IT : Issue of expenses being excessive or not in terms of section 40A(2) is not a question of law but is a question of fact
Wednesday 3 July 2013
Claim for long-term capital losses can’t be denied on mere unproved allegations of sale of shares at
IT : Where assessee-company made provision for doubtful debt given to its group concern and had debited same to profit and loss account and correspondingly reduced assets by reducing amount of unsecured loans, doubtful debt qualified for deduction under section 36(1)(vii)
Services of agents appointed and working outside India won't fall under section 66A
ST: Issue "whether services of sales agents appointed and working outside India are liable to service tax on reverse charge basis under Section 66A" is a debatable question; hence, assessee suffering from financial hardship, was eligible for full waiver of pre-deposit
Life insurance premium qualifies for sec. 80C deduction even if paid out of loan funds
IT: Life insurance premiums, even if paid out of loan funds and not out of income chargeable to tax, are eligible for deduction under section 80C
TP adjustment set aside as comparables chosen by TPO had functional differences and related party de
IT/ILT : Where TPO made certain adjustment to international transactions entered into by assessee with its AE in relation to IT enabled services (ITES), in view of fact that some of comparables selected by TPO were inappropriate on basis of functional difference, related party transactions, different financial year ending etc., impugned adjustment was to be set aside and, matter was to be remanded back for disposal afresh
Investors having a weakness for the yellow market, may consider investing in gold ETFs
Crashing gold prices have hurt investors badly last year. Obviously, the first to take the knock were investors in gold exchange-traded funds or gold ETFs. The other category that took the hit was investors in gold-mining funds. These funds have lost around 40% in the last year.
In comparison, gold ETFs fared better as they lost only 15% during the same period. Since the precious metal continued to be pounded on the bourses almost every day, investors are asking hard questions about these schemes. "Investors take exposure to gold, equity and dollar-denominated assets simultaneously in these schemes.
Their fortunes are linked to the movement of these three variables. The funds have seen an erosion in net asset value due to a sharp fall in gold prices," says Feroze Azeez, director - investment products, Anand Rathi Private Wealth Management. He asks investors to exit these funds.
Fading Fortunes
There are two specific schemes that are dedicated gold mining funds - DSPBR World Gold Fund and Pinebridge World Gold Fund. Also there is one more scheme - Birla Sunlife Commodity Equities Global Precious Metals that invests in shares of gold mining companies among other investments.
These three schemes together managed 731 crore in assets as on March 31. "These schemes are similar to a sector fund, where a fund manager must invest in only one sector - shares of gold mining companies. As the sector falls out of favour, returns dwindle," explains Ashish Shanker, head - investment advisory, Motilal Oswal Wealth Management.
Even as gold prices were rising last decade, the cost of mining gold too has gone up. However, the sustained sharp fall in gold prices last year is expected to adversely impact the profitability of gold mines and investors are shunning shares of these companies," says Shanker. Gold prices are down to $1229 per ounce from a high of $1791, a loss of 31% in the last one year.
Naturally, the net asset values of funds investing in the shares of gold mining companies are plumbing new depths.
The pain would have been even more if it was not for an anaemic rupee. "Thanks to rupee devaluation, the fall in net asset value of these funds is contained," says Abhinav Angirish, managing director, Investonline.in, an online mutual fund distribution entity.
This is because investors in these funds are effectively taking cross-currency bets as fund managers invest in dollar denominated assets. The rupee has fallen from a high of 51.83 per US dollar to 60.73 per US dollar, a fall of 17% in one year.
Similar trend is visible in gold prices, too. While gold is 31% off its peak in dollar terms, it is down 22% in rupee terms when it moved to 25,130 from a high of 32,500 per 10 gram. "If there was no fall in the rupee against the greenback, the losses would have been much more," he adds.
HC denies to quash settlement order; Set Com could verify full and true disclosure by assessee till
IT : High Court will not quash an order of Settlement Commission allowing the assessee's settlement application to be proceeded with or declining to declare settlement application invalid based on report furnished by CIT on grounds of assessee not having made "full & true disclosure" or non-disclosure of this issue is open before the Settlement Commission till final order is made under section 245D(4)
For ALP calculation, outcome of forward contracts undertaken to hedge forex risk form part of operat
IT/ILT : Profit or loss arising from forward contracts entered into for purpose of hedging of foreign currency exposure on underlining trade receivable or payable, has to be treated as part and parcel of operating profit while determining ALP
Pending appeals, stay is to be granted on demand raised by making exhorbitant addition to income
IT: Pending appeals, stay is to be granted on demand raised by making exhorbitant addition to income
RBI issues updated Master Circular on collection of direct taxes
IT : Collection of Direct Taxes-Oltas
Services of ‘Mandap Keeper’ on annual day celebration are input services
ST : Mandap Keeper's services availed in relation to celebration of annual day function are input services
Interest on short-term deposit isn’t eligible for deduction under sec. 36(1)(viii)
IT : Interest on short-term deposit is not eligible for deduction under section 36(1)(viii)
Master Circular No. 5/2013-14 dated 01-07-2013
RBI/2013-14/5
Master Circular No. 5/2013-14
July 1, 2013
To,
All Authorised Dealers - Category I Banks
Madam / Sir,
Master Circular on Risk Management and Inter-Bank Dealings
Foreign Exchange Derivative Contracts, Overseas Commodity & Freight Hedging, Rupee Accounts of Non-Resident Banks, Inter-Bank Foreign Exchange Dealings, etc. are governed by the provisions in Notification No. FEMA 1/2000-RB , Regulation 4(2) of Notification No. FEMA 3/RB-2000 and Notification No. FEMA 25/RB-2000 dated May 3, 2000 and subsequent amendments thereto.
2. This Master Circular consolidates the existing instructions on the subject of "Risk Management and Inter-Bank Dealings" at one place. The list of underlying circulars/notifications is set out in Appendix.
3. This Master Circular is issued with a sunset clause of one year. This circular will stand withdrawn on July 1, 2014 and would be replaced by an updated Master Circular on the subject.
Yours faithfully,
(Rudra Narayan Kar)
Chief General Manager in Charge
Master Circular No. 6/2013-14 dated 01-07-2013
RBI/2013-14/6
Master Circular No. 6/2013-14
July 1, 2013
To,
All Authorised Persons in Foreign Exchange
Madam / Sir,
Master Circular on Miscellaneous Remittances from India – Facilities for Residents
Miscellaneous remittance facilities for residents are allowed in terms of section 5 of the Foreign Exchange Management Act, 1999, read with Government of India Notification No. G.S.R 381(E) dated May 3, 2000, as amended from time to time.
2. This Master Circular consolidates the existing instructions on the subject of “Miscellaneous Remittances from India - Facilities for Residents" at one place. The list of underlying circulars/notifications consolidated in this Master Circular is furnished in Appendix-1.
3. This Master Circular is being issued with a sunset clause of one year. This circular will stand withdrawn on July 1, 2014 and be replaced with an updated Master Circular on the subject.
Yours faithfully,
(Rudra Narayan Kar)
Chief General Manager-in-Charge
Period of notice of demand can’t be reduced on mere fear that taxpayer can obstruct tax recovery
IT : Notices of demand under section 156 cannot reduce normal period of recovery from 30 days on apprehension that assessee would be exploring legal options to delay and obstruct recovery and put in tax avoidance scheme
Delay to be condoned if there is no mala-fide intention on the part of appellant
ST : Unless there are mala fides attributable to conduct of party, generally, delay should be condoned and matter should be allowed to be contested on merits rather than thrown on such technalities
Income from joint venture contracts is taxable as ‘business income’ even it assures minimum return t
IT : Where assessee entered into a joint business agreement to do diamond processing business and provided building and infrastructure such as machinery, security systems, canteen and house keeping etc., income received would be treated as business income; merely because such agreement envisaged assured return to assessee would not take away fact that assessee was engaged in business
Service provided during a stop of ship in foreign territory isn’t liable to service tax
ST/ECJ : Any supply of services during a stop of a ship in a third territory is deemed to be made outside scope of service tax law and not liable to service tax
RBI amends FEMA Regulations on Transfer or Issue of Security by a Person Resident outside India
FEMA/ILT : FEM (Transfer or Issue of Security by a Person Resident Outside India) (Ninth Amendment) Regulations, 2013 - Amendment in Schedule I and Insertion of Regulation 14
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