CL : Any onerous disposition in course of winding up would come within scope of adjudication under section 446(2), no matter whether order of winding up was subsequently stayed or not
Friday, 14 June 2013
Tax collections may fall short of target this fiscal year
Finance and banking companies are likely to pay 5-10% more advance tax for the first quarter of the current fiscal, but the overall trend suggests that total tax collections for the full fiscal year are likely to fall short of target—worrying news for a finance minister that’s trying to rein in its fiscal deficit.
Indicative advance tax payment numbers by the 25 top firms show an increase of 20.96% over last year, said income-tax (I-T) officials on condition of anonymity. A clearer picture will emerge when more companies pay advance tax, the last date for which is 15 June.
Indian companies pay advance tax a fortnight before the end of every quarter on projected earnings and these numbers are seen by analysts as a reflection of their financial performance. Companies are required to pay 15% of their total advance tax in the first quarter, followed by 30%, 30% and 25% in the next three quarters, respectively.
“We need a growth of 19% to achieve the overall target. But it looks difficult at this point of time. However, financial institutions and banking companies are likely to pay 5-10% more,” said one of the income tax department officials cited above.
About 1,200 companies pay more than 75% of corporate tax and account for more than 50% of direct tax collections.
Finance minister P. Chidambaram is bidding to rein in the fiscal deficit to 4.8% of gross domestic product (GDP) this year from 5.2% last year, with increased tax collections playing a key role in the exercise. India’s economy is seen recovering this fiscal from decade-low growth of 5% last year.
The budget estimate for corporate tax collection for the financial year is Rs.4,19,520 crore, 17.71% more than last year’s corporate tax collection. The total direct tax collection target for financial year 2013-14 is Rs.6,68,109 crore, about 19.69% more than last year’s figure.
Although the finance minister on Thursday expressed confidence that the government will not have to go in for expenditure compression to meet its fiscal deficit target, analysts are sceptical of the government meeting its revenue targets.
“This year the problem will be more in revenue rather than expenditure. Besides tax revenues, the government has taken a huge gamble with respect to revenues from spectrum auction and disinvestment, which are dependent on external factors,” said Madan Sabnavis, chief economist at CARE Ratings. “...the government may have no option but to look at expenditure compression this year also to meet the fiscal deficit targets.”
Housing Development Finance Corp. Ltd (HDFC) paid Rs.360 crore compared with Rs.300 crore in the year-ago quarter. Yes Bank Ltd paid Rs.104 crore, up from Rs.75 crore. HDFC Bank Ltd paid Rs.685 crore, compared with Rs.500 crore a year ago.
According to figures given by tax officials, the country’s second biggest bank, ICICI Bank Ltd, paid Rs.600 crore for the reporting quarter against Rs.500 crore. They added that Bank of Baroda paid Rs.325 crore (Rs.300 crore last year), Dena Bank Rs.110 crore (Rs.80 crore), Kotak Mahindra Bank Ltd Rs.110 crore (Rs.75 crore), Accenture India Rs.33 crore (Rs.28 crore), Lafarge India Rs.25 crore (Rs.25 crore) and ITC Ltd Rs.385 crore (Rs.315 crore). Mangalore Refinery and Petrochemicals Ltd isn’t expected to pay advance tax.
Life Insurance Corporation of India paid Rs.679 crore (Rs.638 crore), Tata Steel Ltd Rs.270 crore (Rs.270 crore) and Mahindra and Mahindra Ltd Rs.120 crore (Rs.90 crore).
Details of the highest tax paying firms, State Bank of India and Reliance Industries Ltd, aren’t known at this point of time.
HDFC and Yes Bank confirmed the tax payments, while the other firms could not immediately be contacted for comment.
The gloomy tax outlook comes a day after Chidambaram sought to rally investor sentiment by promising a fresh round of policy initiatives to stimulate economic activity.
The World Bank on Thursday cut its global forecast for 2013 on the back of slower growth projections for emerging economies such as China and India, and a prolonged contraction in Europe. In a report, the bank said the world economy will expand 2.2%, less than a January forecast for 2.4% growth and slower than last year’s 2.3%. While India’s growth projection was lowered to 5.7% from 6.1%, China’s growth outlook was cut to 7.7% from 8.4%.
I-T dept initiates Vodafone conciliation process to resolve tax dispute
The income-tax department has formally written to British telecom major Vodafone, agreeing to a conciliation process to resolve the long-running tax dispute.
The letter to the company stems from last week's cabinet decision that allowed a non-binding conciliation with the company under the Indian Arbitration and Contracts Act, said a government official privy to the development.
The company had sought conciliation under the United Nations Commission on International Trade Law, but the cabinet agreed to the conciliation process only under Indian laws.
A company spokesperson declined to comment.
The Income-tax department would keep the tax demand, which includes interest and penalty, in abeyance during the process. Both sides will appoint representatives to carry out the negotiations.
"Two conciliators will sit together and they would come out with an outcome. It is not an arbitration. They will suggest an outcome, a modified outcome and it is a step by step approach. Everything is in public domain," finance minister P Chidambaram had said after the cabinet decision on June 4.
The Central Board of Direct Taxes, the apex body in charge of administration of direct taxes, is agreeable to waiving off a certain component of the interest and penalty on the total tax liability but the company is pushing for waiving both the interest and penalty and also a part of the principal. A panel headed by Parthasarthi Shome, now an advisor in the finance ministry, had recommended that penalty and interest should not be imposed in cases where law had been amended retrospectively.
Vodafone had acquired Hutchison Essar in 2007 from Hong Kong-based Hutchison Whampoa through a $11.2-billion overseas transaction. Indian income-tax authorities slapped a Rs 20,000-crore tax bill on the company including penalty and interest for not withholding tax on the payment made to Hutchison.
Tax authorities' lost in the Supreme Court, but the government amended the income-tax law retrospectively in the last budget making the company liable to pay tax.
Hotel chain evaded service tax by under invoicing
Assessing the books of accounts of the last five years, the service tax department has found that the group — promoted by former bureaucrat Sanjay Gupta promoted Neesa Leisure Limited (NLL) — had not paid any duty for an income of Rs60 crore which means it is liable to pay Rs3.40 crore as service tax.
Highly placed sources in the service tax department have claimed that the group was found guilty of not paying service tax by under-invoicing stay at its hotels and resorts.
The department had raided the NLL premises this May and seized books of accounts and other records for five years between 2007 and 2012.
“Investigation revealed that taking advantage of one of the rules, the company was raising invoices of Rs999 for visitors instead of the declared tariff of Rs3,500 to Rs16,500 amounting to tax evasion. Also, a batch of 50 people was given same rooms three times in 24 hours,” said a senior official of the department.
Tax is calculated on the difference between invoice amount and declared tariff. “Total difference of under-invoicing is Rs60 crore so far which may go up as assessment is still on,” the official said.
Gupta is currently director and executive chairman of Metro-Link Express for Gandhinagar and Ahmedabad (MEGA) Company to facilitate the Ahmedabad-Gandhingar Metro rail project.
“The group is using its sister concerns to cater to its hospitality business. Service tax charged on the group company is claimed as Cenvat credit (input tax credit) but not deposited with the exchequer,” the official further stated.
“The company has paid Rs1.25 crore in tax liability as well as reduced its claims for Cenvat credit by Rs3.50 crore. However, this is not the final assessment as we are still checking the records,” he added.
New service tax rules
With effect from February 2009, service tax is levied for short-term accommodation in hotels, guesthouses, resorts and other places where the declared tariff is Rs1,000 or more. The declared tariff has been defined within the notification as charges for all amenities provided in the unit of accommodation. Thus, it will include the cost of all electronic gadgets installed in the room and any other facility normally provided by a hotel as part of the stay.
New layer...
AO can’t insist on charging interest paid to partners from net profit remaining after charging the d
IT : For working out disallowance under section 40(b)(iv), in absence of any clear cut guidance that charging of interest has to be on percentage of book profit revenue cannot insist that depreciation being a charge on profit has to be deducted first before considering any interest payment on capital of firm
Receipt of interest by Indian branch from its overseas HO and PEs can’t be charged to tax on grounds
IT/ILT : Interest/commission received by Indian branch from overseas HO and PEs cannot be charged to tax
Kolkata Port Trust Pins Hope On Delhi Meet
KOLKATA: Officers of the Kolkata Port Trust (KoPT) are keeping their fingers crossed. Four days from now, they will get to know whether the port will be allowed to carry out transloading operations at Kanika Sands, off the Odisha coast. The future of Haldia Dock Complex (HDC) depends on this.
With falling draught in the navigation channel outside HDC, the port management was forced to look for other options to increase revenue. One of these was to transload cargo from large vessels to barges at certain locations and bring them to Haldia. The Sandheads, which falls within KoPT's jurisdiction, is one such location. In fact, cargo has been transloaded on to barges and brought to Haldia from the Sandheads.
However, this location suffers from a problem.
"We had to look for another location where lighterage operations can be conducted throughout the year. Kanika Sands is one such location which isn't too far from Haldia. KoPT moved this proposal to the Ministry of Shipping and even got it cleared a couple of years ago. However, the Odisha government was not too keen to allow KoPT to operate so close to its north-eastern coastline as there are private ports operating there. The Odisha government moved the Supreme Court, seeking a reversal of the ministry's order that granted clearance to KoPT," an official said.
After several hearings, the court urged the Centre to convene a meeting with officials from KoPT and the Government of Odisha and find a solution to the problem. The meeting will be held was to be held on Friday but has now been postponed on Tuesday. KoPT officials are hopeful that they would be able to convince the Odisha government that its interests won't suffer if lighterage operations are carried out at Kanika Sands.
"We hope to arrive at a solution in this meeting. If this happens, all parties will move court and submit that the matter has been sorted out," KoPT chairman RPS Kahlon had said a few days ago.
"Lighterage operations are essential for the future of HDC. As draught has fallen, large vessels can't enter the port confines with capacity loads. Importers, on the other hand, want to bring in cargo in larger volumes as this is economical. The only option left with KoPT is to bring in cape-sized vessels to deep-draughted locations like the Sandheads and transload cargo on to barges. In this way, the ships are also not delayed," the official added.
Source:-timesofindia.indiatimes.com
Garment Export In Gurgaon Up By 8%
GURGAON: After a long span of production decline and sluggish growth, the garment export sector here has rebounded to a more lucrative state. In the month of April, the sector grew by over 8% as compared to the previous year. Industry analysts have attributed this rise to the new international business now being diverted towards India, from various other, once-popular, South Asian garment hubs.
"International business to the tune of $3 billion has been diverted to India, because the garment sector has emerged as the most factory complaint in the region," said a representative of the Apparel Exports Promotion Council (AEPC.) The council has reported 'unprecedented export orders in the current season,' with brands such as JC Penny, Abercrombie & Fitch and ZARA among the new buyers.
The AEPC has been running a training programme for the garment sector nationwide named DISHA, under which factories are issued compliance certificates stating that the firm lives up to international codes of business conduct.
"Over 200 garment units have been certified under this scheme. In Gurgaon too, we have issued certificates to local exporters," said the representative. tnnHe added that the recent incident of factory collapse in Bangladesh, which caused global outrage and a protracted labour strife in the country, might also have been one of the contributing factors to the revival observed within the garment sector in India.
"What happened there might only be one of the factors. There are actually multiple factors that have resulted in positive growth over here. Indian has mainly emerged as a factory compliant nation. And the buyers have given this verdict, because it's for the buyers to see whether any improvement has been made in the garment sector of a country," said an AEPC official.
Source:-timesofindia.indiatimes.com
Engineering Exports May Grow Up To 10% In Fy'14
14-Jun-2013
NEW DELHI: Hit by sluggish demand in western markets like the US and Europe, engineering exporters are targeting up to 10 per cent exports' growth in the current fiscal, the Engineering Export Promotion Council said today.
During 2012-13, engineering exports declined 3 per cent to $56.7 billion compared to the previous fiscal, according to the data provided by the Engineering Export Promotion Council (EEPC), which is under the Ministry of Commerce.
The engineering sector is one of the major contributors to the country's total merchandise shipments. But as of now, there has been a flat growth in engineering exports due to weak demand in western markets like the US and Europe, an EEPC official said.
"We will be happy even if we (exports) could grow by maximum 10 per cent in the 2013-14 fiscal," he said.
The US and Europe together account for over 60 per cent of India's total engineering exports.
The official said that although exporters have found new markets such as those in Latin America and Africa, but they are cautious while exploring new destinations due to reasons such as fear of payment default.
Even in the first month of the current fiscal, engineering exports continued to decline, dropping by 10 per cent year-on-year to $4.5 billion.
The council feels that the government needs to take urgent steps to boost exports from the sector in the coming years.
Engineering exports include transport equipment, capital goods, other machinery/equipment and light engineering products like castings, forgings and fasteners.
Source:-economictimes.indiatimes.com
Adoption of cash profit to total cost as PLI justified if same was accepted by TPO in subsequent yea
IT/ILT : Where PLI of cash profit to total cost was accepted in subsequent assessment year, adoption of same by assessee for current year was acceptable
SEBI Regulation on Issue and Listing of Non-convertible Redeemable Preference Shares
SEBI : SEBI (Issue and Listing of Non-Convertible Redeemable Preference Shares) Regulations, 2013
Prohibition on NBFC to become partners in a LLP; NBFC Prudential Norms Directions Amended
NBFC : Non-Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 - Amendment in Para 19A
RBI issues notification to amend NBFC Prudential Norms Directions, 2007
NBFC : Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 - Amendment in Para 20A
Matter to be litigated if aggregate of redemption fine and penalty taken together exceed the minimum
ST : Reduction of Government Litigation - Providing Monetary Limits for Filing Appeals by the Department before CESTAT/High Courts and Supreme Court
Exemption to a trust not to be denied on pretext of religious objects unless actual exp. is incurred
IT : Where revenue could not point out any expenditure which could be said to have been incurred exclusively for a particular religion, denial of exemption under section 11 on ground that objects of assessee were religious one could not be upheld
‘Work contracts’ under VAT to be treated as same under service tax as well
ST : Goods sold in course of providing interior designs services on which VAT had been paid are, prima facie, eligible for exemption under Notification No. 12/2003-ST
When original work contract falls under sec. 194C, its ancillary job would also be covered under it
IT : Where contract for improvement of cities came under purview of section 194C, payment for ancillary jobs relating to same would also come under same section
Order of ITAT is subject to the rectification if principle of natural justice is subdued to pass suc
IT : Where Tribunal proceeded to decide certain issues on merits without giving an opportunity of being heard to assessee, order so passed by Tribunal suffered from an error apparent on face of record which was to be rectified in exercise of power under section 254(2)
Hewlett-Packard India wins stay on Custom dept's $386 million fine
US-based Hewlett-Packard's (HP) India unit has won a stay against Customs Department order asking the computer manufacturer to pay $386 million in alleged duty evasion.
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has stayed the Commissioner of Customs Bangalore's order against HP India Sales Private Ltd (HPI), HP said.
The case relates to an investigation by Directorate of Revenue Intelligence (DRI) in 2008, where the government agency had alleged that HPI had underpaid customs duties while importing products and spare parts into India.
In April last year, the Commissioner of Customs Bangalore had issued an order on the products show cause notice affirming certain duties and penalties against HPI and the named individuals of approximately $386 million.
When contacted, a HPI spokesperson said the firm does not agree with DRI's investigation as well as the commissioner's order.
"The orders passed on April 11, 2012 and April 20, 2012 by the Commissioner of Customs pertain to a DRI investigation which commenced in 2008. HP disagrees with the DRI's position and Commissioner's orders and has challenged the orders before CESTAT. The CESTAT has stayed the Commissioner's orders until final disposal of the appeal," the spokesperson added.
In a regulatory filing to the US Securities and Exchange Commission, HP said: "In April and May 2010, the DRI had issued show cause notices to HPI), a subsidiary of HP, seven HP employees and one former HP employee alleging that HP underpaid customs duties while importing products and spare parts into India and seeking to recover an aggregate of approximately $370 million, plus penalties."
Prior to the issuance of the show cause notices, HP said it had deposited approximately $16 million with the DRI and agreed to post a provisional bond in exchange for the DRI's agreement to not seize HP products and spare parts and to not interrupt the transaction of business by HP in India.
So far, HP has deposited about $70 million with the authorities.
"On April 11, 2012, the Bangalore Commissioner of Customs issued an order on the products show cause notice affirming certain duties and penalties against HPI and the named individuals of approximately $386 million, of which HPI had already deposited $ 9 million.
"On December 11, 2012, HPI voluntarily deposited an additional $10 million in connection with the products show cause notice," the filing said.
It further added: "On April 20, 2012, the Commissioner issued an order on the parts show cause notice affirming certain duties and penalties against HPI and certain of the named individuals of approximately $17 million, of which HPI had already deposited $7 million.
"After the order, HPI deposited an additional $ 3 million in connection with the parts show cause notice so as to avoid certain penalties."
Assessee can change his method for determining ALP before TPO if it exhibits a better result
IT/ILT : Assessee not precluded from pleading before TPO or the appellate courts that the method chosen and adopted by him as the most appropriate method ('MAM') for determining Arm's Length Price is not resulting into proper determination of ALP and some other method should be resorted to. Assessment authorities and appellate courts can take into consideration such a plea before them provided assessee demonstrates as to how a change in the method will produce better or more appropriate ALP in t
Losses of pre-sec. 80-IA period not be carried forward notionally to set off against eligible profit
IT : In terms of provisions of section 80-IA(5), loss incurred prior to initial assessment year of claiming deduction is not required to be notionally carried forward and adjusted against eligible profit so as to disallow a part of deduction claimed
Matter involving quantum of payment under rule 6 of CCR isn’t appealable before HC
ST : Determination of quantum of payment to be made under rule 6 of CENVAT Credit Rules, 2004 is a question of 'ascertaining liability of assessee' and 'determination of rate of duty/tax payable'; and in such matter, no appeal lies before High Court
No sec. 14 disallowance merely for investment in share application money
IT : Where all shares were acquired only in course of business of assessee, pro rata interest on funds relatable to such investment could not be held as outgo in capital field
Mere audit advice won’t prove suppression to invoke extended period of limitation
ST : Mere audit advice without any cogent evidence cannot sustain suppression to invoke extended period of limitation
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