IT : Where off market transactions for sale/purchase of shares with connected concerns were found to be at market rates and payments were made or received through banking channel, loss on same could not be disallowed holding them as sham transactions
Sunday 4 August 2013
Business income applied in pre-determined charitable purposes would be eligible for exemption
IT : Where income from business was applied for charity as per aims and objects of assessee-society, its income will be exempt
Medical ailment not sufficient to seek condonation of delay unless assessee submits proof for same
ST : Medical certificate providing that assessee was suffering from chronic hypertension since long, which required continuous treatment (without providing any details as to date of start of treatment), cannot be a ground to condone delay in filing appeal
Missed the tax filing deadline? Know what to do
The surge in the number of e-filers on 31 July, the last day for filing income tax returns, overloaded the system and forced the government to extend the deadline to 5 August. This last-minute rush has become a regular feature in the past few years. The system gets overloaded because a large number of taxpayers wait till the last day. In the melee, many of them are unable to file by the due date.
However, missing the filing deadline is not an earth shattering event. The online filing data reveals that the biggest surge in tax filing is witnessed not on 31 July but on 31 March the next year. This year, for instance, the peak daily rate of receipt of returns was clocked on 31 March when 7.5 lakh taxpayers filed their returns. If all taxes are paid, a taxpayer will not face any penalty or get a notice for non-filing. |
Prize won under National Saving Scheme couldn't be deemed as 'lottery'
IT: Where assessee was allotted a car as first prize under National Saving Scheme, such prize could not be treated as lotteries under section 2(24)(ix)
No concealment penalty on failure of assessee to prove shareholders’ capacity to invest
IT: Mere failure in proving capacity of shareholders to invest in share capital of assessee, could not be a ground for imposing penalty on company
Profits earned by AE from ultimate customers aren't relevant to determine ALP of transactions with A
IT/ILT: In course of transfer pricing proceedings, there can be no question of substituting profit realized by Indian enterprise from its foreign AE with profit realized by foreign AE from ultimate customers for purposes of determining ALP of international transaction of Indian enterprise with its foreign AE
Rbi Curbs On Gold Import Opposed
August 4, 2013
The Kerala Gold and Silver Merchants Association has warned the restrictions on gold imports introduced recently by the Reserve Bank of India (RBI) would not yield the intended results but instead encourage gold smuggling and hawala trading in the yellow metal.
Explaining the association’s views on the RBI order, its president B. Girirajan made it clear on Friday the main objection was to the RBI directive that 20 per cent of gold imported by banks and other recognized agencies should be kept in customs bonded warehouses and 75 per cent of the gold kept in bonded warehouses should be exported as gold jewellery. This had been made a condition for getting permission for fresh gold imports.
In view of the RBI order, when a bank imports 100 kg of gold, it can release only 80 kg into market for sale. The remaining 5 per cent should be kept in customs bonded warehouses and 15 kg exported as gold ornaments if it wants to place fresh order for gold import. The RBI and Central government believe this measure would help bring down current account deficit. However, the merchants association thinks it would be counterproductive, Mr. Girirajan said.
The RBI restriction would lead to shortage of gold in market and artificial price rise in domestic market. The decline in gold price in international market would not be reflected in local market price because of the RBI order. There was a distinct possibility of gold price rising in domestic market also. These trends in turn would lead to smuggling and black marketing and hoarding of gold, Mr. Girirajan warned.
He said there were already clear indications smugglers and hawala traders were active and ready to exploit the situation. NRIs might be tempted to route their remittances through unauthorized channels. The net results would be diversion of NRI remittances from government coffers and loss of import duty that the government should have received through legitimate imports.
The association pointed out the artificial rise in gold prices would help speculators make big profits. Because of the latest RBI new regulation a bank would be able to import gold only four times a year.
While it was true uncontrolled gold imports had impacted adversely on the country’s foreign reserves, remedial action had to be devised in consultation with merchants’ associations, Mr. Girirajan said.
Source:-www.thehindu.com
Medical Devices Give Healthy Boost To Exports
Medical device firms have contributed more than a quarter (27 percent) of export earnings to New Zealand’s high tech manufacturing sector, according to a just-released report by the Ministry of Business, Innovation and Employment (MBIE).
The high tech manufacturing sector as a whole contributed $1.4 billion in export earnings.
Medical equipment accounted for around $379 million in exports to June 2012 and is currently showing a compound annual growth rate of 5 percent. The sector grew by $260 million in the period 2001-2011. Employment in this sector has also grown to 2,940 people from 1,610 in 2002.
“We are delighted to see innovation and the investment in R&D paying off for companies in this sector and for New Zealand. The New Zealand medical technology manufacturing sector is expected to double export revenue within the next 3-5 years,” says MTANZ chief executive, Faye Sumner.
Ms Sumner says companies such as Fisher and Paykel Healthcare (FPH) and Mesynthes who are highlighted in the MBIE report are leaders in their field and major contributors to this export growth. FPH recorded $287 million worth of exports in 2012 for its therapeutic respiration devices. The company employs 2,600 staff. Mesynthes specialises in medical biomaterial for tissue repair and reconstruction. The company is building a new facility in Wellington and could potentially double in size by 2014.
“Clearly Fisher& Paykel Healthcare leads the sector by some margin but there are a number of smaller medical device firms starting to show good potential as large contributors in the not too distant future,” says Ms Sumner.
“This is a very exciting and dynamic sector and it’s vital we ensure domestic policy relating to procurement and regulations does not stifle this innovation in New Zealand but supports this sector to reap the rewards internationally.”
MTANZ represents not only manufacturers, but also importers and distributors of medical technology used in the diagnosis, prevention, treatment and management of disease and disability.
New Zealand companies currently design, manufacture and export such devices as machines to manage obstructive sleep apnoea and other respiratory conditions; customised titanium hip, knee and neck implants; specialised dental technology and implants, among others.
Source:-www.scoop.co.nz
Rupee Opens Flat At 61.01 Per Dollar
The Indian rupee opened at 61.01 per dollar versus 61.01 Friday. According to Agam Gupta, Standard Chartered Bank, the rupee is expected to open stronger on dollar weakness.
The Indian rupee opened at 61.01 per dollar versus 61.01 Friday.
Agam Gupta, Standard Chartered Bank said, "The rupee is expected to open stronger on dollar weakness. However, the rupee will be in a range on domestic demand supply mismatch along with fears of RBI intervention or measures to stem volatility. The range for the day is seen between 60.75 - 61.25/USD."
The dollar remained on the backfoot following weak US jobs data. The euro was still above 1.32. The dollar index was at 82 mark and the dollar yen was around 98.
Source:-www.moneycontrol.com
Excise Duty Refund Conundrum For Export-Oriented Units
August 4, 2013
The Government issues several notifications, which are followed by clarifications. The clarifications are circulated with the objective of stating the background and objective for issuing the notification. Sometimes there are clarificatory circulars, which are then followed by legislative amendments. Whether issued before or after, these circulars achieve the objective of uniform application of the law, and relief from ambiguity or oppressive interpretation.
One such notification, and associated provisions, that requires clarity is with respect to central excise duty waiver benefit to 100 per cent export-oriented units. Currently, there is a debate with regard to the nature of this notification — whether it is a full and unconditional exemption notification or if it is optional. Several field formations have adopted the view that this notification is full and unconditional, not leaving any scope for exporters to pay central excise duty. In terms of the Foreign Trade Policy’s provisions, an export-oriented unit is also permitted to effect sales in the domestic tariff area. Typically, the exporters utilise the input credit for discharging the domestic liability. A 100 per cent export-oriented unit may not have an output excise duty liability owing to lack of domestic clearances, as a consequence of which input credit gets accumulated. Certain exporters opt to pay excise duty on exported goods, and utilise the input credit towards this payment. The framework of the Foreign Trade Policy as well as the governing central excise notification, read with clarifications issued by the Central Board of Excise and Customs, envisages domestic clearances besides exports. Thus, the debate over whether the provisions are to be interpreted as granting an unconditional exemption — and not as an option to exporters — has become a subject of litigation.
The Madras High Court’s judgment is a recent one on this subject. Orchid Health Care, the petitioner, obtained a relief by way of approval to claim rebate of output excise duty, discharged by utilising the input credit, only after the writ jurisdiction of the High Court was invoked. This is also a statement on how ineffective the adjudication machinery is when it comes to implementing the benefits notified by the Central Government. While it is noteworthy that the High Courts across the country are disposing of such matters at a fast pace, it is unfortunate that assessees are required to invoke the writ jurisdiction of the Courts.
Despite such, and similar, judgments — including at the Tribunal level — divergent views continue to prevail. While measures are proposed time and again for promoting exports, exporters continue to be saddled with such issues. Despite several clarifications on the subject, ambiguity prevails. It is saddening to note that export-oriented units, which have not been granted benefits similar to special economic zones in respect of exemption on procurement of input services, continue to face the brunt of ambiguous legislative machinery.
Recently, the Ministry of Finance has announced the constitution of a forum chaired by Parthasarathi Shome, adviser to the Finance Minister, where there will be an exchange of views between industry groups and the Government on tax-related issues or disputes. Whether or not such issues faced by exporters would qualify as deserving of the attention of this forum is a moot question. Till such time, the export-oriented unit benefits or procedural aspects continue to be ambiguous. At the least, by way of appropriate clarifications, the ambiguity surrounding the refund mechanism should be resolved and appropriate legislative amendments could follow.
Source:-www.thehindubusinessline.com
Textile Exporters Reject Hike In Power Tariff, Pol Prices
August 04, 2013
Textile exporters have rejected the recent hike in power and petroleum product prices as it would trigger inflationary impact and would ultimately affect the overall trade and business environment. Criticising the tariff hike, Asghar Ali, Chairman and Muhammad Asif, Vice Chairman Pakistan Textile Exporters Association, said businesses are already facing tough challenges and further increase in Petroleum prices and power tariff will create enormous inflation and great pressure on the business activities.
Power tariffs in Pakistan are already one of the highest in the region due to which Pakistani products are losing competitiveness in export markets. In China, India, Bangladesh and other countries electricity is available to industrial sector at lower rates than commercial users while in Pakistan, power rates for industries are higher than commercial consumers. The decision to increase oil and power prices, particularly at a time when the economy is struggling for revival, is not in favour of business growth. They said increasing power and Petroleum prices would unleash a new wave of inflation and raise cost of doing business in the country. Instead of increasing petroleum prices, government should decrease petroleum levy to save economy from harmful consequences of high petroleum prices.
Asghar Ali is of the view that the entire industrial sector is already facing multiple internal and external challenges and the recent increase would further aggravate the economic situation. He said the share of furnace oil in Pakistan's energy mix is around 50 percent and hike in petroleum products would significantly push up production cost making our exportable products uncompetitive in international market. Government should make all-out efforts to accelerate oil exploration in potential areas of the country for achieving self-reliance as currently the country is producing just 15 percent of the total oil consumption and a huge amount is spent on oil import due to which our import bill has already surpassed US $15 billion.
Muhammad Asif said due to high cost of doing business, ratio of sick industries is on the rise and further increase in power tariff will drastically hit the industrial chain. He said as result of current increase, especially exporters would suffer a great loss because of continuous fluctuation in tariffs. Instead of frequently increasing energy tariffs, government should develop strategies to control transmission, distribution and theft losses due to which the country is losing more than 30 percent of electricity. Government should focus on exploiting cheap and alternative energy resources for providing uninterrupted power supply to industry at affordable cost so that industrialists could improve productivity and promote exports, he said.
PTEA urged the government to take immediate steps for tackling energy crisis, reducing high production cost and improving business environment, otherwise export sector will not be able to promote trade for ensuring sustainable development of the economy.
Source:-www.brecorder.com
Tech Imports Face Duty Barrier
New Delhi, Aug. 4: The government plans to increase the duty on electronic goods and components to reduce its rising import bill.
India may also levy an additional 5 per cent duty on imported electric gear, which is currently taxed at 21 per cent, to boost local manufacturers and provide them a level-playing field.
Top finance ministry officials said electronic goods were the third most imported item, valued at $32 billion in 2012-13.
If the current trend persists, trade analysts see the import of electronic gears surpassing oil imports by 2020 and can be as high as $300 billion.
“We cannot afford this. India is one of the biggest markets for these goods and manufacturers need to understand that we cannot allow all our forex resources to be drained away to prop up manufacturing in Taiwan and Norway,” officials said.
A plan to encourage domestic manufacturing will be put on the fast track and duty hikes will be announced soon. Such an action is increasingly necessary because the difference between dollar spending on imports and earnings from exports and foreign investment flows has been steadily widening, pulling down the value of the rupee.
The aim is to curb imports of fully built mobile phones or laptops, which the government hopes will force manufacturers to assemble them in the country. Duties on components, too, will be raised progressively to force some or most manufacturers to shift base to India.
Officials said this also prompted India to turn down US vice-president Joe Biden’s demands of signing a trade pact, called ITA-2 (information technology agreement-version 2), made during his trip to New Delhi last month. ITA-2 would make India a signatory to a deal, which allows duty-free trading in IT hardware, including tablets, iPhones, mobiles and flat television sets.
At present, mobile phones, computer processors and hard disks attract an import duty of 6.03 per cent, while iPads, laptops, computers and computer printers a levy of 16.85 per cent. iPods, video games and gaming consoles are imported with a duty of 28.85 per cent.
In many cases, the duty is in the nature of countervailing duties, with the basic customs duty at zero per cent.
Finance ministry officials said barring cases where duty cuts had been given as part of free trade agreements, such as with Thailand or the Asean, India was in a position to raise the duties.
A structured tax set-up, which imposes higher taxes on finished capital goods and electronics and lower taxes on components, will be brought in to engage more domestic manufacturers. Taxes will be lower for products made in India compared with those having less local components.
Power plant parts
India also wants to manufacture more equipment for its power plants. It will be tweaking the policy to force Western gear makers such as Siemens and Babcock as well as Chinese giants such as Shanghai Electric to either make the components here or face higher taxes.
Top finance ministry officials said machinery imports last year were over $30 billion.
Inter-ministry panels have been warning against Chinese imports flooding local markets on account of factors such as the artificially depreciated yuan, tax advantages, subsidies, cheap government loans and absence of labour laws in China.
According to the recommendations of an inter-ministry panel for the 12th Five-Year Plan, “The capital goods industry can be considered as the ‘mother’ of all manufacturing industry and is of strategic importance to national security and economic independence. While it may be preferable from the user industry’s point of view to allow the import of capital goods at lower costs, this will result in over reliance on other countries for key strategic inputs.”
Source:-www.telegraphindia.com
Move To Resume Iron Ore Exports Hits Steel Barrier
Aug 04 2013
An inter-ministerial tussle may delay the centre’s move to lift the ban on iron ore exports and earn foreign exchange in a hurry to bridge the yawning current account deficit.
While the commerce ministry has proposed to approach the Supreme Court to lift the ban on different categories of iron ore exports, especially from Goa and Karnataka, the steel ministry is opposing the move.
The steel ministry, headed by Beni Prasad Verma, has pointed out that high freight rates and 30 per cent export duty have rendered iron ore exports unremunerative, especially with prices quoting at $110–$120 per tonne in the global market.
It has told the commerce ministry that instead of exporting iron ore, the government must encourage export of value-added steel products. The steel ministry has also contested the commerce ministry view that 100 million tonnes of surplus iron ore lying unutilised could be exported to earn precious foreign exchange at a time when the rupee has lost 9.5 per cent of its value against the dollar this year.
Steel ministry officials, who held a meeting with their counterparts in the commerce ministry on July 19, have pointed out that the reported headstock of 100 million tonnes iron ore was ‘misleading’.
Of the so-called estimated stock, state-run SAIL held between 50 million tonnes and 60 million tonnes of low-grade iron ore and slimes “that could not be sold in the open market”.
TURN
Another state-run company, NMDC, held 20 million tonnes of slimes, while the rest of the stock might be lying in Goa since their exports were banned. The steel ministry has also pointed to the inadequate capacities for pelletisation of excess slimes in stock.
The ministry has argued that iron ore reserves are not unlimited and need to be used more judiciously to meet the targeted 300 million tonnes steel production target set for 2025.
Prime minister Manmohan Singh set this target at an inter-ministerial meeting to boost manufacturing capacities. SAIL was to play the lead role and push for higher capacities through special purpose vehicles.
Steel ministry officials have asked their counterparts in the commerce ministry to find ways and means to have the ban on Goa iron ore mining lifted. They have argued that Goa iron ore was viable for exports even at current levels of duties and freight rates.
While agreeing that there was no shortage of iron ore in the country as of now, the possibility of problems in mining in Odisha may lead to localised shortages.
Pointing to serious repercussions in case the ban on iron ore export is lifted, the steel ministry has cited that the domestic steel industry could achieve only 81 per cent capacity utilisation during 2012-13.
The commerce ministry, on the other hand, is exercised about the fall in iron ore exports, as it contributed significantly to the country’s foreign exchange earnings. The commerce ministry, on its part, has maintained, “Since there was no shortage of iron ore for consumption locally, more ore should be made available for exports.”
India exported 168 million tonnes of iron ore worth $7 billion in 2010-11 and emerged as the world’s third largest exporter, before the Supreme Court banned export of most categories of iron ore. Ore exports fell to 18 million tonnes in 2012-13.
The Supreme Court ban came in the wake of a Karnataka Lokayukta report bringing to light serious irregularities in the sector. The ban was subsequently extended to Goa based on a report by the court’s central-empowered committee, effectively stopping exports from that state.
Following the ban and plentiful domestic iron ore availability, steel production is set to go up to 120 million tonnes in this financial year from 89 million tonnes produced in 2011-12.
Source:-www.mydigitalfc.com
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