IT : Ownership of land for development of a housing project is not a criterion for section 80-IB deduction
Sunday 21 July 2013
Payment of consultancy fees to carry on business more efficiently and profitably is a revenue exp.
IT : Expenditure incurred on consultancy charges to carry on business more efficiently, is to be treated as revenue expenditure, and not as capital expenditure
Ownership of property transferred during pendency of proceedings before BIFR or during winding up to
CL: Where transfer of properties were made either during pendency of reference before BIFR or during pendency of winding up proceedings, Official Liquidator was to be directed to take steps for restoration
‘Due date’ under sec. 36(1)(va) for payment of employee’s contribution to PF is same as contemplated
IT: Employee's contribution towards Provident Fund if paid before due date of filing return is allowable under section 36(1)(va) to employer assessee
Functionally different comparables to be excluded from list of comparables for TP study
IT/ILT : Where in course of transfer pricing proceedings, TPO made certain adjustment to ALP determined by assessee, in view of fact that two comparables selected by TPO were functionally different, assessee's plea that said comparables were to be excluded while determining ALP, was to be accepted
Finance Ministry Initiates Steps To Correct Trade Data Discrepancies
21 Jul, 2013
NEW DELHI: The Finance Ministry has asked Customs Department to ensure use of standard units on same items entering or leaving the country across ports in order to prevent discrepancies in trade data, which lead to embarrassment.
The Central Board of Excise and Customs (CBEC) has found that Standard Unit Quantity Codes (UQC), indicated in the Customs Act, are not being uniformly declared by importers and exporters for the same items across different ports.
"The issue of poor quality of trade data has been engaging the attention of the government," CBEC said in a communication to the Customs and other revenue officials.
An error of USD 9 billion was noticed in the country's exports for April-November period of 2011-12.
"The solution lies in improving the quality of data by using standard UQCs...Accordingly, it is directed by the Board that Customs field formations should ensure that only the correct and prescribed Standard UQC ... is mentioned in Bills of Entry/ Shipping Bills," the CBEC said.
It said an analysis of National Import Data Base (NIDB) reveals that there are at times "variations between the lowest and highest unit values of the same item", which might escape detection on account of the use of different unit codes.
Use non-uniform UQCs impacts data quality and makes comparisons and aggregations difficult, the CBEC said.
"The use of non-uniform UQCs for the same item also vitiates the quality of the NIDB data and reduces its utility to the assessing officers, who are unable to ascertain the contemporaneous values or assessment practice of a given item in different Customs locations," it said.
UQC have been specified in the Customs Tariff Act, 1975. The Board, which is responsible for collection of indirect taxes, asked the Chief Commissioners of Customs to ensure the instructions are "complied with scrupulously".
It, however, said the exercise should not result in delays in clearance of cargo.
Earlier, the Directorate General of Foreign Trade (DGFT) had streamlined flow of trade figures from different ports in the country.
This was done following the error in export figures of April-November period of 2011-12. The Prime Minister's Office had asked the commerce department to explain the errors.
Data reporting problems also created problems for officials during a recent visit of Commerce and Industry Minister Anand Sharma to Mauritius where bilateral trade figures were found not matching.
Source:-economictimes.indiatimes.com
Quarterly Apparel Sales Grow 10% On Stable Cotton Price, Removal Of Excise Duty
KOLKATA: Readymade apparel sales have bounced back after two years of flat growth with brands, retailers, manufacturers reporting more than 10% growth in last quarter. A stable cotton pricing coupled with removal of 10% excise duty has worked in favour of apparel industry bringing consumers back to the market at a time when inflationary pressure and rising product prices are pinching their pockets.
The rising domestic demand has prompted the country's textile industry to increase production of apparel and also look at Bangladesh to build up sufficient inventory for the festive season which is expected to drive sales further in the second half of the current fiscal.
"The domestic apparel industry is once again back in the growth mode after a lull of two years. In the first quarter there has been an overall growth of around 10% even though the economic parameters are not very bright. The growth has come because consumers are not willing to hold back their purchases any further," said Rahul Mehta, president of the Clothing Manufacturers Association of India.
Apparel makers and retail chains like Turtle, Madura Fashion, Future Group and Spencer's Retail say steady apparel prices this year has induced consumers to undertake purchases and the wedding season too has helped the industry. Apparel brand Turtle director Amit Ladsaria says the brand has grown by 31% in the first quarter (April-June) of this fiscal as compared to the same period last year. "The best part of this growth in sales is that it happened on full price, without any discounts or consumer offers," says Ladsaria.
Allen Solly brand head Sooraj Bhat adds that more serious shoppers are in the market. "The growth is coming from higher conversions and triggered by regular customers who account for almost 40% of the sales. Footfalls are yet to pick up completely," he says, adding the brand has grown sales of like-to-like stores by 26% in the last quarter over same period last year.
Prices have played a key role in bringing back customers to the market. Though the production cost has gone up but the apparel makers have not passed it to the customers bringing them much relief.
Spencer's Retail president & CEO Mohit Kampani says on an average apparel prices is slightly less expensive compared to last year on per unit basis. "The steady prices has made apparel more affordable when other consumer product prices have gone up.This has been a big catalyst," he says. Spencer's Retail has grown by 15% in apparel on a like-to-like basis over last year. Future Group's fashion business too is growing upwards of 20% at the Big Bazaar stores which the company wants to grow further by recasting the business soon, a senior official said.
The total size of the Indian apparel industry is Rs2.4 lakh crore. Of this,Rs1.62 lakh crore worth of garments is consumed in India and the rest is exported. India has also increased its imports from Bangladesh, one of the leading apparel making nations in the world.
Source:-economictimes.indiatimes.com
Mundra Overtakes Kandla To Emerge As India’S Largest Port
Ahmedabad: Mundra port, run by Adani Ports and Special Economic Zone Ltd (APSEZ), has emerged as the largest merchant port in India, overtaking the Union government-controlled Kandla Port by a whisker in terms of cargo handled in the first quarter of the current fiscal. It’s the first time that a private port has taken the top position.
Cargo handled by Adani port between April and June was close to 24 million tonnes (mt) as compared to about 23 mt handled by Kandla in the same period, said Rajeeva Sinha, whole-time director of APSEZ. “We are today the country’s largest port,” Sinha said. Both ports are located in the Kutch district of Gujarat.
An official at Kandla Port Trust confirmed the development. While Kandla was number one for the past five years, it appears that it is losing ground to Mundra because of the aggressive expansion and the risk-taking ability of the Adani group, said the official on condition of anonymity.
The Centre had set a target of 97 million tonnes per annum (mtpa) of cargo for Kandla port to handle this year while Mundra is likely to cross 100 mtpa mark, the official said.
Pipavav port in Gujarat in 1998 became the first private port in India to start operations, three years before Mundra. The two ports were part of the Gujarat government’s build, own, operate and transfer (BOOT) policy framed in 1995.
Most of Adani’s expansion and growth has come through in the past decade. The company invested about Rs.12,000 crore in this period for port development.
Mundra port’s cargo-handling capacity has been growing at 25% for the last five years on a year-on-year basis. Last year, Mundra became the country’s second-largest port by handling 82 mt, up from 64 mt in the previous year. In comparison, Kandla handled 93.6 mt of cargo, up from 82.5 mt.
Besides Kandla, which began operations in 1957, there are 12 other federal ports in the country, including the newly developed Port Blair in Andaman and Nicobar islands.
“While private ports have come into existence recently, major ports have been around for very long,” said Sajith Sreedharan, deputy managing director at BMT Consultants India that offers advisory services in the port and maritime sector. “Chennai port is 100 years old. There are a lot of bureaucratic hurdles for their expansion. Mundra’s success over Kandla shows the efficiency of a private port as compared to a government-run one.”
The turnaround time—a key yardstick of efficiency—is about two to three days at Kandla; it is less than one day at Mundra due to mechanization.
However, Kandla has one of the lowest tariffs in the world, which makes up for the time and money lost in berthing and unloading cargo, said the same Kandla Port Trust official quoted earlier.
Source:-www.livemint.com
Chemical Exports To Africa On The Rise
Africa is presenting a busy market for India's chemical exports as figures for Nigeria alone indicate considerable growth. Exports of chemical items from India to Nigeria alone have increased to about 5.6 percent from 2012 to 2013, according to the Chemical Export Promotion Council of India (ChemExcil).
In addition, total volume of exports to Nigeria this year amounted to $90.3 million as against $85.5 million last year, ChemExcil executive director Suhas Bhardi said at an exhibition that opened here with over 80 companies in attendance.
"The purpose of this Exhibition is to strengthen/expand existing business, promote india's chemical exports and to create a positive brand image of Indian products. This would also result in many more joint ventures and technology transfer," Bhardi said.
The Indian Chemical and Cosmetics Exhibition has been organised by ChemExcil in collaboration with the Pesticides Manufacturers and Formulators Association of India (PMFAI) and the Indian High Commission in Lagos.
The sector, which consists mainly of petrochemicals, accounts for over 70 percent of the total chemical market in Nigeria. "I am happy to note that the upstream petrochemical sector is well established as Nigeria is the highest oil-producer in Africa," Bhardi said.
PMFAI president Pradip Dave said the African region offered most potential for improvement in the productivity of crops and the African governments have therefore given priority to development of agriculture in the region.
Dave said that there was a good market for agrochemicals in Nigeria, adding that "it is estimated that the private sector agrochemical companies supply about 70 percent of the total CPP demand of approximately $120 million."
"Most of the African countries are now concentrating on development of irrigation projects and, with a modern irrigation system, by optimising and conserving water resources and also introducing drought resistance varieties. The drought resistance and high yielding varieties will definitely boost the agricultural production in the African region which will also help in boosting agricultural exports from Africa," he said.
ChemExcil's studies have shown that Nigerian companies consume in excess of $3.58 billion worth of chemicals per annum but produce just $380 million, an indication that the country is a potential market for the export of chemicals.
"The base chemical sectors, which consists mainly of petrochemicals, accounts for over 70 per cent of the total chemicals market in Nigeria. The upstream petrochemicals sector is well established as Nigeria is the highest oil producer in Africa," the council said on its website.
"Limited development of the downstream sector constrains growth of not only the base chemicals sector but also the total chemicals industry in Nigeria. In the speciality chemicals sector local manufacturing is focussed on paints, coatings and adhesives, using imported raw materials," it added.
For the remaining speciality chemical products, such as preservatives, water treatment and wood and textile treatment chemicals, local manufacture is limited. "The high operating costs as well as a lack of access to raw materials restrains the development of further manufacturing for a wider range of speciality chemicals," it said.
ChemExcil said, "Most regional and global speciality chemicals manufacturers supply raw materials and inputs to the local manufactures through distributors and also use the distributors to import fully manufactured speciality chemicals."
It has also identified a major market in essential oils flavours and fragrance/cosmetics/soaps and toiletries industry on the African continent.
"Africa's middle class has tripled in size in the last 30 years and is driving the continent's demand for cosmetics," it said.
"In Nigeria, cosmetics companies are racing for market share. While multinational brands dominate the market in Kenya and Uganda, and lack of capacity for local manufacturing remains an issue, local entrepreneurs are outsourcing manufacture and are using unique sales strategies."
After the Lagos exhibition, the ChemExil would move on to Addis-Ababa, Ethiopia, for a Buyer-Seller Meet and then to Dar es Salaam, Tanzania, July 23.
Source:-www.smetimes.in
How variation in interest rates alters the returns in debt funds
Every time there is a fall in the net asset value (NAV) of debt funds, there is renewed panic. The simple question in the investor's mind is: if there is no default and the fund is receiving its interest income, how and why should the NAV fall? A drop in the NAV of a debt fund can trigger alarm and lead to a precipitous closure for some, as happened in 2008. The market risks in mutual funds are not widely understood, leading to accusations that these should have been avoided somehow.
Investing in a debt fund is quite different from doing so in a bond or fixed deposit. In the case of a fixed deposit, the investor agrees to an unrealistic freeze in rupee return, in exchange for convenience and simplicity. The government no longer determines interest rates in our economy, nor are they dictated by powerful institutions. We have transitioned to a market for interest rates, and this market enables money to be lent and borrowed based on the needs and views of a large number of participants.
In such a market place, there are only prices and clearing. There is no right and wrong. If a borrower is willing to pay 8% for a year, and a lender agrees to it, the exchange of money is cleared at the agreed rate. The borrower needs the money; the lender has the money. The market just brings them together and enables the clearing. Alternatively, the borrower might be in the market today believing that the rates are set to rise and, therefore, wanting to borrow today; the lender might be in the market with a view that rates are set to fall and, therefore, eager to lend. We will never know the motivations, nor will we be able to identify why rates move up or down. At the end of the day, as long as everyone keeps their promise, we have a market where rates are determined efficiently and fairly.
When an investor chooses a bank deposit, he does not select the market. This is the reason he settles for a 4% rate on his savings bank account, while the bank itself would be lending its surplus balance for 8% in the call market. The bank is in the market for overnight funds, lending and borrowing as needed, while the saving bank depositor is standing out, content with a fixed rate. The market does not matter to this simple investor. He may get a lower or a higher rate. He is happy with a fixed rate and unwilling to look beyond.
What happens when such an investor chooses a debt fund? He simply steps into the market place for borrowing and lending. In this market, the rates change dynamically based on demand and supply and the views of various players. What is in the market is what he gets. This investor makes 9% on his liquid fund, when the money market rates are high; he makes 4% on his gilt funds, when the interest rates have risen; he makes 12% on his income fund, when credit spreads fall; and he makes 16% on his short-term fund, when rates correct sharply. Mutual funds are subject to market risk.
A debt fund also pools in money and creates a portfolio much like an equity fund, except that it buys debt securities issued by governments, banks and companies. If a five-year bond is issued at an interest of 10%, and the fund buys it, it earns this interest just like any other investor. However, since a debt fund is an open-ended product in which investors can come and go as they please, it accounts for the interest income on a daily basis. Therefore, the NAV of all debt funds will hold a component that represents this steady accrual income.
Misras have built a strong asset base, will achieve goals with ease
By Sakina Babwani, ET Bureau | 22 Jul, 2013, 08.00AM IST
Not all skewed portfolios need an immediate overhaul. When NitinMisra, a 40-year-old architect, contacted us for help, the financial planner did not alter the portfolio drastically even though it overtly favoured real estate. This is because Nitin has been a prudent planner, investing carefully to achieve his financial goals. While most advisers would be alarmed at a lopsided portfolio, SumeetVaid of Ffreedom Financial Planners did not recommend major changes as each of his investments is aligned to a goal. Besides, Nitin has built an extremely strong net worth of Rs 2.25 crore. With zero liabilities and a high income, the Misras have little to worry. Nitin lives in Delhi with his wife, Swati, 33, and six-year-old daughter, Nysa. A year after Nitin approached us, his finances are being reviewed by Vaid to check if the family is headed in the right direction.
Our suggestions
The original plan
On considering the Misras' finances, it was clear that they would have a smooth sailing, given his asset base, a high income of Rs 97,000 a month, and a saving rate of a little more than 50%. Nitin was, however, advised to start a few fresh SIPs to achieve his goals. "My investment in real estate will work in my favour as it will help me build a good corpus to meet my post-retirement expenses," says Nitin. A year ago, his portfolio had 88% invested in real estate, 8% in equity and 4% in gold.
The Misras' goals were relatively simple, including a corpus of Rs 22 lakh for Nysa's education in 12 years, and Rs 44 lakh for her marriage in 22 years. For their own retirement, they would need Rs 4 crore in 16 years.
Our suggestions
Nitin did not require life insurance as he had a strong net worth that would take care of his family's needs in case of an emergency. Nitin's family would need Rs 1.5 crore to meet their future expenses and his current net worth is Rs 2.25 crore, of which Rs 1.9 crore will be readily available to the family. This does not include their primary residence. However, Nitin was advised to buy individual health plans of Rs 3 lakh for himself and his family as he had been relying only on a family floater plan of Rs 3 lakh, which would not have been sufficient.
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