Home-workers are employees of manufacturer and not of contractor; no TDS under sec. 194C

IT : Home-workers in bidi manufacturing industry are employees of manufacturer, and not contractors; there is no requirement of deducting tax at source under section 194C on payments to contractors

ITAT upholds TP adjustments for commission on corporate guarantee given for term loan availed by AE

IT : A financial loan guarantee commitment entered into by the assessee company with a third party lender of its Associated Enterprises which obliges the assessee company to cover the risk of default by its Associated Enterprise involves risk of default for which "price" has to be charged. Even the OECD Transfer Pricing Guidelines 2010 supports this view where it is explained that where higher credit rating of Associated Enterprise is due to a guarantee by another group member, such association

Order to retain the amount seized without giving an opportunity to assessee to explain was quashed

IT: Order passed for retaining entire amount seized, without giving opportunity of hearing to assessee is not sustainable

In de novo assessment additions can be made as long as matter is same; banking transactions aren’t s

IT : Where in original assessment Assessing Officer had added new cash credits which on verification in set aside assessment were found to be more and accordingly Assessing Officer made addition, it could not be said to be a case of enhancement of income by Assessing Officer in set aside assessment

Refund claim filed with ST department instead of excise department is valid

ST : Where assessee had filed refund claim of services used by it for SEZ before service tax department in time and such claim was returned on premise that it was to be filed with Central Excise department, such refund claim was to be treated as filed within time

Issue of post-dated cheques is deemed acknowledgement of liability, rules HC

CL: Where respondent-company issued post dated cheques (PDCs) in favour of petitioner but same were dishonoured, issuance of PDCs constituted acknowledgement of liability by respondent and, therefore, winding up petition against it was to be admitted

Sec. 50C to be invoked even on transfer of long term leasehold rights in respect of a plot and a bui

IT : Where assessee had taken plot of land in question on lease for 95 years and later on transferred rights in part of said plot as well as rights in building standing on said plot, provisions of section 50C were attracted

Govt Likely To Announce Export Incentives For Smes

To further boost exports from country, the government is expected to soon announce new incentives for small and medium enterprise (MSME) exporters, reports media.



The government is considering several initiatives, including increasing the rate of interest subsidy from two percent at present and providing financial assistance for product designing and skill development, a senior Commerce Ministry official told agency.



"A committee headed by Finance Secretary R S Gujral would soon submit its report on the matter. The committee was formed to suggest ways to enhance exports from MSME sector," the official said.



The share of MSMEs in the country's total exports was about 40 percent.



However, the official said a mechanism needed to be worked to prevent misuse of the high interest subsidy provision by the MSME players.



"Such differential reward system creates problem. A non- MSME firm can take benefit from this," he added.



India's exports entered the negative zone after a gap of four months, recording a contraction of 1.1 percent in May and leading to a trade deficit of USD 20.1 billion, highest in the last seven months.



In 2011-12, the country's shipments declined by 1.76 percent to USD 300.5 billion. Trade deficit touched an all time high of USD 191 billion during the period.



Increasing exports is necessary for bridging the CAD which has been estimated at 5 percent of the GDP in 2012-13 as against the RBI's comfort level of 2.5 percent.



High CAD puts pressure on the domestic currency and can expose the economy to balance of payments problem.



It also impacts the country's foreign exchange reserves. CAD had touched a record high of 6.7 percent in the October - December quarter. CAD occurs when country's total imports and transfers are higher than its total exports and transfers, it added.

Source:-www.smetimes.in

Govt Likely To Announce Incentives For Msme Exporters

26-Jun-2013

Worried over widening current account deficit (CAD), the government is expected to soon announce incentives for exporters in small and medium enterprises sector to further boost the shipments.



The government is considering several initiatives, including increasing the rate of interest subsidy from 2% at present and providing financial assistance for product designing and skill development, a senior Commerce Ministry official told PTI.



"A committee headed by Finance Secretary R S Gujral would soon submit its report on the matter. The committee was formed to suggest ways to enhance exports from MSME sector," the official said.



The share of MSMEs in the country's total exports was about 40%.



However, the official said a mechanism needed to be worked to prevent misuse of the high interest subsidy provision by the MSME players.



"Such differential reward system creates problem. A non- MSME firm can take benefit from this," he added.



India's exports entered the negative zone after a gap of four months, recording a contraction of 1.1% in May and leading to a trade deficit of $20.1 billion, highest in the last seven months.



In 2011-12, the country's shipments declined by 1.76% to $300.5 billion. Trade deficit touched an all time high of $191 billion during the period.



Increasing exports is necessary for bridging the CAD which has been estimated at 5% of the GDP in 2012-13 as against the RBI's comfort level of 2.5%.



High CAD puts pressure on the domestic currency and can expose the economy to balance of payments problem.



It also impacts the country's foreign exchange reserves.CAD had touched a record high of 6.7% in the October - December quarter. CAD occurs when country's total imports and transfers are higher than its total exports and transfers.



Federation of Indian Micro and Small & Medium Enterprises (FISME) President V K Agarwal has suggested the committee to announce ways to increase product competitiveness of the MSME products in the world market.



"There is need to reduce various impediments which is the sector is facing. There should be a grievance redressal cell. They should announce a set of reforms to boost exports from MSMEs," Agarwal said.

Source:-www.business-standard.com

Turmeric Up 0.5% On Export Demand

26-Jun-2013

Turmeric prices rose by Rs 34 to Rs 6,026 per quintal in futures trade today as speculators created fresh positions, driven by a rise in export demand in the spot market against decline in supplies.



However, good progress of sowing due to sufficient rainfall in producing ares capped the gains.



At the National Commodity and Derivatives Exchange, turmeric for delivery in July rose by Rs 34, or 0.57% to Rs 6,026 per quintal with an open interest of 18,460 lots.



Similarly, turmeric for delivery in August edged up by Rs 26, or 0.43% to Rs 6,106 per quintal in 16,685 lots.



Market analysts said speculators created fresh positions on the back of export demand in the spot market amid decline in supplies from producing region helped turmeric prices to trade higher at futures trade.

Source:-www.business-standard.com

Rupee Off Record Low In Early Trade, Opens At 60.45/$

Indian rupee came off its record low in early trade Thursday. It opened at 60.45 per dollar, up 26 paise compared to previous day's closing of 60.71.



On Wednesday, the rupee touched its all-time low of 60.76 per dollar due to defence and crude oil related demands.



Sonal Varma of Nomura said, "Our bias to remain short rupee, even after spot broke the 60/USD mark, remains intact."



"Despite net portfolio outflows of nearly USD 7 billion from May 22 to June 24, foreign positioning in India remains high," she said.

Source:-www.moneycontrol.com

ALP of sum received by holding Co. for bank guarantee can't be evaluated with charges of bank for sa

IT/ILT : TPO was not justified indetermining ALP for bank guarantee at rate of 3 per cent of amount of guarantee applying external comparables of banks without bringing into record that under which terms and conditions other banks were charging guarantee commission at rate of 3 per cent

Basmati Rice Might Top List Of Agricultural Exports

26-Jun-2013

After two years, Basmati rice could again emerge as India's top agricultural export commodity. During the last two financial years, guar gum had topped the list, in terms of value, primarily due to the shale gas boom in the US.



The commerce ministry expects Russia would lift a ban on Indian Basmati imports soon. The move is expected to further increase exports, said a source at the Agriculture & Processed Food Products Development Authority (Apeda). Currently, a Russian delegation is inspecting rice mills in India. The delegation would provide a report on lifting the ban, said the Apeda source.



Russia, earlier a net importer of Indian Basmati, had imposed a ban on these imports in February, owing to the detection of copra beetle infestation.



In April and May, Basmati exports rose about 25 per cent in volume terms and about 65 per cent in terms of rupee value (46 per cent in dollar terms), against the year-ago period, show data from the All India Rice Exporters Association. In April, the value of Basmati exports stood at Rs 2,378 crore (about $400 million), a rise of about 90 per cent (in rupee terms) compared to the corresponding period last year. In dollar terms, the export value rose 67 per cent. In May, Basmati exports stood at Rs 2,250 crore (about $375 million), a 44 per cent rise against May 2012, in rupee terms. In dollar terms, exports rose about 30 per cent in May.



High demand from Iran, after the settlement of the payment mechanism with India following US sanctions, and a sharp depreciation in the rupee led to the rise in export realisations, exporters said. "Basmati exports are strong. Iran has started buying from India, which led to higher exports. Also, a Russian delegation is in India checking the safety standards on pesticide and copra beetle. India is hopeful the ban would be lifted soon," said an Apeda official.



"Going by the trend this year, we expect Basmati to be India's top export item," said R Sundaresan, executive director, All India Rice Exporters Association. In 2012-13, India exported gaur gum worth Rs 21,287 crore, while basmati rice exports stood at Rs 19,390 crore.



Guar gum exports fall

In the first two months of the last financial year, India's guar gum exports stood at Rs 10,856 crore. In the corresponding period this year, exports almost halved, traders said. "Currently, guar processing units are running at 25-50 per cent of the installed capacity, which clearly shows demand is low compared to last year," said Jinesh Dugar, a guar trader based in Rajashtan.



However, gum exporters are hopeful of regaining lost ground. "Demand should pick up in the coming months. The rupee's depreciation should add to sales realisation by not more than Rs 500 crore," said B D Agarwal, managing director, Vikas WSP, India's largest processor of gaur gum, and an exporter. Cheaper substitutes and high carry-over stocks of the commodity by US energy companies had led to a decline in the demand for guar gum in international markets. About 40 per cent of global guar gum demand is accounted for by sectors such as textiles, food and chemicals. In 2012-13, India exported 4,08,574 tonnes of gaur gum, worth Rs 21,287 crore.

Source:-www.business-standard.com

Silver Imports Shoot Up As Prices Drift To Multi-Year Lows

26-Jun-2013

Silver traders are sitting on huge stocks of the white metal imported in the past few months on the expectation that demand will rise with silver prices falling. As silver is quoted at a 34-month low in the international market and at a 30-month low in India, their calculations seem to be in order.



While India imported 1,900 tonnes of silver in 2012, in the first five months of 2013 alone, imports have touched 2,400 tonnes.



"Silver stock with several bullion traders were getting exhausted and when prices started falling from mid-April, they booked heavily anticipating demand at lower levels as prices have been falling," said Monal Thakkar, president, Amrapali Group, a leading Ahmedabad-based bullion wholesaler.



According to industry estimates, silver imports during the January-March quarter stood at 760 tonnes. Imports shot up 720 tonnes in April alone, and in May, they further swelled by 920 tonnes.



Monal Thakkar advises consumers and investors to start buying silver now as prices have fallen by almost half from the peak of Rs 75,000 two years ago.



Gold and silver prices fell sharply today in the international market, but in India the price fall was lower due to a weak rupee.



Gold reached a fresh three-year low, while silver fell to its 34-month low levels on strengthening of the US dollar. With the dollar appreciating, investors moved from safe havens to risk assets, such as equities.



Both precious metals have lost heavily since the beginning of April this year. In India, the price fall was restrained due to the sharp fall in the rupee against the dollar. Gold was trading at a 33-month low of $1,239 an ounce, down three per cent, while silver was down 4.1 per cent and was trading at $18.85 an ounce.



In Mumbai's spot market, silver closed four per cent lower today at Rs 40,475 a kg, while gold was down 2.5 per cent lower at Rs 26,145 per 10g. According to analysts, since both have broken their technical support levels, further downside is not ruled out.



Silver, which lost 22 per cent since the start of April, is heading for its worst quarterly performance since at least 1920, according to data compiled by Bloomberg. In the current quarter so far, silver is down 33.4 per cent, while gold has lost 22.4 per cent in the international market. In India, both have lost 11.7 per cent and 9.7 per cent, respectively.



Jayant Manglik, president (retail distribution) at Religare Securities, said: "Gold may drift lower towards a level of $1,160 per ounce at COMEX and that would mean a corresponding level of Rs 24,200/10g at MCX in the near-term."



However, at some point in time, factors other than market sentiment will come into play. Gnanasekar Thiagarajan, director, Commtrendz Research, said: "Prices of both precious metals are near their cost of production and if they stay below that for some more time, mines will start cutting production, which will support the prices."

Source:-www.business-standard.com

Rbi Allows Use Of Ecb Fund For Import Of Services

26-Jun-2013

MUMBAI: Amid declining value of rupee, the Reserve Bank today relaxed ECB norms and allowed companies to use the overseas debt to pay for import of services, technical know-how and licence fee as part of capital goods imports.



Currently, eligible entities can raise ECB ( external commercial borrowing) for investment such as import of capital goods, new projects, modernisation/expansion of existing production units in industrial sector, infrastructure sector and entities in the service sector.



"On review, it has been decided to include import of services, technical know-how and payment of licence fees as part of import of capital goods by the companies for the use in the manufacturing and infrastructure sectors as permissible end uses of ECB...," RBI said.



The modifications to the ECB guidelines have come into force with immediate effect.



The rupee today tanked by a massive 106 paise to close at all-time low of 60.72 against dollar on heavy capital outflows and month-end dollar demand from importers.



In a separate notification, RBI also said it has been decided that credit enhancement can be provided by eligible non-resident entities to the domestic debt raised through issue of INR bonds/ debentures by all borrowers eligible to raise ECB under the automatic route.



"It has also been decided to reduce the minimum average maturity of the underlying debt instruments from seven years to three years," it said.



Prepayment and call/put options, however, would not be permissible for such capital market instruments up to an average maturity period of three years, the RBI added.



As of now, credit enhancement is permitted to be provided by multilateral financial institutions, Government-owned development financial institutions, foreign equity holder(s) for domestic debt raised through issue of capital market instruments by Indian companies engaged in development of infrastructure and by IFCs.

Source:-economictimes.indiatimes.com

Don't let falling rupee crash your dream of overseas study

A free falling rupee is likely to upset the calculations of many students preparing to pursue their higher studies abroad.

Usually concerned with entrance exams, admissions, Visa process and so on, these students will have to factor in the sharp depreciation of rupee against foreign currencies , especially the US dollar.

The weakening of the domestic currency is likely to inflate the cost of overseas education, and also the ticket size of study loans. On Wednesday, the rupee closed at a new low of 60.73 against the dollar, a fall of over 9% in the past one month. "It's too recent a development to have an immediate impact on education loans.

However, in the coming days, not only US-bound students , but those planning to study in Europe, Singapore and Australia, too, could be adversely affected," says Narender Singh, general manager , retail banking department, Central Bank of India. "Ticket sizes of loans we have sanctioned recently have increased to the extent of rupee depreciation," informs Prashant Bhonsle, country director, Credila Financial Services, a subsidiary of HDFC.

Rough estimates suggest that the average ticket size has swollen by 10%. "Most people make the mistake of calculating the rupee impact on the total fees payable . However, the fact is that the funds are released on a per-semester basis. Therefore, the current state of the rupee will affect only the first tranche of the loan now; whether the costs for students will go further up or down entirely depends on the future rupee-dollar movement," explains Bhonsle.

There is very little one can do about the currency exchange rate movements . So, it would be wise to focus on measures that will help reduce your overall expenses, including the loan requirement.

"Students should first introspect on the real reason for studying abroad. They should also understand the employment rules, and be very sure about the universities that they apply to. They should save intelligently, consider other options of study, be prepared with all sources of funds and a back-up ," says Swati Salunkhe, managing director with education counselling firm Growth Centre India.

If you have relatives living in the US, they can come to your aid as family sponsors, bringing down your education loan amount. Besides, this arrangement will also eliminate the risk of currency fluctuations , as your relatives do not need to go for currency conversion . Moreover, given that state-run banks have a cap of Rs 20-30 lakh for overseas education loans, you may have to give this alternative a serious thought.

SEBI Buy back regulations - Min cap for buy back raised to 50%; max buy-back period reduced to 6 mon

SEBI : SEBI Board Meeting - Amendments to SEBI (Buy-Back of Securities) Regulations, 1998 Governing Buy-Back Through Open Market Purchase; Enabling Listing of Start-UPs and SMES on Institutional Trading Platform (ITP) Without Having to Make an IPO; Committee on Rationalization of Investment Routes and Monitoring of Foreign Portfolio Investments, Etc. Etc.

ECBs in Renminbi for infrastructure sector is discontinued

FEMA/ILT : External Commercial Borrowings (ECB) in Renminbi (RMB)

ECB for working capital for civil aviation sector extended till December 31, 2013

FEMA/ILT : External Commercial Borrowings (ECB) for Civil Aviation Sector

Scheme for buy back or pre-payment of FCCBs under an approval route to continue till 31-12-2013

FEMA/ILT : Buyback/Prepayment of Foreign Currency Convertible Bonds (FCCBS)

ECB window to finance 3G spectrum Rupee Loan to be opened up to March 31, 2014

FEMA/ILT : External Commercial Borrowings (ECB) Policy for 3G Spectrum Allocation

Income which couldn’t be taxed under specific article of DTAA can’t be subject to tax under ‘residua

IT/ILT : Royalty and fees for technical services cannot be taxed under residual article 22 of India-Thailand DTAA, unless item of income does not fall under any other express provisions of DTAA

No writ would lie against an adjudication order if appeal against it was already dismissed on ground

ST : Where assessee has lost appellate remedy before Commissioner (Appeals) on account of delay, he cannot seek to challenge adjudication order in writ proceedings under Article 226 of Constitution of India

COMMISSIONER INCOME TAX-V Vs. NIPUAN AUTO PVT LTD

THE HIGH COURT OF DELHI AT NEW DELHI % Judgment delivered on: 30.04.2013 + ITA 225/2013 COMMISSIONER INCOME TAX-V ..... Appellant versus NIPUAN AUTO PVT LTD ..... Respondent Advocates who appeared in this case: For the Appellant : Mr Sanjeev Rajpal, Advocate. For the Respondent : None. CORAM:- HON'BLE MR JUSTICE BADAR DURREZ AHMED HON'BLE MR JUSTICE VIBHU BAKHRU JUDGMENT BADAR DURREZ AHMED, J (ORAL) 1. This appeal by the revenue is directed against the order dated 28.12.2012 passed by the Income Tax Appellate Tribunal, New Delhi in ITA No. 1493/2012 pertaining to the assessment year 2006-07. 2. The Assessing Officer had made the additions of ` 37,75,465/- and ` 30,41,000/- under Section 68 of the Income Tax Act, 1961 on account of alleged unexplained investment and alleged unexplained cash credits which were shown as share application money received by the assessee, respectively. 3. The assessee went up in appeal before the Commissioner of Income-tax (Appeals) who had substantially allowed the appeal of the assessee. In so far as ITA No.225/2013 Page 1 of 8 the addition of ` 37,75,465/- is concerned, the CIT (Appeals) deleted the addition to the extent of ` 35,85,465/- which was essentially the unsecured loan received from Mr Alok Aggarwal. In so far as the loans and advances received from Smt Sadhna Aggarwal to the extent of ` 1,90,000/- (` 1,50,000 plus ` 40,000/-) was concerned, the Commissioner of Income-tax concurred with the Assessing Officer that the same had not been explained. Therefore, to that extent (i.e., to the extent of ` 1,90,000/-) the Commissioner of Income-tax (Appeals) confirmed the addition. However, with regard to the amount advanced by Mr Alok Aggarwal, to the extent of ` 35,85,465/-, the Commissioner of Income-tax (Appeals) deleted the same. 4. The Commissioner of Income-tax (Appeals) also deleted the addition of ` 30,41,000/- on account of share application money by holding that the assessee had discharged its burden to establish the identify and creditworthiness of the share applicants as also the genuineness of the transactions. The Income Tax Appellate Tribunal concurred with the views of the Commissioner of Income-tax (Appeals). 5. In so far as the addition on account of unexplained investment was concerned, the Commissioner of Income-tax (Appeals) had directed the Assessing Officer to submit a remand report. The directions given by the Commissioner of Income-tax (Appeals) in that context were as under:- "4.2 During the course of appellate proceedings, the matter was remanded to the file of the AO as follows:- During the course of appellate proceedings, it is noticed that you have made additions on account of unsecured loans for failure on the part of the directors Sh Alok Agarwal and Smt Sadhna Agarwal to attend the proceedings and explain the genuineness of the transactions. The AR has given a list of forty seven persons in case of Sh Alok Agarwal, one of the directors, in whose bank account there were cash deposits and from where the loan was advanced to your assessee and ITA No.225/2013 Page 2 of 8 confirmed that the directors are ready to depose before you so that the genuineness and credibility of the transaction can be verified. In view of the same, you are directed to call Sh Alok Agarwal and Smt Sadhna Agarwal with a view to verify the genuineness of receipt of loan of ` 37,75,465/- by your assessee. You may also call for the I.T. Returns of these persons along with their bank statements and agreements to sell the land so that the loan transaction can be verified to the hilt." 6. The Commissioner of Income-tax (Appeals), noted that the Assessing Officer, by virtue of his report dated 18.09.2010, had indicated that initially the said Mr Alok Aggarwal and Smt Sadhna Aggarwal who were Directors of the Assessee Company did not respond to the notices issued by him. However, subsequently the Directors appeared and filed details including copies of their income-tax returns for the assessment years 2005-06 and 2006-07. In so far as Mr Alok Aggarwal was concerned, in his income-tax return for the assessment year 2005-06 he had disclosed capital gains to the extent of ` 65,480/- and in respect of the assessment year 2006-07, the said Mr Alok Aggarwal had disclosed a capital loss to the extent of ` 5,87,940/- but, at the same time he disclosed sale proceeds of land to the extent of ` 48,16,742/-. 7. From the above, the Commissioner of Income-tax (Appeals) concluded that Mr Alok Aggarwal had ample availability of funds from which he could have advanced the loan of ` 35 lacs (approximately) to the assessee during the year in question after depositing the same in his bank account. It is in this backdrop that the addition made by the Assessing Officer under Section 68 was deleted to the extent of the advances given by the said Mr Alok Aggarwal. However, with regard to the amounts received from Smt Sadhna Aggarwal, since, she had not disclosed any capital gains or availability of funds during the years in question, the Commissioner of Income-tax (Appeals) concluded that the said amount of ` 1.9 lacs remained unexplained and, therefore, the addition made by the Assessing Officer, to that extent, was upheld. It may also be pointed out at ITA No.225/2013 Page 3 of 8 this juncture that inasmuch as the amount received from Mr Alok Aggarwal were in cash and were otherwise, than by way of account payee cheques/drafts, the Assessing Officer was directed to initiate penalty proceedings under section 271D and 271E of the said Act for the alleged violation of sections 269SS and 269TT. 8. The Income Tax Appellate Tribunal examined the order passed by the Commissioner of Income-tax (Appeals) and concurred with the views taken by him. We also find no reason to take a different view. In any event, no substantial question of law arises for our consideration in so far as the addition, on account of unexplained investment is concerned. 9. With regard to the addition made on account of share application money allegedly received by the assessee from two companies, the learned counsel for the appellant/revenue submitted that merely furnishing the income-tax returns and bank statements etc. of the share applicants would not be sufficient. It was further necessary for the assessee to have discharged the burden of proving the creditworthiness of the share applicants by producing the share applicants and by other evidence to the satisfaction of the Assessing Officer. Reliance was placed on the decision of this court in the case of CIT Vs. Nipun Builders and Developers Pvt. Ltd.: ITA No.120/2012 decided on 07.01.2013. The learned counsel for the appellant had placed reliance on paragraphs 8 and 9 of the said decision. The said paragraphs are reproduced hereinbelow:- "8. So far as the creditworthiness of the share subscribers is concerned, the contention of the assessee before us is that it was proved by the bank statements of those subscribers submitted before the AO. The AO has not referred to them in the assessment order but it is not in dispute that the copies of the bank statements were furnished before him. Even assuming that the bank statements were filed before the AO, that by itself may not be sufficient to prove the creditworthiness without any explanation for the deposits in the ITA No.225/2013 Page 4 of 8 accounts and their source. The usual argument in all such cases, including the present case, is that it is not for the assessee to prove the source of source and origin of origin of the receipts. We are alive to the difficulty that may be faced by an assessee to unimpeachably establish the creditworthiness of the share subscribers but at the same time we are of the opinion that mere furnishing of the copies of the bank accounts of the subscribers is not sufficient to prove their creditworthiness. There must be, in our opinion, some positive evidence to show the nature and source of the resources of the share subscriber himself and therefore it is necessary for him to come before the AO and confirm his sources from which he subscribed to the capital. In the present case the assessee did not produce the principal officer of the companies who subscribed to the shares; it merely filed a letter at the "dak" counter of the AO, stating that the communications sent by it to the share subscribers have not come back unserved. This is not compliance with the direction of the AO who had issued notice to the assessee to produce the principal officers of the subscribing companies. As is well known, in the case of private limited companies, it cannot be denied that there is a continuing contact and relationship with the share holders and if the assessee was serious enough to establish its case, it ought to have produced the principal officers of the subscribing companies before the AO so that they can explain the sources from which the share subscription was made. That would also have taken care of the difficulty of the assessee in proving the creditworthiness of the subscriber companies. It was, therefore, in the assessee's own interest to have actively participated and cooperated in the assessment proceedings and complied with the direction of the AO to produce the principal officers of the subscribing companies. Instead, the assessee took an adamant, if we may use that expression, attitude and failed to comply with the direction of the AO; not only that, it challenged the AO's finding that the summons sent to the companies came back unserved with the remark "no such company", which was also supported by the report of the inspector who made a visit to the addresses. The assessee thus took a very extreme stand which was in our opinion not justified; certainly it did nothing worthwhile to discharge the onus to prove the creditworthiness of the subscribing companies. 9. We referred to the argument of the assessee that it is not part of its onus to prove the source of source and origin and origin of the share subscriptions. In addition to what we had said with reference to that ITA No.225/2013 Page 5 of 8 argument in the preceding paragraph we cannot also help observing that the basis of the argument is perhaps the judgment of the Madras High Court in S. Hastimal vs. Commissioner of Income Tax, Madras, (1963) 49 ITR 273. That was a case of reassessment commenced in the year 1957 calling upon the assessee to explain a credit in his favour in the books of account of the firm, made in the year 1947. The assessee explained that he had borrowed the amount from one V in order to provide the monies to the firm. The explanation was not accepted right up to the Tribunal. Commenting on the order of the Tribunal, a Division Bench of the Madras High Court observed as under:- "The Tribunal however has not chosen to accept the assessee's case on grounds which we are unable to appreciate. The Tribunal commenting upon the fact that the books of account of the assessee were kept only at Phalodi, that pakka and katcha roker of the assessee at Phalodi had not been produced, and that the necessary link between the borrowing of Vijayaram and the money brought to Coonoor had not been established. As stated already, with regard to the sum of ` 15,000, the assessee produced indisputable documentary evidence to show that the amount came out of his borrowing at Jodhpur whether it was from Vijayaram Ganeshdas or from Gowri Shankar Bagdy. The assessee has been able to point out a source for this sum of ` 15,000 and this cannot be refuted by a mere steady disability on the part of the department or the Tribunal. After the lapse of ten years the assessee should not be placed upon the rack and called upon to explain not merely the origin and source of his capital contribution but the origin of origin and the source of source as well." The quoted observations will clearly explain the context and setting in which they were made. They cannot, therefore, be understood as placing an embargo on the power of the AO to ask the assessee to prove the creditworthiness of the creditor/share holder for the purpose of Section 68. In an appropriate case, if the facts and circumstances justify, it would be open to the AO to seek information from the assessee as to the creditworthiness of the creditor/share subscriber which may include information as to the sources of the creditor/share subscriber. If proving the creditworthiness of the creditor/subscriber is now judicially accepted as one of the ingredients of the onus cast on the assessee under Section 68, we do not see how proof of the ITA No.225/2013 Page 6 of 8 resources of the creditor/share subscriber can be completely excluded from the sweep of the burden. It may not be required of the assessee to give in-depth particulars and details about the resources of the creditor or the share subscriber, but the minimum required of him would be, in our opinion, information that will prima face satisfy the AO about the creditworthiness. Mere furnishing of the bank statements of the share subscribers without any explanation for the deposits in the accounts may not meet the requirements of Section 68. It may be necessary to know the business activities of the share-subscribers in order to ascertain whether they are financially sound and are able to purchase shares for substantial amounts; if they have borrowed monies for making the investment, whether they were capable of repaying them having regard to the nature of their business, volume of the business, etc. These are very relevant, in our opinion, to establish the creditworthiness of the investors. It is for this purpose that it is necessary for the assessee, in appropriate cases where the facts and surrounding circumstances justify, to seek the assistance of the principal officer of the subscribing companies and present him before the AO so that he will be in a position to explain in detail the source from which the shares were subscribed. A curious aspect of the matter which cannot be lost sight of is that the record reveals the assessee's ability to procure the share applicant's bank statement. This speaks volume about its conduct, and belies the argument about its inability to ensure the presence of such company's principal officers." 10. From a reading of the above extract, it is apparent that the case of Nipun Builders and Developers Pvt. Ltd. (supra) was different and is distinguishable from the present case. In that case, the summons sent by the Assessing Officer to the Companies who had applied for shares had been returned with the remarks "no such company". Whereas in the present case, the identity of the two companies which are sister companies stood established. Furthermore, this is not a case of mere furnishing of copies of bank accounts of the subscribers. But, in the present case, as noted by the Commissioner of Income-tax (Appeals) the assessee had filed the income-tax returns of the subscriber companies as also their bank statements and balance sheets in addition to the confirmation letters ITA No.225/2013 Page 7 of 8 from the said two companies. A copy of the Form No. 2 filed by the assessee with the Registrar of Companies regarding the allotment of shares to the said two companies had also been furnished. It is in this backdrop that the Commissioner of Income-tax (Appeals) had concluded that the assessee had been able to prove its case and that the Assessing Officer could not shift the burden back onto the Assessee Company without the Assessing Officer producing any tangible material to doubt the veracity of the documents furnished by the assessee. The Income Tax Appellate Tribunal concurred with the views taken by the Commissioner of Income-tax (Appeals). 11. It is obvious that in the context and factual matrix of the present case, the case of Nipun Builders and Developers Pvt. Ltd. (supra) is distinguishable. The assessee in the present case, as rightly observed by the authorities below and particularly by the Commissioner of Income-tax (Appeals) has been able to discharge the initial burden to establish the identity, creditworthiness and genuineness as regards the transactions concerning the allotment of shares. In that view of the matter no substantial question of law arises for the consideration of this court. The appeal is dismissed. There shall be no order as to costs. BADAR DURREZ AHMED, J VIBHU BAKHRU, J APRIL 30, 2013 `RK' ITA No.225/2013 Page 8 of 8

COMMISSIONER OF INCOME TAX-II Vs. LIVING MEDIA INDIA LTD

THE HIGH COURT OF DELHI AT NEW DELHI % Judgment delivered on: 23.04.2013 + CEAC No.28/2012 COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX ... Petitioner versus SIMPLEX INFRASTRUCTURE & FOUNDRY WORKS .... Respondent Advocates who appeared in this case: For the Appellant : Mr Satish Kumar, Sr. Standing Counsel. For the Respondent : Mr L.P. Asthana and Ms Praveena Gautam, Advocates. CORAM:- HON'BLE MR JUSTICE BADAR DURREZ AHMED HON'BLE MR JUSTICE VIBHU BAKHRU JUDGMENT BADAR DURREZ AHMED, J (ORAL) CM No. 14721/2012 (Exemption) Allowed subject to all just exceptions. CM No. 14722/2012 (Delay) The delay in filing the appeal is condoned. CEAC 28/2012 & CM No. 14720/2012(Stay) 1 This appeal has been filed on behalf of the Revenue being aggrieved by the order dated 13.07.2011 passed by the Customs, Excise & Service Tax, Appellate Tribunal, Principal Bench, New Delhi in ST/Appeal No. 418/2007 ITA No.28/2012 Page 1 of 3 which arose out of the order dated 30.04.2007 passed by the Commissioner of Customs & Central Excise, Raipur. 2 The only question which is sought to be raised in the present appeal is whether the definition of `Consulting Engineer' as appeared in Section 65(31) of the Finance Act, 1994 as applicable to the period 1997-2001, includes a `company' or not. 3 It is an admitted position that the respondent is a private limited company incorporated under the Companies Act, 1956. According to the appellant, the respondent would be covered by the definition of `Consulting Engineer' in Section 65(31) of the Finance Act, 1994 as it existed at the relevant time. In order to appreciate the argument advanced on behalf of the appellant, it would be appropriate if we set out the provisions of this Section; to the extent relevant, as it existed during the relevant time : "Section 65. Definitions In this Chapter, unless the context otherwise requires:- xxxx xxxx xxxx xxxx xxxx (31). "consulting engineer" means any professionally qualified engineer or an engineering firm who, either directly or indirectly, renders any advice, consultancy or technical assistance in any manner to a client in one or more disciplines of engineering; xxxx xxxx xxxx xxxx xxxx" 4 It may be relevant to point out that the words "an engineering firm" appearing in the above definition, were substituted by the Finance Act, 2006 with effect from 01.05.2006 with the words "any body corporate or any other firm". It is, therefore, clear that the expression "any body corporate" was introduced with effect from 01.05.2006. But, in the present case, the relevant period is 1997- ITA No.28/2012 Page 2 of 3 2001. At that point of time, the expression "any body corporate" was not included in the said definition of `consulting engineer'. 5 The learned counsel for the appellant submitted that Section 3(42) of the General Clauses Act, 1897 ought to be pressed into service. He submitted that the word `person' includes any company or association or body of individuals whether incorporated or not. However, we fail to understand as to how the learned counsel for the appellant can place reliance on Section 3(42) of the General Clauses Act. That provision would only apply where the word `person' is used in any Act or Regulation. The definition of `consulting engineer' as provided in Section 65(31) of the Finance Act, 1994, as it existed during the relevant period, did not employ the word `person' at all. Consequently, the provisions of Section 3(42) of the General Clauses Act, 1897 would not apply. 6 From a reading of the impugned order, we find that the Karnataka High Court has also taken the view that the expression `consulting engineer' as it appeared in Section 65(31) of the Finance Act, 1994, at the relevant time (i.e. prior to 01.05.2006), did not include "a private limited company or any other body corporate". 7 In view of the foregoing, no substantial question of law arises for our consideration. 8 The appeal is dismissed. BADAR DURREZ AHMED, J VIBHU BAKHRU, J APRIL 23, 2013rk/`ns' ITA No.28/2012 Page 3 of 3

Assessee couldn’t raise plea that undisclosed income couldn’t be earned at inception stage if facts

IT : Where genuineness and creditworthiness of transaction was not established, addition made under section 68 could not be deleted on ground that assessee was in inception stage and it would not have earned alleged amount of income from unexplained sources

HC condones delay in filing revised return as it would have caused genuine hardship to small transpo

IT : Where assessee filed a revised return after expiry of prescribed period wherein deduction of freight expenses was claimed, in view of fact that assessee had deposited TDS on said expenses during relevant year and, moreover, assessee being a small time transport operator, disallowance of huge amount of freight expenses would cause a genuine hardship, a case for condonation of delay in filing revised return belatedly was made out under section 119(2)(b)

Lump sum receipts from ex-husband in lieu of monthly alimony is capital receipt and out of clutches

IT : Lump sum receipts by spouse from her ex-husband for relinquishing her right of claiming monthly payments as per divorce agreement is a capital receipts, thus, sec. 56(2)(vi) would not be applicable

Co. operating for full year couldn’t be taken as comparables if assessee was operational only for pa

IT : While making addition in gross profit rate of assessee Assessing Officer was in error in taking case of other concern as a comparable one for reasons that said concern had worked for whole of year whereas, assessee had worked only for a period of about nine months and assessee had been in first year of its functioning

HC allows provision for warranty claim following verdict of SC in Rotork Controls India’s case

IT: Provision made for warranty against goods would be entitled to deduction

Selling ice-cream is service, must be taxed more: Tax authorities

Is an ice-cream a product or a service? Well, you are in for a surprise if you think that it's a product. The tax authorities feel that the ice-cream served by the likes of Amul, Vadilal, Kwality Walls, Baskin Robbins and a host of others retail vends or parlours constitute a service and should be taxed accordingly.

The logic - it is served from air-conditioned facilities.

The budget this year brought under tax the services provided in relation to food or beverages served by a restaurant, eating joint or a mess having air-conditioning or central air-heating facility in any part of the establishment.

Ice -cream, which depends on air-conditioning for its very existence, naturally meets this condition.

The Central Board of Excise and Customs, the apex indirect taxes body under the ministry, is still to issue a directive on implementation of the budget provision. However, field officials, under pressure to meet collection targets, are taking no chances and have turned the heat on ice-cream manufacturers.

The industry finds itself in a precarious situation. Hit hard by rising raw material costs, it is unable to absorb the burden of double taxation.

Ice-cream also attracts value added tax and excise duty, being a manufactured good.

The industry has represented to the CBEC to give clarity on treatment of ice creams as good or service.

The implication of the new levy has been examined by finance minister P Chidambaram and the CBEC is now looking if there is a need to clarify the issue. Ice-cream manufacturers are planning to now take up the issue with finance minister's office.

"This is a double whammy...Ice cream industry cannot function without air conditioned plant or without AC storage," said Sudhir Shah, secretary, Indian Ice Cream Manufacturers Association.

I-T department keep your 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 1.14 % 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.

Assessee can’t raise additional ground before ITAT if it was not raised before CIT(A)

IT : Where additional ground of grievance against Assessing Officer's order was not raised before Commissioner (Appeals) raising of same before Tribunal was not sustainable

RBI/2012-13/543 A. P. (DIR Series) Circular No.114 dated 25-06-2013

Reserve bank of India

A.P. (DIR Series) Circular No. 114

June 25, 2013

To,

All Authorized Dealer Category - I Banks

Madam / Sir

External Commercial Borrowings (ECB) Policy for 3G spectrum allocation

Attention of Authorized Dealer Category-I (AD Category-I) banks is invited to A.P. (DIR Series) Circular No. 28 dated January 25, 2010 relating to External Commercial Borrowings (ECB) for spectrum allocation.

2. As per the extant policy, the payment for spectrum allocation may initially be met out of the Rupee resources by the successful bidders, to be refinanced with a long term ECB, under the approval route, subject to the condition that ECB should be raised within 12 months from the date of payment of the final installment to the Government.


3. On a review it has been decided that ECB window for financing 3G spectrum rupee loans, that are still outstanding in telecom operator’s books of accounts, will be open upto March 31, 2014.


4. All other aspects of the ECB policy shall remain unchanged. AD Category-I banks may bring the contents of this circular to the notice of their constituents and customers.


5. The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully

(Rudra Narayan Kar)

Chief General Manager in-Charge

RBI/2012-13/543

RBI/2012-13/544 A.P. (DIR Series) Circular No. 115 dated 25-06-2013

Reserve bank of India

A.P. (DIR Series) Circular No. 115

June 25, 2013

To,

All Authorized Dealer Category - I Banks

Madam / Sir

Buyback / prepayment of Foreign Currency Convertible Bonds (FCCBs)

Attention of Authorized Dealer Category-I (AD Category-I) banks is invited to A.P. (DIR Series) Circular No. 39 dated December 08, 2008 , A.P. (DIR Series) Circular No. 75 dated June 30, 2011 and A.P. (DIR Series) Circular No. 1 dated July 05, 2012 on the captioned subject.

2. Considering the developments in the global financial markets and on a review of the aforesaid scheme, it has been decided that the existing scheme of Buyback / Prepayment of FCCBs under the approval route which expired on March 31, 2013 may be continued till December 31, 2013 and shall stand discontinued thereafter.


3. AD Category-I banks may bring the contents of this circular to the notice of their constituents and customers.


4. The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully

(Rudra Narayan Kar)

Chief General Manager-in-Charge

RBI/2012-13/544

RBI/2012-13/545 A.P. (DIR Series) Circular No. 116 dated 25-06-2013

Reserve bank of India

A.P. (DIR Series) Circular No. 116

June 25, 2013

To,

All Authorized Dealer Category - I Banks

Madam / Sir

External Commercial Borrowings (ECB) for Civil Aviation Sector

Attention of Authorized Dealer Category-I (AD Category-I) banks is invited to the A.P. (DIR Series) Circular No. 113 dated April 24, 2012 on the captioned subject.

2. In terms of paragraph 2 (iii) of the aforesaid circular, the ECB for working capital for civil aviation sector should be raised within twelve (12) months from the date of issue of the circular. On a review, it has now been decided that the scheme of availing of ECB for working capital for civil aviation sector will continue till December 31, 2013.


3. All other aspects of the ECB policy shall remain unchanged.


4. AD Category-I banks may bring the contents of this circular to the notice of their constituents and customers.


5. The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully

(Rudra Narayan Kar)

Chief General Manager in-Charge

RBI/2012-13/545

RBI/2012-13/546 A.P. (DIR Series) Circular No. 117 dated 25-06-2013

Reserve bank of India

A.P. (DIR Series) Circular No. 117

June 25, 2013

To,

All Authorized Dealer Category - I Banks

Madam / Sir

External Commercial Borrowings (ECB) in Renminbi (RMB)

Attention of Authorized Dealer Category-I (AD Category-I) banks is invited to A.P. (DIR Series) Circular No. 30 dated September 27, 2011 on the captioned subject in terms of which Indian companies in the infrastructure sector are allowed to avail of ECB in Renminbi (RMB) under approval route subject to an annual cap of USD one billion pending further review.

2. It has been observed that the facility of ECB in Renminbi (RMB) had remained unused so far. Accordingly, the scheme of ECB in Renminbi has been reviewed and it has been decided that this scheme may be discontinued from the date of issue of this circular.


3. AD Category-I banks may bring the contents of this circular to the notice of their constituents and customers.


4. The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully

(Rudra Narayan Kar)

Chief General Manager in-Charge

RBI/2012-13/546