IT : Condition precedent for exercising revisional power under section 263 is that order under revision should not only be erroneous, but such erroneous order should also result in prejudice to interest of revenue and, thus, mere error would not confer jurisdiction to exercise revisional power
Tuesday, 2 July 2013
Amount set aside as ‘Debenture Redemption Reserve’ is deductible while computing book profits under
IT : Where assessee-company had set aside certain amount out of profits as debenture redemption reserve, said amount was deductible in computation of book profit under section 115JB
RBI notifies amendment to FEMA (Foreign Exchange Derivate Contracts) Regulations, 2000
FEMA/ILT : FEM (Foreign Exchange Derivative Contracts), (Amendment) Regulations, 2013 - Amendment in Regulations 2, 6, 6A, Schedule I & Schedule II
Trade Notice No. 04 /2013 dated 02-07-2013
Government of India
Ministry of Commerce & Industry
Department of Commerce
Directorate General of Foreign Trade
Udyog Bhawan, New Delhi
Trade Notice No. 4/2013
Dated 2nd July, 2013
To
All RAs of DGFT
All Custom Authorities
Members of Trade
Subject: Non-requirement of Registration Certificates for export of non-basmati rice and wheat [except for export to Bangladesh & Nepal through non-EDI Land Custom Stations (LCS)].
Reference: Trade Notice No. 3/2013 dated 28.05.2013.
Through the above cited Trade Notice it was informed that the online applications for obtaining Registration Certificates (RCs) for export of various commodities like cotton, cotton yarn, non-basmati rice, wheat and sugar would be mandatory from Monday the 1st July, 2013.
It has come to notice that RCs are being insisted upon in case of all exports of non-basmati rice & wheat irrespective of the destination of export. As per Notification No. 98 and Notification No. 99 both dated 23.02.2013, export of non-basmati rice and wheat is permitted through the non-EDI Land Custom Stations (LCS) on Indo-Bangladesh & Indo-Nepal border subject to registration of quantity with DGFT. Such RCs are being issued by Regional Authorities of DGFT at Kolkata and Patna. Earlier these RCs were being issued manually. Now RCs for non-basmati rice and wheat would also be issued only on application through online system.
It is reiterated that there is no change in the policy for export of non-basmati rice & wheat. Registration Certificate is required for non-basmati rice & wheat only when it is exported to Bangladesh & Nepal through non-EDI Land Custom Stations (LCS).
(Daya Shankar)
Deputy Director General of Foreign Trade
Email: daya[dot]shankar[at]nic[dot]in
(Issued from File No. 01/91/180/1194/AM10/EC)
Tribunal had no power to modify stay order which was merged with the order of High Court
ST : Where stay order passed by Tribunal had been challenged before High Court, such order stood merged with order of High Court; thereafter, Tribunal had no power to modify such merged stay order
A solvent company can be wound up for non-payment of its admitted debt - Delhi - HC
CL: For non-payment of admitted debt, company is to be wound up, even though commercially solvent
AAR isn’t required to record reasons or allow hearing to CIT while admitting the application
IT : Authority for Advance Ruling while admitting an application for pronouncing an advance ruling is not required to record reasons for same or to give a hearing to Commissioner, however, such a hearing to Commissioner or his authorized representative is contemplated before actual pronouncement of advance ruling
Commission paid to NR for soliciting export orders abroad isn't taxable in India; no obligation to w
IT/ILT : Where assessee, engaged in business of manufacture and export of shoes, made payments to non-residents for procuring export orders, said payment not being in nature of fee for technical services or royalty, were not taxable in India and, thus, assessee was not required to deduct tax at source while making said payments
Service Tax Refund Norms Simplified For Sezs
Special economic zone (SEZ) developers and units will not be required to pay tax on certain services for which they had to seek refund.
Though the SEZs have been exempted from service tax, developers and unit owners have to first pay the tax to claim the refund. Approval Committee of SEZs will specify such services.
"Where the specified services received by the SEZ unit or the developer are used exclusively for the authorised operations, the person liable to pay service tax has the option not to pay the service tax ab initio", subject to certain condition and procedure, the the Central Board of Excise and Customs (CBEC) said in a circular on Tuesday.
It also said the government has decided to exempt the services on which service tax is leviable (under section 66B of the said SEZ Act), received by a SEZ unit or developer and used for the authorised operation from the whole of the service tax, education cess, and secondary and higher education cess.
"The SEZ unit or the developer shall get an approval by the Approval Committee of the list of the services as are required for the authorised operations on which the SEZ unit or developer wish to claim exemption from service tax," CBEC said. "The exemption shall be provided by way of refund of service tax paid on the specified services received by the SEZ Unit or the Developer and used for the authorised operations."
The norms have been issued at time SEZs are loosing sheen after the government decided to impose minimum alternative tax (MAT) and dividend distribution tax (DDT) on such economic enclaves.
In the past of two years, a large number of developers have either withdrawn SEZ plans or have sought more time from the Commerce Ministry to complete their zones.
Of the 389 SEZs notified, 170 are operational.
Source:-businesstoday.intoday.in
Up Blames Wheat Export For Low Supplies
2-Jul-2013
The Uttar Pradesh (UP) government has blamed wheat export permit for dismal procurement during the current rabi marketing season.
Against the target of six million tonnes (mt), the state agencies could procure only 6.82 mt, 11 per cent of the target.
However, the government maintained the public distribution system (PDS) in UP would not suffer owing to low procurement, since the Food Corporation of India (FCI) would supplied the requisite foodgrain from the central pool.
According to the state food and civil supplies principal secretary, Deepak Trivedi, the export permit for 5 mt of wheat resulted in huge open-market procurement by traders, which affected procurement during April-June 2013, the annual period for purchase.
Besides, adverse climatic conditions before the harvest season also affected production. He added there had been no distress sale of wheat due to the proactive steps by the department, including auction at the mandis.
Meanwhile, the farmers were paid nearly Rs 920 crore for procurement by the state.
This year, wheat acreage and production in UP has been pegged at 9.73 million hectare (mh) and 31 mt respectively vis--vis wheat production of 31.90 mt over an area of 9.731 mh during 2012.
A major portion of the rabi crop is retained by farmers for personal consumption and only the remaining comes to market for procurement.
Earlier, the wheat production was estimated at over 32.15 mt, which led to the government to fix its target at 6 mt, which was over 40 per cent compared to 2012 target of 4.2 mt.
The wheat minimum support price (MSP) stood at Rs 1,350/quintal this year compared to Rs 1,100/quintal, Rs 1,120/quintal and Rs 1,285/quintal during 2010, 2011 and 2012 respectively.
Some neighbouring states had even announced bonus over the MSP to encourage farmers.
Experts lament that the state procurement system suffers from various logistical challenges, including lack of proper storage and weighing mechanism. It is also alleged several procurement centres function only on paper.
Source:-www.business-standard.com
India Coffee Exports Down 4.45% In Jan-Jun
2-Jul-2013
India's coffee exports fell marginally by 4.45% to 1,91,055 tonnes in the first six months of the current calendar year due to sluggish global prices on possible higher production from other countries.
The country had shipped 1,99,969 tonnes in the same period last year, according to the Coffee Board data.
"Since there was not much improvement in the global price situation, our coffee shipments have lowered to 1,91,055 tonnes during January-June period of this year," a senior Coffee Board official told PTI.
In value terms too, overall coffee exports remained slightly lower at Rs 2,818.35 crore during the review period as against Rs 2,955.35 crore in January-June, 2012, he said.
As per the Board data, robusta coffee exports fell by 7% to 1,03,296 tonnes in the first six months of 2013, against 1,10,983 tonnes in the year-ago period,
The shipment of arabica variety fell by a little over 4% to Rs 39,367 tonnes from Rs 41,026 tonnes, while the export of instant coffee declined by 32% to Rs 12,153 tonnes from Rs 17,826 tonnes in the review period.
The export realisation was lower at Rs 1,47,515 per tonne, it added.
According to experts, Indian exporters are cautious in taking export orders as there is sluggishness in global prices because higher supplies are expected from major coffee- producing countries like Brazil, Vietnam and Indonesia this year.
Most of the Indian coffee has been shipped to Italy, Germany and Russian Federation, the Board said.
The Board has pegged coffee production at 315,500 tonnes in the 2012-13 crop year (October-September), a marginal increase of 1,500 tonne over the final estimate of 314,000 tonne in 2011-12.
Source:-www.business-standard.com
Gold At A Huge Premium As Imports Dry Up; Survival Of Small Jewellers At Stake
KOLKATA: India's gold imports in June are estimated to have fallen drastically to 35-40 tonne, less than a quarter of what the purchases in May were because of state restrictions, triggering a sharp rise in premiums in the local market and raising a question mark on the survival of small jewellers. The acquisition cost of the yellow metal has shot up as bullion dealers are now charging a premium of up to Rs 350 per 10 grams over and above the metal's international price, up from only Rs 40 two weeks ago.
The premium, along with the increase in landed price of gold because of the rupee's depreciation, has denied Indian buyers the benefit of the fall in international prices last month.
Gold at a huge premium as imports dry up; survival of small jewellers at stakeDealers said they were paying a premium which was being passed on to jewellers. "This has made the yellow metal costly in the Indian market. The rupee has also played a crucial role in increasing the landed cost of the yellow metal," said Mukesh Kothari, director at Riddisiddhi Bullions, which is thinking to do away with gold coin and bars sale in order to check the investment demand for gold. "Imports have come down drastically in June," said Harmesh Arora, director, Bombay Bullion Association.
Dealers said imports in June are likely to fall to 35-40 tonne in June from a record high of 162 tonne in May when the Akshyay Trititya festival boosted demand. In the Mumbai market, the spot price of gold was hovering around Rs 26,230 per 10 gm. The price would have been Rs 25,930 per 10 gm if the premium was less. The international price of gold was at $1,260 per ounce.
"It is becoming increasingly difficult to get supplies. Most banks have stopped importing gold which has created a supply shortage in the Indian market. Bullion dealers are offloading gold that they stocked during April and May at a high premium," said Bachhraj Bamalwa, director of Nemichand Bamalwa & Sons.
In a bid to contain the record current account gap, the government banned consignment imports, making it difficult for smaller jewellers with a lower working capital to source supplies. The government also raised the import duty to 8% which made acquisition of gold costlier for the trade. Most of the supplies in the Indian market are now being met by privately-held trading houses and state-run agencies such as MMTC, State Trading Corp and PEC through imports in April and early May as banks are still waiting for guidelines from the Reserve Bank of India on outright cash purchases. C Vinod Hayagriv, managing director of C Krishnaiah Chetty & Sons, said, "The need of the hour is to stop bullion sales to unregistered bullion dealers rather than tighten the noose around the entire employment-generating value-added gems and jewellery sector."
Bamalwa said that if situation does not improve in the next fortnight, the survival of a large number of unorganised players will be at stake. "Nearly 3.5 crore people are attached to this trade and their jobs now hinge on the government's move," he said.
Source:-economictimes.indiatimes.com
Cacp Aims At Boosting Domestic Pulses Output By Imposing 10% Import Duty
NEW DELHI:The Commission for Agricultural Costs and Prices (CACP), which advises the government on price policy for major agricultural commodities, has recommended an import tariff of 10% on pulses to promote local production.
Currently, pulses like moong and tur have an import parity price that is below the minimum support price (MSP). Importers and traders say that with domestic prices crashing, the government should allow exports to ensure remunerative prices to farmers.
India is the largest consumer (18.5-20 million tonne), producer (15-18 million tonne) and importer (2.5-3 million tonne) of pulses, an important constituent of protein for most vegetarians in the country. "Especially in tur dal, we have noticed that pulses imported from Myanmar are cheaper than the domestic production. Hence, we have recommended to the Ministry of Agriculture to impose a 10% import duty," said Ashok Gulati, chairman, CACP.
Pulses imports are permitted at zero duty since 2006 to ensure availability at reasonable prices. Pulses exports from India, however, are prohibited since 2006 except for kabuli chana and over 10,000 tonne of organic pulses and lentils per annum.
Pulses importers said the revision of the import duty was a call to be taken by the revenue ministry in consultation with the consumer affairs ministry. "Rather than increasing the import duty, the government should allow exports of pulses to ensure that farmers get a good price," said Pravin Dongre, chairman, India Pulses and Grains Association. He said domestic prices were extremely low with chana selling below the MSP of Rs 3,000 a quintal. The harvesting of new chana crops in Rajasthan and Madhya Pradesh have further crashed domestic prices, said traders at the Delhi's Naya Bazaar mandi.
Consistent efforts by the government have led to a 2.9% increase in pulses production in 2012-13 at 17.6 million tonne from the past year. However, production of kharif pulses is estimated to decline by 9.6% to 5.5 million tonne, with a 3.8% increase in tur, a fall in urad by 1.7% and in moong by a steep 22.1%. According to Gulati, the two important trade policies (MSP and import) were inconsistent and had to be dovetailed to protect and push farmers to grow more pulses. "Imported tur from Myanmar is beingquoted at Rs 3,200 a quintal and we are giving an MSP of Rs 4,300 a quintal to our farmer. What will prevent traders to import at cheaper rates and sell at high prices in the market?" he said.
According to traders and brokers, raw tur was currently being imported from Myanmar and futures contracts were being signed with Malawi, Mozambique, Tanzania, Kenya for August-September delivery. "Market prices are stable and can see a further correction," said Vasad-based Mitesh Patel who processes and sells tur dal under the Lakshmi Toor dal brand. Compared to wheat and rice, the production of which has clocked an all-time high, pulses are a major challenge for India in terms of meeting its domestic demand.
Source:-economictimes.indiatimes.com
No disallowance for TDS default if revenue couldn't prove sum paid is in nature of royalty
IT/ILT : Where assessee engaged in manufacturing sophisticated chemicals, purchased from Germany, a catalyst in form of rings which was used in oxidation process of converting oxylene to pthalic anhydride, it did not amount to payment of royalty within meaning of Explanation to section 9(1)(vi) and, thus, assessee was not required to deduct tax at source while making said payment
If consideration for land sold to sister concern exceeds stamp duty value, it can't be substituted w
IT : Guideline value for consideration under section 50C i.e. stamp duty value applies to sale of land to sister concerns also
Penalty under sec. 78 can’t exceed service tax relating to extended period
ST : Penalty under section 78 cannot exceed service tax paid by assessee for extended period, as there cannot be a penalty under section 78 in respect of service tax paid for normal period
Clash over ‘Paid v. Payable’ after Merilyn Shipping's case is a matter of serious concern, says HC p
IT : Issue of applicability of section 40(a)(ia) only to expenditure which is payable as on 31st March of year under consideration or to expenditure which had already been paid during year itself, requires serious consideration
No concealment penalty if an expenditure is disallowed on basis of a ruling of High Court
IT: Penalty imposed on account of disallowance of interest on borrowing as per High Court's judgment was not justified
Refund of tax paid on services received by Special Economic Zones/Developers - New procedures/comput
ST : Section 93 of the Finance Act, 2013 – Exemptions from Service Tax - Refund of tax paid on services received by Special Economic Zones/Developers - Notification No.40/2012-ST Rescinded; Procedure for Refund Rationalized
ITAT allows 1 crore exemption under sec. 54EC as 6 months fall under 2 financial years
IT : Condition for availing of exemption under section 54EC requires that investment can be made within a period of 6 months and if 6 months fall within two different financial years, assessee can make investment in two different financial years provided in a financial year investment made did not exceed Rs. 50 lakhs
Doctrine of unjust enrichment would apply if price isn’t separately shown in the invoice
ST : If assessee does not show service tax amount separately in invoices, section 12B of Central Excise Act would apply and assessee will be deemed to have passed on full incidence of tax to service recipient except where contrary is proved by assessee
Consideration may flow from a third party unrelated to final consumer
ST/ECJ : Where assessee provides services at below market value against a price reduction coupon issued by a third party and claims price reimbursement from such third party against such coupon, such reimbursement is includible in taxable value, as consideration may flow from a third party unrelated to final consumer
CBDT rescinds profit-split method for computing tax liability
In a breather to the information technology sector, the Income Tax Department, on Saturday, announced withdrawal of a controversial circular, and modification of another one relating to taxation of R&D centres, which play a key role in software development.
While the circular relating to adoption of profit-split method (PSM) as a preferred mode for computation of tax liability has been rescinded, another one relating to development centres will suitably be modified, said the Central Board of Direct Taxes (CBDT).
The decisions were taken following representation from the industry for greater clarity on two circulars concerning international taxation or transfer pricing.
“This is a very positive step. The compliance cost will come down and chances of double taxation may reduce,” said S. P. Singh, Senior Director, Deloitte Haskins & Sells.
RANGACHARY COMMITTEE
The circulars were based on a report of N. Rangachary Committee on ‘Taxation of development centres and IT sector’
The tax department by rescinding the circular had made sure that the profit-split method (PSM), which led to higher taxation, would not be the preferred mode, Mr. Singh said, adding that the I-T Department would use more appropriate methods depending on the circumstances.
Besides PSM, there are five other methods for computing tax liability under the transfer pricing rules. These include, resale price method, cost plus method, comparable uncontrolled price method and transactional net margin method.
The circular which has been withdrawn, the CBDT said, was “appeared to give the impression that there was a hierarchy among the six methods listed in Section 92C and that the PSM was the preferred method in the case involving unique intangibles or in multiple interrelated international transactions.’’
Referring to the other circular, the CBDT said the use of phrases such as ‘cumulatively complied with’, ‘economically significant functions’ and ‘low or no tax jurisdiction’ will be redefined.
“The CBDT believes the rescission of circular No 2 and amendment and reissue of circular No.3 will clear all ambiguities in the matter,” the CBDT added. It further said that ‘Safe Harbour Rules’ are under consideration and will be issued shortly.
The Safe Harbour Rules will bring further certainty in assessment of development centres that are engaged in providing contract R&D services, it added.
Safe harbour principles are international disclosure practises to check litigations in transfer pricing — an accounting mechanism undertaken by MNCs to reduce tax liabilities.
Breather for IT firms as CBDT withdraws controversial tax circular
In a major relief to the IT industry, the Central Board of Direct Taxes (CBDT) today announced the withdrawal of a controversial circular that could have adversely impacted the tax spend for this industry.
The CBDT also modified another circular relating to taxation of R&D centres that also has a crucial role in software development.
The circular (No 2 of 2013) that has been withdrawn related to the adoption of Profit Split Method (PSM) as a preferred mode for computation of tax liability. The decisions were taken following representation from the industry for clarity on two circulars concerning global taxation of transfer pricing.
Tax experts hailed the latest announcements stating that compliance cost will come down and chances of double taxation may be reduced.
“The rescinding of Circular No. 2 is very good news for the industry. This is a positive move and would certainly improve the sentiments of foreign investors who were shying away from investing in R&D in India,” said Vijay Iyer, National Transfer Pricing Leader, Ernst & Young India
SAFE HARBOUR RULES
The Finance Ministry also said that CBDT would soon issue safe harbour rules. Such a move would bring further certainty in assessment of development centres that are engaged in providing contract R&D services.
Safe harbour rules have been defined as circumstances in which the income-tax authorities shall accept the transfer price declared by the assessee.
The Income Tax Department by withdrawing Circular No 2 has made sure that profit-split method, which could lead to higher taxation, will not be the preferred mode.
Besides this method, there are five other methods for computing tax liability under the transfer pricing rules. These include resale price method, cost plus method, comparable uncontrolled price method and transactional net margin method.
No reassessment after 4 years merely in a quest to identify nature of exp. if assessee already discl
IT : No reassessment after 4 years merely in a quest to identify nature of exp. if assessee already disclosed all facts
No addition for failure to produce supporting vouchers of exp. which were destroyed in a natural cal
IT : Where Assessing Officer had not found anywhere in assessment order that expenses towards maistry due was not supported by any material documents, it was only when matter was remitted from first appellate authority to Assessing Officer during pendency of appeal, assessee was not in a position to produce those vouchers as vouchers were damaged during floods, addition made on that account was not justified
No transfer on succession of proprietary concern by co. even if shares worth more than assets exchan
IT: Where assessee, a proprietary concern, had transferred all his assets and liabilities to a company and against consideration he was allotted shares in company, even though value of those shares was much more than value of assets disclosed in books of proprietary concern, provisions of section 47(xiv) would apply to transfer so made
Courses provided by aircraft engineering schools are exempt from service tax, rules Delhi HC
ST : Aircraft Maintenance Engineering training provided by Aircraft Maintenance Engineering Training Schools approved by Directorate General of Civil Aviation is a course recognized by Aircrafts Act/Rules and directions issued thereunder and is exempt from service tax
A real estate developer can’t be termed as dominant player in presence of other players selling simi
Competition Act : Where OP was not only or major real estate developer and many other real estate developer were offering residential flats, OP did not appear to be dominant in relevant market
‘Unexplained cash credit’ pre-requisites books of account; no additions for deposit in bank in absen
IT : Where assessee had not maintained any books of account, assessing officer cannot invoke provisions of section 68 on basis of deposits made in bank account of assessee
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