INCOME TAX APPELLATE TRIBUNAL,MUMBAI CONSTITUTION OF BENCHES FROM 26.08.2013 TO 29.08.2013

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No extension of service tax voluntary compliance scheme

There will be no further extension of the recently-launched Service Tax Voluntary Compliance Encouragement Scheme which expires on December 31, according to Sheila Sangwan, Member (Budget) of Central Board of Excise and Customs.

Speaking at a meeting on the scheme here today, she urged trade to make use of this one-time amnesty scheme and clear its tax dues.

The scheme was launched to enable the trade to clear service tax dues from October 2007 to December 2012. The scheme provides immunity from payment of interest.

Sangwan also said there would be no further amendments to the scheme. “We have set a growth target of 36 per cent from the current level of about 15 per cent,” she said, adding that the scheme would go a long way in meeting this target.

She said the scheme gave adequate time to the trade to raise the required finances to clear the tax dues. She also said that the Department would provide acknowledgement within seven days of the date of filing.

The meeting was informed that the scheme could fetch about 10 per cent of the service tax collections this fiscal. The scheme, if marketed adequately, could garner about Rs 10,000 crore on a conservative basis.

Members of the trade raised several issues and doubts such as Cenvat credit for the period and whether a declaration can be made under the scheme in respect of Cenvat credit.

Unit taking credit on ISD's invoice can be asked to reverse it only on violation of Rule 7 of CCR

ST: In case of units taking credit based on invoice of Input Service Distributor, reversal can be sought from such units only if it is alleged in show-cause notice that credit distributed against documents is in violation of provisions of Rule 7 of CENVAT Credit Rules, 2004.

No TP adjustment was to be made if no comparable had profit margin higher than that of assessee

IT/ILT: Where no comparable had profit margin higher than that of asseseee, transfer pricing adjustment was not required

Interest paid to prospective buyers on cancellation of booking of plots allowable as revenue exp.

IT: Advance returned alongwith interest to prospective buyers for booking of plots, when deals could not be materialized, was business expenditure

Hanveev To Launch Organic Cotton Products

Kerala State Handloom Development Corporation Ltd (Hanveev) on Monday said it is introducing new products like organic cotton in this Onam season to bring its business back to profit. The company, which has an accumulated loss of Rs 58 crore over the 46 years of its existence, expects that the new products will generate about 50% of its revenue in the current fiscal.



"Organic cotton is grown without using artificial fertilizers or pesticides and we are sourcing it from the National Handloom Development Corporation (NHDC)," said N Lakshmanan Nambiar, managing director of Hanveev.



Although this cotton yarn is 30% costlier compared to the normal one, demand is high for products made with it due to its popularity among eco-conscious people, especially tourists from abroad, he said. The new products to be introduced include shirting and churidhar materials.

Source:- timesofindia.indiatimes.com

Saudi Aramco Plans To Enter Indian Oil Sector, Eyes 30% Stake In Opal Project

NEW DELHI: The world's biggest oil producer, Saudi Aramco, plans to acquire up to 30% stake with a key management role in a giant petrochemicals project in Gujarat, and is negotiating with ONGC Petro additions Ltd (OPaL) for the stake that can pave the way for the behemoth's entry into the Indian oil and gas sector.



The proposed deal, currently at an advanced stage, will be mutually fruitful as Middle-East oil suppliers are looking for closer links in large Asian markets, with the American continents likely to depend less on crude oil imports as domestic shale production and deep-sea oil and gas output pick up.



Aramco also aspires to be a world leader in chemicals and is partnering Dow Chemicals in a $20-billion venture to build the world's biggest petrochemicals complex in the east of the kingdom. It partners Exxon, Total and other firms in refining and chemicals ventures too.



For India, investment in the Rs 19,500-crore project by the Saudi behemoth will come as a shot in the arm for the business climate, which has suffered as the rupee has tumbled, markets have crashed and foreign investors are jittery.



Saudi Aramco, which has 54,000 employees across 77 countries, is held in awe by the global oil industry as it pumps a staggering 9.5 million barrels per day (bpd), or eight times the capacity of Reliance's Jamnagar complex that processes 1.2 million bpd.



Saudi Aramco plans to enter Indian oil sector, eyes 30% stake in OPaL Project



"Saudi Aramco is likely to pick up a significant minority stake between 20% and 30 % in OPaL and will become a strategic investor in the company," a person close to the deal told ET.





This would be the first equity investment by the Saudi major, which virtually dominates the global oil market.



The Gujarat project, likely to be completed by 2014, is being funded with a debt-equity ratio of 60:40.

Source:- economictimes.indiatimes.com

Iron Ore Imports Set To Rise 67% To 5 Mt In Fy14

26-Aug-2013

The domestic steel industry, which is facing acute shortage of iron ore, is likely to increase its dependence on imported iron ore for this year as well. The continued ban in Goa, a delay in accordance of environment and forest clearances for several mines in Karnataka and a cap on iron ore mining in Odisha have resulted in a drastic decline in iron ore production.



The steel industry imported 3.05 million tonnes (mt) of iron ore in 2012-13, mainly for port-based steel mills. On account of reduced iron ore production and regional shortages of iron ore last year, major steel units like Essar Hazira, Bhushan Steel and JSW Ispat had to resort to imports of iron ore. Compared to 970,000 tonnes of iron ore imported in 2011-12, the imports in 2012-13 have gone up 3.1 times. However, during the current financial year, iron ore imports are likely to go up 67 per cent to around 5 mt. This is mainly due to lower production of iron ore domestically.



The country was the third largest exporter of iron ore till 2011 and lost its position owing to various factors. According to the Federation of Indian Mineral Industries, a very high export duty of 30 per cent, coupled with higher freight rates on iron ore meant for exports by the railways, iron ore exports have come down sharply during the last financial year. Production of iron ore has come down from 218 mt in 2008-09 to 140 mt in 2012-13 due to enforcement of strict environmental and other regulatory measures. The country had seen a surplus of almost 110 mt in 2008-09 and 2009-10. However, this has come down to a level of just 17 mt in 2012-13.



Most steel plants are operating at sub-optimal levels because of non-availability of iron ore, leaving thousands of crores of investment stranded. The capacity utilisation of steel mills was only around 81 per cent and produced 78.3 mt of steel in 2012-13.



The country witnessed its lowest ever ore export in 2012-13, estimated at close to 18 mt, a decline of 69 per cent over the previous year. India exported 61.8 mt in 2011-12.



“The production of iron ore is expected to remain at the level of 140 mt due to the cap in production in Karnataka, ban in Goa and strict enforcement of environmental regulations in Odisha. However, the domestic steel industry requirement is more than 145 mt in the current fiscal, and the industry is forced to import iron ore, which is not economically viable,” Sajjan Jindal, chairman and managing director, JSW Steel Ltd, said in a recent representation to the prime minister. According to the ministry of steel, Indian steel mills require around 500 mt of iron ore per annum by 2025, when the steel production is estimated to touch 300 mt per annum.



In Karnataka, subsequent to the order of the Supreme Court for opening of mines, the iron ore supply is not yet normalised. Of 57 mines as approved by the Central Empowered Committee, only 14 mines are operating, with an annual production rate of 13.77 mt against the total annual demand of 32-35 mt.

Source:- business-standard.com

Onion Prices Still Rule High At Rs 70/Kg In Delhi

26-Aug-2013

New Delhi: Retail prices of onion in the national capital remained high Monday at Rs 70 a kg due to lower supplies in the wholesale market.



Traders said the wholesale prices of the kitchen staple are ruling firm at Rs 45-50 per kg as supplies from producing regions have been lower in the past couple of days.



"Supply continues to be below normal, due to which prices are high," Onion Merchant Traders Association President Surendra Budhiraj said.



At present, about 40-50 trucks are entering the market as against 60-70 trucks earlier, he added.



Street vendors charge anything between Rs 55 and Rs 70 for one kg of onion in Delhi, depending on the locality and quality of the bulb, a key ingredient in most food items.



In a bid to ease high onion prices -- a politically sensitive issue -- cooperative major Nafed has been asked to import onions to boost domestic supplies.



The vegetable's prices recently touched Rs 80 a kg.



Organised retailer Mother Dairy is selling onions at around Rs 50 per kg through its 400 Safal outlets in the NCR.



Nafed is offering a price of Rs 40 per kg through its 5 outlets and mobile vans.



At Lasalgaon in Nashik district of Maharashtra, a major producing region, prices have risen by Rs 3 per kg to Rs 43 per kg today, and supplies have come down to 3750 qunitals from 4,249 quintals last week, according to National Horticulture Research and Development Foundation (NHRDF) data.



"Prices will remain high as farmers and traders are going to keep supplies under stress to maintain high level of onion prices," a senior official of NHRDF said.

Source:- zeenews.india.com

NBFC's scheme of Arrangement as per Companies Act can't be considered if it's not in conformity with

CL: Chapter IIIB of RBI Act has been given an overriding effect over all other laws including Companies Act by incorporating section 45Q with a clear intention to ensure that in a case of NBFC, a scheme under section 391 of Companies Act cannot be entertained unless it is in conformity with provisions of section 45QA of RBI Act

Panel Suggests Measures To Boost Falling Msme Exports

26-Aug-2013

An inter-ministerial committee set up to suggest ways to boost exports of India's micro, small, and medium enterprise (MSME) sector has recommended more credit for the sector at competitive rates, extension of foreign currency credit and marketing support.



The committee also recommended an increase in capital investment limits for the purpose of defining MSMEs, and leveraging of defence offsets to support MSME exports.



According to the ministry of MSME, several product groups exported by MSMEs reported declines in 2012-13 - gems and jewellery (by 3.5 per cent), electronics (9.27 per cent), ready-made garments (5.76 per cent) and engineering goods (3.1 per cent).



The committee submitted its report last month. It was headed by the Finance Secretary R S Gujral and its other members included Raghuram Rajan, chief economic advisor and governor-designate of the Reserve Bank of India; S R Rao, commerce secretary; Sumit Bose, revenue secretary; Madhav Lal, MSME secretary; and Rajiv Takru, secretary, financial services.



Availability and cost of credit at internationally competitive rates is a major issue facing Indian MSMEs, the report noted, with interest rates of 14-16 per cent, limited access to equity capital, and banks insisting on collateral requirements.



The committee has recommended an additional interest subvention of two per cent for exporters who repay on a timely basis; reduction of the spread of foreign currency credit to London Interbank Offered Rate (Libor) + 2 per cent; and automatic increase in foreign currency limits due to the depreciation of the rupee. It also said export credit must comprise at least 40 per cent of overall bank credit to MSMEs, and banks must increase the number of their MSME borrowers by 10 per cent annually until 2017.



Marketing is one of the critical areas where MSMEs face problems, the report said, adding that there are also challenges in product differentiation, brand-building, customised services, clientele-building and after-sales servicing.



"Many entrepreneurs are not entering the field of exports due to lack of market knowledge, availability of a growing domestic market and the complexities of international trade," it noted.



The committee also recommended a larger budget for market development assistance and market access initiative schemes, greater focus on brand-building and trade fairs, income tax deduction for marketing expenses, support for e-commerce and a focus on Asia.



Modifications in labour laws to facilitate more overtime hours and employment of women in night shifts with necessary safety, enhancement of technology upgradation schemes with both capital subsidy and interest subvention; setting up of research/resource/product development centres and linkages with the technical institutions and CSIR laboratories have also been recommended.



The committee has recommended setting up round-the-clock facilities for export consignments at major air cargo and sea port complexes, enhancement of the ASIDE (Assistance to States for Development of Export Infrastructure & Allied Activities) scheme and development of MSME clusters near highways and rail corridors.



The committee has said a differential corporate tax regime for MSME exporters, separate ECGC policy for MSMEs to reduce costs, and removal of service tax on conversion of export proceeds remittances will reduce transaction costs in exports.



The constitution of a standing committee of secretaries to resolve policy- and implementation-related issues and greater coordination at the ground level between customs and DGFT offices has also been recommended.



The committee recommended a cess of 0.1 per cent on the production of chemicals and plastics, to create a technology upgradation fund for the two sectors; additional budgetary support for the handicrafts sector; enhanced support for the Integrated Leather Development Scheme; amendment of APMC Acts to enable direct purchase of horticulture/vegetable items from farmers by exporters; and greater infrastructure support (testing, labs, packaging houses) for processed agriculture exports.



The committee said tax-related incentives were necessary in view of the imperative need to boost exports and reduce the current account deficit, but could be extended for only five years in order not to increase budgetary expenditures or reduce tax revenue.

Source:- business-standard.com

Rupee Breaches 65 Against Dollar, Nears Record Low

The Indian rupee breached the psychological 65 mark against the dollar on Tuesday ahead of a key debate on the state of the Indian economy in Parliament. Markets also fell sharply with BSE Sensex slumping over 250 points in early trades.



The partially convertible rupee dropped over 1.6 per cent to hit a low of 65.36 as of 09.20 a.m. against Monday's close of 64.30. It is now trading close to its all-time low of 65.56 hit last week.



Traders attributed month-end dollar demand from importers behind the weakness. Sustained foreign selling in equities also continued to raise concerns about the gaping current account deficit.



Finance Minister P. Chidambaram met foreign investors on Saturday to seek suggestions on attracting dollar inflows, but no big steps have been announced so far.



"The reality on the ground makes it a difficult job for the finance minister to attract FII, FDI flows," currency expert AV Rajwade told NDTV.



Adding to the grim situation is the food security bill passed by the Lok Sabha yesterday. The plan worth nearly $20 billion to provide cheap grain to the poor will hit the fiscal hard, analysts said. It will also stoke inflation making it harder for the Reserve Bank to cut rates at a time when the Indian economy is growing at its slowest pace in a decade.



"But for some extremely creative accounting, it's unlikely that fiscal deficit target will be met this year," Mr Rajwade said.



The Sensex traded 228 points lower at 18,330, while the Nifty traded 76 points lower at 5,400. The rupee traded at 65.36 as of 09.20 a.m.

Source:- profit.ndtv.com

TP adjustments deleted as margin declared by taxpayer exceeded average mean of margin of comparables

IT/ILT : Where in course of transfer pricing proceedings, Tribunal found that average mean margin earned by comparables was 10 per cent as against 17 per cent shown by assessee in respect of similar international transactions, it was justified in setting aside impugned adjustment made to assessee's ALP by authorities below

Assessee entitled to interest on refund arising from excess payment of TDS

IT: Refund due to MAT credit and TDS as well, is entitled to interest

Cenvat credit can't be denied if tax paid on non-taxable service exceeds credit taken

ST: Even if a service provided is not taxable, if assessee has paid tax thereon, which is more than Cenvat credit availed, payment of tax must be treated as reversal of Cenvat credit and department cannot seek reversal of Cenvat credit again

Cumulative Redeemable Preference Shareholder would have voting rights if co. fails to pay dividend f

CL : Company having failed to pay dividend on CRPS for continuous two years, CRPS holder would have voting rights under section 87

Rs. 1 crore exemption under sec. 54EC if investment falls in two different FYs but within 6 months

IT: Where assessee within six months from date of transfer of capital asset was able to place investment of Rs. 50 lakhs each in specified assets in two different financial year, restrictive proviso to section 54EC would not limit claim to Rs. 50 lakhs only

Earlier ruling in favour of assessee is relevant in subsequent appeals as well if facts remain same

IT : Where High Court while considering appeal for preceding assessment year in assessee's own case found that appellate authorities had deleted addition after analyzing material on record, said decision would equally apply for year under consideration where addition was based on self same grounds

AO can allow reduced time for payment of demand if full period would be prejudicial to interest of r

IT: Assessing Officer can reduce period for payment of any sum as per demand notice under section 156 but he must have reason to believe that grant of full period would be detrimental to interest of revenue and prior permission of Joint Commissioner must have been obtained

Managing of the properties in lieu of consideration under co-ownership is chargeable to ST

ST/ECJ: Activity of managing buildings/properties under co-ownership for consideration is liable to service tax

If Board delegated its powers to CIT, question of remanding matter again to board doesn't arise

IT : Power of Board exercisable under section 119(2)(a) is an enabling provision empowering Board to pass orders in favour of assessee for waiver of interest levied under sections 234A, 234B and 234C, and where in assessee's case said power was delegated to Chief Commissioner, question of remanding matter yet again directing Board to reconsider it, did not arise