Successor gets deduction for provision for bad debts acquired in amalgamation but subsequently writt

IT : Where amalgamating company carried forward doubtful debts till date of amalgamation, claim for bad debts subsequent to amalgamation is allowable in hands of transferee-company

Indian co. obliged to withhold tax from sum paid to NR and can't evade it even if it's routed throug

IT/ILT : In view of provisions of section 195, read with section 40(a)(ia) an amount will be liable to tax withholding if it inter alia contains some income element and, therefore, if amount paid by assessee is not taxable in hands of recipient, there can be no question of making any disallowance under provisions of section 40(a)(ia)

Urea Import Up 85 Per Cent In April-May To 6.54 Lakh Tonne

18-Jun-2013

NEW DELHI: Urea import almost doubled in the first two months of the current fiscal at 6.54 lakh tonnes and demand for the nutrient is expected to rise this year on normal monsoon.



India had imported 3.51 lakh tonnes in the year-ago period, said a senior Fertiliser Ministry official.



Urea is imported by the government's three canalising agency - Indian Potash Ltd (IPL), MMTC and STC. The country had imported 80.44 lakh tonnes in the entire 2012-13 fiscal at an average cost of USD 417 per tonne.



The official said that 25-30 lakh tonnes of urea import is estimated for the Kharif season. The demand is expected to rise this year as India is likely to have normal monsoons.



IPL, MMTC and STC are in the process of importing more urea to meet the demand in Kharif season, sources said, adding that the country is importing urea from Iran, Indonesia and IFFCO's JV plant in Oman.



In 2012, urea demand was hit because of drought in four states - Karnataka, Maharashtra, Gujarat and Rajasthan.



Urea is provided to farmers at a fixed subsidised maximum retail price (MRP) of Rs 5,360 per tonne. The difference between the cost of production and MRP of urea is provided as subsidy. The domestic production of urea stands at about 220 lakh tonne.

Source:-economictimes.indiatimes.com

Rupee Recovers 15 Paise Against Dollar

The rupee recovered by 15 paise to 58.62 against the dollar in early trade today at the Interbank Foreign Exchange market on increased selling of the US currency by exporters.



However, dollar’s strength against other currencies overseas capped the rupee’s gain as investors await the conclusion of the US Federal Reserve’s policy meeting and a weak opening in the domestic equity market.



The rupee sank by a whopping 90 paise to an all-time closing low of 58.77 in yesterday’s session on massive dollar buying by banks and importers.

Source:-www.thehindu.com

Readymade Garment Exports To Cross Rs 80,000 Crore This Year: Cmai

18-Jun-2013

MUMBAI: The readymade garment industry aims to achieve Rs 80,000 crore in exports in 2013-14, an 8-10 per cent growth from last year's levels.



"We expect 8-10 per cent growth in readymade garment exports in FY 2014 to Rs 80,000 crore (USD 17 billion). Due to the weakness of Indian rupee, our exports are expected to rise further in rupee term," Clothing Manufacturers Association of India (CMAI) President Rahul Mehta told PTI here.



Competitor countries like Bangladesh and China are facing labour problems. China is slowly moving out from the labour intensive garment industry and moving towards high-tech and sophisticated products. The present garment exports of China is approximately 10 times more than India. So, even if 10 percent of China exports get diverted to India, Indian apparel exports could double, Mehta said.



Further, the talks on FTA (Free Trade Agreement) between India and Europe have been going on for the last three years and are likely to be finalised in near future. If the Indo-EU FTA happens, it would provide duty free access to Indian garments in Europe, giving a huge boost to the Indian apparel industry, he said.



The industry is now exploring markets of Japan, Middle East and South America which have a huge potential for readymade garment exports, he said.



The onset of monsoon is expected to stabilise the raw material like cotton prices, which will boost the industry, Mehta said.



Commenting on the domestic market, he said, the association expects that the size of the Indian domestic readymade garment industry will double within 5 years due to economic prosperity, simplified government policy, growth in fashion orientation, brand awareness and consumer expectations.

Source:-economictimes.indiatimes.com

Board Cautions Rubber Exporters Against Piracy

KOCHI: The Rubber Board has warned exporters and traders against the use of pirated software in the wake of the Unfair Competition Act (UCA) in the US. The recently-passed Act prevents US importers from buying a product manufactured by a company which uses pirated software or hardware in its software systems.



"If a rubber manufacturer uses a pirated software or hardware anywhere in his business and sells the product to a US company to become part of a larger product, the US company is liable for damages. This has resulted in an obvious shift in the preference of US companies for buying only from IT-compliant firms," said Sheela Thomas, chairman of the Rubber Board. With a share of nearly 11.8% of India's total rubber goods export and growing at a rate of 5%, the US has been one of the major traditional export markets for the country. However, lndian rubber industry is facing close competition from China, Canada and Indonesia, Thomas said.



More information on UCA is available at www. rubberboard.org.in. Traders can also contact Tamanna Chaturvedi, consultant at the Indian Institute of Foreign Trade, at tchaturvedi@iift.ac.in for details.

Source:-timesofindia.indiatimes.com

Import Growth High, But Shows Signs Of Easing

18-Jun-2013

CHENNAI: India's merchandise import growth slowed down to 7% in May (year on year) from 11% in April. While imports showed some signs of easing, exports painted a dismal picture, falling 1.1% year on year in May.



"As a result, trade deficit for the month widened to $ 2.1 billion, up 18.8% year on year," ratings agency CRISIL said in a recent report.



During May, high import growth was driven by a pick-up in non-oil imports which grew by 9.1%. "Strong growth in non-oil imports, given the significant slowdown in domestic demand for capital and consumption goods imports, hints at rising imports of other commodities, in particular gold," CRISIL said.



At the same time, oil imports continued to decline in May mirroring the softening of global crude oil prices. Oil import growth fell 3% year on year in May led by a 6.4% fall in crude oil prices compared to a year earlier.



High gold imports, which account for nearly 11% of India's total imports, have inflated the import bill. "An anticipation of further restrictions of gold imports and a decline in gold prices is likely to have driven demand for the metal in May," CRISIL said.



Restrictions on gold purchase were announced, twice in the last two months, to curb demand for the metal.

Source:-timesofindia.indiatimes.com

Cooking Oil Rates Up Marginally On Costlier Imports

18-Jun-2013

NEW DELHI: Edible oil prices have increased by up to Rs 3 per litre in the retail market as imports have become costlier due to fall in the rupee value and could rise more if the currency further depreciates against dollar.



Leading edible oil firms Adani Wilmar and Ruchi SoyaBSE 0.00 % that sell cooking oils under Fortune and Ruchi Gold, respectively, have already raised the retail price.



India imports nearly 10 million tonnes of edible oil, which is about 60 per cent of the domestic demand. At present, the import duty on crude edible oil is 2.5 per cent and 7.5 per cent on refined edible oil.



"Rupee depreciation has an impact on all commodities including edible oils. There will be marginal impact on domestic prices as import cost has increased by 7-8 per cent," Solvent Extractors Association Executive Director B V Mehta told PTI.



"The free fall in rupee against the US dollar will impact edible oil prices by Rs 3-5 per litre in the domestic market. Some of it has been absorbed by the manufacturers and some bit has been passed on to consumers," he added.



When contacted, Adani Wilmar Chief Operating Officer Angshu Mallick said the imported edible oils have become costlier by Rs 4.50 per litre because of rupee depreciation from around Rs 54 to over Rs 58 currently.



"We have increased the retail prices two times in the last 15 days by 50 paise each. Currently, we are holding on to the price. We will assess the situation and take a call on further increase in price in next seven days," Mallick said.



Mehta of industry body SEA said that the price increase would not be much as the global prices are lower by about 30 per cent from the last year's level.



"In the recent past, edible oil prices in India remained subdued due to lower domestic demand and adequate global supply. However, since last 3-4 weeks, prices of major edible oil have been rising due to unfavourable USD-INR ratio. In the last 25 days, there has been increase of Rs 2-3 per litre in the retail segment," Ruchi Soya Managing Director Dinesh Shahra said.



Edible oil companies are, however, expecting that the normal monsoon this year would boost oilseeds production keeping a check on retail prices.



According to SEA, there will not be fall in import volumes because of weak ruppe as global prices continue to rule lower compared to the last year's level.



For instance, global price of palm oil is around USD 840 a tonne now, down from USD 1040 per tonne level in the year-ago period, it said.



Overall, vegetable oil imports in the 2012-13 oil year (November-October) is expected to 10.7-10.8 million tonnes, against 10.2 million tonnes last year, due to increase in consumption following rise in population and income level.



The total consumption of vegetable oil in the country is about 17.5 million tonnes.

Source:-economictimes.indiatimes.com

Olive Oil Import Up By 66% To Nearly 12,000 Tonne In Fy13

18-Jun-2013

NEW DELHI: Olive oil import rose by 66 per cent to 11,916 tonnes in 2012-13 despite rise in global prices, an industry body said on Tuesday.



"India imported 11,916.76 tonnes in the year ending March 2013 as compared to 7,163.08 tonnes in March 2012, producing a never-before-seen increase of 66.36 per cent," Indian Olive Association said in a statement.



"The 66 per cent growth rate comes despite a price increase of more than 40 per cent in the last year in producer countries. Prices remain on historical highs even today despite the expectation of a reasonable crop this year," the association said.



An additional adverse factor is the steep depreciation of the rupee in recent weeks. "January 2013 saw an average rate of euro at Rs 71.60 whereas June 2013 saw an average rate of Rs 76, an increase of 6.15 per cent," it said.



The association said that most Indian companies have been compelled to raise olive oil prices between 20-40 per cent since January 2013 either by increasing MRP or by reducing market offers and schemes.



Spain and Italy continued to dominate Indian imports in fiscal year 2013 with Spain accounting for 59.18 per cent and Italy 31.26 per cent in total imports. Imports from Spain rose to 7,052.17 tonnes against 3,407.16 tonnes last year, while imports from Italy increased to 3,724.88 tonnes from 2,564.90 tonnes last year.

Source:-economictimes.indiatimes.com

ALP to be computed on value of international transactions and not on entire turnover

IT/ILT : ALP can only be considered on value of international transactions alone and not on entire turnover of assessee

Revisionary power couldn’t be exercised on mere allegation of deficient enquiry by AO if his order w

IT : Where essential twin conditions for invoking revisionary jurisdiction, namely, impugned assessment being erroneous as well as prejudicial to interest of revenue, were not satisfied, mere alleged insufficiency of enquiry by assessing authority could not be permitted for invoking revisionary jurisdiction

Cenvat credit available even if challan and invoices were in name of head office

ST : Procedural lapses and absence of all particulars are rectifiable errors, hence, credit was to be allowed subject to rectification by assessee; further, credit is allowable even if invoices are in name of head office

Reasons accepted by CBDT for condoning delaying in filing of return would extend even to revised ret

IT: Where explanation for sufficient cause made in application to condone delay in filing of return as well as revised return, when accepted by CBDT, benefit of condoning delay was not only limited to original return but would also extend to filing of revised return

Cenvat credit can be used for paying service tax under reverse charge

ST : Assessee is entitled to utilize Cenvat credit for paying service tax payable under reverse charge on goods transport agency's services

Amount recoverable in a business transaction can’t be compared with loan or advance for sec. 2(22)(e

IT : Where assessee had to recover certain amount from its sister concern on account of goods sold, since said amount involved business transaction and it could not be categorised as loan or advance, question of application of section 2(22)(e) did not arise in respect of same

CUP Method is most reliable when uniform transactions with unrelated parties are available for compa

IT : Where rates charged by assessee to its AE were identical to rates charged by third parties in same line of business for same job, CUP method was most appropriate method for computing ALP

Amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No.6/2013-Service Tax, dated the 18th April, 2013

[TO BE PUBLISED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB SECTION (i)] Government of India Ministry of Finance (Department of Revenue) Notification No. 11 / 2013 - Service Tax New Delhi, the 13th June, 2013 G.S.R. 373(E).- In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby makes the following amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No.6/2013-Service Tax, dated the 18th April, 2013, published in the Gazette of India, Extraordinary, Part II, section 3, subsection(i), vide number G.S.R. 254(E), dated the 18th April, 2013, namely:- In the said notification, in para 3, in condition (a),- (i) for the word and figure "Volume I", the words and figures "Volume I in terms of entitlement under paragraph 3.14.2 or against exports to the countries or regions specified in paragraph 3.14.4(e) or paragraph 3.14.5(e) of the Foreign Trade Policy, as the case may be" shall be substituted; (ii) in the first proviso, for the words "the Focus Market Scheme", the words and figures "paragraph 3.14.2 of the Foreign Trade Policy" shall be substituted; (iii) after the first proviso, the following proviso shall be inserted, namely:- "Provided further that for the purpose of calculation of export performance or for computation of entitlement under paragraph 3.14.4 or paragraph 3.14.5 of the Foreign Trade Policy, the incremental growth shall be in respect of each exporter [Importer Exporter Code (IEC) holder] without any scope of combining the export for group company or for transferring export performance from any other IEC holder and the incremental growth shall be in terms of freely convertible currency to the designated markets. The following categories of exports shall not be counted for calculation of export performance or for computation of entitlement: (i) Export of imported goods or exports made through trans-shipment; (ii) Export from SEZ or EOU or EHTP or STPI or BTP or FTWZ; (iii) Deemed Exports; (iv) Service Exports; (v) Third Party exports; (vi) Diamond, Gold, Silver, Platinum, other precious metal in any form including plain and studded jewellery and other precious and semi-precious stones; (vii) Ores and concentrates of all types and in all formations; (viii) Cereals of all types; (ix) Sugar of all types and all forms; (x) Crude or petroleum oil and crude or primary and base products of all types and all formulations; (xi) Export of milk and milk products; (xii) Export performance made by one exporter on behalf of other exporter; (xiii) Supplies made to SEZ units; (xiv) Items, export of which requires an export authorisation (except SCOMET); (xv) Export of Meat and Meat Products; (xvi) Exports to Singapore, UAE and Hong Kong, (xvii) SEZ or EOU or EHTP or BTP or FTWZ products exported through DTA units;''. [F. No.605/10/2013-DBK] (Sanjay Kumar) Under Secretary to the Government of India Note- The principal notification No. 6/2013-Service Tax, dated18th April, 2013, was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 254(E), dated 18th April, 2013.

Tax broadening measures: Sindh proposes to withdraw ST exemption on various services

Sindh government has proposed to review the exemptions and impose sales tax on services of advertising agents, security agencies, commodity brokers, marriage halls and event management to enhance the tax base without increasing tax rate. The government has also proposed to increase property tax from 20 percent to 25 percent on annual rental value of buildings and lands.

Levying sales tax on services of advertising agents, security agencies, commodity brokers, marriage halls and lawns, event management and public bonded warehouses have been proposed. The services of security agencies will be taxed at 10 percent, instead of the standard rate of 16 percent. While, small marriage halls and lawns located on plots of 800 sq. yds or less will remain exempted from the tax In addition, exemption on internet and broadband services are proposed to be withdrawn. However, Internet services of upto Rs 1,500 per month will remained exempted in order to facilitate students and households.

Certain new services like beauty parlours (exceeding annual turnover of upto Rs 3.6 million) and race clubs are proposed to be brought into the tax net. The beautician services will be taxed at the reduced rate of 10 percent. The Bed Tax of 7.5 percent is proposed to be withdrawn; however, the hotel industry will continue to pay only the Sindh sales tax on their services.

The government has also proposed to increase in license fee of Trade and Import of Potable Liquor and Retail of Liquor License from Rs 600,000 to 800,000 and from 350,000 to 500,000, respectively. According to the budget speech presented by Chief Minister Sindh Syed Qaim Ali Shah, Sindh sales tax is insufficient and limited to few service items and it is not possible to achieve the desirable tax-to-GDP ratio in this sector at the existing tax base.

With a view to supplement the national efforts for achieving the NFC-desired Tax-to-GDP ratio of 15 percent by 2014-15 and also for equitably taxing the service sectors in Sindh, the provincial tax administrations need to be reformed and the tax base needs to be appropriately expanded, he added.

Therefore, the government has proposed that the existing tax anomalies and inequities should be removed and few more of the items in the services sector be brought into the tax net without increasing tax rate He said that Sindh government will not increase the existing sales tax rate of 16 percent to contain inflation.

Some of the services provided under contracts or agreements are proposed to be specified as being liable to sales tax with a view to removing doubts, disputes and confusion about their tax status in view of the fact that tax is already levied on the services of contractual execution of work. These services are specified in the amending provisions of the Bill in relation to the Second Schedule to the Sindh Sales Tax on Services Act, 2011, he informed.

The offer of the Sindh Chapter of the Constructors Association of Pakistan (CAP) to pay Sindh sales tax at a reduce rate of 4 percent without any input tax adjustment is proposed to be accepted. On the pattern of the exemption from tax on the Bank's services of utility bills collection, the similar services by NADRA Technology Limited (NTL) are also proposed to be exempted. The chief minister said that certain legislative arrangements had been proposed with a view to providing clarity and un-ambiguity in law.

In addition, the Special Development and Maintenance of Infrastructure Cess is being levied for the purpose of meeting the costs of wear and tear on the infrastructure due to heavy traffic of the goods entering the province by air or sea, and for providing security. It is proposed to enhance the rate of the Cess from 0.80-0.85 percent to 0.90-0.95 percent on various slabs of the imports to facilitate additional funds to the Government for meeting the cost of maintenance of infrastructure.

Direct tax arrears of Rs.5.8 trillion bigger than fiscal deficit

Direct tax collection in India in the year ended March grew 13% to Rs.5.58 trillion, while arrears jumped 20%. Cumulative direct tax arrears stood at Rs.5.8 trillion on 1 April, according to the central action plan for 2013-14 prepared by the Central Board of Direct Taxes (CBDT). The arrears are bigger than the fiscal deficit, estimated at Rs.5.42 trillion for the fiscal year to March 2014. CBDT’s central action plan, a copy of which was reviewed by Mint, was released earlier this month for circulation within the income-tax (I-T) department. It outlines the tax collection plans of the agency for the current fiscal. The agency plans to collect Rs.6.68 trillion in direct taxes, about 19.69% more than last year. CBDT is the apex authority that administers direct taxes. In 2012-13, due to the slowdown in the economy, direct tax collection fell short of the revised target of Rs.5.65 trillion; the earlier target was Rs.5.70 trillion. To boost the collection this fiscal, the department has sent notices to at least 70,000 defaulters. In the current fiscal, the tax authority plans to recover at least Rs.61,018 crore through arrears, according to CBDT’s central action plan—about three times the amount it had planned to collect in the last fiscal. A large number of cases where tax demands have been raised have been stuck in appellate tribunals and courts. Other tax arrears, such as those related to Harshad Mehta are purely notional. In 1992, the late Mehta was indicted by the Bombay high court in a Rs.5,000 crore securities scam. CBDT, to achieve its stiff target, has asked its legal counsels to follow the apex court’s ruling in the Vodafone Group Plc. tax dispute case. In 2010, the Supreme Court had directed Vodafone to pay 25% of the demanded taxes to the government and deposit the remaining 75% as a bank guarantee even before admitting its appeal in court. CBDT wants its legal counsels to push for similar judgements in all tax disputes pending in various courts. “The underlying principle is that the government needs funds in public interest and there should be no impediments in recovery of taxes,” said CBDT’s central action plan. In 2007, Vodafone International Holdings, a Dutch unit of the British telecom firm, bought the Indian business operations of Hutchison Telecommunications International Ltd through the sale of a Cayman Islands-based firm called CGP Investments Ltd, a unit of Hutchison, in a $11 billion deal. The Indian tax department estimated the company’s liability at around Rs.11,000 crore for not withholding tax while paying Hutchison. The Supreme Court, in its judgement in January last year, held the deal was not taxable in India. Subsequently, the government introduced retrospective amendments to tax laws and revived the Vodafone case despite the apex court’s order. At present, the government has decided to enter into a non-binding conciliation with Vodafone to resolve the tax dispute. CBDT has also asked the tax department to recover arrears from defaulters with the help of Credit Information Bureau (India) Ltd, or Cibil, the country’s largest collector of databases on borrowers. “Since Cibil also contains information about the credit rating of entities, it would also help in ascertaining the financial capability of the PAN (permanent account number) holders against whom the demand has been raised,” said the CBDT central action plan. Indirect tax collection up 3.8% Indirect tax collection in April- May, the first two months of fiscal 2014, grew by a meagre 3.8% to Rs.71,379 crore. Customs duty collection was Rs.28,080 crore, while service tax collection was Rs.19,710 crore, people in the finance ministry said. Excise duty collection for the period was Rs.23,589 crore. Indirect tax collection in May grew 4% to Rs.37,695 crore.

Silence of assessee before AO over jurisdictional issues bars him from raising the same issues befor

IT : Where issue of jurisdiction under section 148 was not raised before Assessing Officer and conduct of assessee before Commissioner (Appeals) showed that he agreed to assumption of jurisdiction by Assessing Officer, additional ground raised by assessee on issue of jurisdiction before Tribunal could not be admitted

Writing off shares and FD deposited in lieu of a bank guarantee, allowed on liquidation of guarantor

IT : Where equity shares and fixed deposits were deposited for obtaining bank guarantee, writing off same on liquidation of bank is allowable as revenue expenditure

Input services used exclusively for manufacture of exempted goods are not eligible for credit

ST : Input services used exclusively for manufacture of exempted goods are not eligible for credit, even if such goods are used by another unit of assessee for manufacture of dutiable goods

Winding up petition admitted as respondent co. didn’t take notice of appearance before court on seri

CL : Where company ignored claim of petitioner in respect of goods supplied and failed to appear before Court in response to statutory notice, conduct of company amounted to uncontroverted admission of claim of petitioner and was to be wound up

Re-assessment notice can’t be issued in respect of fringe benefits escaping assessment

IT: Section 115WG provides special provision for fringe benefit tax escaping assessment; notice under section 148, therefore, cannot be issued