CBDT constitutes DRP panels at specified jurisdictions

IT/ILT : Section 144C of the Income-tax Act, 1961 - Dispute Resolution Panel (DRP) - Reference to - Reconstitution of DRP at specified areas of jurisdiction

Banks can offer any interest on NRE deposits with maturity of 3 years and above without any ceiling

BANKING : Deregulation of Interest Rates on Non-resident (External) Rupee (NRE) Deposits

RBI's clarifications on restrictions imposed on import of gold

FEMA/ILT : Import of gold by nominated banks /agencies/entities

Loss incurred in forex contracts entered into in course of export business isn't a 'speculative loss

IT: Where assessee, an exporter, entered into foreign exchange contracts as incidental to its export business and incurred loss in said contracts, said loss was not speculative loss but business loss

Authority rejects application for advance ruling as transaction was reported in return filed by appl

IT/ILT : Application for advance ruling was rejected as question on which advance ruling was sought was already reported in the return filed by the tax payer

Limit on remittance under Liberalized Remittance Scheme reduced to USD 75,000; further clarification

FEMA/ILT : Liberalised remittance scheme for resident individuals- Reduction of limit from USD 200,000 to USD 75,000

Interest rate on FCNR deposit with maturity of 3-5 years raised to LIBOR or SWAP plus 400 bps

BANKING : Interest rates on FCNR(B) deposits

RBI lessens limit of ODI from 400% to 100% of net worth under an automatic route

FEMA/ILT : Overseas Direct Investments

Incremental FCNR and NRE deposits with maturity of 3 years or more exempted from CRR and SLR require

BANKING : Section 42(1) of the Reserve Bank of India Act, 1934 and section 24 of the Banking Regulation Act, 1949 - FCNR(B)/NRE deposits - Exemption from maintenance of CRR/SLR and exclusion from ANBC for priority sector lending

No reassessment to disallow excess deduction under sec. 10B if assessee disclosed all facts in its r

IT: No reassessment to disallow excess deduction under section 10B if assessee disclosed all facts in its return

Protocol to India-Sweden DTAA: Mandatory to furnish info sought; authorities can visit other country

IT/ILT : Section 90 of the Income-tax Act, 1961 - Double Taxation Agreement - Agreement for Avoidance of Double Taxation and Prevention of Fiscal Evasion with Foreign Countries - Sweden - Amendment in Notification No. GSR 705(E), dated 17-12-1997

Revenue sharing between film distributors and exhibitors is a joint venture; subject to ST

ST : Circular No.148/17/2011-ST clarifying levy of service tax on transactions relating to film distributor/sub-distributor/exhibitor it was not violative of section 37B, as there is no direction to adjudicating authority decide a particular case in particular manner and taxability depends upon facts and circumstances of each case

HC upheld recovery of half of tax demand in EMIs as assessed income exceeded twice of returned incom

IT: Where assessment was only two and a half times higher than returned income, exercise of Assessing Officer's discretion under section 220(6), directing to pay half demand in instalments was reasonable and no further relief to assessee was sustainable

Additions on estimation basis can't lay down foundations for concealment penalty - Jodhpur ITAT

IT: Where additions were based on estimated disallowance of expenses, penalty under section 271(1)(c) could not be imposed

Sec. 150 conditions not satisfied if instead of giving effect to order of CIT(A) AO preferred to re-

IT : Where Assessing Officer instead of giving effect to order of Commissioner (Appeals) had sought to reopen assessment on ground that giving effect to order of Commissioner (Appeals) would result in escapement of income, provisions of section 150 were not applicable

RBI/2013-14/189 A.P. (DIR Series) Circular No.27 dated 16-08-2013

Reserve Bank Of India

A.P. (DIR Series) Circular No.27

August 16, 2013

To

All Category - I Authorised Dealer Banks

Madam / Sir,

Exim Bank's Line of Credit of USD 41.60 million to the Government of the Union of Comoros

Export-Import Bank of India (Exim Bank) has entered into an Agreement dated February 22, 2013 with the Government of the Union of Comoros, for making available to the latter, a Line of Credit (LOC) of USD 41.60 million (USD Forty one million and six hundred thousand only) for financing eligible goods, services, machinery and equipment including consultancy services from India for the purpose of financing the installation of an 18 MW power project in Moroni, the capital city of Comoros. The goods, services, machinery and equipment including consultancy services from India for exports under this Agreement are those which are eligible for export under the Foreign Trade Policy of the Government of India and whose purchase may be agreed to be financed by the Exim Bank under this Agreement. Out of the total credit by Exim Bank under this Agreement, the goods and services including consultancy services of the value of at least 75 per cent of the contract price shall be supplied by the seller from India and the remaining 25 percent goods and services may be procured by the seller for the purpose of Eligible Contract from outside India.

2. The Credit Agreement under the LOC is effective from July 23, 2013 and the date of execution of Agreement is February 22, 2013. Under the LOC, the last date for opening of Letters of Credit and Disbursement will be 48 months from the scheduled completion date(s) of contract(s) in the case of project exports and 72 months (February 21, 2019) from the execution date of the Credit Agreement in the case of supply contracts.


3. Shipments under the LOC will have to be declared on GR / SDF Forms as per instructions issued by the Reserve Bank from time to time.


4. No agency commission is payable under the above LOC. However, if required, the exporter may use his own resources or utilize balances in his Exchange Earners’ Foreign Currency Account for payment of commission in free foreign exchange. Authorised Dealer Category- l (AD Category-l) banks may allow such remittance after realization of full payment of contract value subject to compliance with the prevailing instructions for payment of agency commission.


5. AD Category-I banks may bring the contents of this circular to the notice of their exporter constituents and advise them to obtain full details of the Line of Credit from the Exim Bank’s office at Centre One, Floor 21, World Trade Centre Complex, Cuffe Parade, Mumbai 400 005 or log on to www. eximbankindia.in.


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

Yours faithfully,

(C. D. Srinivasan)

Chief General Manager

RBI/2013-14/189

RBI/2013-14/188 A.P. (DIR Series) Circular No.26 dated 14-08-2013

Reserve Bank Of India

A.P. (DIR Series) Circular No.26

August 14, 2013

To

All Category - I Authorised Dealer Banks

Madam / Sir,

Deferred Payment Protocols dated April 30, 1981 and December 23, 1985 between Government of India and erstwhile USSR

Attention of Authorised Dealer Category-I (AD Category-I) banks is invited to A.P. (DIR Series) Circular No.05 dated July 08, 2013 , wherein the Rupee value of the Special Currency Basket was indicated as Rs.80.972091 effective from June 25, 2013.

2. AD Category-I banks are advised that a further revision has taken place on August 06, 2013 and accordingly, the Rupee value of the Special Currency Basket has been fixed at Rs.83.45023 with effect from August 12, 2013.


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


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

Yours faithfully,

(C.D.Srinivasan)

Chief General Manager

RBI/2013-14/188

RBI/2013-14/187 A.P. (DIR Series) Circular No. 25 dated 14-08-2013

Reserve Bank Of India

A.P. (DIR Series) Circular No. 25

August 14, 2013

To,

All Category - I Authorised Dealer Banks

All Scheduled Commercial Banks which are Authorised Dealers (ADs) in Foreign Exchange/ All Agencies nominated for import of gold

Madam / Sir,

Import of Gold by Nominated Banks /Agencies/Entities

Attention of Authorised Persons is drawn to the Reserve Bank’s A.P. (DIR Series) Circular No. 15 dated July 22, 2013 on the captioned subject. As per these instructions, certain restrictions were imposed on the import of various forms of gold by nominated banks/nominated agencies/ premier or star trading houses/SEZ units/EoUs which have been permitted to import gold for use in the domestic sector.

2. Government of India and the Reserve Bank of India have been receiving several requests for clarifications on the operational aspects of the scheme of imports put in place in terms of the above circular. There have also been representations to change certain aspects of the scheme. Taking into account all these representations and in consultation with the Government of India, it has been decided to issue the following clarifications/modifications in supersession of all the earlier instructions:
   
   
   
   1. Import of gold in the form of coins and medallions is now prohibited.
   
   
   2. It shall be incumbent on all nominated banks/nominated agencies and other entities to ensure that at least one fifth, i.e., 20%, of every lot of import of gold imported to the country is exclusively made available for the purpose of exports and the balance for domestic use. A working example of the operations of the 20/80 scheme envisaged in terms of the present instructions is given in the Annex. This shall be monitored by customs authorities, and will be implemented port-wise only.
   
   
   3. Further, nominated banks/ nominated agencies and other entities shall make available gold for domestic use only to the entities engaged in jewellery business/bullion dealers and to banks authorised to administer the Gold Deposit Scheme against full upfront payment. In other words, supply of gold in any form to the domestic users other than against full payment upfront shall not be permitted.
   
   
   4. The nominated banks/agencies/refineries and other entities shall ensure that there is no front loading of imports, particularly in the first and second lots of imports. Such imports shall be linked to normal quantities of gold supplied to the exporters by the nominated banks/agencies and shall not exceed the highest quantity supplied during any one year out of last three years. The quantity thus arrived at, however, will not be imported in one or two lots only. As a thumb rule, imports of more than maximum of two months of requirements of the exporters in a lot would be considered unusual. Illustratively, if the gold supplied to exporters by a bank during the last three years is say, 30 tonnes, 40 tonnes and 60 tonnes respectively, imports in terms of this circular shall be based on highest of three i.e. 60 tonnes. Further, import of 50 tonnes( two months export of 10 tonnes for exports and 4 times the amount for domestic use, totalling 50 tonnes) will be considered unusual. In case of nominated banks not having a previous record of having supplied gold to the exporters they would need to seek prior approval from RBI before placing orders for import of gold for the first lot under the 20/80 scheme.
   
   
   5. The 20/80 principle would also apply for the henceforth import of gold in any form/purity including gold dore, whereby 20 per cent of the gold imported shall be provided to the exporters. This will be administered and monitored at the refinery level for each consignment at the time of such imports. This will also be monitored by the customs authorities. The refinery shall make available for domestic use only to the entities engaged in jewellery business/bullion dealers and to the banks authorised to administer the Gold Deposit Scheme against full upfront payment and sale of gold against any other form of payment shall not be permitted. Further, the import of gold dore is permitted only against a licence issued by DGFT.
   
   
   6. Any authorisation such as Advance Authorisation/Duty Free Import Authorization (DFIA) is to be utilised for import of gold meant for export purposes only and no diversion for domestic use shall be permitted.
   
   
   
   


3. Entities/units in the SEZ and EoUs, Premier and Star trading houses are permitted to import gold exclusively for the purpose of exports only.


4. AD Category I banks are advised to strictly ensure that foreign exchange transactions effected by / for their constituents are compliant with the above instructions. Head Offices of nominated agencies / International Banking Divisions of banks would be responsible for monitoring operations of the revised scheme taking into account transactions put through different centres. In respect of gold released for the purpose of exports, AD Category I banks will also put in place a special mechanism to monitor realization of export proceeds as per the extant regulations and any contraventions/ unusual developments in this regard should be reported forthwith to the concerned Regional Office of the Reserve Bank of India.


5. Government of India will be issuing separate instructions, if any, to the customs authorities/DGFT to operationalise and monitor the above requirements for import of gold.


6. The above instructions will come into force with immediate effect. Authorised dealers may please bring the contents of this circular to the notice of their constituents and customers concerned.


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

Yours faithfully

(Rudra Narayan Kar)

Chief General Manager-in-Charge

RBI/2013-14/187

---

Annex

Working example of the operations of 20/80 scheme for import of gold

1. A nominated bank/agency/ any other entity ABC imports say 100 kg of gold, which shall be routed through custom bonded warehouses only. If considered necessary, the lot can be procured through two invoices – one for exporters (i.e.20%) and the other one for domestic users (80%).


2. Out of the above import of 100 kg, 20 kg gold held in the bonded warehouse can be got released in part or full to be made available to the exporters of gold against undertaking to customs authorities as is the practice now.


3. The balance 80 kg can be supplied in part or full to domestic entities engaged in jewellery business/bullion traders/banks operating the Gold Deposit Scheme against full upfront payment. In other words, no credit sale of gold in any form will be permitted for domestic use. In case, the nominated bank itself is operating the Gold Deposit Scheme, the bank is permitted to use out of 80 kg, a portion for regularising own open position in gold arising out of operations of the Gold Deposit Scheme.


4. Next lot of import of gold by ABC shall be permitted by the customs authorities only after the quantity earmarked for exporter clients (i.e. 20 per cent of the imported lot) is released to the exporters against their undertaking to fulfill the export commitments within the stipulated time.


5. The quantum of gold permitted to be imported in the third lot will be restricted to 5 times the quantum for which proof of export is submitted. For import of gold in the subsequent lots, the cycle may be repeated following the 20/80 principle.

Note: The same procedure is to be followed by the refineries and by any other entity importing gold in any other form/ purity and in the case of import of Gold Dore also.

Statement during survey couldn't be retracted if original statement proved to be true and complete

IT : Where disclosure in statement was correct and complete in all respects, retraction from statement could not be accepted

Input credit can’t be denied in carousel fraud transactions if assessee isn’t the party to fraud

ST/ECJ: Input credit cannot be denied to an assessee merely because in chain of supply of transactions, another prior or subsequent transaction is vitiated by VAT fraud/carousel fraud, without assessee knowing or having any means of knowing it

Additions can't be made on mere trend analysis of exp.; GP rate can't be enhanced without rejection

IT : In absence of any defect in maintenance of books of account, books could not be rejected and gross profit rate need not be enhanced