Retail vendors aren't buyers under sec. 206C; no TCS to be collected from them

IT: Where a distillery had sold country liquor to various retail vendors at price fixed by Excise Commissioner and while raising invoices it had collected from retail vendors tax purporting to be under section 206C, in view of Explanation (a)(iii) of section 206C retail vendors could not be termed as 'buyer' and hence distillery was restrained from collecting tax under section 206C from retail vendors

IMCOME TAX APPELLATE TRIBUNAL :AHMEDABAD BENCHES :AHMEDABAD CONSTITUTION FROM 12.08.2013 TO 14.08.2013

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IMCOME TAX APPELLATE TRIBUNAL :MUMBAI BENCHES :MUMBAI CONSTITUTION FROM 05.08.2013 TO 08.08.2013

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Sec. 80G approval once granted would continue perpetually unless specifically withdrawn

IT: Where assessee-trust had valid approval under section 80G(5) on 1-10-2010, such approval shall continue in perpetuity as per Circular No. 5 dated 3-6-2010

In high stake matters HC can condone delay in filing of appeal by department provided it imposes a c

ST : Delay in filing appeal before High Court by Department must be condoned by imposing costs, particularly when huge stakes are involved

DDT to be refunded if dividend paying and receiving Cos. merged into one before declaration of divid

IT: Where there was amalgamation of dividend paying and dividend receiving companies prior to declaration of dividend, such payment would cease to retain character of dividend since no dividend could be paid by company to its ownself

Trader held for evading service tax

A city entrepreneur was arrested on Friday for defaulting on Rs 70 lakh service tax. This is the first crackdown on indirect tax defaulters in the city. Sudip Das (48), owner of a courier agency, thus earned the dubious distinction of becoming the first person to be arrested from the eastern region for failing to deposit service tax. Service tax officials, under the department of revenue, Ministry of Finance, picked him up from his Salt Lake residence. He was later produced at Barasat court. This is for the first time that service tax rules have been amended to attract the Criminal Procedure Code (CrPC) in line with customs and central excise. Section 91, which was incorporated in this year's Finance Bill, provides power to arrest a person for non-payment of collected service tax, by an officer not below the rank of superintendent of central excise. With the Finance Bill 2013 allowing arrest and imprisonment of service tax defaulters, officials of service tax in Kolkata had started probing the misappropriation complaints levelled against Das last month. Over the years, Das, who runs his proprietorship firm from 41 Abdul Halim Lane in south Kolkata, had collected around Rs 70 lakh from his clients. "After preliminary probe, we found that he has committed a cognisable offence under Section 91 of the Finance Act. It's a non-bailable section and Das could be imprisoned for seven years," said K K Jaiswal, commissioner, service taxes. "Let this be a warning for all those assessees evading service taxes. The department will take stern action against them. This was our first arrest from the eastern region after the Finance Bill, 2013 was passed this year," said Jaiswal. As per the Section 91, a director and manager of a firm that fails to pay collected service tax can be arrested with imprisonment of up to seven years in addition to a penalty extending up to Rs 1 lakh.

Assessee's mistake in choice of comparables doesn't empower revenue to select functionally distinct

IT/ILT: Merely because assessee made a mistake in selection of comparables or in selection of best suitable method for determining ALP, it did not empower revenue authorities to apply data of other cases to transactions of assessee without finding that they were functionally comparable with assessee or not

July Silver Imports Highest In 5 Years

02-Aug-2013

AHMEDABAD: Silver imports recorded a staggering 258.65% growth at 857 metric tonnes (MT) in the first four months (April-July) of 2013-14 as compared to 239 MT by July 2012.



The imports of 274.922 MT in July are the highest in last five years in the first four months of a financial year. In fact, silver imports in July 2013 are the second highest in any month in the last five years.



On the other hand, gold has seen a steep decline in imports in June (only 8.908 MT) compared to 37.618 MT in May, the second lowest in last five years. Overall, in the first four months, gold imports have grown by 104.27% at 78 MT.



Experts say traders are importing more silver because of trade restrictions on gold by the Government of India since June 3. The decrease in silver prices over the last three months is also driving imports. "Due to restrictions on gold, these figures were expected and traders are waiting for gold prices to fall further before they start buying," said Kishore Javeri of Javeri and Company.



Some traders also believe that the decrease in imports is also because of the depreciating rupee. "The rupee is touching 60 and there is also market pressure to maintain the balance in imports of gold, hence the decline in gold imports," said Monal Thakkar, president of Amrapali Industries.



"Silver, unlike gold, is very erratically imported. There have been periods when silver imports have been zero. Gold imports have been consistent until last month," said Samir Mankad, director of Gujarat State Cargo Exports Ltd . He added, "Silver imports are also high due to physical inventory available to store silver."



Aram Shishmanian, CEO of World Gold Council said, "It is well known that there is a deep belief in gold and its long-term prospects in India and China. Since the sudden drop in gold prices in mid-April, which was driven by the US investment markets, this belief has been reinforced."

Source : timesofindia.indiatimes.com

Govt May Hike Duty On Electronic Goods To Ease Cad Woes

The government is keen to narrow the CAD via import compression and is preparing a report to identify areas where duties can be hiked. Though hiking duties on categories such as medicines, organic chemicals, cotton yarn and intermediate goods is not possible, the finance ministry is identifying areas of final consumption. CNBC-TV18's Aakanssha Sethi reports.



A large chunk of the imports — about 31.2 billion for 2012-2013 — is electronic goods. Here, the finance ministry is targeting about 13-14 billion where import duties can be hiked and demand can be restricted.



Now, there are certain products that are under the I-T agreement of 1991 and these cannot be touched. So only those products, which were not in existence in 1991, will see a hike in import duties.



Also Read: FinMin draws up plan to shore up forex to insulate economy Apart from this, the other challenge is Free Trade Agreements (FTAs) with the various countries. Sources say that most of these FTAs have clauses to say that a certain amount of value addition has to take place in the country and countries, which are just being used as a route for cheap imports. There you are likely to see a hike in import duties.



The other big item is machinery, also at about 32 billion, but on that nothing much will be done because power equipment will see a hike in import duties about one and half years from now.



Auto is another big component at about 14 billion. But sources say since the auto sector is already seeing a slowdown, they would not like to target it.



Palm oil is other product, which is being talked about. Sources in the finance ministry say that 40 percent of the vegetable oil consumption in India is palm oil, again something they would not like to target.



That leaves you with iron and steel, again at 15 billion, where the finance ministry could consider a hike in import duties.

01-Aug-2013

Source:-www.moneycontrol.com

Rupee Plunges To Record Closing Low Of 61.10 Despite Rbi Steps

Mumbai: The rupee fell a massive 67 paise to all-time closing low of 61.10 against the dollar despite slew of steps taken by the government and the central bank in the past few weeks to support the battered currency.



There was heavy dollar demand from importers, mainly oil refiners, and some banks on behalf of their clients as hopes of a strengthening dollar overseas weighed on sentiment, a forex dealer said. Better than expected US GDP growth has boosted the US dollar.



At the Interbank Foreign Exchange Market, the rupee resumed lower at 60.61 a dollar from the previous close of 60.43 and touched a high of 60.58.



As local stocks declined, the rupee continued its downward march and touched a low of 61.17 before closing at an all-time low of 61.10, a fall of 67 paise or 1.11 percent. The previous record low closing was 60.72 on June 26. However, the rupee touched all-time intra-day low of 61.21 on July 8.



"The moves by the government to curb rupee volatility and tame the exchange rate have partly worked," said Ashtosh Raina, head of forex trading at HDFC Bank. "As long as there is no matching demand for the rupee, the dollar will always weigh heavy. That is what we have seen. The current account deficit (CAD) is still a major issue."



In another attempt to support the rupee, the Reserve Bank yesterday made it mandatory for foreign institutional investors to obtain the consent of holders of participatory notes and derivative instruments before hedging. Earlier, the central bank tightened liquidity for banks and took steps to curb speculative activity in forex markets, among others.



The S&P BSE Sensex Friday fell for the eighth day, dropping 153 points, or 0.79 percent, reversing early gains that came on the back of liberalised FDI norms. FIIs bought shares worth a net USD 46.28 million yesterday. The dollex index, consisting of six global rivals, was up 0.09 percent.



"Friday also, RBI intervention was suspected in the forex markets to support rupee," said Pramit Brahmbhatt, CEO of Alpari Financial Services. "Trading range for spot USD/INR pair is expected to be within 60.80-61.50."



"The rupee's weakness was mainly attributed to the upbeat data from the US, which sent the US dollar index to its one-week high," said Abhishek Goenka, Founder and CEO of India Forex Advisors. "Although the central bank took some measures to stem the fall in rupee, it could not provide a long lasting relief to the currency."



RBI Governor D Subbarao Friday reiterated that liquidity tightening measures will be rolled back only after stability is restored in the forex market as volatility hurts growth.



"While steps initiated by the government, Sebi and RBI have been able to help rupee not breach 62-levels, one must bear in mind all these steps will need be given some more time to see their full effect," said Dhanlaxmi Bank Executive Vice-President (Treasury) Srinivasa Raghavan.



Forward dollar premiums recovered on fresh payments by banks and corporates.



The benchmark six-month forward dollar premium payable in January rose to 259-264 paise from the previous close of 251-255 paise. Far-forward contracts maturing in July firmed up to 470-475 paise from 458-460 paise.



The RBI fixed the reference rate for the dollar at 60.8035 and for the euro at 80.3655.



The rupee remained weak against the pound sterling to end at 92.57 from the previous close of 92.07 and fell back to 80.70 against the euro from 79.99. It edged up against the Japanese yen to 61.22 per 100 yen from 61.25.

Source:-zeenews.india.com

Apparel Exporters Demand Separate Interest Rates For Garment Exports

2 Aug, 2013

KOLKATA: The apparel exporters have demanded a separate interest rates for garment exports. In a letter written to the finance minister Mr P. Chidambaram, Dr A Sakthivel, chairman AEPC (Apparel Export Promotion Council) has demanded that garment exports should be given a separate chapter for interest rates in export sector.



In his letter AEPC chairman wrote, "Reserve Bank of India has announced the credit policy. However, the garment export industry was expecting lowering of the interest rate, which has not been announced. The pre and post shipment credit rates are hovering around 10% which is very high when compared to interest rates available to our competitors."



"It was your initiative through which you had given a separate chapter for interest rates in the export sector. The industry appeals to you for reintroduction of the separate rates of fixed 7.5 % for the labour intensive sectors of clothing and textiles," the letter further said.



Dr Sakthivel further said, the industry is looking for this help as a stable and long term solution to uncertain high lending interest rates.On increasing the interest subvention from 2% to 3%, Dr Sakthivel, thanked Union Finance Minister.



He said "The garment exporting communitytakes this opportunity to thank you for enhancing the interest subvention from 2% to 3 % in readymade garment sector. This initiative is a great help to our labour intensive sector employing over 11 million workers and industry earning over Rs 75000 Crores."

Source:-economictimes.indiatimes.com

Protective order of HC directing SEBI to initiate action against petitioner for Satyam scam gets SC

SEBI : A protective order of High Court directing SEBI to commence proceedings against petitioner for alleged offences committed in 'Satyam Scam' was not to be interfered with

Repair of an infrastructure is a mere 'work contract' not eligible for sec. 80-IA relief

IT : Contract to effect repairs to infrastructure by construction of protection wall on canals would be mere works contract not eligible for deduction under section 80-IA

Co-operative hosing society assessable as mutual concern if no commerciality involved in its service

IT: Co-operative housing society is assessable as mutual concern only where no commerciality is involved and from money's received, services offered to members are in nature of privileges and advantage

'Custody and Settlement' fees paid to NSDL are professional fees and subject to TDS under sec. 194J

IT: Charges paid to depositories, i.e., NSDL/CDSL by share transfer agent fall under professional managerial services and, therefore, tax is deductible at source on such payment

CLB can dispense with requirements of sec. 169 if it exercises power to allow majority to convence E

CL : CLB can dispense with requirements of section 169 if it exercises power to allow majority to convence EGM

Notification No 32 (RE-2013) / 2009-2014 dated 02-08-2013

Government of India

Ministry of Commerce & Industry

Department of Commerce

Udyog Bhawan

Notification No. 32 (RE-2013)/2009-14

New Delhi, Dated 2^nd August, 2013

Subject:- Permission to The Cotton Corporation of India Ltd. for export of cotton (Tariff Codes 5201 and 5203) during the cotton season 2012-13.

S.O. (E) In exercise of the powers conferred by Section 5 of the Foreign Trade (Development & Regulation) Act, 1992 (No.22 of 1992) read with Para 2.1 of the Foreign Trade Policy, 2009-14, the Central Government has decided to allow export of cotton by The Cotton Corporation of India Ltd., a Public Sector Undertaking under Ministry of Textiles, during the current cotton season 2012-13 under Tariff Item HS code 5201 & 5203 [ Sl. Nos. 197 & 199 of ITC(HS) Classification of Export & Import Items].

2. The conditions stipulated for issue of RC as mentioned in para 2(ii) of Notification No 26 dated 30^th November, 2012 and condition at para 2 (ii) of Notification No 17 dated 1^st October, 2012 will not apply to grant of RC for export of cotton by Cotton Corporation of India. The stipulation regarding Procedure for Reporting in Notification No. 63 dated 04.08.2011 will continue to apply.


3. Effect of this notification:
   

   Certain conditions regarding export of cotton have been relaxed for The Cotton Corporation of India Ltd., a Public Sector Undertaking under Ministry of Textiles, during the current cotton season 2012-13.

   
   

(Anup K. Pujari)

Director General of Foreign Trade

e-mail: dgft[at]nic[dot]in

(Issued from F.No.01/91/180/1194/AM10/Export Cell)

Extension of Dates of Tender No. HW/NW/DIT(S)-IV/TAXNET/2013 published on 4th March, 2013, for selection of a New Managed Service Provider for LAN, WAN, FMS and Video Conferencing of Income-tax Department.

Pre-qualification criteria for Tender Ref. No.HW/NW/DIT (S)-IV/TAXNET/2013* S.No Criteria Documentary Proof Required 1. The bidder should be either a company "Consortium" shall mean more than one (single legal entity) or a consortium. company which joins with other companies of complementing skills to undertake the scope of work defined in this RFP. In case of consortium applicant, consortia shall submit a valid Memorandum of Valid Memorandum of Understanding Understanding (MOU)/agreement. (MOU)/agreement on Stamp Paper among the members signed by the Authorized Signatories of the companies under consortium dated prior to the submission of the bid to be submitted in original. The MoU/agreement shall clearly specify the details of Prime bidder, stake of each member and outline the roles and responsibilities of each member. 2. The bidder/ Prime bidder and all its Valid Certificate of incorporation issued consortium member should be registered by competent authority in India, (for all under the Indian Companies Act, 1956 members in case of consortium) since last 5 years as on 31.03.2012 Relevant extract from Memorandum and Articles of Associations of bidder or The bidder or the Prime bidder (in case of consortium) should be a Network Service the Prime bidder in case of consortium Provider & should have been in business Annual reports for last 5 years. for a period exceeding five years as on 31.03.2012 in India. 3. The bidder or the Prime bidder (in case Valid Service Tax and VAT Registration of consortium) should have valid Service Certificates issued by competent tax and VAT Registration in India authority in India 4. The bidder or the Prime bidder (in case of consortium) should be a Valid copy of Permit and License issued Telecommunication Service provider with by competent authority in India valid NLD permit and Class A ISP S.No Criteria Documentary Proof Required licenses. The bidder or the Prime bidder (in case At least one project citation of the of consortium) should have their own bidder/ Prime bidder with a copy of MPLS based VPN network. work order detailing . 5. The bidder or the Prime bidder (in case of Copy of valid certificate, certified by the consortium) should have a valid ISO Company Secretary of the bidder/ Prime 9001:2008 certificate, ISO 27001:2005 bidder and ITSM 20000-1 certificate.** 6. The bidder or the Prime bidder (in case Relevant extracts from the audited of consortium) should have an annual financial statements of the bidder/ turnover (Audited) of more than INR 300 Prime bidder (in case of consortium) Crores from Network related services, in showing turnover details from Network each of the last three financial years as on related services. 31.03.2012. The turnover must be of the bidding entity. Certificate from statutory auditor/Certificate from Company Secretary of Bidder clearly mentioning the turnover. 7. The bidder/ Prime bidder (in case of consortium) should have experience in Maximum 4 citations with the following setting up and operating atleast 1000 documentary proofs: WAN locations in India (excluding VSAT locations) across a minimum of 4 states. Copy of work order; A certificate from (These 1000 locations should not be the client stating that the network has spread in more than 4 projects, which been established and that it has been should have been operational for atleast operational for at-least 6 months ,,OR last 6 months). Work Completion certificate from client; In case project is reasonably completed, At least one of the networks mentioned in Certification Letter from the Client to be the above projects should have been submitted, clearly indicating the extent implemented by bidder/ Prime bidder of completion of project. for Government /PSU/ Bank / Insurance companies in India 8. The bidder/ Prime bidder (in case of consortium) should possess a valid Copy of valid Unified access Service Unified Access Service License, issued by Provider License from the competent Competent Authority in India.*** authority in India. S.No Criteria Documentary Proof Required 9. The bidder/ Prime bidder or its proposed Maximum 4 citations with the following consortium member /subcontractor) documentary proofs: should have experience in providing LAN & Facility management services for Copy of work order; A certificate from atleast 1000 buildings in India across a the client stating that the network has minimum of 4 states. (These 1000 been established and that it has been buildings should not be spread in more operational for at-least 6 months ,,OR than 4 projects, which should have been Work Completion certificate from client; operational for atleast last 6 months). In case project is reasonably completed, Facility Management would include Letter from the Client to be submitted, desktop management, helpdesk, asset clearly indicating the extent of management etc.). **** completion of project. 10. The bidder or the Prime bidder (in case Certificate issued by Head of HR of the of consortium) must have on its payroll, bidder/ Prime bidder, certifying the at the time of bid submission, at least 100 number of Certified Network Engineers Certified Network Engineers.*** on its payroll. 11. The bidder/ prime bidder and any of its consortium member(s) should not be Declaration by the authorized signatory blacklisted by Central Government as per format given in annexure Department or any Central Public Sector Unit 12. Earnest Money Deposit in the form of a Earnest Money Deposit (EMD) should be Bank Guarantee issued by any submitted as mentioned in the RFP. Nationalized bank 13. The bidder or Prime bidder (in case of consortium) should submit letter from the Network equipment Original Equipment Manufacturers (OEM) for all active components confirming following: - Authorization for Prime bidder - Written declaration from OEM that the products quoted for this project are not Manufacturers authorization form by the announced as end of life or end of sale OEM as per format given in annexure - Written declaration from OEM that the support including spares, patches for the quoted products shall be available in India for next 8 years from the date of bid S.No Criteria Documentary Proof Required submission 14. The bidder or the Prime bidder (in case of consortium) should have an all India Undertaking by the authorized signatory presence. of as per format given in annexure 15. The bidder or the Prime bidder (in case of consortium) should have purchased the RFP, and the copy of purchase receipt Copy of receipt for purchase of RFP. should be submitted. The RFP document is non-transferrable document. *Amended as per Corrigendum dated 10th May, 2013 of Request for Proposal for Selection of Managed Service Provider for WAN, LAN, FMS and Video Conferencing . **Amended as per point 8 of aforementioned Corrigendum ***Amended as per point 9 of aforementioned Corrigendum ****Amended as per point 10 of aforementioned Corrigendum The relevant extracts of the aforementioned Corrigendum is given below: S. RFP Page Revised / Additional Text No. Volume No. 8 Volume 42 Item no 5 of clause no. 5.3 has been replaced with II "The bidder or Prime bidder (in case of consortium) should have valid ISO 9001:2008 certificate and ISO 27001:2005 certificate." 9 Volume 43 Following points of clause 5.3 have been deleted: II Point no. 8: The bidder/ Prime bidder (in case of consortium) should possess a valid Unified Access Service License, issued by Competent Authority in India. Point no 10: The bidder or the Prime bidder (in case of consortium) must have on its payroll, at the time of bid submission, at least 100 Certified Network Engineers. 10 Volume 43 Item no 9 of Clause no. 5.3 has been replaced with II 9a) The bidder/ Prime bidder or its proposed consortium S. RFP Page Revised / Additional Text No. Volume No. member should have experience in providing LAN for at least 1000 buildings in India. (These 1000 buildings should not be spread in more than 6 projects, which should have been operational for at least last 6 months). 9b) The bidder/ Prime bidder or its proposed consortium member should have experience in providing Facility management services for at least 1000 buildings in India (These 1000 buildings should not be spread in more than 6 projects, which should have been operational for at least last 6 months). Facility Management would include desktop management, helpdesk, asset management etc. as detailed in clause 8.5.2.1, RFP Vol I. -END OF DOCUMENT-

WEST BENGAL STATE ELECTRICITY DISTRIBUTION COM. LT Vs. CENTRAL ELECTRICITY REGULATORY COMMISSION AND ORS.

* IN THE HIGH COURT OF DELHI AT NEW DELHI Pronounced on: 30.07.2013 CM Nos.11667/2012, 572/2013 in WP(C) No.4867/2012 GRIDCO LTD ..... Petitioner Through : Mr. Soli J. Sorabjee, Senior Advocate with Mr.R.K.Mehta, Mr. Antaryami Upadhyaya and Mr. Premjit Elangbam, Advocates. versus STATE OF ORISSA AND ORS ..... Respondents Through : Mr. G.E.Vahanvati, Attorney General Mr. S.B.Upadhyay, Senior Advocate with Mr. Pawan Upadhyay, Ms. Sharmila Upadhyay, Mr. Anupam Prasad & Ms. Tara Narula, Advs. CM No.12129/2012 WP(C) No.5396/2012 WEST BENGAL STATE ELECTRICITY DISTRIBUTION COM. LTD AND ANR. ..... Petitioners Through : Mr. Upamanyu Hazarika, Sr. Adv. with Mr. Sakya Sinha Chaudhari and Ms. Prerna Priyadarshini, Advs. versus CENTRAL ELECTRICITY REGULATORY COMMISSION AND ORS. ..... Respondents Through : Mr. G.E.Vahanvati, Attorney General, Mr. S.B.Upadhyay, Senior Advocate with Mr. Pawan Upadhyay, Ms. Sharmila Upadhyay, Mr. Anupam Prasad & Ms. Tara Narula, Advs. CM 11667/12, 572/13 in WP(C) 4867/12, 12129/12 in WP(C) 5396/12, 11666/12, 2999/12 in WP(C) 5397/12 Page 1 CM No.11666/2012 in WP(C) No.5397/2012 THE BIHAR STATE ELECTRICITY BOARD ..... Petitioner Through : Mr. M.K.Singh, Advocate versus THE UNION OF INDIA AND ORS ..... Respondent Through : Mr. G.E.Vahanvati, Attorney General, Mr. S.B.Upadhyay, Senior Advocate with Mr. Pawan Upadhyay, Ms. Sharmila Upadhyay, Mr. Anupam Prasad & Ms. Tara Narula, Advs. CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE NAJMI WAZIRI % MR. JUSTICE S. RAVINDRA BHAT 1. For detailed order please see CM No.16060/2011 in WP(C) No.7017/2011 titled Maharashtra State Electricity Distribution Co Ltd. Vs. Central Electricity Regulatory Commission and Anr. S. RAVINDRA BHAT (JUDGE) NAJMI WAZIRI (JUDGE) JULY 30, 2013 CM 11667/12, 572/13 in WP(C) 4867/12, 12129/12 in WP(C) 5396/12, 11666/12, 2999/12 in WP(C) 5397/12 Page 2

MAHARASHTRA STATE ELECTRICITY DISTRIBUTION CO. LTD Vs. CENTRAL ELECTRICITY REGULATORY COMMISSION AND ANR.

* IN THE HIGH COURT OF DELHI AT NEW DELHI Pronounced on: 30.07.2013 + CM No.16060/2011 in W.P.(C) 7017/2011 MAHARASHTRA STATE ELECTRICITY DISTRIBUTION CO. LTD. ..... Petitioner Through : Mr. Ravi Prakash and Mr. Varun Pathak, Advocates. versus CENTRAL ELECTRICITY REGULATORY COMMISSION AND ANR. ..... Respondents Through : Mr. G.E.Vahanvati, Attorney General, Mr. S.B.Upadhyay, Senior Advocate with Mr. Pawan Upadhyay, Ms. Sharmila Upadhyay, Mr. Anupam Prasad & Ms. Tara Narula, Advocates. Mr. M.Y.Deshmukh and Mr. Yatin M.Jagat, Adv. for R-3. CM Nos.11667/2012, 572/2013 in WP(C) No.4867/2012 GRIDCO LTD ..... Petitioner Through : Mr. Soli J. Sorabjee, Senior Advocate with Mr.R.K.Mehta, Mr. Antaryami Upadhyaya and Mr. Premjit Elangbam, Advocates. versus STATE OF ORISSA AND ORS ..... Respondents Through : Mr. G.E.Vahanvati, Attorney General Mr. S.B.Upadhyay, Senior Advocate with Mr. Pawan Upadhyay, Ms. Sharmila Upadhyay, Mr. Anupam Prasad & Ms. Tara Narula, Advs. CM No.12129/2012 WP(C) No.5396/2012 WEST BENGAL STATE ELECTRICITY DISTRIBUTION COM. LTD AND ANR. ..... Petitioners CM 16060/11, in WP(C) 7017/11, CM 11667/12, 572/13 in WP(C) 4867/12, 12129/12 in WP(C) 5396/12, 11666/12, 2999/12 in WP(C) 5397/12 Page 1 Through : Mr. Upamanyu Hazarika, Sr. Adv. with Mr. Sakya Sinha Chaudhari and Ms. Prerna Priyadarshini, Advs. versus CENTRAL ELECTRICITY REGULATORY COMMISSION AND ORS. ..... Respondents Through : Mr. G.E.Vahanvati, Attorney General, Mr. S.B.Upadhyay, Senior Advocate with Mr. Pawan Upadhyay, Ms. Sharmila Upadhyay, Mr. Anupam Prasad & Ms. Tara Narula, Advs. CM No.11666/2012 in WP(C) No.5397/2012 THE BIHAR STATE ELECTRICITY BOARD ..... Petitioner Through : Mr. M.K.Singh, Advocate versus THE UNION OF INDIA AND ORS ..... Respondent Through : Mr. G.E.Vahanvati, Attorney General, Mr. S.B.Upadhyay, Senior Advocate with Mr. Pawan Upadhyay, Ms. Sharmila Upadhyay, Mr. Anupam Prasad & Ms. Tara Narula, Advs. CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE NAJMI WAZIRI % MR. JUSTICE S. RAVINDRA BHAT 1. The common grievance of all the writ petitioners in these batch of proceedings under Article 226 of the Constitution of India relates to the framing, enforcement and interpretation of the Central Electricity Regulatory Commission (Sharing of Interstate Transmission and Losses) Regulations, 2010 (hereafter called "the impugned regulations"). This order proposes to dispose of one set of applications seeking interim orders (CM Nos. 16060/2011 in WP(C) No.7017/2011, 572/2013 in WP(C) No. 4867/2012, 12129/2012 in WP(C) No.5396/2012 and 2999/2012 in WP(C) No.5397/2012. These have been CM 16060/11, in WP(C) 7017/11, CM 11667/12, 572/13 in WP(C) 4867/12, 12129/12 in WP(C) 5396/12, 11666/12, 2999/12 in WP(C) 5397/12 Page 2 preferred by the Petitioners. The order also disposes off two other applications (CM Nos.11666/2012 and 11667/2012 preferred by the Power Grid Corporation of India seeking appropriate directions. These applications were heard with consent of counsel for the parties, on 23rd July, 2013 and listed for orders for today, i.e. 30th July, 2013. 2. The petitioners are transmission utilities or corporations, in terms of Section 38 of the Electricity Act, 2003. The petitioners submit that in the "Postage Stamp Method", in vogue prior to enforcement of the impugned order GRIDCO and others were paying amounts towards transmission charges to the Power Grid Corporation. This method incorporated all the assets of the concerned region whose transmission charges were finalized by the Central Electricity Regulatory Commission, till 30.06.11. Under the said old method (Postage Stamp Method) only Rs.11 crore, approximately was payable, for instance by the GRIDCO. However, now GRIDCO is being billed for an amount of Rs.15.69 crore towards the transmission charges which has increased by 43 % which entails a heavy financial burden upon it (GRIDCO). If the Transmission charges are billed 100% on the basis of Point of Connection (PoC) Methodology such charges will go up to the extent of Rs.20.26 Crores per month which would translate to an increase by 88%. 3. Mr. Sorabjee, learned senior counsel appearing on behalf of the GRIDCO relies upon the orders of the Orissa High Court, dated 04-11-2011 and 08-11- 2011, to submit that there is a subsisting interim order which in effect directs the respondents not to recover amounts based on the impugned regulations. He also submits that the impugned regulations are ex-facie arbitrary and discriminatory. Counsel relied on the following averments in the reply to the Power Grid Corporation's application for directions: "10. That the methodology whose objective was to make Transmission Tariff sensitive to Distance, Direction & Quantum of flow has been ultimately defeated and could not be concluded an appropriate CM 16060/11, in WP(C) 7017/11, CM 11667/12, 572/13 in WP(C) 4867/12, 12129/12 in WP(C) 5396/12, 11666/12, 2999/12 in WP(C) 5397/12 Page 3 methodology. In the present PoC regime (as per recent CERC Order DPi 30.11.12) purchase of power from Taicher-IT by Odisha which is at periphery of TSTPS is 24.38Pf Unit whereas purchase of Taicher 11 power by Andhra Pradesh (at a distance of 1000 Kms) and Karnataka (1500 Kms) is 20.70 P/unit and 18.70 P/unit respectively. Hence Odisha is paying more as the far off region for the generator situated in Odisha. A Map sharing the Pictorial presentation of the location of injection point and drawal point of Odisha, Andhra Pradesh and Karnataka is filed herewith as Annexure l3." 4. It was contended that while framing the impugned Regulations, it was assumed that States like Odisha Housing Generating Stations located near the Load Centers, will have to pay lesser Transmission Charge as the Network utilized by the load for drawing its power from the Generators shall be less. The above presumption was further substantiated by Para 3.1.6 of CERC Statement of Reasons dated 11.06.10. That document stipulates as follows: " . . These days ER imports power from WR under most grid conditions, therefore any generation in Orissa will most likely get absorbed in Orissa itself, thereby using very less transmission network (and hence lower transmission charges). This will further lead to reduction in the utilization of the transmission network (reduced flow on the ER4VR links) and invite lower transmission charges for the generator.........." 5. Relying on the averments in the application for stay, and the materials on record, including the copy of a map produced for the purpose of this petition, it was argued that the PoC regime through which the impugned regulations have been brought into force in fact undermines its objective. There is utter arbitrariness in regard to the levy of charges. In several places or regions, which are located within short geographical proximity of the electricity generating assets, under the pre-existing regime, the rates payable were reasonable, and had a nexus with the distance. However, under the new regime through the CM 16060/11, in WP(C) 7017/11, CM 11667/12, 572/13 in WP(C) 4867/12, 12129/12 in WP(C) 5396/12, 11666/12, 2999/12 in WP(C) 5397/12 Page 4 impugned regulations, in the Eastern Region like Odisha and West Bengal, etc the companies had to pay more, even though the transmission or generating assets were located geographically close to the units; on the other hand, units located far away in Karnataka and Andhra Pradesh had to pay less than the petitioner. This was iniquitous and arbitrary. 6. The petitioners also rely on Para 7 (q) of the impugned regulations, which is as follows: "...For the first two years, the zonal charges obtained using the Point of connection method shall be adjusted such that 50% of the Yearly Transmission Charge of the ISTS Licensees is recovered through Hybrid methodology and the balance 50% of the Yearly Transmission Charge of the ISTS Licensees is recovered based on Uniform Charge Sharing Mechanism. After a period of two years from the implementation of these arrangements, the Commission may review the weightages accorded to the Hybrid methodology and the Uniform Charge Sharing Mechanism." 7. It is submitted that any system or regime which does not predominantly take into account actual usage charges, and is based primarily on some formula, is bound to be arbitrary, which is the vice of the impugned regulations. The PoC method is based on right of use, or contract and not on actual usage. Other counsel also adopted the submissions of Shri Sorabjee. 8. Mr. Upamanyu Hazrika learned senior counsel for the West Bengal Electricity Board, one of the writ petitioners adopted the submissions of Mr. Sorabjee. He argued that the impugned regime introduced by the impugned regulations cannot be sustained because in spite of the non-participatory nature of some or predominant constituents in a grid system, they would have to bear uniform charges. Thus, for instance, transmission charges from the Northern to the North Eastern Regions would have to be borne by all grid transmission participants, regardless of their involvement or usage through such transactions. 9. The Attorney General, who appeared on behalf of the Power Grid Corporation- i.e. the respondent in all writ petitions, and applicants in the two CM 16060/11, in WP(C) 7017/11, CM 11667/12, 572/13 in WP(C) 4867/12, 12129/12 in WP(C) 5396/12, 11666/12, 2999/12 in WP(C) 5397/12 Page 5 interim applications seeking directions, submitted that the impugned regulations have statutory force; consequently a presumption of Constitutionality attaches to them. That apart, argued counsel, the Petitioners are stressing unduly on the distance factor, in support of the case. In this context, it was contended that the impugned regulations, as indeed the National Transmission Policy framed under the Act, envisions a scientific and rational method of apportioning expenses borne by transmission companies and entities. It was argued that while the previous policy did take into account regional requirements, that did not mean that such policy had to be continued. The power of the respondents to revise and put in place a system or tariff policy which was rational to all users, was unquestioned. It was contended that 66 of the 71 users in the country adopted the new regime and have been making payments. The petitioners have, however chosen to challenge the policy, and unjustifiably resisted making payments towards the bills raised upon them by the Power Grid Corporation. 10. The Attorney General referred to a study conducted by the Central Commission which preceded the introduction of the impugned Regulations. It was urged that the National Electricity Policy and the National Tariff policy envisage a transmission pricing sensitive distance, direction and quantum of power flow. This enjoins upon the Central Commission to develop and implement a National Transmission Tariff frame-work to meet the stated objectives envisaged in the National Electricity Policy. The Petitioners' argument that the new methodology is ultra vires the provisions of the Electricity Act, 2003 or the National Electricity Policy or the National Tariff Policy was denied. 11. It was submitted that the intransigence of the petitioners cannot be countenanced and if the directions sought for are not granted, the Power Grid Corporation itself would face serious financial crisis. The Attorney General emphasized that it was only the Orissa High Court which had granted an interim CM 16060/11, in WP(C) 7017/11, CM 11667/12, 572/13 in WP(C) 4867/12, 12129/12 in WP(C) 5396/12, 11666/12, 2999/12 in WP(C) 5397/12 Page 6 order, limited in point of time. When the Supreme Court directed the transfer of all proceedings pending before various High Courts, there was in fact no interim order suspending the petitioners' obligations to make monthly payments. 12. This court notices that the present proceedings were taken up by this Court, further to directions of the Supreme Court dated 7th May, 2012. The Supreme Court had transferred writ petitions from various High Court, involving challenges to the impugned Regulations. They were, thereafter, referred to the Division Bench, on account of the fact that a challenge to the validity of statutory Regulations was involved. 13. The Petitioners' contention that the Orissa High Court's interim order of 4th November 2011 has continued and is subsisting, in the opinion of this Court, is insubstantial and meritless. Facially, that order directed the parties to maintain status quo till the next date of hearing; so did the next order of 8 th November, 2011. Thereafter, transfer proceedings were initiated before the Supreme Court. The record does not disclose that the Supreme Court made any interim order, or that it expressed any view on the feasibility of such interim orders. The record shows that the interim order made by the Orissa High Court had exhausted itself, by 8th November 2011. 14. As far as the merits of the arguments concerning grant of interim order in favour of the writ petitioners are concerned, this Court is of opinion that the writ petitioners' contentions do no warrant the grant of any interim order. Firstly, what is in issue is the validity of statutory regulations. The power to frame and issue those regulations is not questioned; what is sought to be highlighted is that it has an arbitrary effect. Now, the petitioners may undoubtedly be affected by the operation of the impugned regulations; they might be casting a greater financial burden upon them than was being cast on them hitherto. That by itself in the opinion of the court, does not amount to arbitrariness. As far as the complaint that the petitioners, though located nearer the transmission assets, CM 16060/11, in WP(C) 7017/11, CM 11667/12, 572/13 in WP(C) 4867/12, 12129/12 in WP(C) 5396/12, 11666/12, 2999/12 in WP(C) 5397/12 Page 7 have to pay more amounts than those who are located farther away are concerned, the argument overlooks that distance is one of the factors which weighed with the policy makers while framing the regulations. Three factors, i.e. distance, direction and quantum of power flow appear to have been the guiding factors while fixing the transmission tariff costs in the facts of this case. It would be well-nigh impossible for this court, at this stage of the hearing, to characterize all, or any one of these considerations as arbitrary, or even say that the administration of the impugned regulations has led to demonstrable and manifest arbitrariness or discrimination. The court is conscious of its limitation in exercising ad-interim jurisdiction in a matter which has received the attention of experts and was concededly preceded by a process of consultation. To delve deep into the issues, at this stage of the proceeding, without a full understanding or grasp of the complexities of the issues, sans a palpable and manifest arbitrariness on the face of the record (the existence of which alone can justify an ad-interim interdiction by a writ court) would be to assume that the petitioners' submissions are correct- a course clearly impermissible in law. Consequently, this court is of opinion that the applications for ad-interim stay of the impugned regulations have no force; they are consequently dismissed. 15. Dealing next with the applications of the Power Grid Corporation, the claim made is for appropriate directions to the petitioners to pay the charges which they have to bear in terms of the impugned directions. This court is of opinion that with the dismissal of the petitioner's application, there really should be no need for such directions. Nevertheless, to put the matter beyond the pale of controversy, the writ petitioners are hereby directed to abide by the conditions in the impugned regulations, with regard to payments to the Power Grid Corporation. In case any of the petitioners makes a request for payment of arrears of charges, the respondents should consider the same reasonably, and in the light of the applicable rules and regulations, including those pertaining to CM 16060/11, in WP(C) 7017/11, CM 11667/12, 572/13 in WP(C) 4867/12, 12129/12 in WP(C) 5396/12, 11666/12, 2999/12 in WP(C) 5397/12 Page 8 paying such amounts through instalments, subject to prescribed conditions in that regard. 16. In the light of the above discussion, CM Nos.16060/2012, 572/2013, 12129/2012 and 2999/2013 are rejected; CM Nos. 11666/2012 and 11667/2012 are allowed, in the above terms. There shall be no order as to costs. Order Dasti. WP(C) Nos. 7017/2011, 4867/2012, 5396/2012, 5397/2012 List for hearing on 17th September, 2013. The concerned parties shall file synopsis of arguments not exceeding seven pages with appropriate cross references. The parties shall restrict their respective arguments to half an hour each. S. RAVINDRA BHAT (JUDGE) NAJMI WAZIRI (JUDGE) JULY 30, 2013 CM 16060/11, in WP(C) 7017/11, CM 11667/12, 572/13 in WP(C) 4867/12, 12129/12 in WP(C) 5396/12, 11666/12, 2999/12 in WP(C) 5397/12 Page 9

ESTER INDUSTRIES LTD Vs. COMMISSIONER OF INCOME TAX

$~17. * IN THE HIGH COURT OF DELHI AT NEW DELHI + INCOME TAX APPEAL NO. 574/2009 Date of decision: 29th July, 2013 ESTER INDUSTRIES LTD ..... Appellant Through Mr. R. Santhanam, Advocate. versus COMMISSIONER OF INCOME TAX ..... Respondent Through Mr. Sanjeev Sabharwal, Sr. Standing Counsel. CORAM: HON'BLE MR. JUSTICE SANJIV KHANNA HON'BLE MR. JUSTICE SANJEEV SACHDEVA SANJIV KHANNA, J. (ORAL): This appeal by the assessee-M/s Ester Industries Limited impugns order of the Income Tax Appellate Tribunal dated 14th December, 2007, which relates to Assessment Year 1997-98. 2. Learned counsel for the appellant submits that adjustments required for computing book profits under Section 115JA of the Income Tax Act, 1961 (Act, for short) have been wrongly made by the Assessing Officer and benefit of Section 80HHC has not been granted. 3. For the assessment year in question, the assessee had filed return on 28th November, 1997 declaring "nil" taxable income under the normal provisions. The assessee did not compute taxable income ITA No. 574/2009 Page 1 of 5 under MAT provisions, i.e., Section 115JA and a specific note was attached that the said provisions were not applicable. 4. The Assessing Officer passed an order under Section 143(1)(a) of the Act making adjustments and computing 30% of the book profit at Rs.4,07,72,346/-. This was made subject matter of challenge in the appellate proceedings but we need not refer to the orders passed as this aspect is not relevant. 5. In the meanwhile, the Assessing Officer passed a regular assessment order and calculated the tax payable under Section 115JA at Rs.4,07,72,346/-. The Assessing Officer directed levy of interest under Sections 234B and 234C and observed that penalty proceedings under Section 271(1)(c) had already been initiated. 6. The assessee filed first appeal but was not successful before the Commissioner of Income Tax (Appeals). Order passed by the first appellate authority has, however, not been placed on record. The assessee thereupon filed second appeal before the Income Tax Appellate Tribunal raising the following grounds:- "1. In upholding Rs.14,175/- U/s 40A(3) of the Income Tax Act illegally and unjustifiably. 2. In disallowing the appellant's claim for gratuity liability of Rs.22,48,530/-. 3. In confirming a disallowance of 50% of the expenditure as if it is in the nature ITA No. 574/2009 Page 2 of 5 of entertainment when it is not at all falling U/s 37(2) as entertainment expenditure for disallowance. 4. In confirming an illegal demand of Rs.1,75,32,108/- towards Minimum Alternate Tax U/s 115JA ignoring the fact that U/s 115 JAA the deposit of any amount will be considered as available as credit and in the absence of any deposit, the credit would be denied and in the absence of any tax liability being determined in the normal assessment and adjusted within the 5 years period, the entire amount of credit would be swallowed by the Government and non-payment of any amount towards interest-free credit cannot, therefore, be considered as tax payable by the appellant and hence the imposition of Minimum Alternate Tax on the appellant is clearly illegal and unauthorised by law and must be set aside and quashed. 5. In not directing the disallowance U/s 43 43B of Rs.72,17,146/- to be deleted instead of remanding the matter to the Assessing Officer who does not act in a fair and just manner." 7. Subsequently, an application raising two additional grounds was filed but the said application was rejected by the tribunal by the impugned order. Additional grounds raised but were not entertained read:- "1. On the facts and in the circumstances of the case, the entire amount of MAT sought to be levied and collected is required to be given credit mandatorily and the amount of such credit ought to be refunded with interest to the assessee in the event of there being no such ITA No. 574/2009 Page 3 of 5 liability in the next five years in the case of the appellant, the refund of the entire amount collected with interest being granted to the appellant. 2. On the facts and in the circumstances of the case, the authorities below have erred, both on facts and in law, in disregarding the provisions for grant of credit u/s 115 JAA and the consequent non-existence of liability to MAT during the five years following the year 1997-98 and hence, the orders passed by the authorities below and denied refund with interest to the appellant cannot be upheld." 8. It is noticeable from the grounds of appeal raised before the tribunal as well as the additional grounds that the assessee never challenged the computation made under Section 115JA or challenged or questioned the assessment order on the ground that adjustments had not been made, as required and mandated by law. The assessee in the grounds of appeal as well as additional grounds did not challenge the assessment on the said ground. To this extent, he did not raise grievance or protest. Tribunal in the impugned order dated 13 th/14th December, 2007 has dealt with the grounds as originally raised on merits and has dismissed the appeal of the assessee. There is no discussion in the impugned order on the question of adjustments, which should be permitted and allowed under Section 115JA or computation of taxable book profits under Section 115JA. It is apparent and crystal clear that this issue/question was not raised before ITA No. 574/2009 Page 4 of 5 the tribunal as the petitioner, who appears, did not want to raise the said contention and issue. The tribunal in the impugned order has specifically recorded as under:- "The grounds of appeal raised by the assessee does (sic) do not challenge the manner of determination of book profits under Section 115JA of the Act." 9. In view of the aforesaid position, we do not think the assessee can now in the fourth appeal, (maintainable only on the ground of substantial question of law arising out of the order of the tribunal) can be allowed and permitted to raise this contention and set the ball rolling back once again to the Assessing Officer, after lapse of several years. The appeal relates to the Assessment Year 1997-98. Allowing the appellant to now question the computation will be allowing a person to raise stale issue and to question a decision which was accepted. In these circumstances, we do not think the appellant- assessee should be permitted and allowed to raise this ground belatedly at this stage. The issue was not raised before the tribunal, and has not been dealt and decided by them. The appeal is accordingly dismissed. SANJIV KHANNA, J. SANJEEV SACHDEVA, J. JULY 29, 2013 VKR ITA No. 574/2009 Page 5 of 5

CUSTOMS INSTRUCTION dated 31-07-2013

Government of India

Ministry of Finance, Department of Revenue

Central Board of Excise and Customs

Instructions

New Delhi, the 31^st July, 2013

To

All Chief Commissioners of Customs/Customs (Prev.)

All Chief Commissioners of Central Excise/Customs & Central Excise

All Director Generals under CBEC

All Commissioners of Customs/Customs (Prev.)

All Commissioners of Central Excise/Customs & Central Excise

Madam/ Sir,

Subject: Audit Report No. 15/2011-2012, Section 2, Duty Drawback Scheme.

Kind attention is invited to the above subject and the Board’s Circular No.46/2011-Customs as well as letter dated 26.6.2012 (copy enclosed).

2. Upon receipt of further reports from field formations certain issues have been considered further:-
   
   
   
   1. Audit had observed processing of time barred drawback claims under Section 74 of the Customs Act, 1962. It is directed to ensure due diligence is exercised in the application of provisions of Rule 5 of Re-Export of Imported goods (Drawback of Customs duties) Rules, 1995 in dealing with such cases.
      
   
   
   2. Audit also noticed instances where the specifications/ details of the goods exported were somewhat differently described in the export documents and in the brand rate letters issued by Central Excise. For example, export document showed PT-439 (39 h.p.) agricultural tractor and the brand rate letter for the relevant Shipping Bill referred to agricultural tractor Powertrac–439. The different manner of describing the goods creates unnecessary room for doubt. To avoid such situations, it is directed that full and comprehensive details of the exported goods should be indicated clearly in the brand rate letters.
   
   
   
   
   


3. Receipt of the Instructions may be acknowledged.

Encl: As above.

(Ashok Kumar Pandey)

Senior Technical Officer (Drawback)

F. No. 603/01/2011-DBK

Rectification application is beyond jurisdiction of Settlement Commission

IT: An application for rectification under section 154 is impermissible and beyond jurisdiction of Settlement Commission

Proviso to sec. 2(15) applies to residuary clause only which is 'advancement of any other object of

IT : First proviso to section 2(15) as amended by Finance (No. 2) Act, 2009 is applicable in cases of carrying on charitable purpose covered by residuary clause i.e., 'advancement of any other object of public utility' and not to charitable purposes like relief to poor, education, medical relief etc.,

ITO vs. Karnavati Petrochmem Pvt. Ltd (ITAT Ahmedabad)

S. 14A/ Rule 8D: Interest expenditure has to be netted against interest income and only the difference, if any, can be considered for disallowance In AY 2008-09, the assessee invested Rs. 95 lakhs in shares on which it earned Rs. 300 as dividend. The AO applied Rule 8D and made a disallowance of Rs. 15 lakhs. The assessee claimed that no expenditure had been incurred to earn the dividend income on the basis that while the interest expense was Rs. 1.83 crore, the interest income was Rs. 1.86 crore and there was a net surplus interest income of Rs. 3.79 lakh. The CIT(A) held that the AO had not established a nexus between the expenditure incurred and the tax free income and that as the assessee had net positive interest income, there could be no disallowance of the interest expenditure u/s 14A read with Rule 8D. He sustained the disallowance at 0.5% of the average investment. On appeal by the department HELD dismissing the appeal: No nexus has been established by the AO between the expenditure incurred by the assessee and the tax free income earned by him. Further, as the interest income was more than interest expense and the assessee was having net positive interest income, the interest expenditure cannot be considered for disallowance u/s 14A and Rule 8D (Trade Apartment (ITAT Kol) & Morgan Stanley (ITAT Mum) (both included in the file) followed)

RBI/2013-14/169 A.P. (DIR Series) Circular No. 18 dated 01-08-2013

Reserve Bank Of India

A.P. (DIR Series) Circular No. 18

August 1, 2013

To,

All Category - I Authorised Dealer Banks

Madam / Sir,

Risk Management and Inter-bank Dealings

Attention of Authorised Dealers Category – I (AD Category I) banks is invited to AP (DIR) Circular No. 121 dated June 26, 2013 wherein it was clarified that if an FII wishes to hedge the Rupee exposure of one of its sub-account holders, it should be done on the basis of a mandate from the sub-account holder for the purpose and that the AD bank should verify the same along with the eligibility of the contract vis-a-vis the market value of the securities held in the concerned sub-account.

1. In this context, the Reserve Bank has been receiving enquiries as to the applicability of the clarifications issued in the aforesaid circular to Participatory Notes(PN) /Overseas Derivative Instruments(ODI) issued by the FIIs. It is therefore clarified that if an FII wishes to enter into a hedge contract for the exposure relating to that part of the securities held by it against which it has issued any PN/ODI, it must have a mandate from the PN/ODI holder for the purpose. Further, while AD Category bank is expected to verify such mandates, in cases where this is rendered difficult, they may obtain a declaration from the FII regarding the nature/structure of the PN/ODI establishing the need for a hedge operation and that such operations are being undertaken against specific mandates obtained from their clients.


2. AD category banks may bring the content of this circular to the notice of their constituents.


3. 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/2013-14/169

Notification No 31 (RE-2013) / 2009-2014 dated 01-08-2013

GOVERNMENT OF INDIA

MINISTRY OF COMMERCE AND INDUSTRY

DEPARTMENT OF COMMERCE

NOTIFICATION NO. 31 (RE-2013)/ 2009-2014

NEW DELHI, DATED THE 1^st August, 2013

In exercise of powers conferred by Section 5 of the Foreign Trade (Development & Regulation) Act, 1992 (No.22 of 1992) read with paragraph 1.2 of the Foreign Trade Policy, 2009-2014, the Central Government hereby notifies the following amendments in the Foreign Trade Policy (FTP) 2009-2014.

2. After para 4.1.14 of FTP a new para 4.1.15 is inserted.

“4.1.15 Wherever SION permits use of either (a) a generic input or (b) alternative inputs, unless the name of the specific input(s) [which has (have) been used in manufacturing the export product] gets indicated / endorsed in the relevant shipping bill and these inputs, so endorsed, match the description in the relevant bill of entry, the concerned Authorisation will not be redeemed. In other words, the name/description of the input used (or to be used) in the Authorisation must match exactly the name/description endorsed in the shipping bill. At the time of discharge of export obligation (EODC) or at the time of redemption, RA shall allow only those inputs which have been specifically indicated in the shipping bill.”

3. Para 4.2.3 of FTP is being amended by adding the phrase “4.1.14 and 4.1.15” in place of “and 4.1.14”. The amended para would be as under:

“Provisions of paragraphs 4.1.11, 4.1.12, 4.1.13, 4.1.14 and 4.1.15 of FTP shall be applicable for DFIA holder.”

4. Effect of this Notification: Inputs actually used in manufacture of the export product should only be imported under the authorisation. Similarly inputs actually imported must be used in the export product. This has to be established in respect of every Advance Authorisation / DFIA.

(Anup K. Pujari)

Director General of Foreign Trade

E-mail:dgft@nic.in

(Issued from F. No. 01/ 94 / 180 /165 / AM12 / PC-4)

Concealment penalty upheld as supplier confirmed bogus bills of purchase asserted by assessee in boo

IT : Where seller stated that he had not made any sales and given only bills to assessee and assessee had not chosen to cross-examine said seller, penalty under section 271(1)(c) was rightly levied upon assessee

Services supplied by non-profit entities to their members are exempt from service tax

ST/ECJ : As per Entry 28 of Notification No. 25/2012-ST, provided other conditions are met, services supplied by non-profit entities/unincorporated bodies to their members are exempt, even if they are supplied only to one or several of those members

FIIs to provide mandate from account holders for Participatory Note or Overseas Derivate Instrument

FEMA/ILT : Risk Management and Inter-Bank Dealings

Duration for utilization of Governmental debts limits reduced from 45 days to 30 days

SEBI : Utilisation Period for Government Debt Limits

Mere reference to BIFR won't turn interest recoverable from sick company into bad debts; interest he

IT : Mere fact that debtor company became a sick company and its case was referred to BIFR could not be sole ground to exclude accrued interest for loan advanced to such debtor

CBDT pulls up Indore income tax office for poor Q1 show

Central Board of Direct Taxes (CBDT) has pulled up Indore regional office of income tax (I-T) for its poor show during first quarter of the current fiscal. A source said the office during the period, ending June 30, achieved result which was less than the national average. Moreover, the CBDT asked the office to achieve the target at any cost by the fiscal-end. Reviewing the region's performance here on July 29, member (audit & judiciary) of CBDT, Anita Kapur, is reported to have expressed serious concern over the poor show asking officials to pull up their socks to achieve the target of tax collection by the end of the current fiscal. The Indore office could achieve the revenue earning to the tune of Rs 2,025 crore as on March 31 in 2013. The CBDT has fixed the target of Rs 2,500 crore for the current fiscal for the Indore office during the current fiscal, source said. Tax deduction at source (TDS), income tax and advance corporate tax are main sources of revenue generation for the department. However, except for TDS, the Indore office fared much below expectations during Q1 on all other parameters. It had collected revenue of Rs 379 crore during the period as against the mark of Rs 275 crore in the corresponding period of the last financial year, which shows a healthy growth. Still, it registered a marginal improvement on the front of corporate tax (CT) and negative growth in income tax collection, source said. Kapur also asked officials to meet top corporate guys to ensure advance tax collections due from them in time. When contacted, a senior official of Indore office, on condition of anonymity, told ToI, the office would be able to achieve its target by the end of this fiscal.