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Wednesday 9 October 2013
Appointing Common Adjudicating Authority ORDER 6/2013- Service Tax
Appointing Common Adjudicating Authority ORDER 5/2013- Service Tax
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No concealment penalty for disallowance of repair exp. after treating it as capital exp.
IT: Disallowance of repair expenses on ground that same was capital in nature could not be sole reason for imposition of penalty under section 271(1)(c)
HC sets aside revisional order of CIT as addition was made by AO after appropriate enquiry
IT : Commissioner is empowered to revise block assessment order passed after taking statutory approval of Joint Commissioner
Refund can't be adjusted against demand unless prior intimation is given to assessee
IT: Assessee must be intimated of proposed adjustment of refund against tax remaining payable
Assessee must furnish Cenvat credit documents when called upon by department
ST: If assessee wants to avail credit as provided for under law, they are bound to produce relevant documents on strength of which they want to take credit so that department can verify same
Service tax applicable on food, beverages served at pool side
Food and beverages served at swimming pool side in a hotel will attract service tax, the Finance Ministry has said.
"Services provided by specified restaurant in other areas of the hotel are liable for service tax," said the Central Board of Excise and Customs (CBEC) while clarifying doubts regarding the applicability of the levy on restaurant service.
In a hotel, if services are provided by a restaurant in other areas like swimming pool or an open area attached to the restaurant will attract the service tax, it said.
The CBEC, responsible for administration of indirect taxes, further said that service tax is not applicable on goods sold on MRP (maximum retail price), like water bottles, in restaurants.
"If goods are sold on MRP basis...they have to be excluded from total amount for the determination of value of service portion," it said.
It further clarified that services provided in relation to serving of food or beverages by a restaurant, eating joint or mess, having the facility of air conditioning or central air heating, attracts service tax.
However, services provided in non-air conditioned restaurants are treated as "exempted service".
In restaurants, service tax is charged at the rate of 12 per cent plus cess on 40 per cent of the food bill.
Imparting training to pilots as per statutory norms doesn't satisfy 'make available' clause; no FTS
IT/ILT: Where assessee engaged in business of charter hire of helicopters, paid training expenses of pilots to a US based company, in view of fact that training was given to pilots and other staff as per requirement of DGCA Rules in order to enable pilots to work in aviation industry and such training would not fall under term 'service make available' as mentioned in para 4(b) of article 12 of India-USA DTAA, assessee was not required to deduct tax at source while making payments in question
India To Discuss Uranium Issue With Australia
09-Oct-2013
The issue of uranium sale to India from Australia may figure in discussions when Prime Minister Manmohan Singh meets his new Australian counterpart Tony Abbott here tomorrow on the sidelines of East Asia Summit.
Singh, who arrived here today for 11th ASEAN-India summit, would also meet leaders of various other countries on the sidelines of the summit and attend the East Asia Summit as well tomorrow.
East Asia Summit is a forum for co-operation between various countries of this region with ASEAN and includes Australia, China, India, Japan, Republic of Korea, New Zealand, Russia and the US, in addition to the ten ASEAN (Association of South East Asian Nations) countries.
Official sources said that the issue of uranium sale may come up for discussion during Singh's meeting with Abbott here tomorrow.
While maintaining that all issues can not be covered during this meeting, which would be the first between the two leaders, they said that uranium issue could still be very high on agenda.
"The new government in Australia has said they would be happy to schedule a meeting on uranium matter relatively very soon and therefore the issue could be deliberated upon during this meeting," they added.
"While finer details might not be discussed, the initial issues must be talked about there," sources said.
If the two nations go ahead with the deal, India will be the first customer of Australia that is not a signatory to the nuclear Non-proliferation Treaty (NPT).
Source:- business-standard.com
Steel Demand In India To Grow At 3.4% In 2013: World Steel Association
09-Oct-2013
Steel demand in India is expected to grow 3.4% this year, faster than the 2.6% expansion recorded in 2012, when high inflation and structural problems in the economy restricted its use. Next year, however, the demand is set to grow at a substantially faster 5.6% due to accelerated attempts to implement structural reforms, according to the World Steel Association's short range outlook for 2013 and 2014.
As per the leading international steel body's outlook, India's total steel demand is set to touch 7.4 million tonnes in 2013. The domestic expansion is pegged higher than the 3.1% global growth, which rests mainly on the 6% growth in China while the rest of the world is estimated to grow at just 0.7%. Next year, the global demand is projected to grow 3.3% to touch 1.52 billion tonnes amid a slow but steady recovery.
"The key risks in the global economy, the eurozone crisis and a hard landing for the Chinese economy have continued to stabilise in last six months since April. The correction in the eurozone has been more severe than forecasted but the improvement seen recently is now expected to continue for the rest of 2013," said Hans Jurgen Kerkhoff, chairman of WSA Economics Committee.
The association expects to see continued recovery in global steel demand in 2014, with the developed economies returning to overall positive growth.
The apparent steel use in China is expected to grow 6% in 2013 to 699.7 mt, following a 2.9% increase in 2012, reflecting the impact of the government's stimulus measures focused on infrastructure. However, demand expansion in 2014 is expected to slow to 3%, as the Chinese government's efforts to rebalance the economy continue to restrain investment activities.
In the European Union, apparent steel use is expected to decline for the second straight year in 2013 by 3.8% to 134.9 mt after falling 9.5% in 2012. Steel demand is, however, expected to increase 2.1% in 2014 to 137.8 mt.
In the US, a pick-up in demand from the automotive, energy and residential construction sectors coupled with an improvement in the global economy are likely to lead to a 3% growth in steel demand during 2014, following an estimated 0.7% growth to 96.9 mt in 2013.
Source:- economictimes.indiatimes.com
Financial Aid Boost For Plastic Processing Industries
NEW DELHI: The Centre has planned to provide financial assistance to promote setting up of plastic parks for downstream plastic processing industries. The chemicals and petrochemicals department has proposed setting up of a special purpose vehicle (SPV) that would provide infrastructure and common facilities for the industries.
In an official statement, the department has said that state government or its agency, which would set up such SPVs, must have equity participation in it. Share subscription agreements between the SPV and its members will have to be executed. The contribution of the members will have to be at least 20% of the total equity, including the cost of the land.
The Centre will provide a grant-in-aid upto 50% of the project cost and not exceeding Rs 40 crore per SPV. The rest of the contribution will be made by the state government, its agencies, beneficiary industries or loan from financial institutions. The release of funds will be based on identification of milestones and time limits set for each milestone to be decided at the time of the project approval by a scheme steering committee (SSC).
The scheme is aimed at increasing investment in the sector for additions in capacity and for increased exports in the sector. Adopting a clustered development approach, the scheme aims to achieve environmentally-sustainable growth through innovative methods of waste management, recycling, etc.
Source:- timesofindia.indiatimes.com
Service Tax Applicable On Food, Beverages Served At Pool Side
09-Oct-2013
Food and beverages served at swimming pool side in a hotel will attract service tax, the Finance Ministry has said.
"Services provided by specified restaurant in other areas of the hotel are liable for service tax," said the Central Board of Excise and Customs (CBEC) while clarifying doubts regarding the applicability of the levy on restaurant service.
In a hotel, if services are provided by a restaurant in other areas like swimming pool or an open area attached to the restaurant will attract the service tax, it said.
The CBEC, responsible for administration of indirect taxes, further said that service tax is not applicable on goods sold on MRP (maximum retail price), like water bottles, in restaurants.
"If goods are sold on MRP basis...they have to be excluded from total amount for the determination of value of service portion," it said.
It further clarified that services provided in relation to serving of food or beverages by a restaurant, eating joint or mess, having the facility of air conditioning or central air heating, attracts service tax.
However, services provided in non-air conditioned restaurants are treated as "exempted service".
In restaurants, service tax is charged at the rate of 12 per cent plus cess on 40 per cent of the food bill.
Source:- economictimes.indiatimes.com
Textiles Ministry For Restoration Of Fms To Cotton, Cotton Yarn Exporters
09-Oct-2013
The Textiles Ministry today said it will soon ask the Commerce Ministry to restore the export incentives under the Focus Market Scheme (FMS) given to cotton and cotton yarn exporters.
The Directorate General of Foreign Trade (DGFT) was of the view that these products are on one hand availing export incentives under FMS, while on the other hand there are curbs on their exports.
"We will be writing to the Commerce Ministry in this regard. It withdrew FMS which was given to cotton and cotton yarn exporters and it was based on the belief that we have already got surplus production in this country. So, they must have thought that it (sops) is not necessary," Textiles Minister Kavuru Sambasiva Rao today said.
He was talking to reporters after chairing a Conference of State Ministers of Textiles here.
He, however said, the Current Account Deficit (CAD) is a major issue. To address this, exports have to be increased in order to bring in more foreign exchange in the country. Therefore, the Commerce Ministry should encourage textiles exports.
The objective of the FMS was to offset the high freight cost and other disabilities to select international markets with a view to enhancing export competitiveness.
It allowed 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 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.
In regard to the Technology Upgradation Fund Scheme (TUFS), Rao said: "TUFS has been notified. Earlier, in August this year, the Cabinet Committee on Economic Affairs gave its approval for continuing the TUFS during the 12th Plan period with a major focus on powerlooms in accordance with the Budget announcement for the 2013-14 fiscal."
Source:- economictimes.indiatimes.com
Trade Deficit At 30-Month Low As Gold, Silver, Oil Imports Fall
India's trade deficit fell to its lowest level in 30 months as exports retained their double-digit growth rate and imports contracted due to a fall in the shipment of gold, silver and oil. The data comes as a huge relief to policy makers struggling to put a lid on the yawning current account deficit (CAD).
Data released by the commerce department on Wednesday showed that trade deficit had narrowed to $6.8 billion in September, the lowest since March, 2011, when it was estimated at $3.8 billion.
Since then, the monthly trade deficit has never been in single digit. Gold and silver imports plunged 82% to $800 million in September, compared to $4.6 billion a year ago, shutting out a major worry for policymakers. Surging gold imports were blamed for the widening of the CAD which triggered a sharp slide in the rupee against the US dollar.
Similarly, oil imports were down almost 6% at a little over $13 billion. As a result of the fall in two major items, India's imports declined by over 18% to $34 billion in September, 2013. The government has been brainstorming on the need to compress imports to trim the CAD. There has been talk of compressing non-essential imports but the move is still to gather pace.
"The government has taken steps to curtail imports of non-essential commodities, particularly precious stones. That is the singular reason for the decline in trade deficit," commerce secretary S R Rao told reporters. A lower trade deficit also augurs well for the rupee, which had depreciated by over 20% to a record low of 68.75 to a dollar in August end.
Boosting exports has been listed as one of the main pillars of the strategy to tackle the problem of a widening CAD. A slowdown in India's key markets such as the United States and the European Union had hurt exports, but the plan to diversify to other markets in Africa, Southeast Asia and Latin America has helped reverse the trend. Experts say the trend has to sustain in the months ahead to help macroeconomic managers breathe easy after a months of turbulence.
Exports rose for the third straight month as major items in India's basket—ranging from garments to textiles, pharmaceuticals to diamond jewellery—remained steady in the wake of higher price realization by Indian traders as well as improved demand in the US and Europe. Textile exports are estimated to have increased 15% in September, the Apparel Export Promotion Council said in a statement.
"I am confident that import-containment measures put in place for non-essential imports are playing out extremely well and we need to continue this so that our rupee becomes stronger," said Rao.
The widening trade deficit had resulted in the current account deficit hitting a record high of 4.8% of the GDP in 2012-13, prompting the government to announce a string of tough measures. "While there will be pressure from gold imports during the festival season, it is believed that if similar trends are maintained, the deficit can be lower than that of 2012-13 by $10-20 billion," CARE Ratings said in a statement. Last year, the trade deficit was estimated at $178 billion.
"India's current account deficit in the first quarter of 2013-14 was $21.8 billion (4.9% of GDP). An over $20 billion reduction in merchandise trade deficit in the second quarter as compared to the first suggests significant improvement in the current account deficit for the second quarter. Better-than-expected export growth, if sustained, creates a downside to our forecast for CAD at 3.9% of the GDP for 2013-14," added Crisil.
Source:- timesofindia.indiatimes.com
Only recovery officer and not the Co. Court has got powers to dispose of immovable property of liqui
CL: Once recovery certificate has been issued by Debt Recovery Tribunal, it is only Debt Recovery Tribunal, and not company Court, which will have exclusive jurisdiction in respect of subject properties of company-in-liquidation
High net worth individuals aren’t always smart investors
They stay away from shoddy chit funds and phoney plantation schemes. They are advised by top brokers and wealth managers. And they are always snooping around for smarter ways to make money.
They are the high net worth individuals or HNIs. But a lesser known side to their story is how they can be amazingly gullible and unbelievably greedy — qualities that make them irresistible to unscrupulous money managers. What makes the latter's job easier is the reluctance of these investors to admit their mistakes.
Just as the illiterate, hapless investors of ponzi schemes like Saradha, these moneybags are being duped by 'advisors' promising extraordinary returns. "I had surplus funds in my account and I was assured of liquidity and a fixed return of 14% per annum. I thought I would park some money for a year and make good gains," said a 40-year businessman from Mulund, a Mumbai suburb.
The person invested Rs 10 lakh in the now infamous paired contracts traded on the National Spot Exchange (NSEL). Thrilled at the payout he received in the second month, he reinvested the money only to find the entire investment sink in the next few weeks. He's yet to share the story to his family members.
The lure of fancy products
Whilesmall savers are attracted by high returns, the well-heeled investors are drawn in by the charm of exotic products. Remember the Citibank Gurgaon fraud? A friendly, glib talking relationship manager even ended up fooling a well-known private equity fund manager who had trusted him to deploy funds cleverly.
Such incidents are a reminder that many HNIs are only as smart as their poorer cousins when it comes to assessing financial products. "While HNIs are more aware of financial products and investment opportunities compared to retail investors, they tend to focus more on returns and not on the risks involved. As a result, some investors fall prey to structurally-flawed or fraudulent schemes that fail to match their expectations," says Anshu Kapoor, who heads the global wealth management at Edelweiss Financial Services.
Some overestimate their sense of judgment in evaluating the potential of seemingly-exotic stuff and most consider tradition offerings generating relatively lower returns unglamourous.
Ashish Kehair, Kapoor's counterpart in ICICI Securities, explains the mindset of these investors: "Their inability to assess risk and overestimation of their abilities leads to continuous trysts to try out different products where the maximum or past or projected returns are higher than less risky products with lower return potential."
Outsourcing pitfalls
Make no mistake. Very few HNIs blindly trust their brokers or intermediaries. They flood them with questions, spend hours trying to figure out the best bet and often haggle over charges. But at the end of the day, they can be swayed by "an opportunity to make super normal returns on a risk-adjusted basis." This is why crafty intermediaries make a killing.
"Some manufacturers or advisors do misuse this desire for higher returns," says Swapnil Pawar of Karvy Capital. The absence of an industry-wide qualification for financial advisors also poses a challenge for investors looking for professional advice. But money managers ET spoke to said while it does put a question mark over the reliability and quality of advice offered, new rules are evolving and incidence of frauds will come down.
World over, HNIs look for 'risk-adjusted products' — structured products that are designed to fetch the maximum return at different levels of risks. Such products, currently rare in India, may be able to wean investors away from riskier and potentially dubious schemes. HNIs, looking for absolute returns, typically prefer non-traditional products. Some of them sense that these strategies carry risk, but many don't.
"Such investors feel let down when such strategies fail to deliver with respect to their expectation," says Rajesh Iyer, head of investments and family office at Kotak Wealth Management. While scandals hurting HNIs make news as the money lost run into hundreds of crores, it's not always easy to nab the perpetrators.
Raghavendra Nath, managing director at Ladderup Wealth Management, who disagrees that HNIs are more gullible than others, says many frauds go undetected as people who dupe investors cover their tracks before they sell.
Beware of tall claims
Thanks to a choppy market, many are staying away from stocks, preferring stable products without default risks. If they do not see these two risks in a product, they assume there is no risk. Here, they tend to overlook the hidden risks. It's best to stay away from anyone claiming to sell products with zero risk, but high returns. It's a dangerous proposition.
In fact, there are different types of risks one needs to understand before signing up for any product. Investors should assess the portfolio risk — which simply put means understanding how the money is deployed, whether it's concentrated in certain assets, and can the institution find itself in a position where it's unable to even pay back the principal. If necessary, ask the family lawyer to browse through the document.
"Remember, all products carry some risk and investing in something that does not upfront disclose the risks can be a bad idea," says Pawar. This doesn't mean products promising higher returns should be straightaway dismissed, but there is a need for basic research.
The NSEL experience shows that a few minutes of Google search anytime in the last 15 months could have thrown up information that the government has questioned the legality of the product. Finally, question the numbers. "You should be sceptical of any scheme that offers super-normal, risk-free returns, of more than 13 or 14%," advises Pawar.
For aword of advice, ask your kid who may be aHarry Potter fan. She would remind you what Professor Albus Dumbledore, the wisest character in Harry Potter and the Half-Blood Prince, said, "I make mistakes like the next man. In fact, being —forgive me — rather cleverer than most men, my mistakes tend to be correspondingly huger."
Visa in pact to promote savings among low-income households
MUMBAI: Global payment technology company Visa today said it has partnered with Micro-Pension Foundation to create a lab which help in channelling savings amongst the low-income households.
'Micro-Pension Visa Financial Inclusion Lab' will target 140 million low-income, unbanked, informal sector individuals and provide them access to affordable, micro-savings and pension products from regulated financial institutions.
"We are delighted to partner with Micro-Pension Foundation. Through the lab we propose to create solutions that inculcate and channelise savings," Uttam Nayak, Group Country Manager-India and South Asia, Visa said here.
"This will directly impact both voluntary savings discipline and the amount of pension that subscribers get in their old age," Gautam Bhardwaj, co-founder of Micro-Pension, said.
The Foundation has eight lakh customers and also runs financial literacy centres. The lab is running a pilot programme in New Delhi where truck drivers and cleaners are given education on the benefits of saving regularly for old age.
Redemption fine paid to Customs authority in lieu of confiscation is compensatory in nature and reve
IT: Redemption fine paid in lieu of confiscation of goods to customs is an allowable business expenditure, as it is not penal in nature
ST exemption availed by abusive practice to be denied; deemed as 'sham' transaction
ST/ECJ : Where accrual of a tax advantage/exemption constitutes principal aim of transaction or transactions at issue, courts can give a finding of an abusive practice by assessee and regard such transaction as sham
Sum incurred on repairing of roads and plot levelling is revenue expenditure, says HC
IT : Expenditure incurred on road repairing, plot levelling and adjustment is revenue expenditure
Assembling of Radio Frequency Identification Devise is 'manufacture'; entitled to sec.80-IC relief
IT : Where assessee purchased imported PCBs, RAMs, wireless adaptors, antennas softwares and other networking components and redesigned and developed radio frequency identification device, a product is manufactured which would be eligible for deduction under section 80-IC
Ad-hoc additions justified due to low GP rates and failure of assessee to furnish docs demanded by I
IT : An ad hoc addition on account of low gross profit rate was justified when information supplied by assessee was not only deficient in material particulars but assessee had also shown its helplessness to provide particulars demanded by income tax authorities
Penalty imposed on appellant-Co. as it failed to submit detailed info required by SEBI
SEBI: Imposition of penalty upon appellant-company on its failure to submit detailed information as required by SEBI
SEBI approves of e-KYC service of UIDAI as valid identity and address proof
SEBI : Know Your Client Requirements
In Re Castleton Investment Ltd (AAR)
AAR not bound by own rulings. Transfer pricing & ROI filing provisions apply despite no income. Foreign company is liable for MAT u/s 115JB
The applicant, a Mauritius company, sold shares of Burroughs Wellcome (India) Ltd. The resultant capital gains were not chargeable to tax under the India-Mauritius DTAA. The AAR had to consider whether, as the Applicant had no income chargeable to tax in India, (a) the transfer pricing provisions were applicable to its, (b) section 115JB (MAT) was applicable to it and (c) it was liable to file a return of income. The AAR had to also consider whether it was bound by its own earlier rulings. HELD by the AAR:
(i) The theory of precedents does not have strict application to the AAR. It is bound only by the decisions of the Supreme Court. The decisions of High Courts have only persuasive value. The AAR is not subordinate to any High Court for even Article 227 of the Constitution to apply and there are grave doubts whether the jurisdiction under Article 226 will be attracted to the AAR. While the AAR should be slow in disagreeing with propositions of law laid down in earlier rulings, it should not be deterred from taking a contrary view if it is convinced that the earlier view is not correct;
(ii) Though in Praxair Pacific 326 ITR 276, Vanenburg Group 289 ITR 464 & Dana Corporation 32 DTR 1, it was held that the transfer pricing provisions were machinery provisions and could not apply if the income was not chargeable to tax, this view is not correct because first the computation of the “income” arises before considering its’ chargeability. The fact that the income is not taxable and the transfer pricing exercise may not be fruitful cannot affect the applicability of the statutory provisions;
(iii) A return of income has to be filed u/s 139(1) even if the income is not chargeable to tax;
(iv) Though in Timken 326 ITR 193 (AAR), it was held that s. 115JB does not apply to foreign companies, this view is not correct because s. 115JB applies to every “company” and makes no distinction between a resident company and a non-resident company. S. 2(17) defines a “company” to include a “foreign company”. The fact that the foreign company has no permanent establishment in India makes no difference to the applicability of s. 115JB. There may be practical difficulties for foreign companies to prepare accounts in terms of Schedule VI to the Companies Act but that is no reason to whittle down the scope of s. 115JB. Advance Ruling P No. 14 (234 ITR 335) & Niko Resources 234 ITR 828 followed)
CIT vs. Excel Industries Ltd (Supreme Court)
(i) Q whether income has accrued must be considered from a realistic & practical angle (ii) If Dept has accepted adverse verdict in some years, it cannot be allowed to challenge verdict in other years (iii) disputes as to the year of taxability with no/ minor tax effect should not be raised by Dept Pursuant to the import-export policy of the Government, the assessee was entitled to make duty free imports of raw materials in respect of the exports made by it. The assessee accounted for the benefit of the entitlement to make duty free imports in the year of export but claimed that the benefit was not chargeable to income-tax in the year in which the exports were made but it was chargeable to tax only in the year in which the imports were availed of and the raw materials consumed. The AO rejected the contention and held that as the assessee was following the mercantile system of accounting, the right to receive the benefit accrued as soon as the export obligation was fulfilled and it was chargeable to tax in that year u/s 28(iv). On appeal, the CIT(A), Tribunal and High Court upheld the assessee’s stand. On appeal by the department to the Supreme Court, HELD dismissing the appeal: (ii) Further, as in several assessment years, the Revenue accepted the order of the Tribunal in favour of the assessee and did not pursue the matter any further, it cannot be allowed to flip-flop on the issue and it ought let the matter rest rather than spend the tax payers’ money in pursuing litigation for the sake of it (Radhasoami Satsang 193 ITR 321 (SC) & Parashuram Pottery Works 106 ITR 1 (SC) followed); |
Notice to re-assess an assessed income held valid as assessee failed to promptly reply such notice
IT: Where only after notice for reassessment was issued, assessee belatedly replied that receipt sought to be taxed had already been taxed in immediate preceding year, Assessing Officer might stop or proceed further after verifying details
KAVERI IMPEX P. LTD , MUMBAI
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INTEGRON PROJECT SOLUTIONS P. LTD ( FORMERLY KNOWN AS M/S INTERGRON MANAGEMENT SERVICES P. LTD, MUMBAI
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HC grants immunity from pre-deposits as pending appeals of prior years probably could set-off existi
IT : Pending appeal of earlier year having possibility of setting off current demand, partial stay may be granted on pre-deposit requirement
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