REI Agro Ltd vs. DCIT (ITAT Kolkata)

No s. 14A disallowance if satisfaction not recorded with reference to A/cs. Under Rule 8D(2)(ii) loans for specific business purposes cannot be included. Under Rule 8D(2)(ii) & (iii) investments which have not yielded income cannot be included In AY 2008-09, the assessee invested Rs.103 crores in shares on which it earned tax-free dividends of Rs. 1.3 lakhs. The assessee claimed that though its borrowings had increased by Rs. 122 crores, the said investments were funded out of own funds like capital and profits. It claimed that no expenditure had been incurred to earn the dividends and no disallowance u/s 14A could be made. The AO applied Rule 8D and computed the disallowance at Rs. 4 crore. On appeal by the assessee, the CIT(A) reduced the disallowance to Rs. 26 lakh. On cross appeals, HELD by the Tribunal: (i) When the AO does not accept the assessee’s claim regarding the non-applicability/ quantum of disallowance u/s 14A, he has to record satisfaction on that issue. This satisfaction cannot be a plain satisfaction or a simple note. It has is to be done with regard to the accounts of the assessee. On facts, as there is no satisfaction by the AO, no disallowance u/s 14A can be made (Balarampur Chini Mills 140 TTJ (Kol) 73 (included in file) followed); (ii) Rule 8D(2)(ii) is a computation provision in respect of expenditure incurred by way of interest which is not directly attributable to any particular income or receipt. This clearly means that interest expenditure which is directly relatable to any particular income or receipt is not to be considered under rule 8D(2)(ii). The AO has to show that the interest is not directly attributable to any particular income or receipt. In the assessee’s case, the interest has been paid on loans taken from banks for business purpose. There is no allegation that the loan funds have been diverted for making investment in shares or for non-business purposes. The loans are for specific business purposes and no bank would permit the loan given for one purpose to be used for making any investment in shares. Also, the assessee has substantial capital & reserves. Accordingly, the interest on the loans cannot be included in Rule 8D(2)(ii); (iii) Further, in Rule 8D(2)(ii), the words used in numerator B are “the average value of the investment, income from which does not form or shall not form part of the total income as appearing in the balance-sheet as on the first day and in the last day of the previous year“. The AO was wrong in taking taken into consideration the investment of Rs.103 crores made during the year which has not earned any dividend or exempt income. It is only the average of the value of the investment from which the income has been earned which is not falling within the part of the total income that is to be considered. Thus, it is not the total investment at the beginning of the year and at the end of the year, which is to be considered but it is the average of the value of investments which has given rise to the income which does not form part of the total income which is to be considered. The term “average of the value of investment” is used to take care of cases where there is the issue of dividend striping; (iv) Under Rule 8D(2)(iii), what is disallowable is an amount equal to ½ percentage of the average value of investment the income from which does not or shall not form part of the total income. Thus, under sub-clause (iii), what is disallowed is ½ percentage of the numerator B in rule 8D(2)(ii). This has to be calculated on the same lines as mentioned earlier in respect of Numerator B in rule 8D(2)(ii). Thus, not all investments become the subject-matter of consideration when computing disallowance u/s 14A read with rule 8D. The disallowance u/s 14A read with rule 8D is to be in relation to the income which does not form part of the total income and this can be done only by taking into consideration the investment which has given rise to this income which does not form part of the total income.

Trust registration doesn’t require benefit for the whole mankind, benefit to a segment of public wou

IT : Even if benefit of trust is restricted to members of a particular religion, who are members of a particular church, it would be a charitable institution under section 2(15), eligible for registration under section 12A

Taxability on sale of tenancy rights can be decided only after determination of assessee’s right to

IT: Where assessee was in possession of a property and later on he sold right of possession to another person for a sum, it was necessary to decide first whether assessee's rights in property constituted a 'tenancy rights' within amended section 55(2)

I-T department to keep tax returns in hi-tech, world-class swanky centres

Your taxes are dear to the income tax department, but your returns are even dearer, so the department has ensured that they are kept in world-class safe keeping. Iron Mountain, the safe-keeper of the wills of Princess Diana, Charles Darwin, Bill Gates' Corbis photographic collection and the recordings of Frank Sinatra, makes sure that your tax returns are safe once they land with the department. "Printed documents are bar-coded and then sent to the company's storage houses," said an income tax (IT) department official. Safe-keeping of records is a crucial part of the agreement with IT major Infosys, the contractor for the Central Processing Centre (CPC) in Delhi. The tax documents in double-sealed cartons are bar-coded and sent in GPS-enabled security vans to swanky storage centres with climate-controlled conditions. The bar-coding ensures that no document reveals the identity to a normal eye, thereby ensuring its safety and security. The records will be kept for six years as the IT department can reopen an assessment for the past six years. After six years, the records will be destroyed, but according to well-documented global standards. "Only the relevant records will be called for using the bar-codes and shredded in the presence of income tax officials, InfosysBSE -1.33 % officials and Iron Mountain in the presence of a video camera," the official added. Though the returns processed are e-filed, the paper records of verification forms and returns are still preserved. At CPC, verification forms sent after the returns are filed for validation are scanned mechanically, matched with the e-filed returns and after processing, the advice for refund is sent out automatically to the refund banker to issue the refund to the taxpayer. The letters are printed and put in envelopes automatically and collected by India Post for despatch. CPC has processed more than 4.15 crore returns in the past three years of operations. As against the average processing time of more than 12 months in the past, CPC has brought it down to 65 days, the official said. Faster processing of returns has also helped the department reduce the interest it had to pay on refunds: the interest rate on delayed refunds is down to 4.77% against an average rate of more than 17% in 2009-10.

If order of pre-deposit isn't stayed by HC its non-compliance would cause dismissal of appeal

ST : If pre-deposit order is not stayed by High Court, non-compliance therewith would lead to dismissal of appeal

A jurisdictional court alone can try a dispute of specific performance of sale

SARFAESI Act : Dispute of specific performance of sale can be tried by jurisdictional Court only

Receipt of gift by HUF from a relative of its Karta isn't taxable under section 56

IT : Where assessee-HUF received a sum of Rs. seven lakh as gift from a relative of Karta of HUF, in terms of proviso to section 56(2)(v) amount so received could not be brought to tax

Calcutta high court strikes down Bengal entry tax as unconstitutional

In a major setback for the Mamata Banerjee government, Calcutta high court on Monday struck down the entry tax on commodities imported from other states, which has been showcased as one of the achievements of the Trinamool Congress government since it was imposed in April 2012.

The order will have serious repercussions on the state's finances - cash-strapped Bengal stands to lose Rs 1,200 crore a year. The court has granted a six-week stay, allowing the government to move a division bench. The Mamata government had faced similar embarrassment a year ago when a division bench of the high court called the Singur Land Act "unconstitutional and void."

In her 100-page order Justice Indira Banerji said on Monday that the 'West Bengal Tax on Entry of Goods into Local Areas Act, 2012' is unconstitutional because the state Act doesn't have the President's assent. The preceding Left Front government had sent the entry tax proposal for the President's assent in 2003 but didn't pursue it after 2010.

With Bengal's treasury in a desperate condition, finance minister Amit Mitra introduced entry tax in 2012. He hailed its contribution to the state's revenue but a group of business houses and traders moved high court, challenging the validity of the Act. While presenting his 2013-14 budget on March 15, Mitra had assured the assembly that there was no need to obtain presidential assent for compensatory entry tax. But the high court has ruled otherwise.

The Left Front government had scrapped entry tax 17 years before Mitra introduced it as a 1% levy on consignments from outside valued above Rs 25,000. During the passage of the entry tax bill in the House on March 31, 2012, Mitra had said the levy was designed to be "compensatory in nature", and that the entire tax shall go to a "dedicated fund" to boost infrastructure - building of roads, bridges, linking of markets, setting up storage facilities and supply of electricity and water to industries and commercial complex.

But during its submission in court, the state government couldn't quantify the benefits to local area trade and commerce as mentioned in the purpose of the Bill. Justice Banerji held that the tax wasn't compensatory in nature. The Supreme Court had laid down the guidelines for introducing such a compensatory entry tax (Jindal Stainless Ltd Vs the State of Haryana) to make the government accountable for beefing up infrastructure.

The SC guidelines provide that entry tax should be a compensatory tax till such time as it is required to improve infrastructure such as roads, markets and power, and the proceeds of the tax have to be utilized exclusively for the development of trade, commerce and industry and the activities specified. The fund cannot be utilised for other purposes, the apex court held.

Sensing the legal implication, Mitra took care to set up a "Compensatory Entry Tax Fund" for upgrading infrastructure. He also named the fund carefully because the Karnataka high court had struck down a plea of imposing entry tax in Bangalore on the ground it was restricting free movement of commodities. The same plea was taken in the court while contesting the Entry Tax Act.

Legal setbacks for govt in Calcutta high court

1. June 22, 2012: Singur Land Act struck down as 'unconstitutional and void'

2. Feb 19, 2013: CBI probe ordered into the Gurap rehab home rape-murders

3. May 10, June 13, 2013: Primacy of State Election Commission upheld in the conduct of panchayat polls

4. May 13, 2013: CBI inquiry ordered into Dhaniakhali custodial death

How Bihar's Flat-Tax Scheme a success for small businessmen

Rajul Awasthi, IFC-World Bank's senior private sector development specialist in Washington, remembers a workshop in Bhagalpur, Bihar, two years ago where he was speaking to a hall of about 100 people on tax compliance. At the end of the workshop four people walked up to him. Going by their clothes and manner Awasthi figured they were small merchants. "One of them said, 'we are very scared to go to the offices though we want to be part of the scheme'," he says. "They said they didn't want to do business like thieves." What they were referring to was the sales tax system that existed in Bihar, as in many other states. Much has changed since 2009 when Bihar introduced a flat-tax scheme for small businessmen. The scheme did away with quarterly filings with the tax department and scrutiny by officials, instead accepting the businessmen's assessment of their business in good faith. In short, a small businessman did not have to meet a tax official on any occasion. Awasthi, who was one of the key advisors to the state government, says many people do not pay tax simply because the compliance cost was too high. Experience worldwide and now in India shows that an easy way to improve tax payments is to reduce the cost of compliance. Many Indian states such as Kerala, Gujarat and Maharashtra have improved tax collections by simply making it easier for people to pay their taxes. The commercial tax reform project in Bihar, which borrows elements from good practices in other states, proves that even regions that are far behind in economic activity can scale up their revenues with some simple measures, especially for small taxpayers. Some of these lessons are finding their way into the national Goods and Services Tax regime being designed by an empowered committee chaired by Sushil Kumar Modi, Bihar's finance minister. Only 149 businessmen in Bihar filed tax returns electronically in 2009 when the project started. In February 2013, 78,000 businesses filed returns online. Value added tax grew 29 percent in fiscal year 2013, says Modi. The state ended the year with a total tax revenue of Rs 16,509 crore compared to just Rs 3,561 crore seven years ago. What Changed Sitting in the first class compartment of the speeding Patna-bound Rajdhani Express, Delhi-based businessman RK Gupta is carefully filling up a 'C' form on his laptop. The 'C' form is a mandatory filing made by businessmen who have inter-state trade in India. Gupta imports polymer bags to Bihar from his factory near Delhi. Earlier, a businessman in Bihar (it is still the case in many states) had to physically file the form in triplicate at the sales tax office and wait for the officials to issue an acknowledgement which had to be shown at the checkpoints on borders and verified by tax officials. The form would have a declaration of the goods and their value. Now Gupta can fill it online and get a token number which his trucker can quote at the state border where tax officials look it up online. Officials at the checkpoint have also been asked to take the declaration of value in good faith and not harass the truckers. Modi, who is also the deputy chief minister and leader of the Bharatiya Janata Party which rules the state in alliance with Nitish Kumar's JD(U), says, "Businessmen were filing the documents earlier too. But there were so many documents at different places that it was very difficult to reconcile. Now I have all the information online and I can easily check if the goods declared tally with those sold in the state." Besides, Bihar has rationalised tax rates of about 150 items with its neighbours. That takes away the tax arbitrage, eliminating the incentive to smuggle goods. Amit Mitra, finance minister of neighbouring West Bengal told Forbes India in an earlier interview that his state had eased inter-state movement of goods. "The way bill is generated online and importers have to pay only 1 percent of the value of the goods which they declare," Mitra had said adding that it has practically eliminated the need for sales tax check posts at borders. Such rationalisation smoothens movement of goods, saving time and money for businesses and reducing petty corruption. Bihar has moved many of its tax processes online, including payments. More than 90 percent of tax payments were made online in fiscal year 2013, Modi says. When Bihar approached IFC seeking help in reforming its tax regime, Awasthi first commissioned a survey of businesses in the state. "We found that there was a significantly high compliance burden on many tax payers," he says. Businesses had to hire accountants and spend time and effort which was not justified by the turnover and amount of tax they were expected to pay. Awasthi advised the state to introduce a flat tax scheme for small businessmen. Following the advice, Bihar launched a scheme under which businesses with a turnover of less than Rs 40 lakh a year could pay a flat tax of Rs 10,000, that too in two instalments if they like. It also replaced quarterly statements with a single, yearly statement. To remove the fear of the taxman, the state decided to exempt all such businesses from scrutiny. "We have not done a single tax raid this year," says Modi. He has found other ways to check evasion. The government has asked 1,500 large companies for data on goods supplied to Bihar. Modi reasons that a television maker, for example, will have meta data of sets sold in the state and once that is available, it is easy to find out who sold what and where and cross check whether revenue flowed to government coffers or not. Electronic markers are easier and efficient than sending a pack of taxmen to raid offices and homes to chase paper trails. Manoj Kumar, a watch-shop owner in Patna, says that the new regime saves him a lot of hassles and costs. He says he has a turnover of approximately Rs 30 lakh. If he were to calculate his tax burden at the earlier rate, it would have worked out to about Rs 9,000. "I deposit Rs 10,000 in the bank now and there are no hassles," says Kumar. He, however, feels that he would have had to pay much less when business is slow and turnover falls to, say, Rs 20 lakh. "I wish there was one more slab with a lower tax rate." The Larger Picture Modi says it did not make sense for the state to spend its energy on small taxpayers. "Ninety-eight percent of our tax revenues come from 2 percent of tax payers. So we are focusing only on the biggies," he says, adding that what Bihar did was not original but largely copied from the successful model of Kerala which reformed its tax regime some years ago. In Kerala businesses with a turnover of less than Rs 5 lakh do not need to register or pay any tax. Those with a turnover between Rs 5 lakh and Rs 10 lakh have to register but pay no tax. Those with a turnover of Rs 10 lakh and up to Rs 40 lakh pay 0.5 percent of their turnover as tax. When Bihar was implementing the project, it invited officials from other states such as Kerala, Maharashtra, Karnataka and Gujarat to hold workshops to share good practices. Many of these practices could also find their way into the GST regime as and when it is rolled out. One of the key subjects that the empowered committee on GST headed by Modi is currently discussing is the tax regime for small businessmen. The success of the model even in Bihar shows that it can be implemented nationally. Modi says one of the three sub-committees is working on it. An issue they are grappling with is setting the threshold for Central excise. Modi feels businesses could be exempted up to a turnover threshold of Rs 1.5 crore. That could be a boon for millions of small businesses across the country.

Govt Cuts Import Tariff Value Of Gold, Silver

24-Jun-2013

NEW DELHI: The government today slashed the import tariff value of gold to $421 per ten grams and that of imported silver to $709 per kg, considering the falling trend in global prices.



Tariff value is the base price on which the customs duty is determined to prevent under-invoicing.



Last month, the tariff value of gold was at $459 per 10 grams and silver at $737 per kg.



The notification in this regard has been issued by the Central Board of Excise and Customs ( CBEC).



Government has reduced the import tariff value of gold as global prices in Singapore have been volatile in the last few days. Global prices today fell by 1.4 per cent to $1,278.94 an ounce and silver by 2.8 per cent to $19.55 an ounce. A similar trend was seen in silver rates as well.



India's gold import in the second quarter of the current fiscal is expected to more than halve to 150 tonnes, as against around 350 tonnes in the April-June period of the 2013-14 fiscal, as per the Bombay Bullion Association.



Gold in the national capital is costing around Rs 27,320 per 10 grams, while silver at Rs 42,500 per kg.



Besides precious metals, the government has hiked the import tariff value of RBD palmolein to $869 per tonne, as against $854 per tonne. The tariff value of other varieties of edible oil have been kept unchanged.

Source:-economictimes.indiatimes.com

Forex gain or losses in course of business to be considered for computation of net margin and intern

IT/ILT : Gain or loss arising on account of foreign exchange fluctuation in normal course of business transactions has to be taken into account while computing net margin of international transactions entered into by assessee with its AE

Indian Rupee Opens Flat At 59.66 Per Dollar

Indian rupee opened flat at 59.66 per dollar on Tuesday as against previous day's closing of 59.68 per dollar.



Jayesh Mehta of Bank Of America feels the drop in US yields and the weakness in US equities could help stem rupee depreciation in today's session, it could strengthen by 20-30 bps.



"The range for the day is seen between 59-59.50/USD," he added.

Source:-www.moneycontrol.com

India: Bright Future For Jawaharlal Nehru Port

24-Jun-2013

The Jawaharlal Nehru Port Trust (JNPT), Mumbai and Nhava Sheva (India) Gateway Terminal Pvt. Ltd. (a subsidiary of M/s DP World), signed a concession agreement for development of standalone container handling facility at the Jawaharlal Nehru port.



Shri G. K. Vasan, Union Minister for Shipping and Sultan Ahmed Bin Sulayem, Chairman, M/s DP World were present on the occasion. Under the agreement, a terminal with the quay length of 330 metres will be developed by the concessionaire at an estimated cost of Rs. 600 Crores. The estimated capacity addition will be 0.8 Million TEUs per annum. The project is slated to be completed by December 2015. The project would be executed on DBFOT (Design, Built, Finance Operate and Transfer) basis, with a concession period of approximately 17 years.



The Jawaharlal Nehru Port Trust floated a global tender and DP World was the successful bidder for the project, with their offer of 28.9% revenue share to the port. M/s DP World has formed a special purpose vehicle (SPV) namely Nhava Sheva (India) Gateway Terminal Pvt. Ltd. to implement this project. The agreement was signed on behalf of JNPT by Chairman Shri N.N. Kumar and on behalf of Nhava Sheva (India) Gateway Terminal Pvt. Ltd by Shri Anil Singh, Senior Vice President & MD of DP World (Subcontinent).



Speaking on the occasion, Union Minister for Shipping Shri G.K. Vasan said that the achievement of the Ministry was outstanding during 2012-13, in terms of awarding capacity augmentation projects at major ports. The Ministry has awarded 32 Projects in 2012-13 which will add a capacity of 137 MMTPA (Million Metric Tonne Per Annum) at an estimated investment of Rs. 6765 crore.



This is the best performance for any year in the history. JN Port is the biggest container handling Port in India, handling around 44% of the country’s containerized cargo, first crossing the historic landmark of 4 million TEUs in container throughput in the year 2007-08. The port is currently ranked 26th among the top 100 Container Ports in the world.

Source:-www.dredgingtoday.com

Ceratizit Eyes Exports To China

KOLKATA: Ceratizit India, the subsidiary of Luxembourg-based engineering solutions provider Ceratizit, is planning to use its base in Bengal to penetrate Chinese markets. The company has decided to expand production capacity in West Bengal for catering to the Chinese markets, said its MD A K Sareen.





The Luxembourg-based MNC has a unit in Barisha, Kolkata, and set up a new unit in Uluberia industrial area. "We are investing Rs 90 crore for the state-of-the-art Uluberia facility. There is a good market for cutting tools in China, which we are supplying," he said.



According to Sareen, over a period of two-three years, 30% of the production at Uluberia unit will be exported to China. Ceratizit India has a turnover of Rs 120 crore and has set a target of Rs 170 crore turnover in next two-three years. The Indian arm has become an integral part of the global production and is now responsible for the supply of cutting tools for a lot of countries in Asia like Thailand, Malaysia and Taiwan.



"The new unit at Uluberia will raise our output by three times. There will be an additional job opportunity for 200 people as well," he said. The biggest user industries for cutting tools include automotive, aerospace, railways, power and defence.

Source:-timesofindia.indiatimes.com

Guar Gum Exports Halve On Low Demand By Oil Companies

NEW DELHI: Guar gum, which set the futures market on fire a year ago, faces headwinds in the international market. Shipments of India's top agri-export commodity halved in the April-May period this year from a year ago as demand from oil and gas exploration companies has slowed down, say companies. Futures prices have remained lacklustre, worrying farmers and traders.



The July guar gum contract on the National Commodity and Derivatives Exchange ( NCDEX) was down 2.14% at 21,460 a quintal with an open interest of 2,801 lots at 3:45 pm on Monday. Guar seed for the July contract edged down by 1.72% to Rs 7,440 per quintal, with an open interest of Rs 7,358 lots on the exchange.



According to the provisional figures of the Directorate general of Foreign Trade (DGFT), guar gum exports fell 56.22% in value terms in April-May of 2013 compared to April-May of 2012.



"Guar gum exports have fallen by 20-30% in terms of volume in the past few months. Current high prices are not attracting buyers in the export market," said Sudhir Merchant, former chairman, Shellac and Forests Products Export Promotion Council (Shefexil), a nodal agency which promotes guar gum exports. He said demand by major US companies such as Halliburton, Economy Polymers and Chemicals and Chemplex was expected only if guar gum prices were in the range of Rs 16,000- Rs 20,000 a quintal.

"Everyone is going for a short-term contract and conversion margins are reducing by 50-60%," said Merchant, who is the chairman of Encore Natural Polymers.



The crop, cultivated in the arid regions of Rajasthan, is the leading agriculture export commodity from India. In March 2012, guar gum prices rose to a record Rs 95,920 per quintal from Rs 13,600 in October 2011.



Traders who had never seen guar gum prices topping Rs 5,000-Rs 6,000 a quintal till 2011 made a quick buck last year when prices skyrocketed. Current spot market prices are around Rs 21,000- Rs 22,000 a quintal.



"Oil and gas exploration companies abroad are now adopting waterless fracturing where guar consumption is nil. This has led to negligible orders for Indian companies," said Guar Gum Manufacturers' Association president Purushottam Hisaria. He said guar was still the best bet for farmers because guar prices were far more remunerative than cotton and soya bean.



The industry expects guar acreage to increase 20-25% from the previous year's area of 30 lakh hectare. Guar acreage is expected to go up in non-traditional growing states such as Maharashtra, Tamil Nadu, Uttar Pradesh, Madhya Pradesh and Andhra Pradesh this year. "People will grow guar as it requires very less pesticide and fertiliser," said Merchant.



Guar seed production touched 23 lakh tonne in 2012 with industry analysts expecting farmers and traders to hold more than 50-60% of the crop. "Till June, guar seed consumption is no more than 8 lakh tonne," said a leading player into guar gum manufacturing in Jodhpur.



Biren Vakil, CEO, Paradigm Commodity Advisors, an Ahmedabad-based commodity derivative specialized firm, said guar seed and gum prices have remained volatile. "In the past fortnight, we have seen prices fall by more than 25%. Market dynamics will keep varying with changes in weather conditions," he said.



Some traders said sentiments will be weak with the new smaller summer crop in Ganganagar and Hanumangarh entering the market after August. The bigger crop will be harvested by November. "Around 2,000 tonne of guar seed is coming to the Jodhpur market daily according to local demand. Prices are likely to remain stable," said Jai Prakash Saraswat, owner of Dalal Shakti trading company at Jodhpur.

Source:-economictimes.indiatimes.com

Seafood Exports Touch Record High In 2012-13

KOCHI: Higher production and export of shrimp and chilled items drove India's marine products export to an all-time high of Rs 18,856 crore ($3,511.67 million) in 2012-13, rising 7.68% in quantity compared to the previous year, said LeenaNair, chairman of Marine Products Export Development Authority (Mpeda).



The exports crossed earlier records in quantity, rupee value and US dollar terms. Based on quantity, the country exported 9,28,215 tonnes in 2012-13. In rupee and dollar terms, the growth was 13.61% and 0.1%, respectively.



"Increased production of Vannamei and Black Tiger shrimp and increased export of chilled items have helped to achieve higher exports. Frozen shrimp continued to be the major export value item, accounting for 51.35% of the total US dollar earnings," she said.



According to Mpeda, shrimp exports rose by 20.88%, 18.73% and 3.56% in quantity, rupee value and US dollar value, respectively. There was steep drop in unit value realization of frozen shrimp at 14.33%," highlighted Nair.



"The increase in export figures must be viewed in the light of weaker economic conditions in the European Union, still recovering economy in the US, moderate growth in China, technical barriers in trade with Japan, continuing anti-dumping duty and the possibility of countervailing duty on frozen shrimp by the US, and the devaluation of Indian currency. Supply conditions in other countries have also recovered in comparison to the previous year," said Nair.



Meanwhile, fish has retained the position as the principal export item in quantity terms and the second largest export item in value terms, accounting for a share of about 37.05% in quantity and 17.59% in US dollar earnings.



Southeast Asia continued to be the largest buyer of Indian marine products with a share of 23.12% in US dollar terms. European Union is the second largest market, followed by the US, Japan, China, Middle East and other countries.



Mpeda chief also saidthat the country expects to achieve seafood exports worth $4.3 billion for the current fiscal year. Among potential markets, the agency targets China, expecting an increase in the trade between the two countries.



"India has signed an agreement with China's General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ). Increase in seafood trade is one of the conditions," said Nair.

Source:-timesofindia.indiatimes.com

Re-assessment can’t be founded on a future contingency which may emerge from outcome of a pending ap

IT : The jurisdictional requirement for reopening an assessment under Section 148 is the formation of a reason to believe by the Assessing Officer that income has escaped assessment. The existence of that reason must be in the present –i.e. a reason which is present to AO's mind when he forms his reason to believe, that income has escaped assessment. Recourse to Section 148 cannot be founded in law on a hypothesis of what would be the position in future should an appeal before the appellate auth

Annual receipts of multiple educational institutions not to be clubbed for computing 1 crore limit f

IT : Society registered under Societies Registration Act is Artificial Juridical Person (AJP) and not Association of Persons(AOPs). For the purposes of exemption of income under section 10(23C)(iiiad), the limit of aggregate annual receipts of Rs.1 Crore should be computed educational institution-wise. The receipts of all educational institutions run by assessee-Society should not be clubbed for computing the limit of Rs. 1 crore

COMMISSIONER OF SERVICE TAX Vs. RATAN SINGH BUILDERS PVT LTD

THE HIGH COURT OF DELHI AT NEW DELHI % Judgment delivered on: 07.05.2013 + CEAC 23/2013 COMMISSIONER OF SERVICE TAX ..... Petitioner versus RATAN SINGH BUILDERS PVT LTD ..... Respondent Advocates who appeared in this case: For the Appellant : Mr Geetanjali Sharma, Advocate. For the Respondent : Mr Ruchir Bhatia, Advocate CORAM:- HON'BLE MR JUSTICE BADAR DURREZ AHMED HON'BLE MR JUSTICE VIBHU BAKHRU JUDGMENT BADAR DURREZ AHMED, J (ORAL) CM No. 6603/2013 (Exemption) Allowed subject to all just exceptions. CM No. 6602/2013 (for condonation of delay in refiling) The delay in refilling is condoned. The application stands disposed of. CEAC 23/2013 1. This appeal is directed against the order dated 27.02.2012 passed by the Customs, Excise & Service Tax Appellate Tribunal in service ST Stay No. 1989/2011 and ST Appeal No. 965/2011. The Tribunal observed that the issue involved in the present case was whether the applicable rate of service tax would be the rate in force at the time of realisation of the consideration in respect of the CEAC No23/2013 Page 1 of 4 taxable service or would it be the rate of tax which was in force at the time of the rendition of the taxable service. The Tribunal noted that recently it had decided that the appropriate rate of tax would be the rate which was in force at the time when the service was rendered and not the rate which was in force on the date in which the payments were received. Accordingly, the Tribunal dismissed the Revenue's appeal. 2. The revenue is aggrieved by the said order dated 27.02.2012 and has preferred the present appeal before us. 3. We may point out that the entire controversy arose out of the show cause notice dated 21.04.2009 wherein the main allegation against the respondent was as under:- "2. Whereas on scrutiny of the ST-3 return of Works Contract Service for the period Oct. 07 March 08, it has been observed that the notice had paid the service tax in the month of March 1998 @ 20% instead of 4%. As per Ministry of Finance, Department of Revenue (Tax Research Unit) F.No. 345/6/2007-TRU dated 28.04.2008, the service tax shall become chargeable on receipt of payment and on the amount so received for the service provided or to be provided, whether or not services are performed. The rate applicable to taxable transaction shall be the rate in force at the time the service tax becomes chargeable. This is a well settled legal position. The date on which the services one record be provided has no relevance to examine the applicable tax rate the service is already taxable at the time of revision on rate. In view of the above, it is clarified that the rate of 4% is applicable for the Works contract service where the payment for the service is received on or after 01.03.2008." 4. In the present case, it is an admitted position that the service in execution of Works Contract had been rendered by the respondent during the period CEAC No23/2013 Page 2 of 4 October 2007 to the end of February 2008. It is also an admitted position that all invoices in respect of the said services had been raised by the end of February 2008. However, the payments in respect of the said services were received only after 01.03.2008. It is also an admitted position that rate of service tax applicable prior to 01.03.2008 was 2% and after 01.03.2008 was 4% under the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007. It is the case of the appellant that since the payments for the services rendered were received only after 01.03.2008, the applicable rate would be 4% and not 2%. Reliance was placed by the revenue on the Ministry of Finance, Department of Revenue instruction dated 28.04.2008. 5. We may point out at this juncture itself that recently a similar issue had arisen in another set of cases before us. Those were decided on 23.01.2013 in W.P.(C) 5636/2010 entitled Vistar Construction Pvt. Ltd. v. Union of India & Others and W.P.(C) 3632/2012 entitled Piyare Lal Hari Singh Builders Pvt. Ltd. v. Union of India & Others. In that decision, the main controversy was with regard to the applicable rate of service tax in respect of works contract service. There also, the service had been rendered prior to 01.03.2008, but the payments were received after 01.03.2008. The revenue had placed reliance on the very same instruction dated 28.04.2008 and, after going through the same, this court held that the view expressed in the instruction was wrong. This court had placed reliance on the Supreme Court decision in the case of Association of Leasing & Financial Service Companies v. Union of India: 2010 (20) STR 417 (SC), wherein the Supreme Court clearly held that the service tax was levied on service and that it was not a tax on materials or sale. The taxable event was the rendition of the service. Consequently, this court held that the rendition of the service had been completed prior to 01.03.2008 and, therefore, the taxable event had occurred prior to 01.03.2008. Consequently, the applicable rate of tax would be CEAC No23/2013 Page 3 of 4 the rate which was prevalent prior to 01.03.2008. Since the entire foundation of the argument of the revenue is based on the instruction dated 28.04.2008 which has been found to be invalid by virtue of our decision in the case of Vistar Construction (supra), the present appeal is also liable to be dismissed. 6. The learned counsel for the appellant, submitted that Rule 3(3) of the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 had not been examined by this court in the case of Vistar Construction (supra) and, therefore, that decision was distinguishable. First of all, we are not able to agree with the learned counsel for the appellant inasmuch as the instruction dated 28.04.2008 had been dealt with in detail and the paragraph 2 thereof, specifically refers to the said Composition Rules of 2007. Secondly, and more importantly, the show cause notice does not contain any such allegation with regard to the respondent having made an option under the said Rule 3. Since, there is no foundational basis for making the submission and no such submission was made before the appellate authority, the appellant cannot be permitted to take up this plea before this court for the first time. 7. In view of the foregoing, following the decision in the case of Vistar Construction (supra,) the present appeal does not raise any substantial questions of law and is therefore dismissed. There shall be no order as to costs. BADAR DURREZ AHMED, J VIBHU BAKHRU, J MAY 07, 2013 rk/MK CEAC No23/2013 Page 4 of 4

Differentiating between whisky and non-whisky alcoholic beverages is undesirable for comparability u

IT/ILT : Product similarity is must for applying CUP method, not for TNMM. Where assessee sells non-whisky alcoholic beverages(Vodka, Gin, Brandy, Rum etc) to non-AEs and whisky to AEs, Net Profit Margin on sale by assessee of non-whisky alchololic beverages cannot be rejected as internal TNMM for calculating ALP on assessee's sale of whisky to AEs simply based on distinction between whisky & non-whisky as two different products

ITAT rejects recall application filed by CA in ‘personal’ capacity; directs ICAI to act suitably for

IT : CA who appears as AR for client before the ITAT have no locus standi to file any application before ITAT in his individual capacity without the client's consent after disposal of client's appeal. CA's conduct of filing such application after the date of Tribunal's order disposing it off in his client's favour for expunging remarks from order sheet without filing any affidavit before ITAT was contemptuous nor stating how any observation of ITAT was injurious to him, abuse of process of law a

M/S AIR INDIA LTD Vs. COMMISSIONER ADJUDICATION, SERVICE TAX

THE HIGH COURT OF DELHI AT NEW DELHI % Judgment delivered on: 03.05.2013 + CEAC 27/2013 & CM No. 7071/2013 (stay) M/S AIR INDIA LTD ... Appellant versus COMMISSIONER ADJUDICATION, SERVICE TAX... Respondent Advocates who appeared in this case: For the Appellant : Mr P.K. Sahu, Adv. with Mr Prashant Shukla, Adv. For the Respondent : Mr Satish Kumar, Adv. CORAM:- HON'BLE MR JUSTICE BADAR DURREZ AHMED HON'BLE MR JUSTICE VIBHU BAKHRU JUDGMENT BADAR DURREZ AHMED, J (ORAL) 1. This appeal is directed against the order dated 05.03.2013 passed by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) in Service Tax Stay No. 513/2012 in ST Appeal No. 243/2012. The Commissioner of Service Tax by virtue of the Order-in-Original dated 14.11.2012 had confirmed a service tax demand of `. 65,48,52,240/- against the appellant in respect of the year 2006-07. The said service tax demand had two components. The first component being in respect of alleged repair and maintenance service to the extent of `. 49.95 crores CEAC 27/2013 Page 1 of 6 and the other component being in respect of alleged business auxiliary service to the extent of `. 15.53 crores. 2. Insofar as the component pertaining to the alleged repair and maintenance service is concerned, the Tribunal was of the prima facie view that the service tax demand of `. 49.95 crores on this component did not appear to be sustainable. However, with regard to the service tax demand of `. 15.53 crores, the Tribunal, prima facie, held that the demand was on a strong footing. The Tribunal observed as under:- "7. As regards the service tax demand of `. 15.53 crores, this demand is in respect of payments made to General Sales Agents (GSAs) appointed by the appellant in various foreign territories for the services received by them. On perusal of the relevant clauses of the appellant's agreements with the GSAs as, reproduced in the impugned order, we are of the prima facie view that the services provided by the GSA to the appellant are covered by the definition of business auxiliary service as given in Section 65(19) of the Finance Act, 1994, as the GSAs appointed by the appellant not only represent the appellant abroad and provide various services on their behalf they also promote the sales of the services being provided by the appellant by undertaking various sales promotion activities. Since this service has been used by the appellant in India in relation to their business located in India, in terms of the provisions of Rule 3(1)(iii) of the Taxation of Services (provided from outside India and received in India) Rules, 2006, this service has to be treated as having been provided from outside India and received in India by the appellant and, therefore, in terms of the provisions of Rule 66 A of the Finance Act, 1994 read with Rule 21(d)(iv) of the Taxation Rules, 1994, the appellant as CEAC 27/2013 Page 2 of 6 service recipient would be liable to pay service tax on the same. We are, therefore, of the prima facie view that the service tax demand of `. 15.53 crores is on strong footing. As regards question of limitation, since the same is a mixed question of fact and law, the same can be examined only at the time of final hearing." 3. It is on this basis that the Tribunal, prima facie, held that out of the total service tax demand of `. 65,48,52,240/-, the service demand of about `. 15.53 crores appeared to be on strong footing. However, taking the financial hardship of the appellant in consideration, the Tribunal directed the appellant to make a pre-deposit of `. 8 crores within a period of 8 weeks from the date of the order. 4. The learned counsel for the appellant submitted before us that pre- deposit of the entire amount of tax demanded ought to have been waived by the Tribunal inasmuch as the financial position of the appellant was very precarious. The fact that the appellant was going through a financial crisis has been recognised by the Tribunal itself in its orders dated 29.11.2011 and 12.10.2012, though those orders pertained to different services and different periods. The order dated 29.11.11 was passed by the Tribunal in ST/S431/2010/ in ST Appeal No. 265/2010 in the case of National Aviation Co. of India v. CCE. In that order, in paragraph 8 it was specifically mentioned as under:- "But considering the financial hardship faced by this company, wholly owned by the Government of India we waive the full dues arising from the impugned order for hearing of the Appeal. There shall be stay on collection of such amounts during the pendency of the appeal." CEAC 27/2013 Page 3 of 6 The order dated 12.10.2012 was passed by the Tribunal in ST/Stay Application No. 291/2010 in ST/Appeal No. 187/2010-(DB) in the case of Air India Limited v. CCE.. In that order also the Tribunal recognised the fact that the appellant was undergoing financial difficulties. This would be apparent from the paragraph 17 of the said order which reads as under:- "17. Considering the fact that the appellant is a national carrier under the ownership of Government of India presently facing serious financial difficulties and in view of the overall appreciation of the issues involved as analyzed above we consider it proper to waive the requirement of pre-deposit of dues arising from the impugned order for admission of appeal. It is ordered accordingly. There shall be stay on collection of dues arising from the impugned order during the pendency of appeal." 5. In the present case, the learned counsel for the appellant submitted that even in respect of the demand of `. 15.53 crores, the Tribunal ought to have taken a prima facie view in favour of the appellant. The learned counsel referred to the provisions of section 66A of the Finance Act, 1994 and, in particular, to sub-sections (1) and (2) thereof as also to Explanations 1 and 2 therein. According to the learned counsel for the appellant, the purported "business auxiliary service" which was allegedly rendered was, in any event, entirely rendered and received outside India and therefore there was no question of payment of service tax in India in respect CEAC 27/2013 Page 4 of 6 thereof. The learned counsel for the appellant also submitted that the contract with the GSA (General Sales Agent) was also entered into in Hongkong. Furthermore, the ultimate beneficiaries of the services were customers located abroad. On the other hand, the Tribunal has taken a prima facie view that the demand of Rs. 15.53 crores stands on a strong footing. 6. We have also heard the learned counsel for the respondent on this issue as well. 7. After examining the issue at some length, we feel that the provisions of section 66A would require interpretation and the issue according to us is not so clear-cut and is debatable. In these circumstances, and particularly in view of the fact that the financial hardship of the appellant has already been recognised by the Tribunal in other orders dated 29.11.2011 and 12.10.2012, which we have referred to above, in our opinion, the entire amount of tax, penalty and interest demanded ought to have been waived as a condition for hearing the appeal. Consequently, we modify the order of the Tribunal by directing that there shall be full waiver of the requirement to pre-deposit the tax, penalty and interest. The appeal of the appellant before the Tribunal shall be heard without insisting on any pre-deposit. It is obvious that the respondent shall also not press for recovery of the tax, penalty and interest amount till the disposal of the appeal by the Tribunal. CEAC 27/2013 Page 5 of 6 8. The appeal is allowed to the aforesaid extent. There shall be no orders as to costs. BADAR DURREZ AHMED, J VIBHU BAKHRU, J MAY 03, 2013 kb CEAC 27/2013 Page 6 of 6

Intermediary not supposed to bear product awareness exp.; no deduction allowed for such exp. reimbur

IT/ILT : Payment to AE deductible if it tangibly benefit assessee & would have been borne by independent entity

Resulting Co. can file appeal after demerger; abundant caution appeal by demerged Co. dismissed to a

IT : Resulting co's appeal maintainable. Demerged co's appeal filed as abundant caution to be dismissed in limine to avoid duplicate appeals on same matter. Appeals filed by demerged company under the apprehension that the original appeals filed by the transferee company(resulting company) may be held as not maintainable as these are nothing but duplicate appeal and such duplication is not permissible in the eyes of law. Such duplicate appeals may lead to a serious problem, if remain un-noticed,

Provisions of sec. 269SS or sec. 269T won’t be attracted on discounting of cheques

IT : Discounting of cheque does not amount to acceptance of deposit or loan within meaning of section 269SS or section 269T

If Finance Ministry has its way, you won't have to pay service tax on home delivery, takeaway services

The finance ministry has come to a conclusion that service tax cannot be levied on takeaway and home delivery services. The ministry is examining the structure of tax and constitutional provisions. Article 366 of the Constitution, on which the ministry relied, empowered state governments to levy tax on food supply during a service. In the Union Budget 2013-14, service tax was extended to all air-conditioned restaurants. Although Central Board of Excise or Customs did not specify the applicability of service tax on takeaways and home deliveries clearly.This is where the confusion initiated from. Air-conditioned restaurants, as a result of unclear specifications, started charging service tax on takeaways and home deliveries. The confusion aggravated when some service providers started imposing tax while others collected the tax but never deposited it. Any clarity on the issue would bring relief to the industry, which has seeked clarification from the government, time and again, on the applicability of service tax.

Assessment quashed as sec. 143(2) notice was dispatched after expiry of date fixed for hearing

IT : Where notice under section 143(2) was dispatched to assessee only after dated fixed for hearing, there was denial of reasonable opportunity of hearing to assessee and, in such a case, impugned order passed by revenue authority was not sustainable as it violated principles of natural justice

Person working on job work basis don't fall under ‘Manpower recruitment’ or ‘Supply Services’

ST : Assessee working on a job work basis at premises of principal manufacturers and being paid on piece basis is not, prima facie, liable to service tax under Manpower Recruitment or Supply Agency's Services

Difficult to recover 97% of Rs 4.82 lakh crore tax arrears: Central Board of Direct Taxes

In a startling revelation, the Central Board of Direct Taxes ( CBDT) has reported that 97 per cent of Income Tax demand arrears, quantified over Rs 4.66 lakh crore, is "difficult" to be recovered. The total arrears amount to be recovered, stuck because of a variety of reasons like litigation, companies in liquidation, sick companies and untraceable taxpayers, is Rs 4.82 lakh crore. Alarmed by the "precarious" situation, the apex body of the I-T department has initiated a slew of measures to collect these taxes including attachment of bank accounts of defaulters and arrest of 'wilful' evaders under Tax laws. "Attention is drawn to the precarious situation arising out of comparison of total arrear demand outstanding and demand difficult to recover. The total arrear demand outstanding as on April 2012 was Rs 4,82,027 crore while the demand difficult to recover as per central action plan for March 2013 is Rs 4,66,854 crore (97 per cent). The situation is alarming and leaves only 3 per cent of the demand in the recoverable arena. "Even more alarming is the situation that less than 5 per cent, Rs 2,39,95 crore, of the total arrear demand outstanding (Rs 4.82 crore) could be collected during the 2012-13 fiscal," the Central Board of Direct Taxes (CBDT) said in a recent communication to its top officers. "The situation is surely not pleasant but the board and the I-T department are geared to pursue these cases vigorously. The Parliamentary Standing Committee on Finance have time and again urged the finance ministry to minimise this revenue loss sector and steps are being taken. The results will soon show," a senior official who did not want to be named said.

Sec. 80-IB benefit allowed on construction projects with less that 1500 sq. feet area approved after

IT : Deduction under section 80-IB is allowable on construction projects approved after 1-10-1998 wherein area of flats were less than 1500 sq. ft.