IT : Director (Exemption) having allowed accumulation of income of assessee-trust in terms of section 11(2) after being satisfied with objects of trust, exemption under section 11 could not be denied to assessee on ground of non-application of income for charitable purpose
Sunday, 8 September 2013
ITAT can't remand a matter for verification if it hasn't been challenged before it
IT : Where issue regarding grant of deduction was not challenged before Tribunal, it could not remand such issue for verification
Petitioner failed to prove rendition of service to support allegation of non-payment; winding-up ple
CL : Where petitioner filed a petition seeking winding up of respondent-company on ground that respondent failed to pay its fees for rendering services for raising private equity finance from suitable parties, in view of fact that there was no material on record that respondent had actually received private equity finance from one 'T' Ltd. because it was clear from petitioner's invoice itself that it was a case of mere sanction of finance, in such a situation, demand raised by petitioner could n
Exemption to small service provider allowed as credit availed was reversed before actual utilization
ST: Where assessee has claimed Cenvat Credit but has reversed it before utilization, assessee may claim benefit of small service provider/threshold exemption under Notification No. 6/2005-S.T., dated 1-3-2005
Non-payment of taxes by recipient of income is a pre-condition to invoke recovery provision on TDS d
IT : Non-payment of taxes by recipient of income is a condition precedent for invoking section 201(1) and onus is on Assessing Officer to demonstrate that said condition is satisfied
Fruit, Vegetable Export Jumps To $625 Million
FAISALABAD: Export of Pakistan fruits and vegetables has jumped from 538 million dollars to 625 million dollar in one year.
A spokesman of agriculture (extension) department told here Sunday that Pakistan is producing best quality of fruits and vegetables which have attracted the foreign buyers very much.
He told that Pakistan has started its potato export to the markets of Middle East whereas the markets of South Korea, Mauritius and Japan have also allowed access to Pakistani fruits.
The spokesman further told that during 2012-13, Pakistan has made recorded export of potato, onion and Kinnow and in one year, the Pakistan fruit and vegetable exports jumped from 538 million dollars to 625 million dollar.
He told that climatic condition of Pakistan is most suitable for producing high quality fruits and vegetables and the Punjab government has also made tremendous efforts to increase exports of fruits and vegetables from this province.
In this regard, an exhibition of Pakistani fruits and vegetables was also in Germany whereas handsome subsidy is being provided to the growers so that the farmers could produce high quality fruits and vegetables and play their role in enhancing Pakistani exports, he added.
However, he stressed the need to improve quality of local production up to international standard and said that new varieties of fruits and vegetables are also being introduced among the farmers besides imparting education and training to the growers to improve the quality of fruits and vegetables by utilizing new technologies for grading, processing, packing, storing and transporting of fruits and vegetables.
Source:-www.brecorder.com
As Rupee Falls, Exporters Take On China
BANGALORE: "With the drop in the rupee, we are now much cheaper than China. We can today manufacture some products at 10% lower costs," says V Raja, MD of TE Connectivity India, which designs and manufactures products that connect and protect the flow of power, data and signals.
Raja, who has been with TE Connectivity since 2011 and who was CEO of GE Healthcare India for the seven years prior to that, says his parent company - the $13-billion US entity previously called Tyco Electronics - is examining the economics of exporting more out of India. "We are establishing a new facility in Bangalore, and we could create additional capacity for export if needed," he said.
The potential silver lining in the massive drop in the rupee value is beginning to emerge.
Manufacturing has been one of India's weakest links, but the rupee fall now makes a variety of products more exportable or import-substitutable. China, which has been the factory to the world for many years, has seen its currency actually appreciate slightly against the dollar during the past few months that the rupee collapsed, making Indian products even more attractive.
J Crasta, whose company CM Envirosystems makes environmental testing chambers to test a whole range of products, including missiles, says his exports have risen three-fold this year, in part due to the rupee depreciation. "By the end of the year, we might touch Rs 25 crore in exports, compared to about Rs 4 crore last year. We improved our product quality a lot, making them as good as or better than German and Japanese ones. But thanks to the rupee, we are now very, very competitive globally. The Japanese want to buy from us, and seeing that some Italians have come to us," says. Crasta, who is also the Karnataka head of industry chamber Assocham.
The depreciation comes at a time when the government has initiated significant measures to boost manufacturing.
Under the modified special incentive package scheme for the electronics sector announced last year, wherein it provides an attractive capital subsidy, the government is said to have already received project proposals worth Rs 11,500 crore. Of these, some have been approved, including a Rs 406-crore investment by Samsung to manufacture smartphones in Noida, and a Rs 544-crore investment by Bosch Automotive Electronics to make electronic control units of cars.
"The rupee depreciation is the icing on the cake," says P V G Menon, president of the India Electronics & Semiconductor Association (IESA). A study by IESA, which is yet to be concluded and which seeks to understand India's disability in manufacturing in comparison to China, finds that India has a 12-13% disability in certain high volume products, but has a 1-2% advantage in certain other industrial products such as flat panel displays. "Now with the depreciation, these figures may be more in favour of India. Labour in China has become four times as expensive as in India, and many companies are today looking at a China-plus-one strategy. So we should benefit," Menon says.
Electronic products is one of India's biggest import items currently, and is growing so rapidly (it grew 30% to Rs 1.57 lakh crore in 2011-12 over the previous year) that some estimate it will cross the oil import bill by 2020 if there aren't major import substitution efforts.
"In the last 18 months, there has been some movement in manufacturing from China to India largely in precision engineering as we are equipped in terms of technology and people. Also, China has lost its price-competitiveness in regular manufacturing," says Tamilselvan Sankaran, technical director in Detroit-headquartered engineering support services and technology solutions company EASi Engineering. But he says he is yet to see an impact due to the rupee depreciation.
For most, that could take time. It takes time to change customer mindsets and in many cases, companies have signed long-term contracts.
Sanjay Nayak, co-founder of Tejas Networks that makes telecom optical transmission products, says Indian customers have the choice to buy from Tejas or from a foreign vendor. "Many today have contracts with foreign vendors, but they should be motivated to shift in the medium term," he says. Nayak says Tejas is also more export-competitive now - it sells in over 60 countries - given that 50% of the cost of his product is the value addition that the Indian company makes on top of imported components.
But some of the older challenges to exports and manufacturing continue and will limit the potential. Infrastructure in terms of roads and ports are still problem areas. "Anomalies in the tax structure has to be rectified," says Anwar Shirpurwala, executive director in hardware association MAIT, referring to the lower customs duties on finished products in comparison to that on components.
TE Connectivity's Raja says labour laws are a critical concern for his parent company. "If I can't downsize in bad times, it's a big problem for me because we operate at very low margins. Global companies recognize India's capabilities, even Airbus and Boeing buy from me. If some of the problem areas are addressed, the potential is huge," he says.
Source:-timesofindia.indiatimes.com
Rupee Free Fall Against Dollar Likely Over, Say Forex Dealers
Sep 08 2013
Mumbai: Bankers are saying the worst is over for India’s currency. The rupee, which hit a record low of 68.85 a dollar on 28 August, has staged a dramatic recovery and since risen 5.5% to 65.25 on 6 September.
The Reserve Bank of India (RBI) on 28 August allowed oil marketing companies to buy dollars from the central bank through a swap window and followed this up on 4 September with allowing banks to swap their dollar deposits with it at a special concessional rate of 3.5% for at least three years and permitting local banks to raise 100% of their core capital from overseas all on 4 September. Such borrowing can also be swapped with RBI at 1% less than the market rates.
These measures and the passage of a few crucial bills in Parliament have restored investor confidence in the currency.
The rupee won’t go anywhere close to Rs68 per dollar in the next three to six months as dollar inflows from last week’s RBI moves and a likely shrinking trade deficit will support the currency, according to Agam Gupta, managing director, fixed income trading India, at Standard Chartered Bank Plc.
“I expect at least $15 billion to come from RBI’s recent moves on foreign currency deposits and allowing banks to raise higher amount of capital from abroad. Trade deficit is also likely to shrink and the government may announce more measures to curb gold and oil imports,” Gupta said, adding that all these measures mean that “the worse is over for the rupee.”
The trade deficit is the difference of a country’s exports and imports.
Gupta expects India’s deficit to ease to $10 billion in August from $12.27 billion in July as the value of exports rise and imports remain stable.
The rupee’s “secular downward move” is over, said Ashish Vaidya, head fixed income, currency and commodity trading, India, at UBS AG.
“We saw a phase in which the rupee fell sharply and more than other emerging market currencies. That phase is now over,” Vaidya said. “Yes, there are risks like a tapering by the US Federal Reserve and higher oil prices because of a possible US strike on Syria, but more or else the crisis is behind us.”
Higher oil prices are likely to worsen India’s current account deficit, which has ballooned to a record $88.2 billion or 4.8% of gross domestic product (GDP) in fiscal year 2012-13. Oil constitutes 80% of India’s imports.
Vaidya expects the rupee to be around 65 per dollar with a broader 62-65 per dollar range in the next three to six months.
To be sure, bankers do not expect the rupee to rise sharply from current levels. However, the sharp fall seen in the past four months is unlikely to be repeated. From 53.80 a dollar on 30 April, the rupee slumped 21.84% to 68.85 on 28 August.
The sentiment towards the Indian currency has turned for the better, said Manoj Rane, managing director and head of fixed income and treasury at BNP Paribas SA’s Indian unit.
“From here on, if the currency has to appreciate, we will have to see real capital inflows coming in,” Rane said. “I would think the RBI should target to keep the rupee value at Rs 65 per dollar because in times of global uncertainties it is better than the currency is a bit undervalued.”
A proposal from the BRICS (Brasil, Russia, India, China and South Africa) nations countries to launch a $100 billion currency reserve fund also arguers well for the rupee, according to Jayesh Mehta, managing director and country treasurer at the global markets group at Bank of America-Merrill Lynch.
On Thursday, the BRICS group announced the launch of a $100 billion currency reserve fund to tide over the likely end of the US Federal Reserve’s stimulus package. India will contribute $18 billion to the fund.
“It will create a buffer for the US tapering,” Mehta said, adding that he also expects $15 billion to $20 billion to come through bank deposits and fund raising from banks.
Besides the moves by RBI, two important developments in Parliament—the passage of the pension reform legislation that allows foreign direct investment of up to 26% in the sector and gives statutory power to the sector regulator and the land acquisition Bill—has also brightened investor sentiment.
Source:-www.livemint.com
Engineering Imports Adding To Current Account Burden: Eepc
8 Sep, 2013
NEW DELHI: Engineering export body EEPC India today said large imports of engineering goods, in addition to crude oil and gold, are exerting pressure on country's current account.
The CAD has widened to a record high of USD 88 billion or 4.8 per cent of the GDP for the fiscal ended March 31, from USD 78.2 billion in 2011-2012, about 4.2 per cent of the GDP.
The import-export gap in the engineering items is overly negative at USD 17 billion (2012-13) despite the fact that engineering items are among the largest contributors to India's total export basket, an EEPC India study said.
The engineering exports have not been picking up. They fell by 5.77 per cent in the first four months of the current financial year, it added.
"It is not only crude and gold imports which are causing India's CAD to swell but also several other items like industrial machinery and other capital goods," EEPC India Chairman Aman Chadha said.
While there are no domestic alternatives available for the crude oil and gold, import of engineering goods can be reduced by giving a boost to the capital goods sector, he added.
"It is very much doable, and nurturing the sector can make the country achieve a positive balance of trade in the engineering goods sector in the next five years," Chadha said.
The study said there are at least 79 tariff lines of different engineering products such as automotive engines, which have shown an annual compound average growth of as high as 35 per cent in some cases.
"For instance, imports of engines of cylinder capacity greater than 250 CC were only USD 114 million in 2005-06. The import of this item has now crossed USD one billion," it said.
"We must lower the manufacturing/engineering trade deficit. This can be done by only by promoting the production of capital goods sector in the country," the study done by EEPC India (formerly Engineering Export Promotion Council ) said.
In order to curtail import of engineering items, EEPC India said the government should immediately launch a Technical Upgradation Scheme.
"We must thus move towards promotion of valued - added goods in the country," Chadha added.
Source:-economictimes.indiatimes.com
Travelling exp. incurred by assessee on shifting of employees to payroll of AE is subjected to TP an
IT/ILT: Where assessee incurred travelling expenses on seconding its employees to AEs located abroad, in view of fact that those employees were shifted to payrolls of AEs and revenues earned from work performed were billed by AEs in their own accounts, travelling cost of said employees was to be borne by AEs and, since, assessee had not shown any amount recoverable from AEs on said account, TPO was justified in making adjustment in respect of same while determining assessee's arm's length price
Onion, Cotton May Lose Export Incentives
September 8, 2013
Products like onion and cotton are likely to lose export incentives as there are restrictions on their outbound shipments, a senior commerce ministry official said today.
The matter is under active consideration of the Commerce Ministry. The issue came up during a meeting of senior officials of the ministry recently.
"The senior officials pointed out that some products like onion and cotton are on one hand availing export incentives under Focus Market Scheme (FMS) or Focus Product Scheme (FPS) while on the other hand there are curbs on their exports," the official said.
The objective of the FMS is to offset the high freight cost and other disabilities to select international markets with a view to enhancing export competitiveness.
It allows a duty credit of 2.5 per cent of free-on-board value of exports to countries that are identified as focus markets by the government. The duty credit may be used for import of inputs or goods including capital goods. The products covered under FPS are entitled for 2 per cent duty credit scrip.
In the case of onion, the government has fixed minimum export price of $650 per tonne and the commodity also avail export incentive under FMS or FPS.
"It is not logical that on one hand we are giving incentives to boost export and on the other, putting restrictions on the shipments," the official added.
Similarly, the government has imposed quantitative restrictions on the exports of cotton and cotton yarn.
Exporters can apply for registration certificate (RC) for a maximum quantity of 30,000 bales or actual quantity exported in the previous cotton season, whichever is less. One bale contains 170 kg of cotton.
Cotton production was estimated to be around 34 million bales for the 2012-13 cotton season (October to September).
India's cotton exports are likely to remain flat at around 10 million bales in the 2013-14 season due to lesser demand from China. China is the biggest importer of the Indian natural fibre.
Source:-www.business-standard.com
Russia Lifts Ban On Rice Imports From India
September 7, 2013
Russia has lifted the ban on imports of rice and peanuts from India, after about nine months. This followed a series of marathon meetings between the governments of the two countries and India’s assurance of adhering to global quality standards.
Indian exporters would be able to send consignments of rice, rice cereals and peanuts to Russia with immediate effect. In December 2012, Russia had banned imports of rice, rice cereals and peanuts from India after khapra beetle (Trogoderma granarium), a pest found in stored grain products and seeds, was discovered in a few consignments.
Earlier, the ban had strained trade relations between India and Russia. The resumption of exports comes at a time when the Centre is pushing high quantities of exports to secure dollars. This would, in turn, help address the government’s current account deficit.
A communiqué posted on the website of Agricultural and Processed Food Products Export Development Authority said, “The ministry of foreign affairs of the Russian Federation presents its compliments to the Embassy of India in the Russian Federation and has the honour to inform you based on the material on the results of the Rosselkhoznadzor delegation’s visit to India and the guarantees of the Indian side to comply with Russian phytosanitary requirements, Russolkhoznadzor considers possible to cancel temporary restrictions on the import of rice, rice cereal and peanuts from India to Russia starting September 1.”
“The ministry of foreign affairs of the Russian Federation avails itself of this opportunity to renew to the Embassy of India in the Russian Federation the assurances of its highest consideration,” it added.
Gurnam Arora, joint managing director, Kohinoor Foods (formerly Satnam Overseas), said, “Though Russia is not a big market for Indian rice exports, opening up this market would surely make a positive difference for exporters here.”
The issue was discussed at a recent meeting between Commerce Minister Anand Sharma and Russian Minister of Economic Development Alexey Valentinovich Ulyukaev on the sidelines of an Association of Southeast Asian Nations ministerial meeting in Brunei. Sharma assured sanitary and phytosanitary issues in exportable commodities would be addressed.
Vijay Setia, former president of the All India Rice Exporters’ Association, said, “The opening of the Russian market will help India’s rice exports grow.” India’s rice exports to Russia increased to $25 million in April-December 2012, compared with $4.5 million in the corresponding period of 2011.
Source:-www.business-standard.com
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