RBI/2013-14/131 A.P. (DIR Series) Circular No. 08 dated 11-07-2013

Reserve bank of India

A.P. (DIR Series) Circular No. 08

July 11, 2013

To

All Category - I Authorised Dealer Banks

Madam / Sir,

Overseas Investments – Shares of SWIFT

Attention of the Authorised Dealers (AD) is invited to Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2004 notified by the Reserve Bank vide Notification No. FEMA 120/RB-2004 dated July 07, 2004 and as amended from time to time.

2. As per the extant FEMA provisions, the proposal of acquisition of the shares of Society for Worldwide Interbank Financial Telecommunication (SWIFT), Belgium by the resident bank is considered by the Reserve Bank on case to case basis under the approval route.


3. On a review, it has now been decided to grant general permission to a bank in India, being licensed by the Reserve Bank under the provisions of the Banking Regulation Act, 1949, to acquire the shares of SWIFT as per the by-laws of SWIFT, provided the bank has been permitted by the Reserve Bank for admission to the ‘SWIFT User’s Group in India’ as member.


4. This modification shall come into force with immediate effect. Necessary amendment to the Notification No. FEMA.120/RB-2004 dated July 07, 2004 has been issued vide Notification No. FEMA.271/RB-2013 dated May 29, 2013 and notified vide dated G.S.R.No.345 (E) dated 29.05.2013 (copy enclosed).


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


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

Yours faithfully,

(C. D. Srinivasan)

Chief General Manager

RBI/2013-14/131

RBI/2013-14/132 A.P. (DIR Series) Circular No. 09 dated 11-07-2013

Reserve bank of India

A.P. (DIR Series) Circular No. 09

July 11, 2013

To

All Category - I Authorised Dealer Banks

Madam / Sir,

Trade Credits for Imports into India – Review of all-in-cost ceiling

Attention of Category-I Authorized Dealer banks is invited to the A.P. (DIR Series) Circular No. 98 dated April 09, 2013 relating to all-in-cost ceiling of Trade Credits for imports into India.

2. On a review it has been decided that the all-in-cost ceiling as specified under paragraph 4 of A.P. (DIR Series) Circular No.28 dated September 11, 2012 will continue to be applicable till September 30, 2013 and is subject to review thereafter.


3. It has also been decided that for availment of trade credit, the period of trade credit should be linked to the operating cycle and trade transaction. AD banks may ensure that these instructions are strictly complied with.


4. All other aspects of Trade Credit policy remain unchanged. Category-I AD 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/2013-14/132

RBI/2013-14/133 A.P. (DIR Series) Circular No. 10 dated 11-07-2013

Reserve bank of India

A.P. (DIR Series) Circular No.10

July 11, 2013

To

All Category - I Authorised Dealer Banks

Madam / Sir,

External Commercial Borrowings (ECB) Policy – Refinancing / Rescheduling of ECB

Attention of Authorized Dealer Category-I (AD Category-I) banks is invited to A.P. (DIR Series) Circular No. 112 dated April 20, 2012 relating to ECB.

2. On a review, it has been decided that the instructions contained in the above mentioned circular will continue to be applicable till September 30, 2013 and is subject to review thereafter.


3. All other aspects of ECB policy remain unchanged and 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/2013-14/133

Sec. 68 provisions couldn’t be invoked on business related exp. allowable under sec. 37(1)

IT: Provisions of section 68 cannot be invoked while considering expenditure on sales promotion; such expenses are incurred for business and, thus, allowable under section 37(1)

Exp. couldn’t be disallowed merely because AO denied sec. 12A exemption which was a matter of pendin

IT: Merely on assumption that exemption claimed under section 12A had been rightly denied, Assessing Officer would not be permitted to disallow expenditure incurred by assessee

Original order and not the consequential order to be challenged

ST: In case of orders passed in consequence of an order-in-original, appeal must be filed against that order-in-original and not against consequent order

Every default of concerned officer doesn’t result in disciplinary action under RTI Act, unless it’s

RTI Act : In terms of section 20(2), every default on part of concerned officer may not result in issuance of a recommendation for disciplinary action and it has to be seen that case falls in category of specified default and reasoned finding is recorded by commission while making such recommendation

Karnataka HC lays down guidelines on imposition of concealment penalty

IT : Karnataka HC's guidelines for imposition of penalty under section 271(1)(c)

No exception for Govt. bodies under proviso to section 2(15)

IT : Proviso to section 2(15) would be attracted if activity carried on by institutions are similar to trade, commerce or business; for this purpose use or application or retention of consideration received is not relevant at all

ITAT confirms TP adjustment for depreciation as assessee applied SLM and comparables followed WDV me

IT/ILT: Where assessee charged depreciation on straight line basis, whereas comparables applied written down value method, adjustment for depreciation was required

Rupee Falls In Early Trade At 59.75 Per Dollar

Indian rupee has opened at 59.75 per dollar Friday, down by 8 paise compared to previous day's closing value of 59.67 per dollar.



Pramit Brahmbhatt of Alpari said feels the rupee is likely to trade in positive zone on Federal Reserve's statements, a weak dollar and positive equity markets.



According to him, the range for the rupee is seen between 59.41-60.31/USD.



He expects May Index of Industrial Production (IIP) to come in between 2.5-3 percent, which is expected to be announced later in the evening.

Source:-www.moneycontrol.com

Dgft For Boost To Set Top Box Manufacturing In India

11-Jul-2013

NEW DELHI, INDIA: Director General Foreign Trade (DGFT) Dr Anup Pujari today informed that all items suggested by the IT department had been notified for an additional 2 per cent incentive and that Set Top Box has been identified as a focus product.



Giving the inaugural address at a seminar on 'Set Top Box - Making India a Manufacturing Hub' organized by the Confederation of Indian Industry (CII) here today, Dr Pujari asked stakeholders to brainstorm and advise him on third party certification that will enable and facilitate trade, citing the example of FDA approval for drug manufacturers.



Participants felt that the timing of the seminar was most opportune as cable TV networks in India have been mandated to go digital by December 2014. This entails that the TV signal may be received only through Set Top Boxes (STB).



Speaking about the digitalization process, Supriya Sahu, Joint Secretary, Ministry of Information & Broadcasting, said that it was envisioned that 75 million STBs would be required for Phase 3 and Phase 4. She assured the participants that the government would look at their suggestions for tax rationalization but urged them to rise to the occasion so that this huge opportunity could be utilized as there was a very short time window.



Globally too, most countries have a roadmap to go digital in the next 3-5 years. Expected demand globally for set top boxes is around USD 12 billion. The STB manufacturing opportunity has been identified as amongst the growth drivers for the electronics manufacturing industry.



Keith Cochran, VP (Digital Home sector), Jabil Circuits Inc, noted that India has to revisit its tax policy structure if it wants to attract investment in this area. Competing countries, he said, were offering both discretionary and statutory incentives to attract long term investment.



Apart from tax incentives, he suggested the government must also offer special incentives for supply chain manufacturers and extend incentives to R&D and design functions to promote expansion of the available market.



Many players in Indian electronics industry have developed set top boxes which are cost competitive and meet the technological requirement of the customers.



Dr Ajay Kumar, Joint Secretary, DeitY, Ministry of Communication & IT, informed that the department was announcing a series of incentives for the electronics manufacturing cluster scheme and assured the participants that set top boxes was a priority area given the speed of the cable digitalization process. He mentioned that an Indian CAS can be expected in the next 12-14 months.



Earlier, Vinod Sharma, chairman, CII National Committee on ICTE Manufacturing & Managing Director, Deki Electronics Ltd, set the tone for the discussions by stating that manufacturing, finance and policy all had to be strong so that the opportunity presented by digitalization does not go waste.

He informed that the trade deficit on this one item alone was $360 million last year. Success in business, he said, was a result of reinforcement of the strengths of entrepreneur, enablers and business drivers.



Sunil Vachani, CMD, Dixon Technologies (India) Pvt Ltd & Honorary Treasurer of CEAMA, outlined the advantages that Indian manufacturers gave to MSO operators and DTH service providers without any compromise on quality. In his closing remarks, he also stressed that the duty increase did not adequately compensate for other disability factors which were denying Indian manufacturers the competitive edge.



The seminar was attended by key officials from concerned Government Ministries and Departments, MSO operators, DTH service providers, chipset suppliers, STB manufacturers, and representatives of ecosystem industries among others.

Source:-www.ciol.com

Lenders Asked To Boost Export Credit

The Reserve Bank of India (RBI) has asked banks to strengthen rupee export credit and lower interest rates for those borrowers, in the pre-monetary policy deliberations with the chief executives of select banks. RBI would announce its first quarter policy review on July 30.



"In view of the widening current account deficit, the central bank sees a need to boost exports and interest rates in that sector should be lowered," said a banker who was present in the meeting.



Recently, the government has decided to extend the interest subvention of two per cent on rupee export credit to March 31, 2014, on pre and post shipment rupee export credit for certain employment-oriented export sectors. In addition, certain sectors like handicraft, carpet, handloom, sports goods, toys, were also made eligible for the interest rate subvention.



Bankers, on the other hand, said there was not much demand for loans from the exporters. Banks have requested the regulator to lower provision on restructured assets which were recently raised following the Mahapatra committee recommendation.



"We have said provisioning that was introduced in the restructuring should be reviewed because there is tremendous pressure on demand for restructuring and banks might find it difficult to make such provisions," said K R Kamath, chairman, Indian Banks' Association and chairman and managing director, Punjab National Bank.



"Provision requirement on restructuring is quite onerous and they are going to be a significant expense on the P&L (Profit & Loss) account and they need to be re-visited," said Diwakar Gupta, managing director and chief financial officer of State Bank of India.



RBI has hiked the standard asset provisioning requirement for restructured assets to five per cent for fresh loans (came into effect from June 1) from 3.3 per cent. The Mahapatra Committee had recommended higher provision for recast loans, as there was a view than banks and their borrowers are taking undue advantage of the loan recast mechanism and resorting to it to delay non-performing asset formation. Banks are also required to increase the provisioning of existing restructured loans in a phased manner.



Though bankers have demanded leeway, RBI has not made any commitment that such a request would be granted. Top officials from Punjab National Bank, Bank of Baroda, State Bank of India, Union Bank of India, Citibank, Karnataka Bank were present in the meeting. All the four deputy governors of the central bank also attended the meeting.



Banks have also demanded an interest on cash reserve ratio (CRR).



"We have requested that if RBI can give some interest on CRR, it would be most welcome," Kamath said.



Unlike the past however, bankers didn't make a fresh pitch for a CRR cut. "Bankers themselves believe that liquidity is really comfortable, so a case for CRR cut does not really exist," said Gupta, of State Bank of India.



Bankers also demanded RBI to reduce the tenure of foreign currency non resident (FCNR) accounts and non resident external (NRE) deposit accounts from the current one year to improve dollar flow in the country. "We have said that currently the FCNR and NRE deposit - the minimum period is one year. We have requested that if it can be reduced to at least six months, it would help us to bring some more dollars into this country" Kamath said.



RBI in this calendar year has so far reduced repo rate by 75 basis points to 7.3 per cent and CRR by 25 basis points.

Source:-www.business-standard.com

Matter remanded as CIT(A) didn’t consider India Switzerland treaty to determine taxability of divide

IT/ILT : Where assessee paid licence fees to its AE and worked out ALP of this payment at rate of 3 per cent of turnover, rate of licence fees at 3 per cent deserved to be upheld

Central Govt. announces Rules for regulating the refund of court fee in Debts Recovery Tribunal

DRT : Debts Recovery Tribunal (Refund of Court Fee) Rules, 2013

SARFAESI Central Registry Rules to include transactions which subsisted before setting-up of Central

SARFAESI : Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Central Registry) (Amendment) Rules, 2013 - Amendment in Rules 2, 5 and 7

Special audit isn’t a tool to extend period of limitation; HC quashed assessment barred by limitatio

IT : Where assessee was not granted opportunity of being heard before passing an order under section 142(2A) and, moreover, such a procedure was adopted merely to extend period of limitation for completing assessment, Tribunal was justified in setting aside said assessment holding it to be barred by limitation

Sec. 78 penalty to be reduced to 25% if service-tax was paid prior to passing of order

ST : Where an assessee has deposited sum equal to 25 per cent of service tax as penalty under section 78, penalty so leviable must be reduced to 25 per cent of service tax

Assessment in accordance with sec. 144A directions can’t be reopened; AO can take recourse of revisi

IT: Assessment done pursuant to directions issued by Additional Commissioner under section 144A cannot be reopened; however, revisionary power under section 263 can be exercised

Reassessment unsustainable as reasons of AO were based on an assessment order set-aside by CIT(A)

IT : Where material on which Assessing Officer had formed belief as regards escapement of income was assessment order for year 2006-07, which on date of reopening of assessment for year under consideration was set aside by Commissioner (Appeals) and as such had no existence in eyes of law, reopening of assessment could not be sustained

School not providing admission to EWS students still a charitable trust

IT : DIT(E) could not cancel registration granted to assessee-society under section 12AA on ground that school run by society did not provide admission to students of EWS category in accordance with percentage prescribed in Government policy

Even illegal income to be shared with revenue - ST leviable even on unlawful renting

ST/ECJ : Renting out a place for selling of drugs is liable to service tax, even if such activities carried out at rented place constitute a criminal offence, which may make such renting also unlawful

Nursing homes equipped with scientific instruments are depreciable under block of plant and machiner

IT : Where nursing home was equipped viz. scientific instruments, same would be treated as plant and machinery and depreciation should be allowed on it accordingly