IT: Investment in new residential property made by assessee is not entitled to deduction under section 54F to extent same is made before sale of existing residential property
Monday, 17 June 2013
Info gathered by TPO under sec. 133 must be provided to assessee for verification, says ITAT
IT : Information gathered by TPO under section 133(6) should be provided to assessee to enable it to verify comparable figures with a right to file objection/reply thereon
Government Allows Gold Exports From Sezs After Value Addition
NEW DELHI: Concerned over decline in gold exports from SEZs following ban on its trading, the government has allowed units in these zones to export gold items after a minimum value addition of 3 per cent.
"Commerce Ministry in a notification on April 26 has put a stop to gold trading in SEZs with effect from May 1. We have now made it mandatory that even in SEZ, gold units shall comply with the...minimum value addition of 3 per cent in gold jewellery and 5 per cent in gold and precious stone studded jewellery," Commerce Secretary S R Rao said.
Earlier, this provision was there for gold units outside the zones.
Rao said that the step would help in boosting jewellery exports from India. Gold exports from SEZs in May declined by about USD 0.8 billion.
"Anybody who is exporting gold jewellery has to abide by this value addition norms. Prior to May 1, this norm was not applicable for SEZ exporters. So this has now been made applicable. Now its is mandated," he said.
The government had banned trading of gold by units in the SEZs to check misuse of tax benefits by them. SEZs are allowed duty-free imports.
Reacting on the move, Gems and Jewellery Export Promotion Council Chairman Vipul Shah said the step would benefit genuine jewellery exporters.
Rao said: "Gold exports itself have taken a hit of USD 0.8 billion which essentially contributed to the gold trading that used to take place through SEZ."
Director General of Foreign Trade ( DGFT) Anup Pujari said that prior to May 1, the value addition norm were not applicable for SEZ exports so this has been now made applicable.
"...earlier if somebody exported gold items from SEZ, he was not mandated to follow a minimum value addition norm," Pujari said.
An official said that the Commerce Ministry has taken this step of its own to help genuine jewellery exporters.
"The Commerce Ministry had received lot of complaints about diversion of gold from few zones to the domestic markets. The decision would now help in checking the misuse," the official said.
According to sources, SEZ units were earning arbitrage profits of as high as 7.5 per cent by diverting imported gold to the domestic market.
This was a very profitable venture for SEZ units as it did not involve much capital, infrastructure or labour.
India is the largest consumer of gold. High gold imports are one of main reasons behind high Current Account Deficit, which touched a record high of 6.7 per cent of GDP in December quarter of last fiscal.
The monthly gold imports have averaged 152 tonnes in the first two months of this fiscal, as compared to an average of 70 tonnes seen in the 2012-13 financial year.
Source:-economictimes.indiatimes.com
India Will Be Major Exports Hub: Ford
US automobile major Ford Motor Company is betting big on Asia-Pacific markets, especially China and India. "In the next four to five years, sales from Asia-Pacific would be about 40 per cent," said Ford chief executive Alan Mulally, adding markets in this region were growing the fastest in the world. Currently, Asia-Pacific accounts for 19 per cent of Ford's global sales.
Ford Chief Executive Alan Mulally, here for the roll-out of the Ford EcoSports production line at its existing facility near Chennai, said Asia-Pacific was important for Ford and strategies were being put in place to tap the domestic market and use the region as a sourcing hub. The company is betting big on the 'B', or compact car, platform/chassis. Mulally said Ford was investing in seven plants in the Asia-Pacific region - five in China and two in India (the engine plant at the facility near Chennai and a new facility in Gujarat).
"Ford will export Figo and EcoSport models out of India. The Indian plants would support the market here, as well as other global markets," Mulally said, adding one of India's advantages was its competitiveness and free trade.
Mulally said there was a huge opportunity in the B-platform, where different kinds of body panels could be put on. He added Ford was focusing on the B-segment and there would be more models in this space.
Joginder Singh, president and managing director, Ford India, said the company had doubled its investment in India from $1 billion in 2011 to $2 billion. It had also doubled its production capacity in India.
On the EcoSport, Mulally said it would be a small sports utility vehicle on the 'B' platform, one of the fastest growing segments in the country. By 2015, the company would produce two million vehicles a year on its B-platform globally.
Ford has invested about $142 million at its plant near here to roll out the EcoSport. Currently, it manufactures the model at its plants in Camacari (Brazil) and Chongqing (China). Production in Rayong (Thailand) and Tatarstan (Russia) is yet to start.
On whether the company would lose about $2 million in Europe this year and whether it would shut any of its European plants, Mulally said though the European market was under stress, the leadership in that region was dealing with the hurdles and some felt the crisis had bottomed out. He added Ford Motor Company was restructuring its European operations and cutting production levels to match the demand there.
He said the company continued to supply engines to Tata Motors' Jaguar and Land Rover models. A few years ago, Tata Motors had acquired these brands from Ford.
Source:-www.business-standard.com
Indian Cotton Arrivals Dipping, Says Ica
17-Jun-2013
The arrivals are dwindling in most of the States and season seems to be coming to a close. Approximately 3 Crore 19 lakh bales have arrived in the market as per trade sources. CCI seems to be the best source for good cotton especially in the Andhra Pradesh region at the moment at around Rs.41,000/-Spot per candy.
Most of the North Mills are procuring from Gujarat and Madhya Pradesh due to their proximity from these centres to save lorry freights while the South Mills are sourcing from CCI in Andhra Pradesh.
The Indian rupee has fallen to nearly Rs.59/- to a dollar thereby making import of cotton unfeasable and export of yarn an attractive proposition to the Textile Mills. Monsoon which is main deciding factor for Farming operations have begun on time and now spreads across the arable areas.
Prospects of a normal monsoon are bright. Cotton seed distribution is in progress. Mostly Bt seeds are in demand by Farmers. Farmers group is also worried on the increased cost of inputs like seeds, fertilizers, pesticides, labour and the funds crunch. Demand for cotton lint is persisting. Monsoon will decide the Farmers mood to decide the area.
PUNJAB, HARYANA AND RAJASTHAN:
Daily kappas (seed cotton) arrivals have dropped to approximately 1500 bales. Cotton sowing is almost complete in this region. Prices for good quality J-34 R/g from Punjab is Rs.4170/- per maund spot, while in Haryana and Rajasthan good quality J-34 R/g is priced at Rs.4070/- per maund spot. Bengal Desi S/g is quoted at Rs.3850/- per maund spot. Area sown by cotton is yet to be assessed. Canal water is boon for irrigation in this belt. Monsoon predictions are favourable.
GUJARAT:
Daily cotton arrivals are approximately 8000 bales and arrival of rains in many parts of Gujarat are helpful for the Farmers to prepare to sow cotton for the new season. Prices for good quality S-6 is Rs.39,800/-Spot per candy while good quality V-797 r/g was priced at Rs.27,500/-Spot per candy. Saurashtra area experienced good rain.
Cotton seed sales are brisk. S.6 spot rates moved up from Rs.39,000 /cdy spot to Rs.40,500 /cdy spot from middle of this fortnight, due to various factors like firm ICE Futures, Good demand from Southern Mills due to improved yarn Market conditions, both in Local and Export (Due to devaluation of Rupee) and less arrival of kappas, from the beginning of this fortnight.
Quality is the constraint at present in S.6, due to deterioration in both Staple length and Micronaire. V.797 prices were ruling at around Rs.27,500 to Rs.28,000/cdy spot. In Gujarat, arrival of monsoon in proper time, did not have any impact on prices till now, which usually, witness a bearish trend, due to factors mentioned above besides, lower crop estimated for the current season.
Source:-www.fibre2fashion.com
Rupee Plunges 56 Paise Against Dollar
The rupee on Tuesday plunged by 56 paise, or almost 1 per cent, to trade at 58.43 against the dollar in early trade at the Interbank Foreign Exchange market due to renewed dollar demand from importers and appreciation of the U.S. currency overseas.
Forex dealers said besides dollar’s gains against the yen overseas as investors await the outcome of a US Federal Reserve meeting, increased demand from oil importers for the American currency and a weak opening in the domestic stock market also put pressure on the rupee.
The rupee fell by 36 paise to close at 57.87 against the US currency in the previous session on fresh dollar demand from importers and some banks even as RBI kept its policy rates on hold, and stock markets posted gains.
Source:-www.thehindu.com
India’S May Trade Deficit Widens On High Gold Imports
New Delhi: India’s trade deficit widened in May as gold imports rose and exports contracted, exerting further pressure on the current account deficit.
However, the recent measures announced by the government and the central bank could stem the demand for gold and narrow the deficit in the coming months, said economists.
Trade deficit, or the difference between merchandise exports and imports, rose to $20.1 billion in May, from $17.8 billion in April and $16.9 billion in the year-ago period.
On a year-on-year basis, while exports contracted in May for the first time in five months, by 1.1% to $24.5 billion, imports rose 7% to $44.65 billion.
photo
The rise in imports was mainly on account of a near 90% surge in gold imports to $8.4 billion during the month, but this was slower than the 138% growth in April.
Imports of petroleum products were up 3% at $15 billion.
India has been struggling to control its rising current account deficit, or CAD, which rose to a record 6.7% of gross domestic product in the third quarter of 2012-13, increasing the country’s vulnerability to external shocks.
The full-year number, to be released on 28 June, is likely to be higher than 5% of gross domestic product (GDP).
The high current account deficit has been exerting pressure on the rupee, which ensured that the Reserve Bank of India did not lower key policy rates in its monetary policy review on Monday despite a benign inflation number.
The domestic currency has weakened by 6.6% since 22 May as foreign institutional investors pulled out funds on fear of the US Federal Reserve tapering its quantitative easing measures.
The only way to contain CAD is to increase the domestic production of oil and coal and restrain the consumption of gold, finance minister P. Chidambaram said at a meeting of his ministry’s parliamentary consultative committee on Monday.
Pointing out that India depends heavily on imports for items such as oil, coal and gold, he said it is important for the country to finance the deficit through inflows than by drawing down foreign exchange reserves.
The government was able to finance the CAD and add around $3 billion to foreign exchange reserves in 2012-13, he said.
The government and the Reserve Bank of India have taken a number of steps to reduce gold imports, including increasing the import duty to 8%, the third increase in less than two years and making it difficult for banks and other agencies to import the precious metal.
These steps are likely to yield results from June.
Gold imports have fallen from an average of $135 million a day in the fortnight ended 20 May to $36 million a day in the fortnight ended 7 June, according to government officials.
The high trade deficit, though, is worrisome, commerce secretary S.R. Rao said.
Exports contracted in May, largely because of restrictions on gold trading in special economic zones, he said.
The weakness in the European markets also affected export growth.
The Directorate General of Foreign Trade made it mandatory for gold units in such zones to have a minimum value addition of 3% in gold jewellery being exported and 5% in gold and precious stone studded jewellery from 1 May.
Prior to this, the value addition norm was not applicable for exports from special economic zones (SEZs).
Rao said exports should bounce back as gold trading activities have started again in SEZs.
The trade deficit should come down in the months ahead as gold imports moderate and exports stabilize, said D.K. Joshi, chief economist at rating agency Crisil Ltd.
“Inflation is moderating. So the demand for gold as a hedge against inflation will come down. The measures taken by the government and central bank will also start showing results,” he said. “Overall, given a weak domestic industrial output and lower oil prices, import growth will not be very high in the coming months.”
Source:-www.livemint.com
Sunset clause doesn't need a road map to end tax exemption; Parliament has legislative powers to wit
IT : Amendments by Finance Act, 2011 to withdraw exemption from MAT & Dividend Distribution Tax to SEZ developers/units are not unconstitutional. In the impugned amendment it is made clear that it is prospective in nature. Therefore the impugned amendments can neither be said unreasonable or arbitrary. The road map is not a condition precedent for the Parliament to introduce sunset clause. The Parliament has the sovereign legislative power to withdraw the tax exemption by way of legislative amen
Agents assisting non-resident principal in sale of products in India couldn’t be deemed as its agenc
IT : Merely assisting a non-resident principal would not cause an agent to be considered as PE, making profits taxable in hands of principal
Even good fences don't make good neighbours; high value of neighbour's property saddles assessee wit
IT : Where during search in case of third party, department found exchange of money over and above recorded sale consideration in relation to certain property located in close vicinity of property sold by assessee to sister concern of said third party, Assessing Officer could have reason to believe that sale consideration shown by assessee was less than actual sale consideration and, thus, there was escapement of income
Services provided to exporters against FMS Scrips - Exemption to apply exporter-wise
ST : Section 93 of the Finance Act, 1994 - Exemptions - Exemption to Services Provided to Exporters against Debit to FMS Duty Credit Scrip - Export Performance to be Computed Exporter-Wise and not Group-Wise and Certain Exports Excluded from Such Computation
Mindtree Limited vs. UOI (Karnataka High Court)
Withdrawal of MAT And DDT exemption to SEZs is not breach of promissory estoppel As a corollary to the Special Economic Zones Act, 2005 (‘SEZ Act’), s. 115JB(6) and s. 115-O(6) was inserted to exempt SEZs from payment of minimum alternate tax (“MAT”) on book profits and tax on distributed profits [Dividend Distribution Tax ("DDT")]. By the Finance Act, 2011, the exemption granted by s. 115JB(6) and 115-O(6) was made inoperative w.e.f. 1.4.2012 and 1.06.2011 respectively. The Petitioners claimed that they had established SEZs on the basis of the promise made by the Government that SEZs would enjoy an exemption from payment of MAT and DDT and that the amendments by the Finance Act 2011 withdrawing the said exemption was opposed to the Doctrine of Promissory Estoppel and the Doctrine of Legitimate Expectation. HELD by the High Court dismissing the Petition: |
CIT vs. Textool Co. Ltd (Supreme Court)
Though s. 36(1)(v) requires direct payment to the gratuity trust fund, payment to the LIC Group Gratuity Scheme is also allowable The assessee set up a gratuity fund which was duly approved by the CIT. However, instead of making payment to the fund directly, the assessee paid an amount of Rs. 50 lakhs as initial contribution and an amount of Rs. 5 lakhs as annual premium to the Life Insurance Corporation (“LIC”) pursuant to the group Life Assurance Scheme framed by the LIC for the benefit of the employees of the assessee. The AO disallowed the claim for deduction on the ground that payment towards the gratuity fund was not made to an approved gratuity fund and was not allowable u/s 36(1)(v). The CIT(A), Tribunal and High Court (257 ITR 39 (Mad)) upheld the assessee’s claim on the basis that the payment to LIC under the Group Life Assurance Scheme was for the exclusive benefit of the employees of the assessee under the policy issued by it and that the conditions stipulated in s. 36(1)(v) had not been violated. On appeal by the department to the Supreme Court, HELD dismissing the appeal: |
Disallowance for TDS default under sec. 194C can’t be invoked without ascertaining the existence of
IT: Without ascertaining whether assessee itself had carried on transportation contract or merely sub-contracted same, mischief of section 40(a)(ia), read with section 194C, is not attracted
Reassessment can be made on the basis of info supplied by investigation wing of department
IT : Action under section 147 read with section 148 can be taken on basis of report from Investigation Wing of department
INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES AHMEDABAD CONSTITUTION FOR THE WEEK FROM 17/06/2013 TO 20/06/2013
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INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCHES CHENNAI CONSTITUTION FOR THE WEEK FROM 17/06/2013 TO 20/06/2013
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Alienation of property for construction under joint development agreement comes within meaning of ‘t
IT : Transfer of possession of property to developer for construction of flats under Joint Development Agreement, as per which assessee was entitled to 50 per cent built up area, is 'transfer' as per section 2(47) and is taxable in year in which agreement, giving vacant and peaceful possession to developer, was entered into by assessee
Adjudication can't be made beyond the scope of show cause notice
ST : When demand was confirmed under a head different than that proposed in show-cause notice, adjudication order was liable to be set aside
E-filing of tax returns made simple
MUMBAI: As July 31 - the last date for filing your income tax returns - approaches, it's time to brace yourself for the annual ritual. However, this year, you will not have the luxury of simply gathering all the relevant documents and handing them over to your tax consultant. You will have to adopt a more proactive approach this year, as all tax-payers with a taxable income of over Rs 5 lakh are now required to file their return online.
Naturally, this development could unnerve many tax-payers, particularly those who are not conversant with the computer and the Internet.
However, the process is not as cumbersome as it is assumed to be. If you are a salaried individual not liable to pay any additional taxes and are not expecting any refund from the income tax department, you can follow these simple steps to complete the process within an hour:
Step 1: Log on to www.incometaxindiaefiling.gov.inand register yourself, if you haven't done so already. Your PAN will act as your user ID.
Step 2: The next step is to download the ITR form applicable to you. You will find the forms in 'Downloads' menu. This year, most tax-payers will have to download Form ITR 2 as those with tax-exempt income of over Rs 5,000 cannot file their tax return using Form Sahaj (ITR 1). In simple terms, if your salary includes components like conveyance allowance, house rent allowance (HRA), leave travel allowance, etc, which collectively exceed Rs 5,000 in a year, you will have to opt for ITR-2.
Step 3: Once you download the Return Form's excel utility, you need to enter all the details asked for by referring to the Form 16 issued by your employer.
Step 4: Now, validate the information by clicking the 'Validate' key. An XML sheet will be generated and saved on your computer.
Step 5: Upload the XML file on to the I-T e-filing website after selecting AY 2013-2014 and the applicable ITR form. You will be asked whether you wish to digitally sign the file. If you have obtained the DS (digital signature), select 'Yes'. Otherwise, choose 'No' and proceed further.
Step 6: If the process is completed as per the requirements, the site will flash a message indicating the success of your e-filing process. You can check your mailbox to ascertain whether your ITR-Verification form has been mailed to your registered e-mail ID.
Step 7: Next, get a print-out of your ITR-V, sign the form (in blue ink) and send it by ordinary post to the Income Tax Department-CPC, Post Bag No-1, Electronic City Post Office, Bangalore - 560 100, Karnataka within 120 days of filing your returns electronically.
Step 8: If you do not receive any acknowledgement from the I-T Department, you should send the form again. However, avoid enlisting the services of courier companies, as your form will not be accepted. Forms sent through Speed Post, though, will be accepted.
Mere assumption of bogus purchases isn’t sufficient to invoke disallowance of exp.
IT: Expenditure cannot be disallowed on account of 'bogus purchase' only on basis of assumption and presumption
Interest on FDs and deposits with Electricity Board don’t qualify for sec. 80-IB deductions
IT : Deduction under section 80-IB is not allowable in respect of interest on security deposit with Electricity Board and interest on fixed deposit
Matter remanded as proviso to sec. 2(15) was not considered while allowing depreciation to a trust
IT : Where while allowing depreciation to assessee trust, embargo stipulated in first proviso to section 2 (15) was not considered, matter was to be readjudicated
Sum incurred by Audio Co. to acquire copyrights of sound tracks is revenue in nature
IT : Where assessee was engaged in business of purchasing of copyrights of sound tracks of feature films, expenditure incurred on purchasing such copyrights were allowable as revenue expenditure
Payment of VAT doesn’t absolve liability to pay service tax
ST : A service provider cannot pay service tax or VAT at his option; tax is to be paid as per law applicable and tax due under service tax cannot be discharged by paying tax under VAT laws under a lower rate
Additions couldn’t be made merely on basis of statement given during survey not duly substantiated b
IT : Addition can be made on basis of assessee's statement in survey, only if it is supported by relevant material to substantiate same
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