HC allows SetCom’s decision to compute undisclosed income on GP rate declared by assessee

IT: Where material was available before Settlement Commission which was considered for determining undisclosed income on basis of gross profit rate, such addition was just

Job-worker can't take credit of input services distributed by principal manufacturer

ST : Job-worker cannot take credit of input services received by principal manufacturer, as job-worker, being independent manufacturer, cannot be regarded as manufacturing unit of principal manufacturer for purposes of distribution of credit as Input Service Distributor

SAT imposed penalty on appellant for execution of fraudulent trades in scrips of a co.

SEBI : Where appellant had some connection with promoter group members due to which it was held guilty of executing fraudulent trade in scrip of company, penalty was to be imposed upon appellant

India Lags Bric Peers On Import Cover

NEW DELHI: India may not be short of foreign exchange to cover its import bill but the falling rupee and fears of FIIs withdrawing some of their investments in the country have put a spotlight on the reserves.





From an import cover of over 17 months a decade ago, India now has reserves of around $279 billion, sufficient to fund imports of just under seven months. In contrast, the BRIC peers — China, Russia and Brazil — have reserves to cover imports for one-and-a-half to two years. Compared to some of its Asian countries, such as South Korea, Malaysia and Indonesia, the situation in India would appear to be under control. But, economists are quick to point out that barring Indonesia, all other economies with similar import covers have a surplus on the current account, while India reported a record deficit of 4.8% of GDP in 2012-13 .



Of course, as the government has maintained that there is no need to panic just yet. "We are not short of money, or reserves or foreign exchange," Arvind Mayaram said on Friday.





The government seems to be drawing comfort from the possible fall in gold imports after a series of measures initiated by it. But, a weaker rupee will push up the import bill for oil and other products even if shipments stay flat. "There is stress on multiple fronts and external vulnerabilities have gone up. While there is pressure on foreign exchange reserve, much higher compared to 1991," said D K Joshi, chief economist at rating agency Crisil.



Economists say the situation is not as comfortable as is being made out to be. "We don't think the rupee will settle down until there are more proactive steps to raise import cover," said Indranil Sengupta, economist at Bank of America-Merrill Lynch.

Source:-timesofindia.indiatimes.com

Rupee Hits Record Low Below 62 A Dollar; Further Losses Expected

MUMBAI: The rupee touched an all-time low of 62.03 to the dollar in intra-day trade on Friday over fears of more Reserve Bank curbs on capital outflows.



The measures taken by the RBI earlier this week have sent out a signal that it may do more to curb capital outflows. On Wednesday, the central bank limited overseas direct investment by Indian companies to 100% of their net worth from 400%. It also cut overseas remittances by Indians to $75,000 a year from $200,000.



"The last two measures seem symbolic in nature and may not arrest the rupee's fall," said Arvind Narayanan, ED, sales treasury & markets at DBS India.



"Any sign of desperation is not good for the rupee. I would like decision makers to take two-three major steps that ensure immediate capital inflows, rather than multiple smaller steps."



The Indian currency, which had opened at 61.35 after a market holiday, recouped early losses to close at 61.65, lower than Wednesday's close of 61.43.



Rupee hits record low below 62 a dollar; further losses expected

The RBI has taken a slew of measures since July 15 to stall the rupee's slide, including raising of short-term interest rates by 200 basis points and squeezing liquidity. Curbs have been put on gold imports, a key factor in the ballooning of the current account deficit.



"While the RBI measures announced were helpful for the rupee, it (rupee) got impacted by US jobless data, which signaled that a decision to taper could be taken earlier than December," said Harihar Krishnamoorthy, head of treasury at FirstRand Bank. "This led to sharp weakness in the emerging markets on account of QE 3 pull-back." The rupee is among the worst-performing emerging market currencies, having dropped nearly 15% since May 22.



"RBI's hesitant intervention style through intermittent supply of dollars at times create volatility, as many people see it as fresh buying opportunity," said Partha Bhattacharya, deputy CEO of Mecklai Financial.



On Friday, yield on the 10-year bond rose to a record high of 8.895%. Bond yield and prices move in opposite directions. Until the rupee stabilises, bond yields are expected to remain high.



"So long as the repo facility is not available for government securities beyond 0.5% of the net demand and time liability, the market may be reluctant to add on to the G-Sec portfolio, as the market is overall surplus BY 6%. This may lead to yields having a upward bias," said Krishnamoorthy.



Traders expect bond yields to touch 9.25% if the monetary policy is not eased anytime soon.

Source:-economictimes.indiatimes.com

No presumptive deduction of tax from salary when salary linked compensation is awarded by MACT - SC

IT: Where there was no proof that income-tax payable by deceased was not deducted at source by employer, it was to be presumed that salary paid to deceased was paid by deducting income tax on estimated income of deceased and, therefore, no amount was to be deducted from salary of deceased towards income tax for calculating compensation under Motor Vehicles Act

Payment of sponsorship fee to foreign co. in lieu of 'right to advertise' isn't royalty

IT/ILT: Where assessee made payment for sponsorship of various sports events, whereby it was entitled to advertise at venue and in brochure etc., it was purely for advertisement and not in nature of royalty

Handicrafts Exports Grow 10% In July

Aug 16, 2013

NEW DELHI: India's handicrafts exports grew 10 per cent year-on-year to about USD 205 million in July 2013 owing to rising demand from markets like the US, China and Latin America.



In July last year, these exports stood at USD 185.88 million, according to the data provided by the Export Promotion Council for Handicrafts (EPCH).



"There has been an increase in the number of orders from emerging markets like China, Latin America and Africa," EPCH executive director Rakesh Kumar said.



He said the US market has started picking up though the demand is still sluggish in European countries.



The US and Europe together account for about 60 per cent of the country's total handicraft shipments.



Besides, the exporters are exploring new markets like China, Latin America and Africa to reduce dependence on traditional markets.



Founder of RK Arts and former EPCH chairman Ravi Passi said: "We are expanding our presence in new markets like China and Latin America as our products are getting popularity in these markets. Also, we expect this trend to continue in the coming months."



Among the items that registered increase in July 2013, were woodwares which saw the highest growth of 28 per cent, followed by shawls as artwares at 25.56 per cent and imitation jewellery at 25.36 per cent.



During April-July 2013, handcraft items grew about 12 per cent to USD 869 million compared to the same period last fiscal.



The country's total handicraft exports have met the target of USD 3.3 billion for 2012-13.



The handicraft sector employs one million people. Moradabad, Jaipur, Saharanpur and Jodhpur are the major handicraft hubs in the country catering to global markets.

Source:-timesofindia.indiatimes.com

China Buys 140 Million-Kg Yarn From India In Two Months, Crisis-Ridden Textile Industry Cheers

16-Aug-2013

CHENNAI: Prospects for India's crises-ridden textiles industry, a labour-intensive sector that contributes 4 per cent to GDP, have brightened for the first time in many years, cheering hitherto wary lenders who could now consider lending more.



A major reason for the change in fortunes of the sector, which in recent years has hurtled from one crisis to another, is the huge appetite that China is showing for overseas yarn.



In the past two months alone, China has bought 140 million kg of yarn from India, about 75 per cent more than usual, says K Selvaraj, secretary general of the Coimbatore-based industry body Southern India Mills Association.



India's neighbour is becoming uncompetitive in yarnmaking with the currency appreciation and high labour costs there. R Rajendran, director of finance at textile machinery maker LMW, says the China factor isn't an aberration.



"Unlike India, China is known to keep its policy consistent longer. So we can expect the import of yarn to continue," he says. The rising Chinese demand is the latest in the rush of recent uplifting news for a sector that had to contend with everything from volatile cotton prices and power crisis, to weak overseas demand and the emergence of new rivals such as Bangladesh.



But it isn't just the China factor that's working to its advantage. The US, a major market, is holding on as a consumer. Bangladesh, which was giving India's textile industry a run for its money, seems to have fallen in the eyes of global buyers after the tragic factory collapse earlier this year there.



The power situation has also improved in the textile hub in Tamil Nadu. LMW's Rajendran also anticipates the finance ministry giving a green signal to the Technology Upgradation Fund Scheme, under which companies can access funds cheap for equipment modernisation. The buoyancy isn't confined to yarn.



A Sakthivel, president of the Tirupur Exporters Association, a representative body of knitwear makers, says exports have gone up to Rs 4,200 crore in the past three months compared to Rs 3,600 crore in the year-ago period. However, it may be too early to conclude that the overall garment exports (made of both 'knitwear' and the 'woven' segments) might be picking up.

Source:- economictimes.indiatimes.com



Data from the Office of Textile and Apparel, US, says Indian exporters have reported lower growth in the first six months of 2013 from the comparable period of the prior year, relative to the growth reported by China, Vietnam and Bangladesh.



It means the effect of the weak rupee and the Bangladesh factor haven't been yet reflected in the available data. However, the biggest garment exporter Gokaldas reported a 15 per cent year-on-year growth in revenue at Rs 258 crore for the June 2013 quarter.



Kitex Garments, another exporter, reported over a 50 per cent jump in revenue at Rs 100 crore. The lenders seem to have noted these changes. Through huge turbulences in the past, the textile industry could manage to get cheap credit from banks due to the Technology Upgradation Fund Scheme. But since the big crash in cotton prices two years back, a near halving that caused mega inventory losses, banks have been loath to lend.

India's Trade With Ghana Clocks Over 60 Percent Growth

16-Aug-2013

India's exports to the West African nation, with which it has had a long and historic relationship dating back to the time of its independence leaders Jawaharlal Nehru and Kwame Nkrumah, comprise mainly pharmaceuticals, agricultural machinery and items such as steel and cement required for infrastructure development.



India's export strategy, the statement said, is aimed at helping Ghana establish developmental projects with a combination of investments, grants and loans, complemented by projects and exports to provide inputs for these projects and not to dump cheap products.



"India does not believe that cheap, low-tech products that can be detrimental to the local industry are consistent with Africa's pursuit of self-reliance and with its efforts to add value to its significant natural resources," the statement noted.



"India wishes that these projects are undertaken under proposals authored by Ghana according to its own development priorities," it said, adding: "Where technology and knowledge-based items such as pharmaceuticals are exported from India, these are meant to bring down the cost of life-saving drugs and equipment."



India has so far extended and approved $230 million in credit lines to support various projects including the construction of the Flagstaff House Presidential Palace, establishment of a Foreign Policy Training Institute and financing a rural electrification project, the statement said.



Other projects are the supply of agricultural and irrigation equipment, a fish processing plant and supply of waste management equipment. "Some of these projects have already been completed while the others are at various stages of implementation," the statement said.



It also recalled the financing of the India-Ghana Kofi Annan Centre of Excellence for ICT that was set up with a grant from the Indian government and said this was "a shining example of India's commitment to complement Ghana's efforts towards human resource development".



"Teams of Indian experts have been visiting the Centre to upgrade the supercomputer there and train the Ghanaian manpower. India takes justified pride in the immense success of this Centre, which has become a hub for training in computer technology and for refining the IT skills of students and professionals, not just from Ghana but from the rest of the region," the statement noted.



It said Ghana is to receive 175 slots in this year's Indian Technical and Economic Cooperation (ITEC) programme following the recommendation to increase the allocated 150 slots by 25. "This is in view of the exceptionally high quality of talent in Ghana and the impressive record of utilisation," the statement added.



It said India's cooperation with Ghana is based on a bilateral relationship that is "issue-free, positive, forward-looking and ever-expanding while also being in tune with the rapidly evolving international order".



"When relations between two countries are rooted in a common historical legacy underlined by shared aspirations of their peoples and the progressive vision and values of their founding fathers, these cannot be but robust and it is but natural for them to enjoy mutual trust and understanding," the statement added.

Source:- www.newstrackindia.com

Nafed Sells Onions At Rs 55 Per Kg In Delhi; Import Tender Likely Next Week

16-Aug-2013

NEW DELHI: Cooperative major Nafed may float a tender early next week for importing onions to boost domestic supplies and curb prices that have risen to Rs 70-80 per kg in retail markets across major cities.



To give relief to Delhiites, the National Agricultural Cooperative Marketing Federation of India (Nafed) has started selling onions at Rs 55 a kg through its five retail outlets and two mobile vans in the national capital.



In a bid to increase local supplies and curb rising prices of onions, the government, on August 14, fixed a minimum export price of $650 per tonne for the commodity and asked Nafed to import onions.



Following the government's directions, sources said Nafed has started enquiring about supplies and prices in the global markets, including Pakistan and Iran. The cooperative is expected to gather all the information from trade channel partners by tomorrow, they added.



The tender for onion imports is likely to be floated early next week, sources said. Besides Pakistan and Iran, Nafed is exploring the option of buying onions from China and Egypt.



Meanwhile, onion wholesale prices eased by about Rs 2 at the Lasalgaon in Nashik to Rs 44 a kg on increased arrivals, according to data maintained by the National Horticultural Research and Development Foundation (NHRDF).



"Traders at Lasalgaon market are still selling onions at high prices as their sales have not been affected," NHRDF Director RP Gupta told PTI.



At Azadpur mandi in Delhi, onion prices remain at the previous level of Rs 50-55 per kg.



"Onion supply is normal today. Around 12,000 quintals have arrived in the market but prices are still high due to speculation," Onion merchant traders' association president, Surendra Budhiraj said.



India exported 6.39 lakh tonnes of onions during April-July of this fiscal year, compared with 6.94 lakh tonnes in the year-ago period. Production stood at 16.6 million tonnes in 2012-13.

Source:- timesofindia.indiatimes.com

Duty At Par, Finished Jewellery Import Becomes Cheaper Than Gold

16-Aug-2013

The latest round of customs duty hike made import of finished jewellery cheaper than manufacturing ornaments in local factories with imported gold. Consequently, jewellers have started importing finished jewellery instead of gold to sell directly in their retail stores.



In fifth such instances in 20 months, the government raised import duty on gold by 2% on Tuesday to 10% from less than one% in January 2012.



The latest round of duty hike brought import duty on gold at par with finished jewellery. Considering one% value added tax (VAT) the overall duty works out to around 11.5% on both gold and finished jewellery.



Hence, it makes sense for jewellery retailers to import finished ornaments than the bullion and incur additional conversion cost which will make domestic origin jewellery costlier.



“Jewellers have started passing on orders for finished jewellery now to overseas companies which makes sense at equal import duty of 10%. Orders started flowing to companies in Thailand and Italy,” said Vipul Shah, chairman of Gems & Jewellery Export Promotion Council (GJEPC).



With this, local manufacturing units in gems and jewellery segment have started facing the heat. Many of the them have initiated job cuts while others await till the revival in demand.



“We will soon meet the commerce ministry to apprise with the situation as our own manufacturing units are facing problems with this decision. Hence, we would request the ministry to raise import duty on finished gold jewellery to keep a wide differential for safeguarding our domestic manufacturing units,” said Shah.



Jewellery manufacturing cost works out to 10% of the cost of ornaments. specifications, Controller of Explosives

Source:- www.business-standard.com

SC slams HC for admitting writ; order set aside as assessee has an alternate remedy of filing of app

IT : Writ petitions cannot be entertained when alternative remedy of filing appeal before Commissioner (Appeals) is available

Department can't seek coercive recovery if delay in disposing of stay isn't attributable to assessee

ST : If stay application is filed, then : (1) assessee must intimate department; (2) department should wait for a reasonable period depending on date given by appellate authority; (3) if delay in disposing stay is not attributable to assessee, department must refrain from initiating coercive action; (4) assessee must show his diligency to department in pursuing appeal (preferably monthly)

CIT can't exercise revisionary powers to re-examine certain items of expenses

IT: In absence of recording any reason for initiation of revisional proceedings, Commissioner was not justified in issuing notice under section 263 merely on ground that certain items of expenses were required to be examined again

Total exp. couldn't be disallowed on short deduction of tax at source

IT: Where acquisition expanded manufacturing facility and profit making apparatus of assessee, loss incurred would be capital loss, not allowable as an item of expenditure

Rate fixed for electricity sale and not rate charged for sale of surplus units valid to compute sec.

IT : It is price at which assessee transferred electricity generated by it eligible business to its other business which would be considered for purpose of computation of profits and gains of eligible business in terms of section 80-IA(8) and not lesser price at which surplus electricity was sold to Electricity Board

THE COMMISSIONER OF INCOME TAX-XVI Vs. MR. YOSHIO KUBO

* IN THE HIGH COURT OF DELHI AT NEW DELHI Reserved on: 08.07.2013 Decided on: 31.07.2013 + ITA 379/2007 THE COMMISSIONER OF INCOME TAX XVI ....Appellant versus SH. SASHI MUKUNDAN ..... Respondent + ITA 387/2008 THE COMMISSIONER OF INCOME TAX XVI ...Appellant versus MR. SHORT DONALD ..... Respondent + ITA 212/2009 THE COMMISSIONER OF INCOME TAX ......Appellant versus MR. FUMIO GOTO ..... Respondent + ITA 15/2010 THE COMMISSIONER OF INCOME TAX-XIV .....Appellant versus MR. DUNCAN ETHERINGTION ..... Respondent + ITA 351/2010 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant versus SH. YASHIMITSU ZAUTSU ..... Respondent + ITA 408/2010 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant versus SH. IKUJU YABUKI ..... Respondent + ITA 450/2010 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant ITA 379/2007 & connected matters Page 1 versus SHRI TOSHIHORU SUNAHARA ..... Respondent + ITA 534/2010 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant versus SOJITZ CORPORATION AS AGENT ..... Respondent + ITA 635/2010 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant versus SH. YASHIMITSU ZAUTSU ..... Respondent + ITA 1354/2010 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant versus SH. JASWINDER SINGH .... Respondent + ITA 1556/2010 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant versus MR. MOHAMMAD RAUFF NABI BAX ..... Respondent + ITA 1561/2010 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant versus MR. MOHAMMAD RAUFF NABI BAX ..... Respondent + ITA 370/2011 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant versus GORAM WESTERBERG ..... Respondent + ITA 1557/2010 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant versus MR. JOHN TRIPLETT ..... Respondent ITA 379/2007 & connected matters Page 2 + REV. PET. 708/2011 IN ITA 1369/2010 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant versus SH. FUMIO GOTO ..... Respondent + ITA 761/2005 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant versus MR. K.P.HOSTELLEY ..... Respondent + ITA 798/2005 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant versus MR. YOSHIO KUBO ..... Respondent + ITA 800/2005 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant versus MR. YOSHIO KUBO ..... Respondent + ITA 680/2007 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant versus SH. MOHAN RAI ..... Respondent + ITA 681/2007 THE COMMISSIONER OF INCOME TAX XVI ..... Appellant versus SH. MOHAN RAI ..... Respondent + ITA 1215/2008 COMMISSIONER OF INCOME TAX DELHI XIV ..... Appellant versus MR. GHORAYEB EMILE, C/O AIR FRANCE ..... Respondent + ITA 494/2010 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant ITA 379/2007 & connected matters Page 3 versus SH. HIROYASU KITADA ..... Respondent + ITA 508/2010 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant versus SH. HIROYASU KITADA ..... Respondent + ITA 577/2010 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant versus MR. SCOTT R BAYMAN ..... Respondent + ITA 631/2010 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant versus SH. VENKAT RAO SHRIDHAR ..... Respondent + ITA 699/2010 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant versus MR. JEROME SUDAN ..... Respondent + ITA 1912/2010 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant versus SH. PANKAJ SHAH ..... Respondent + ITA 528/2011 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant versus SH. MARCH FRANCOIS JEAN SOULACROUP ..... Respondent .....Appearance Through: Mr. Rajiv Tyagi with Mr. Ajay Kumar, Mr. Gyanendra Sharma and Ms. Renu Narula, Advocates, for respondent in ITA 379/07. ITA 379/2007 & connected matters Page 4 Mr. Pawan Sharma with Ms. Madhavi Swaroop, Advocates, in ITA 15/2010. Mr. Piyush Kaushik, Advocate, in ITA 450/10 & ITA 534/10. Ms. Amita Kalkal Chaudhary, Proxy for Mr. Naresh Kaushik, Advocate, in ITA 1354/10. Mr. S. Ganesh, Sr. Advocate with Mr. Pawan Sharma, Ms. Madhavi Swaroop, Ms. Roohina Dua and Ms. Preeti Goel, Advocates, in ITA 577/10. Mr. Satyen Sethi with Mr. Arta Trana Panda, Advocates, in ITA 1912/10. Ms. Shreya Verma, Advocate, for Respondent in ITA 681/07 & ITA 1215/08. Mr. Salil Kapoor, Mr. Vikas Jain, Mr. Manomeet Dalal and Ms. Preity Goel, Advocates, for Respondents in ITA 212/09, ITA 1556/10, 1561/10, 1369/10, 370/11, 494/10, 508/10 and ITA 631/10. CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE R.V. EASWAR MR. JUSTICE S. RAVINDRA BHAT % 1. For detailed judgment please see ITA 441/2003 titled YOSHIO KUBO vs. COMMISSIONER OF INCOME TAX. S. RAVINDRA BHAT (JUDGE) R.V. EASWAR (JUDGE) JULY 31, 2013 ITA 379/2007 & connected matters Page 5

THE COMMISSIONER OF INCOME TAX-XVI Vs. SH. PANKAJ SHAH

* IN THE HIGH COURT OF DELHI AT NEW DELHI Reserved on: 08.07.2013 Decided on: 31.07.2013 + ITA 379/2007 THE COMMISSIONER OF INCOME TAX XVI ....Appellant versus SH. SASHI MUKUNDAN ..... Respondent + ITA 387/2008 THE COMMISSIONER OF INCOME TAX XVI ...Appellant versus MR. SHORT DONALD ..... Respondent + ITA 212/2009 THE COMMISSIONER OF INCOME TAX ......Appellant versus MR. FUMIO GOTO ..... Respondent + ITA 15/2010 THE COMMISSIONER OF INCOME TAX-XIV .....Appellant versus MR. DUNCAN ETHERINGTION ..... Respondent + ITA 351/2010 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant versus SH. YASHIMITSU ZAUTSU ..... Respondent + ITA 408/2010 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant versus SH. IKUJU YABUKI ..... Respondent + ITA 450/2010 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant ITA 379/2007 & connected matters Page 1 versus SHRI TOSHIHORU SUNAHARA ..... Respondent + ITA 534/2010 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant versus SOJITZ CORPORATION AS AGENT ..... Respondent + ITA 635/2010 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant versus SH. YASHIMITSU ZAUTSU ..... Respondent + ITA 1354/2010 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant versus SH. JASWINDER SINGH .... Respondent + ITA 1556/2010 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant versus MR. MOHAMMAD RAUFF NABI BAX ..... Respondent + ITA 1561/2010 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant versus MR. MOHAMMAD RAUFF NABI BAX ..... Respondent + ITA 370/2011 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant versus GORAM WESTERBERG ..... Respondent + ITA 1557/2010 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant versus MR. JOHN TRIPLETT ..... Respondent ITA 379/2007 & connected matters Page 2 + REV. PET. 708/2011 IN ITA 1369/2010 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant versus SH. FUMIO GOTO ..... Respondent + ITA 761/2005 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant versus MR. K.P.HOSTELLEY ..... Respondent + ITA 798/2005 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant versus MR. YOSHIO KUBO ..... Respondent + ITA 800/2005 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant versus MR. YOSHIO KUBO ..... Respondent + ITA 680/2007 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant versus SH. MOHAN RAI ..... Respondent + ITA 681/2007 THE COMMISSIONER OF INCOME TAX XVI ..... Appellant versus SH. MOHAN RAI ..... Respondent + ITA 1215/2008 COMMISSIONER OF INCOME TAX DELHI XIV ..... Appellant versus MR. GHORAYEB EMILE, C/O AIR FRANCE ..... Respondent + ITA 494/2010 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant ITA 379/2007 & connected matters Page 3 versus SH. HIROYASU KITADA ..... Respondent + ITA 508/2010 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant versus SH. HIROYASU KITADA ..... Respondent + ITA 577/2010 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant versus MR. SCOTT R BAYMAN ..... Respondent + ITA 631/2010 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant versus SH. VENKAT RAO SHRIDHAR ..... Respondent + ITA 699/2010 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant versus MR. JEROME SUDAN ..... Respondent + ITA 1912/2010 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant versus SH. PANKAJ SHAH ..... Respondent + ITA 528/2011 THE COMMISSIONER OF INCOME TAX-XVI ..... Appellant versus SH. MARCH FRANCOIS JEAN SOULACROUP ..... Respondent .....Appearance Through: Mr. Rajiv Tyagi with Mr. Ajay Kumar, Mr. Gyanendra Sharma and Ms. Renu Narula, Advocates, for respondent in ITA 379/07. ITA 379/2007 & connected matters Page 4 Mr. Pawan Sharma with Ms. Madhavi Swaroop, Advocates, in ITA 15/2010. Mr. Piyush Kaushik, Advocate, in ITA 450/10 & ITA 534/10. Ms. Amita Kalkal Chaudhary, Proxy for Mr. Naresh Kaushik, Advocate, in ITA 1354/10. Mr. S. Ganesh, Sr. Advocate with Mr. Pawan Sharma, Ms. Madhavi Swaroop, Ms. Roohina Dua and Ms. Preeti Goel, Advocates, in ITA 577/10. Mr. Satyen Sethi with Mr. Arta Trana Panda, Advocates, in ITA 1912/10. Ms. Shreya Verma, Advocate, for Respondent in ITA 681/07 & ITA 1215/08. Mr. Salil Kapoor, Mr. Vikas Jain, Mr. Manomeet Dalal and Ms. Preity Goel, Advocates, for Respondents in ITA 212/09, ITA 1556/10, 1561/10, 1369/10, 370/11, 494/10, 508/10 and ITA 631/10. CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE R.V. EASWAR MR. JUSTICE S. RAVINDRA BHAT % 1. For detailed judgment please see ITA 441/2003 titled YOSHIO KUBO vs. COMMISSIONER OF INCOME TAX. S. RAVINDRA BHAT (JUDGE) R.V. EASWAR (JUDGE) JULY 31, 2013 ITA 379/2007 & connected matters Page 5

COMMISSIONER OF INCOME TAX-I Vs. AIRLINE ALLIED SERVICES LTD.

$~7. * IN THE HIGH COURT OF DELHI AT NEW DELHI + INCOME TAX APPEAL NO. 13/2013 Date of decision: 8th August, 2013 COMMISSIONER OF INCOME TAX-I ..... Appellant Through Mr. Sanjeev Rajpal, Sr. Standing Counsel. versus AIRLINE ALLIED SERVICES LTD. ..... Respondent Through Mr. P.K. Sahu & Mr. Prashant Shukla, Advocates. CORAM: HON'BLE MR. JUSTICE SANJIV KHANNA HON'BLE MR. JUSTICE SANJEEV SACHDEVA SANJIV KHANNA, J. (ORAL): This appeal by the Revenue pertains to Assessment Year 2003- 04 and arises out of order passed by the Income Tax Appellate Tribunal dated 15th June, 2012. 2. Revenue in this appeal has only raised two issues. First issue relates to deletion of addition of Rs.27,71,00,000/- made by the Assessing Officer, by Commissioner of Income Tax (Appeals), which have been affirmed by the tribunal. The Assessing Officer had noticed that grant of Rs.35 crores was sanctioned by the Government in the said year to improve air connectivity in North-Eastern Region. The respondent-assessee had taken on lease four ATR-42-320 aircrafts for ITA No. 13/2013 Page 1 of 5 five years from Ms/ Aviande Transport Regional (ATR). 3. The respondent-assessee had authorised and had spread this grant over a period of five years as the lease period of the aircrafts was sixty months. The Assessing Officer disagreed and held that once the respondent-assessee had received the grant of Rs.35 crores from the Ministry of Finance and Company Affairs, the same could not have been spread over five years, i.e., the lease period, and the entire amount should be brought to tax in one year, i.e., year of receipt itself. The assessee was following mercantile system of accounting and the grant had accrued to the respondent-assessee in the period relevant to the present assessment year. Thus, addition of Rs.27.71 crores was made. 4. CIT(Appeals) and the tribunal have observed that the Assessing Officer had committed a mistake and his reasoning was erroneous. The grant was in terms of the Memorandum of Understanding and as per the terms of the grant the respondent-assessee was to provide 4177 seats per week. This payment of Rs.35 crores was made for operational expenses of four leased aircrafts for 60 months. It was held that the respondent had obtained concessions under the scheme and the progress of the scheme had to be intimated to North-Eastern Council. As the respondent was utilising the said grant over a period of five years, they had followed AS-12 accounting standards. CIT(Appeals) and the tribunal have held that the said standard recognises that while ITA No. 13/2013 Page 2 of 5 computing profit and gains, the account should be prepared on systematic and rational basis so as to match the receipt or the grant, with the related cost. AS-12 was in accordance with Section 145 of the Income Tax Act, 1961 and Section 211 of the Companies Act, 1956. CIT (Appeals) and the tribunal have referred to the aforesaid admitted factual matrix and the applicable and relied upon accounting standard, which were prescribed by the Institute of Chartered Accountants. It was held that the accounts of the respondent should give true and fair view of the profit and loss account. Reference has been made to judgments of the Supreme Court in CIT versus Woodward Governor India Private Limited, (2009) 312 ITR 254 (SC), CIT versus Bilahari Investments (P) Limited, (2008) 299 ITR 1 (SC) and J.K. Industries Limited & Another versus Union of India & Others, (2007) 312 CTR (SC) 301. 5. The findings recorded by the two appellate authorities is that the standard followed by the respondent was as per accounting standard AS-12 prescribed by the Institute of Chartered Accountants. The said method of accounting cannot be faulted or ignored. It is further recorded that there was no dispute that the grant given to the respondent was based upon operations from which net profit/income had to be arrived at after deducting the expenditure. The grant had to be utilised over five years. They accordingly ITA No. 13/2013 Page 3 of 5 accepted that amount of Rs.7.29 crores declared by the respondent, out of grant of Rs.35 crores should be treated as income of the year in question. Before us, the counsel for the Revenue has not been able to point out and state, how and why the reasoning can be faulted as the assessee had followed AS-12. Revenue has not disputed before us that the accounting standard, as prescribed by the institute, has been followed. On the first question, therefore, no substantial question of law arises. 6. The second question relates to addition of Rs.534.79 lacs, which was made by the Assessing Officer but again deleted by the first appellate authority and upheld by the tribunal in the impugned order. The Assessing Officer has recorded that in the notes of the Auditor, they had qualified the accounts stating that details of inventories of Rs.534.79 lacs could not be ascertained. The assessee in the reply had stated that the basic records were maintained by the Indian Airlines as per procedure and the reconciliation of the same was done at much later date. On the question of reconciliation, we may state that the tribunal has sustained addition of Rs.34.31 lacs. On the question of inventories of Rs.534.79 lacs, the CIT (Appeals) has recorded that this amount was duly reflected in the Annual Report. He has made reference to Schedule IV of the Annual Report where under the head `inventories' full details had been given. It is pointed out that the ITA No. 13/2013 Page 4 of 5 inventories were maintained by Indian Airlines and the figures given by them have been taken in the books. The Auditor had hedged his report and had stated that they could not ascertain inventories of Rs.534.79 lacs in view of the said factual position, i.e., they had taken the figures given by Indian Airlines and had not examined the accounts/books of Indian Airlines. 7. During the course of the first appellate proceedings, in view of the response/contention of the appellant, a remand report from the Assessing Officer was called for. The Assessing Officer did not submit the remand report to contest the contention of the respondent- assessee. CIT (Appeals) accordingly recorded that amount of Rs.534.79 lacs was not in dispute. The respondent-assessee succeeded. Before tribunal also, the Revenue could not contest the said position as has been recorded in paragraph 10 of the impugned order passed by the tribunal. Therefore, even on the second issue, we do not find any substantial question of law arises for consideration. The appeal is dismissed. SANJIV KHANNA, J. SANJEEV SACHDEVA, J. AUGUST 08, 2013 VKR ITA No. 13/2013 Page 5 of 5

M/S USHA MICRO PROCESS CONTROLS LTD. Vs. COMMISSIONER OF INCOME TAX

* IN THE HIGH COURT OF DELHI AT NEW DELHI DECIDED ON: 5th August, 2013 + ITA 101/2000 M/S USHA MICRO PROCESS CONTROLS LTD. ..... Appellant Through: Mr. Prakash Kumar, Advocate. versus COMMISSIONER OF INCOME TAX ..... Respondent Through: Mr. Sanjeev Sabharwal, Sr. Standing Counsel. CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE NAJMI WAZIRI % MR. JUSTICE S. RAVINDRA BHAT (OPEN COURT) 1. The appeal under section 260A of the Income Tax Act, 1961 impugns the order of the Income Tax Appellate Tribunal (ITAT) dated 30.12.1999. 2. This Court had by order dated 09.1.2001 framed the following question of law: "Whether Tribunal was justified in holding that the levy of Rs. 4 lakhs in respect of redemption fine and personal penalty was in the nature of fine and penalty and are not to be allowed as deductible business expenditure while computing total income of the assessee?" 3. Briefly, the facts are that the petitioner had imported some software during the relevant Assessment Year i.e. 1985-86. It had sought to re-export the software after making some declarations. The customs authorities were of the opinion that the appellant's action was not legal and directed it to pay differential duties. In addition its Managing Director was made personally liable to penalty. The goods were sought to be confiscated. The matter was carried in appeal. Eventually the Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT) decided the matter on 30.5.1999. The ITA 101/2000 Page 1 Tribunal directed the deletion of personal penalty but proceeded to uphold the order in so far as the fine in lieu of confiscation is concerned --to Rs. 4,00,000/-; the original amount was Rs. 10,00,000/-. 4. For Assessment Year 1985-86, the assessee had claimed Rs. 4,00,000/- as deductible under Section 37(1) of the Income Tax Act. 5. The appellant claimed benefit of Section 37(1) of the Income Tax Act in respect of payments made towards the penalty as well as redemption fine. The CIT appeals had granted the benefit to the appellant; however regular appeals before the ITAT succeeded. 6. The appellant relies upon the decision of the CEGAT especially paragraph Nos. 18 and 19 to say that the Explanation to Section 37(1) of the Income Tax Act which can be the only rationale for refusal to permit the claim as a deduction was inapplicable. Learned counsel also relied upon the judgment of Madras High Court reported as Commissioner of Income Tax v. N.M. Parthasarathy, 1995 (212) ITR 105 as well as the ruling of the Supreme Court in M/s. Prakash Cotton Mills Pvt. Ltd. v. Commissioner of Income Tax (Central), Bombay, 1993 (201) ITR 684. 7. Learned counsel for respondent Mr. Sabharwal argued that the impugned order ought not to be interfered with since the Tribunal took the note of the relevant tests and considered the scheme of enactment while concluding that the amount of Rs.4,00,000/- involved in the present case fell under the explanation of Section 37 (1) of the Income Tax Act. 8. The observations of the CEGAT are pertinent. They are extracted below: 18. Keeping in view the totality of the facts and circumstances of the case, we reduce the fine in lieu of the confiscation to Rs. 4,00,000.00 (Rupees four lacs only). ITA 101/2000 Page 2 19. Now coming to the penalty, we would like to observe that in the foregoing paragraphs we have held the importation of hardware as authorised and regarding the importation of software, the appellants had requested for the re-exportation of the software and had also placed on record to the effect that the software which was sent with the hardware was not ordered by the appellants and the appellants were keen for sending them back. There is complete absence of the elements of mens reg (sick) and the valuation of the hardware has been taken at a higher figure due to difference of opinion. 9. In Prakash Cotton Mills Pvt. Ltd.'s case (supra), the Supreme Court pertinently observed that whenever an authority has to decide whether to grant or refuse deduction under section 37(1) of the Income Tax Act, the governing test would be whether the amount payable is compensatory in nature. In N.M. Parthasarathy's case (supra), the identical situation where redemption fine under the Customs Act was in issue, the Court after examining the scheme of the enactment held as follows: "22. Coming to the facts of the case on hand, the goods belonging to the assessee had been confiscated under section 111(d) of the Customs Act, 1962, read with section 3 of the Imports and Exports (Control) Act, 1947. However, under section 125 of the Customs Act, 1962, an option had been given to the owner assessee to pay, in lieu of such confiscation, a fine of Rs. 1,84,000 which had been reduced on appeal to Rs. 84,000 and the goods had been cleared exercising the option. If the seized goods, without the exercise of option, had been confiscated once and for all, it goes without saying that the property in the goods shall vest in the Government, in the sense of the Government becoming the absolute owner thereof. The fine amount, whatever be its quantification, that is to say, whether it is equivalent to or below the value of the goods seized, cannot at all, in such a situation, be stated to be penal in nature, notwithstanding its nomenclature, but it is reparatory or compensatory in nature. Once it is compensatory in nature, its goes without saying that the authority has to allow deduction ITA 101/2000 Page 3 under section 37(1) of the Income Tax Act as laid down by the apex court in the two latest decisions aforecited. Further, the expenses incurred by way of payment of fees to advocates in defending penalty proceedings must also be construed as an allowable deduction. We, therefore, answer questions Nos. 1 and 4 in the affirmative and against the Revenue." 10. In the present case, this Court notices that originally the penalty which the appellant had been directed to pay was deleted by the CEGAT. What remained was the confiscation; the appellant was given the choice of redeeming the goods by depositing redemption fine as is evident from combined reading of paragraph Nos. 18 and 19 of CEGAT order. The Tribunal went so far as to say that valuation of goods in question was on the basis of difference of opinion. Nevertheless, that being the rationale for deletion of penalty, the Tribunal felt that the order of confiscation did not require to be upset, instead redemption fine was reduced to Rs. 4,00,000/-. On a proper application of the ruling in M/s. Prakash Cotton Mills Pvt. Ltd.'s case (supra), this Court is of the opinion that the amount of redemption fine in the present case was compensatory and therefore, fell outside the mischief of explanation of Section 37(1) of the Income Tax Act. 11. In the above conclusion, the question of law framed is answered in favour of the appellant/assessee and against the Revenue. The appeal is allowed in above terms. S. RAVINDRA BHAT, J (JUDGE) NAJMI WAZIRI, J (JUDGE) AUGUST 5, 2013/mv ITA 101/2000 Page 4

Mere Purchase of land isn't commencement of infra development business unless environment clearance

IT : Where during assessment, in response to questionnaire assessee had already furnished details of services, income and expenditure, reassessment to be quashed

Central Excise Notification No 25/2013 dated 13-08-2013

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

Notification No. 25/2013-Central Excise

New Delhi, the 13^th August, 2013

G.S.R. (E). - In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 12/2012-Central Excise, dated the 17^th March, 2012 which was published in the Gazette of India, Extraordinary, vide G.S.R. 163(E) dated the 17^th March, 2012, namely: -

In the said notification, in the Table,-

1. in S. No. 189, against item (i) for the entry in column (4), the entry “9%” shall be substituted.


2. in S. No. 189, against item (ii) for the entry in column (4), the entry “9%” shall be substituted.


3. against S. No. 190, for the entry in column (4), the entry “8%” shall be substituted;


4. in S. No. 191, against item (i) for the entry in column (4), the entry “9%” shall be substituted.


5. in S. No. 191, against item (ii) for the entry in column (4), the entry “8%” shall be substituted.


6. against S. No. 191A, for the entry in column (4), the entry “8%” shall be substituted;

[F. No. 354/95/2013-TRU]

[Raj Kumar Digvijay]

Under Secretary to the Government of India

Note.- The principal notification No. 12/2012-Central Excise, dated the 17^th March, 2012 was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 163(E) dated the 17^th March, 2012 and was last amended vide notification No.24/2013-Central Excise, dated the 2^nd August, 2013 which was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R 528 (E) dated the 2^nd August, 2013.

Assessment made originally under sec. 147 is a regular assessment and subject to sec. 234B interest

IT: When assessment is made first time under section 147 read with section 143(3), it being a regular assessment, section 234B(1) gets attracted, and interest under section 234B is chargeable

Cenvat credit can be allowed only if assessee holds valid invoice

ST/ECJ : Credit can be taken only after : (1) goods have been delivered or services performed and (2) assessee holds invoice or document which, as per Rules, may be considered to serve as an invoice

CBDT issues draft ‘Safe Harbour Rules’ after considering suggestions in Rangachary Committee’s repor

IT/ILT : CBDT Issues Draft 'Safe Harbour Rules' After Considering Suggestions in Rangachary Committee's Reports

DGFT Policy Circular No 05 (RE-2013/2009-14) dated 14-08-2013

Government of India

Ministry of Commerce and Industry

Department of Commerce

Directorate General of Foreign Trade

Udyog Bhawan, New Delhi

Policy Circular No. 05 (RE- 2013) /2009-2014

Dated: 14^th August, 2013

To

All Regional Authorities (RAs) of DGFT

Spices Board

All Commissioners of Customs

Members of Trade

Subject: Norms for Spices under Advance Authorization.

Reference: ALC Circular No. 04/2003 dated 21.11.2003 & ALC Circular No. 01/2004 dated 31.05.2004 .

As per circulars cited above, the norms for the spices are being fixed on the basis of Sample Analysis Report (SAR) furnished by the Spices Board of the samples drawn by the Customs. Norms in respect of applications under Para 4.7 of HBP are fixed by the Norms Committee solely on the basis of SARs being furnished by the Spices Board, Cochin. It has been felt that this procedure takes considerable time in ratification of norms leading to delays in redemption of licences.

2. In order to cut short the delays, it has been decided that Regional Authorities (RAs) concerned may redeem the Advance Authorisations (whether issued under Para 4.7 of HBP or otherwise) based on the SARs furnished by Spices Board, Cochin. This Policy Circular will be applicable in respect of all the pending cases before the Norms Committee as well as in respect of future Advance Authorizations.


3. Regional Authorities (RAs) will furnish a consolidated monthly report of such redemptions to the Norms Committee-IV at DGFT(HQ) for information and record.


4. Provisions regarding sampling and analysis of such samples indicated in ALC Circulars cited above shall remain unchanged.


5. This issues with the approval of Director General of Foreign Trade.

(Daya Shankar)

Deputy Director General of Foreign Trade

E-mail: daya[dot]shankar[at]nic[dot]in
(F. No. 01/83/171/00017/AM13/DES-IV)

Notification No 35 (RE-2013) / 2009-2014 dated 14-08-2013

Government of India

Ministry of Commerce & Industry

Department of Commerce

Udyog Bhawan

Notification No 35 (RE-2013)/2009-2014

New Delhi, Dated 14^th August, 2013

Subject:- Export Policy of Onions.

S.O. (E) In exercise of 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, 2009-2014, the Central Government amends para 2 of Notification No.03 (RE-2012)/2009-14 dated 29.06.2012 with immediate effect .

2. The amended para 2 of Notification No. 03(RE-2012)/2009-14 dated 29.06.2012 will now read as :
   

   “Export of onion for the item description at Serial Number 51 & 52 of Schedule 2 of ITC(HS) Classification of Export & Import Items shall be permitted subject to a Minimum Export Price(MEP) of US$ 650 per Metric Ton F.O.B. or as notified by DGFT from time-to-time”.

   
   


3. Effect of this Notification:
   

   Export of all varieties of onions as described above will be subject to a Minimum Export Price (MEP) of USD 650 per MT.

   
   

(Anup K. Pujari)

Director General of Foreign Trade

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

(Issued from File No. 01/91/180/922/AM’08/PC-III/Export Cell)

No concealment penalty if additions and grounds for imposition of penalty cease to exist

IT: Penalty need not be imposed when addition made, which was basis for penalty, was set aside

Rangachary Committee issues 5 reports recommending safe harbour rules in different sectors

IT/ILT : Rangachary Committee Recommends Safe Harbour Rules in Various Sectors Like, IT/ITES, Financial Transactions, Contract R&D in it and Pharma and Automotive Sectors