate NPS scheme and contributes to the employees' account," informs Vineet Arora, executive vicepresident, ICICI Securities.
NPS has not found much favour with financial advisors since it was extended to all Indian citizens in 2009. Financial planners have often cited NPS' restricted equity exposure (maximum 50%) and distribution issues as hindrances to those planning for a longterm goal like retirement. However, lately some investment experts concede that NPS merits consideration, but not merely because of its recent showing.
"While evaluating the relevance of a product, one should not look at the short-term returns alone. Rather, the product needs to be evaluated on fundamentals and suitability," says Kapil Narang, chief operating officer with financial planning firm Ameriprise India. That is, you need to ascertain whether the product structure, costs and features complement the objective for which it is launched.
Likewise, you need to ensure that the features suit your risk profile, financial goals and investment horizon. An evaluation of the advantages and drawbacks, therefore, is a must before zeroing in on any investment avenue. First, the positive factors. It is cost effective, despite the designated pension fund managers now being allowed to prescribe their own fee, subject to the ceiling of 0.25%.
"Its fund management charges are among the lowest in the space even now. NPS is a good long-term product and hence, investors should use it to invest a part of their retirement-oriented investment. Also, the lock-in feature of the product provides the benefit of compounding," says Arora. "NPS levies the lowest fund management charges compared to any pension/fund management scheme. This makes it cost-efficient and, also, low expense ratio means additional returns for the investor. It is also professionally managed by renowned fund managers in the country," adds Narang. Other charges could include registration and transaction fees.
Second, it offers flexibility of choosing from various combinations of debt and equity plans. However, as said before, the maximum exposure to equities is limited to 50%. If you want to avoid micro-managing your investment, you can simply opt for the lifecycle strategy that automatically decides your asset allocation, depending on your age. Then, there are tax benefits.
"If you take the NPS benefit through your employer, you are eligible for additional tax deductions (over and above Sec 80C) of up to 10% of your basic pay," informs Narang. However, the grand retirement scheme is not without its share of limitations. The key one, of course, is the cap on maximum exposure that you can take in equities, which stands at 50%.
Now, if you are a young professional willing to stomach risks and stay invested for the long term, financial planners recommend a high equity exposure of 60-70%. Such investors may not find NPS' proposition appealing. This apart, remember, if you need funds during a crisis, you cannot tap into your entire NPS corpus.
Receipt of interest by NR Co. from its HO isn’t chargeable to tax on principal of mutuality
IT/ILT : Interest received by assessee from overseas branches/head office is not to be included in assessee's income
No tax on interest earned by Govt.’s nodal agency if it was reinvested as per Govt.’s directives
IT : Where interest earned by assessee, a nodal agency, on funds advanced to local bodies/IDSMT was again invested in various development projects as per Government instructions, such interest could not be treated as assessee's income
RBI enhances the ceiling on foreign investment in government securities
FEMA/ILT : Foreign Investment in India by SEBI Registered Long Term Investors in Government Dated Securities
SEBI enhances the limit of Foreign Investment in government debts for specified FIIs
SEBI : Enhancement in Foreign Investment Limits in Government Debt
Investment made by SEBI registered Foreign Venture Capital investors are covered under FDI scheme -
FEMA/ILT : Foreign Direct Investment - Reporting of Issue/Transfer of Shares To/By a FVCI
Multiple firms can't be converted into single LLP; LLP deemed to be the auditor on conversion of CA
CL : Clarification on Conversion of a Firm into a Limited Liability Partnership
CIT vs. Nike Inc (Karnataka High Court)
S. 5 & 9: No income is attributable to Liaison Office’s activity of sourcing mfgd products from India even if fee for service is received from overseas buyer The assessee, a USA company, set up a liaison office in India whose main activity was to liaise with Indian manufacturers for purchase of apparels from India by the assessee’s HO and overseas subsidiaries. It employed a large variety of staff whose task was to create awareness amongst the Indian manufacturers of the need to maintain quality control and adhere to standards. The price for each apparel was negotiated with the manufacturer and the samples were forwarded to the US office. The liaison office gave its opinion about the reasonableness of the price and all related issues etc. The US office decided about the price, quality, quantity, to whom to be shipped and billed. The liaison office kept a close watch on the progress, quality, time schedule etc at the manufacturing workshop. The AO held that the activities of the assessee of identifying exclusive manufacturers, designing the products, supervising the manufacture and quality of the and marketing the products were beyond that required by a liaison office and resulted in income accruing or arising in India u/s 5(2) read with s. 9(1)(i). He accordingly held that 5% of the export value of the goods was attributable to India operations and was chargeable to tax. This was upheld by the CIT(A). On appeal, the Tribunal (125 ITD 35 (Bang) held that the activity of the liaison office was merely that of purchasing goods for the purpose of exports as the agent of the buyer and that under Explanation (1)(b) to s. 9, no income can be said to be derived by the assessee in India through the operations of the liaison office. On appeal by the department to the High Court, HELD dismissing the appeal: (ii) On facts, the assessee is not carrying any business in India. The object of the liaison office is to identify manufacturers, give them technical know-how and see that they manufacture goods according to the assessee’s specification which would be sold to the assessee’s affiliates. The person who purchases the goods pays money to manufacturer and in the said income, the assessee has no right. The said income cannot be said to be a income arising or accruing in India vis-a-vis the assessee. As the entire operations are confined to the purchase of goods in India for the purpose of export, the income derived therefrom cannot be deemed to accrue or arise in India. The non-resident buyer may in turn pay some consideration to the assessee outside India but as that contract between the assessee and the buyer is entered outside India, that income arises or accrues to the assessee outside India and is not chargeable to tax in India (Anglo-French Textile 23 ITR 101 (SC) & R.D. Agarwal 56 ITR 20 (SC) referred) |
India-Monaco TIEA is effective from 27-03-2013
IT/ILT : Section 90 of the Income-Tax Act, 1961 - Double Taxation Agreement - Agreement for Exchange of Information with Respect to Taxes with Foreign Countries - Principality of Monaco
Winding up petition against co. admitted as it didn’t repay the dues even after direction of the Cou
CL : Where reasons given by respondent-company, TTL for not adhering to order directing it to make payment to petitioner were neither satisfactory nor convincing and TTL was not in a position to pay outstanding amount, winding up petition against TTL was to be admitted
CIT can’t exercise the revisionary powers against matters which are subject matter of appeal
IT: Where issues raised under section 263 were subject-matter of appeal, provisions of section 263 were not attracted
RBI/2012-13/529 A. P. (DIR Series) Circular No.110 dated 12-06-2013
Reserve bank of India
A.P. (DIR Series) Circular No.110
June 12, 2013
To
All Category - I Authorised Dealer banks
Madam / Sir,
Foreign Direct Investment – Reporting of issue / transfer of Shares to/by a FVCI
Attention of Authorised Dealers Category-I (AD Category - I) banks is invited to Regulations 9 and 10 and para 9 of Schedule I to the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 notified vide Notification No. FEMA 20/2000 -RB dated May 3, 2000 (hereinafter referred to as Notification No. FEMA 20), as amended from time to time. Attention of AD Category - I banks is also invited to A. P. (DIR Series) Circular No. 44 dated May 30, 2008 and A.P. (DIR Series) Circular No.63 dated April 22, 2009 .
- In terms of the said regulations, transfer of equity shares / fully and mandatorily convertible debentures/ fully and mandatorily convertible preference shares (hereinafter referred to as ‘shares’) of an Indian company, from a person resident outside India (non-resident) to a person resident in India (resident) or vice versa, has to be reported to an Authorized Dealer bank within 60 days of transactions. Further, the receipt of consideration for issue of shares as well as the issue of shares of an Indian company, to a non-resident has to be reported to the Reserve Bank of India through an Authorized Dealer bank within 30 days of the transaction.
- It has been observed that SEBI registered FVCIs making investments in an Indian Company under FDI Scheme in terms of Schedule 1 of Notification No. FEMA 20/2000 -RB dated May 3, 2000 , as amended from time to time, also report the same transaction under Schedule 6 of the Notification ibid, resulting in double reporting of the transaction.
- It is clarified that wherever a SEBI registered FVCI acquires shares of an Indian company under FDI Scheme in terms of Schedule 1 of Notification No. FEMA 20/2000 -RB dated May 3, 2000 , as amended from time to time, such investments have to be reported in form FC-GPR/FC-TRS only, as applicable. Where the investment is under Schedule 6 of the Notification ibid, no FC-GPR/FC-TRS reporting is required. Such transactions would be reported by the custodian bank in the monthly reporting format as prescribed by RBI from time to time. Revised forms FC-GPR and FC-TRS are annexed as ANNEX-I and ANNEX-II, respectively, to this A.P.(DIR Series) Circular.
- A SEBI registered FVCI while making investment in an Indian company may determine upfront whether the said investment is under FDI or FVCI scheme and report accordingly. For the guidance of FVCI investors, a suitable remark in para 3(4) and 5(a)(4) of form FC-GPR and para 4(4) and para 5(4) of form FC-TRS, has been incorporated, which would read as follows:
‘The investment/s made by SEBI registered FVCI is/are under FDI Scheme, in terms of Schedule 1 to Notification No. FEMA 20/2000 -RB dated May 3, 2000 .’
- AD Category - I banks may bring the contents of the circular to the notice of their customers/constituents concerned.
- Reserve Bank has since amended the Regulations vide Notification No.FEMA.266/2013-RB dated March 05, 2013 and notified vide G.S.R.No.341(E) dated May 28, 2013.
- The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.
Yours faithfully,
(Rudra Narayan Kar)
Chief General Manager-in-Charge
RBI/2012-13/529
Blending of tea is neither ‘manufacture’ nor ‘production’ for purpose of sec. 80-IA or for sec. 80-I
IT : Activity of blending of tea does not amount to either 'manufacture' or 'production' and, therefore, such industrial undertaking is not entitled for deduction either under section 80-IA or 80-IB
ITAT nods to sec. 68 addition as donor was not traceable to verify the genuineness of gift
IT : Where donor was not related to assessee and he was neither produced for examination nor was he traceable at given address, addition of amount of gift as income from undisclosed sources under section 68 was justified
Customs Notification No 59/2013 (NT) dated 12-06-2013
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(DEPARTMENT OF REVENUE)
(CENTRAL BOARD OF EXCISE AND CUSTOMS)
Notification No. 60/2013-Customs (N.T.)
Dated the 12th June, 2013
22 Jyaistha, 1935 (SAKA)
S.O… (E). - In excise of the powers conferred by section 14 of the Customs Act, 1962 (52 of 1962), the Central Board of Excise & Customs hereby makes the following further amendments in the Notification of the Government of India, Ministry of Finance (Department of Revenue ) No. 59/2013-CUSTOMS (N.T.) dated the 6th June, 2013 published in the Gazette of India, part II, Section 3, Sub-section (ii), Extraordinary vide number S.O.1465[E], dated 6th June, 2013, namely:-
In the Schedule-I of the said Notification, for Serial Nos. 3, 5,11& 16 and in Schedule-II of the said notification for serial No. 1, and the entries relating thereto, the following shall be substituted, namely:-
SCHEDULE-I
| S.No. | Foreign Currency | Rate of exchange of one units of foreign currency equivalent to Indian Rupees | |
| (1) | (2) | (3) | |
| (a) | (b) | ||
| (for imported Goods ) | (For Export Goods) | ||
| 3 | Canadian Dollar | 57.95 | 56.55 |
| 5 | EURO | 78.40 | 76.45 |
| 11 | Pound Sterling | 91.90 | 89.75 |
| 16 | Swiss Franc | 63.40 | 61.65 |
SCHEDULE-II
| S.No. | Foreign Currency | Rate of exchange of 100 units of foreign currency equivalent to Indian Rupees | |
| (1) | (2) | (3) | |
| (a) | (b) | ||
| (For Imported Goods ) | (For Export Goods) | ||
| 1. | Japanese Yen | 60.05 | 58.55 |
The rates will be effective from 13.06.2013
(S.C GANGER)
Under Secretary to the Govt. of India
Tel No.23095574
F. No. 468/03/2013-Cus-V
RBI/2012-13/529 A. P. (DIR Series) Circular No.110 dated 12-06-2013
[unable to retrieve full-text content]RBI : Foreign Direct Investment - Reporting of issue / transfer of Shares to/by a FVCI
RBI/2012-13/530 A. P. (DIR Series) Circular No.111 dated 12-06-2013
Reserve bank of India
A.P. (DIR Series) Circular No.111
June 12 , 2013
To
All Category – I Authorised Dealer Banks
Madam / Sir,
Foreign investment in India by SEBI registered Long term investors in Government dated Securities
Attention of Authorized Dealer Category-I (AD Category-I) banks is invited to Schedule 5 to the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 notified vide Notification No. FEMA 20/2000 -RB dated May 3, 2000 , as amended from time to time, in terms of which SEBI registered Foreign Institutional Investors (FIIs) and long term investors may purchase, on repatriation basis Government securities and non-convertible debentures (NCDs) / bonds issued by an Indian company subject to such terms and conditions as mentioned therein and limits as prescribed for the same by RBI and SEBI from time to time.
- Attention of AD Category-I banks is also invited to A.P.(DIR Series) Circular No.94 dated April 1, 2013 in terms of whichthe present limit for investments by FIIs, QFIs and long term investors in Government securities and for corporate debt stood at USD 25 billion and USD 51 billion respectively.
- On a review, it has now been decided in consultation with Government of India to enhance the limit for foreign investment in Government dated securities with USD 5 billion to USD 30 billion with immediate effect. The enhanced limit of USD 5 billion will be available only for investments in Government dated securities by long term investors registered with SEBI – Sovereign Wealth Funds (SWFs), Multilateral Agencies, Pension/ Insurance/ Endowment Funds, Foreign Central Banks.
- The operational guidelines in this regard will be issued by SEBI.
- All other existing conditions for investment in Government securities remain unchanged.
- AD Category – I banks may bring the contents of this circular to the notice of their constituents and customers concerned.
- The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.
Yours faithfully,
(Rudra Narayan Kar)
Chief General Manager-in-Charge
RBI/2012-13/530
Notification No 19 (RE-2013) / 2009-2014 dated 12-06-2013
Government of India
Ministry of Commerce & Industry
Department of Commerce
Udyog Bhawan
Notification No. 19 (RE-2013) /2009-2014
New Delhi, Dated 12th June, 2013
Subject: Export of Cut & Polished Diamonds for Certification/ Grading &Re-import
S.O (E) In exercise of the powers conferred by Section 5 of the Foreign Trade (Development & Regulation) Act, 1992, as amended, read with paragraph 1.3 of the Foreign Trade Policy, 2009-2014, the Central Government hereby amends paragraph 4A.2.1 in Chapter 4 of Foreign Trade Policy, 2009-2014 (RE 2013).
2. Under para 4A.2.1 of the Foreign Trade Policy dealing with “Export of Cut & Polished Diamonds for Certification/Grading & Re- import” following two additional authorized laboratories for certification/ grading of diamonds of 0.25 carat and above are added after Serial No. (xv):
(xvi) International Gemological Institute (IGI) – Antwerp, Belgium;
(xvii) International Gemological Institute (IGI) – Hong Kong.
3. Effect of the Notification:
To the existing authorised laboratories, two additional laboratories are added for purpose of certification/grading of diamonds of 0.25 carats & above.
(Anup K. Pujari)
Director General of Foreign Trade
E-mail: dgft@nic.in
(Issued from File No.01/94/180/409/AM12/PC-4)
Service-tax can’t be charged on apportionment of income
ST : Appropriation of income cannot be liable to service tax, as service tax can only be charged on consideration for service provided
Fateh Chand Charitable Trust vs. CIT (Allahabad High Court)
Shock & Anguish expressed at mal-administration by AO & CIT. CBDT directed to take action against erring officials The assessee, a charitable trust registered u/s 12A, received donations of Rs. 5.23 crore in AY 2006-07. The assessee filed a ROI offering Nil income and the same was accepted by the AO u/s 143(3) without making any inquiry. Subsequently, the CIT initiated proceedings u/s 12AA(3) for cancellation of registration of the assessee as a charitable trust. However, this was dropped without assigning any reasons. Thereafter, the AO issued a notice u/s 148 seeking to reopen the assessment on the ground that the said donation was bogus as the donor had no financial capacity to give the donation. The assessee filed a Writ Petition to challenge the reopening. HELD by the High Court dismissing the Petition: |
No disallowance for TDS default if exp. paid before end of previous year; Merilyn Shipping's case fo
IT : Where transportation charges claimed by assessee had been paid before end of relevant financial year, disallowance under section 40(a)(ia) was not warranted
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