Tax Administration Reform Commission (TARC)

PRESS INFORMATION BUREAU GOVERNMENT OF INDIA *** Tax Administration Reform Commission (TARC) New Delhi, October 21, 2013 Asvina 29, 1935 Pursuant to the announcement made by the Hon'ble Finance Minister in his Budget Speech 2013-14, the government set-up Tax Administration Reform Commission (TARC) with a view to reviewing the application of Tax Policies and Tax Laws in India in the context of global best practices and to recommend measures for reforms required in Tax Administration to enhance its effectiveness and efficiency. The term of the Commission is 18 months and it will work as an advisory body to the Ministry of Finance. The Commission will give its first report within six months and thereafter submit periodic reports after every three months. The Chairman of the Commission is Dr. Parthasarathi Shome, in the rank of Minister of State. The Members of the Commission are as follows: Full-Time Members: Shri Y.G. Parande Ms. Sunita Kaila Part-Time Members: Shri M.K. Zutshi Shri S.S.N. Moorthy Shri M.R. Diwakar Shri S. Mahalingam The Terms of Reference of the Commission are as follows:- To review the existing mechanism and recommend appropriate organizational structure for tax governance with special reference to deployment of workforce commensurate with functional requirements, capacity building, vigilance administration, responsibility and accountability of human resources, key performance indicators, assessment, grading and promotion systems, and structures to promote quality decision making at the highest policy levels. To review the existing business processes of tax governance including the use of information and communication technology and recommend measures for tax governance best suited to Indian context. To review the existing mechanism of dispute resolution covering time and compliance cost and recommend measures for strengthening the same. This includes domestic and international taxation. To review the existing mechanism and recommend capacity building measures for preparing impact assessment statements on taxpayers compliance cost of new policy and administrative measures of the tax departments. To review the existing mechanism and recommend measures for deepening and widening of tax base and taxpayer base. To review the existing mechanism and recommend a system to enforce better tax compliance ­ by size, segment and nature of taxes and taxpayers, that should cover methods to encourage voluntary tax compliance. To review the existing mechanism and recommend measures for improved taxpayer services and taxpayers education programme. This includes mechanism for grievance redressal, simplified and timely disbursal of duty drawback, export incentives, rectification procedures, tax refunds etc. To review the existing mechanism and recommend measures for "Capacity building" in emerging areas of Customs administration relating to Border Control, National Security, International Data Exchange and securing of supply chains. To review the existing mechanism and recommend measures for strengthening of Database and Inter-agency information sharing, not only between Central Board of Direct Taxes(CBDT) and Central Board of Excise and Customs(CBEC) but also with the banking and financial sector, Central Economic Intelligence Bureau (CEIB), Financial Intelligence Unit (FIU), Enforcement Directorate etc. and use of tools for utilization of such information to ensure compliance. To review the existing mechanism and recommend appropriate means including staff resources for forecasting, analysis and monitoring of revenue targets. To review the existing policy and recommend measures for research inputs to tax governance. To review the existing mechanism and recommend measures to enhance predictive analysis to detect and prevent tax/economic offences. Any other issue which the government may specify during the tenure of the Commission. The Commission will be supported by a Secretariat and have its head quarters at Delhi. It will be provided information and quantitative data of Central Board of Direct Taxes / Central Board of Excise and Customs to do statistical analysis for making recommendations. The first meeting of the Commission was held on 21st October 2013. ******

Accrual of interest on enhanced compensation should be determined on year-to-year basis

IT: Accrual of interest on enhanced compensation for land acquired under Land Acquisition Act should be determined on year to year basis

IRDA accepts e-KYC services of UIDAI for KYC verification

INSURANCE : e-KYC Services Of UIDAI

SEBI consents to creation of centralized database for corporate bonds

SEBI : Centralized Database for Corporate Bonds/Debentures

Tax Reform Commission to submit first report in six months: Parthasarathi Shome

The Tax Administration Reform Commission (TARC), set up by the Finance Ministry to suggest measures to prevent economic offences among other things, is expected to submit its report in six months, TARC Chairman and Advisor to Finance Minister Parthasarathi Shome said here on Monday.

The Commission held its first meeting here on Monday.

The term of the 7-member TARC is 18 months, and it will work as an advisory body to the Ministry of Finance.

The terms of reference of the Commission include a review of the existing mechanism of dispute resolution and methods to widen tax base.

The TARC will also recommend measures to strengthen inter-agency information sharing between Central Board of Direct Taxes (CBDT), the Central Board of Excise and Custom (CBEC), the Financial Intelligence Unit (FIU), the Enforcement Directorate, and also with banking as well as financial sectors.

It will review the existing mechanism and recommend measures to enhance predictive analysis to detect and prevent tax and economic offences, said an official statement.

Besides, it will recommend a system to enforce better tax mechanism — by size, segment and nature of taxes and taxpayers that should cover methods to encourage voluntary tax compliance.

The statement said the Commission will be supported by a Secretariat and have its headquarters in Delhi. It will be provided information and quantitative data of CBDT and CBEC to do statistical analysis for making recommendations.

“An emerging economy must have a tax system that reflects best global practises. I propose to set up a TARC to review the application of tax policies and tax laws and submit periodic reports that can be implemented to strengthen the capacity of our tax system,” Finance Minister P Chidambaram had said in his budget speech.

The members of the Commission are: Y. G. Parande, Sunita Kaila, M. K. Zutshi, S. S. N. Moorthy, M. R. Diwakar and S. Mahalingam.

The Commission will again meet on Tuesday.

Ministry allows large manufacturing SEZ units to sub-contract production to DTA units for longer per

SEZ : Permission for Sub-Contracting by A Sez Unit to A DTA Unit

RBI restricts eligible payments via Asian Clearing Union route; merely export or import transaction

FEMA/ILT : Memorandum of Procedure for Channelling Transactions Through Asian Clearing Union (ACU)

Rewards accumulated through credit card spending is legal liability ; Provision thereof is allowable

IT : Deduction under section 80-IB is admissible to all small scale industrial undertakings/industrial undertakings set up in a declared industrially backward State/Union Territory, even if it is engaged in production of articles or things listed in XIth Schedule

Notification No 46 (RE-2013) / 2009-2014 dated 23-10-2013

Government of India

Ministry of Commerce & Industry

Department of Commerce

Udyog Bhawan

Notification No 46 (RE – 2013)/2009-2014

New Delhi, Dated : 23 October, 2013

Subject: Import of new motorcycles from Bangladesh through Land Customs Stations (LCSs) across Indo-Bangladesh Border.

S.O.(E) In exercise of the powers conferred by Section 5 of the Foreign Trade (Development & Regulation) Act, 1992 (No.22 of 1992) read with Para 1.3 and para 2.13 of the Foreign Trade Policy, 2009-2014, as amended from time to time, the Central Government hereby makes the following amendment in Chapter 87 of ITC(HS) 2012 Schedule 1 (Import Policy):

2. The following sentence is added at the end of Policy Condition 2(II)(d) of Chapter 87 to ITC (HS) 2012, Schedule 1 (Import Policy):
   

   “In addition, import of new motorcycles is also permitted through LCS, Benapole/Petrapole and LCS, Agartala.”

   
   


3. After amendment, Policy Condition 2(II)(d) of Chapter 87 shall be as under:
   

   “The import of new vehicles shall be permitted only through the Customs port at Nhava Sheva, Kolkata, Chennai, Chennai Airport, Cochin, ICD Tughlakabad and Delhi Air Cargo, Mumbai Port and Mumbai Air Cargo Complex, ICD Talegaon Pune, ICD Faridabad and Ennore Port. In addition, import of new motorcycles is also permitted through LCS, Benapole/Petrapole and LCS, Agartala.”

   
   

Effect of Public Notice:

In addition to the existing 12 Ports / ICDs, 2 more LCSs (Benapole/Petrapole & Agartala) across Indo-Bangladesh Border are permitted for importing new motorcycles.

Sd/-

(Anup K. Pujari)

Director General of Foreign Trade

E-mail: dgft@nic.in

(Issued from F.No.01/93/180/11/AM-12/PC-2(B))

Urban land held as part of industrial undertaking ceases to have its independent character for wealt

IT : Scope of section 2(ea) does not include 'urban land' but once land so held is part of industrial undertaking or factory, it ceases to have independent character as urban land; it is part of industrial undertaking

Services availed up to port of export are eligible input services

ST: In case of export, place of removal is 'place of loading at port of export' and, therefore, outward transportation upto that place is eligible for input service credit

HC directs CBI to aid State machineries in fast disposal of Shardha like scams

CL : Direction to CBI, Enforcement Directorate, Ministry of Corporate Affairs, SFIO and others to render all necessary assistance to State machinery to complete process of investigation and prosecution of accused in collection of funds by chit fund companies

India-USSR deferred payment protocol: rupee value of special currency basket further revised to Rs.

FEMA/ILT : Deferred Payment Protocols Dated 30-4-1981 and 23-12-1985 Between Government of India and Erstwhile USSR

Coal India Gets Listing Blues

Coal India is staring at a potential violation of listing norms even as it moves towards a 5% stake sale by the government.



Clause 49 of the listing agreement requires that in case the chairman is an executive director (which is the case in Coal India), at least half of the board should comprise of independent directors.



But Coal India hasn’t had any independent director since the tenure of six – R N Trivedi, Sachi Chaudhuri, Md Anis Ansari, K Barua, Sheela Bhide and Kamal R Gupta – ended in August.



“Coal India might face serious questions regarding its corporate governance practices if it fails to fill up the posts of independent directors soon,” said a partner in Deloitte, requesting anonymity.



The world’s largest coal miner, which has just began global roadshows for the disinvestment, has already flagged the issue. “In accordance with the provisions of our Articles of Association, the President of India, acting through the ministry of coal, is in the process of appointing independent directors on our board. Depending on the timing of such appointments, it is possible that we may not be compliant with the requirements of Clause 49 of the listing agreement until such appointments are completed,” it said in a presentation.



The listing norms also require that “an independent director who resigns or is removed from the board shall be replaced by a new independent director within a period of not more than 180 days from the day of such resignation or removal”.



So, Coal India needs to recruit at least one independent director soon, to replace AK Rath whose term ended on April 26.



For the other vacancies of independent directors, the company has some time in hand. However, it is staring at delays in key decisions, including approval of financial results for the quarter ended September. The earnings announcement is slated for November 21.

Source:- dnaindia.com

India Spices Up On Export Demand

23-Oct-2013

Jeera futures rose on Wednesday on buying at lower levels supported by some export demand, though expectations of higher area under cultivation and large spot supplies capped the gains.



Sowing of jeera has started in some areas and would gain pace from next week. Jeera, or cumin seed, is a winter crop sown from October and farmers mainly depend on the rains to moisten the land for sowing.



At 0933 GMT, the actively traded jeera contract for November delivery was up 0.51 per cent at Rs 12,700 per 100 kg on the National Commodity and Derivatives Exchange (NCDEX). It has fallen more than 13 per cent between September 3 and October 22.



"Jeera prices have come down significantly and this is a good opportunity to buy. Export demand has also picked up and is likely to gain further," said Jay Kumar Jain, a trader from Unjha, a key market in Gujarat.



Daily supplies at Unjha were at 7,000-8,000 bags of 60 kg each, higher than the expected 3,000-4,000 bags.



Spot jeera fell Rs 40 to Rs 13,079 per 100 kg in Unjha.



Howeverm, turmeric futures rose on a pick-up in local demand in the festive season and on export inquiries though large stocks limited the upside. The most-actively traded turmeric contract for November delivery was up 1.17 per cent at Rs 4,848 per 100 kg on the NCDEX.



"Turmeric prices should improve from these levels as local and export demand are expected to pick up," said Suresh Chaudhary, a trader from Nizamabad, a key market in Andhra Pradesh.



Turmeric cultivation usually starts in the last week of May and continues until August. A lengthy harvesting process starts from January.



Spot turmeric rose Rs 13 to Rs 4,906 per 100 kg at Nizamabad. Indian will celebrate Diwali in the first week of November.



There was some fresh export demand for turmeric at lower prices, which could increase if prices stabilise around those levels, spot traders said.

Source:- economictimes.indiatimes.com

Turmeric Up 1.5% On Export Demand

Turmeric prices rose 1.52% to Rs 4,954 per quintal in futures market today as speculators enlarged positions on the back of export demand.



At the National Commodity and Derivatives Exchange, turmeric for delivery in December rose by Rs 74, or 1.52%, to Rs 4,954 per quintal with open interest of 7,935 lots.



Likewise, turmeric for delivery in November went up by Rs 56, or 1.17%, to Rs 4,848 per quintal in 14,690 lots.



Market analysts said speculators enlarged their positions on the back of export demand mainly pushed up turmeric prices at futures trade.

Source:- business-standard.com

Ph Gets Support Of 3 Countries To Keep Rice Import Restriction

Three countries have endorsed the Philippines’ bid to keep its special restriction on rice imports until 2017.

The National Food Authority (NFA) said China, India and Indonesia have supported the country’s petition to continue imposing its quantitative restriction (QR) on rice during a meeting of the World Trade Organization (WTO) Committee on Trade in Goods (CTG) in Geneva.

Rice is the only commodity in the Philippines that enjoy a special restriction.

“The outcome of the CTG (meeting) has reinvigorated and boosted the country’s efforts in pushing the initiative into positive conclusion by early next year,” Agriculture Assistant Secretary Romeo Recide, chief negotiator of the Philippines, said.

The country’s petition will be tackled again in the special CTG meeting in March, during which a general consensus on the matter is expected to be arrived at.

“If this goes well, we may get the general concensus by March,” said NFA administrator Orlan Calayag, adviser to the negotiating panel.

This corresponds to the final approval of the Philippines’ petition on the QR extension.

Participating in the negotiations for the country’s bid for QR extension are Australia, China, Canada, India, Indonesia, El Salvador, Pakistan, Thailand, US, and Vietnam. Also included in the negotiations are European Union, Japan and Korea.

“What is important is that we get the consensus of the countries we are negotiating with,” said Calayag.

The European Union, Japan and Korea have also shown support for the country’s petition.

Source:- abs-cbnnews.com

Nafed Floats Tender To Import Onions Amid High Domestic Prices

23-Oct-2013

After Onions touched an all time high of Rs 90 per kg, co-operative major NAFED on Wednesday floated tender for import of the bulb from Pakistan, Iran, China and Egypt.



National Agricultural Cooperative Marketing Federation of India (NAFED) has floated tender after kitchen staple prices touched Rs 90 even though wholesale rates were much less at Rs 50-60 a kg. The previous record high of retail prices was in 2010 when it touched Rs 85 per kg.



"NAFED is interested in importing onions of Pakistan, Iran, China and Egypt origin to be delivered at NAFED warehouse at Lawrence Road, New Delhi," the co-operative major said in the tender.



According to a senior official of NAFED, onions from Pakistan, Iran and China would cost around $200-$250 per tonne, while those from Egypt is likely at $350 per tonne.



Whereas India has fixed minimum export price of Onions at USD 900 per tonne to deter outbound shipments.



In the tender, NAFED has sought "fresh quality big onions, Red/Pink in colour, size above 45mm, with white flesh, well dried, free from mechanically damaged, bulbs double, semi-matured, sprouted, soft, mushy, wet bulbs and completely free from fungus infestation and insect mould attack."



It also said a crop certificate issued by the competent authority stating that the onion crop is of new crop of 2013, is required.



On September 2 also NAFED had floated a tender for import of Onions.



However, NAFED reserves the right to accept or reject any or all offer in part or full without assigning any reason thereof, says the tender.



Meanwhile, concerned over price spike, the Centre asked states to take firm action against hoarders to boost domestic supplies as prices have been high for the last three months.



After discussing the issue with Agriculture Minister Sharad Pawar, Food Minister K V Thomas had said there is no plan to ban exports.



A senior government official, however, said that the Centre is also considering banning overseas shipments.

Soruce:- businesstoday.intoday.in

Thailand Agrees To Levy Import Duty On Gold Jewellery

23-Oct-2013

Thailand has agreed to pay import taxes on gold and gold jewellery being shipped to India. This puts an end to acrimony between the two countries over third country gold coming into India at concessional duties through Thailand under the bilateral free trade agreement.

“We had some special allowance under FTA that when we ship gold jewellery to India, there would be no tax in the past. But now we have agreed to pay duty. Exporters from Thailand and importers in India have agreed that now we will pay tax on gold, gold chains and things like that,” Thai Deputy Prime Minister and Minister for Commerce Niwattumrong Boonsongpaisan told Indian media on Wednesday.

Early this year, India had stopped concessional import of gold from Thailand under the early harvest scheme of the bilateral free trade agreement. India said that Thai exporters have to prove that the gold originates from there and is not being sourced from a third country before they could claim import duty concessions.

The Early Harvest Scheme signed by India and Thailand in 2004 allows import of gold jewellery at a concessional duty of one per cent against a regular duty of 15 per cent now applicable on all imports. Gold attracts an import duty of 10 per cent.

India had put in place very strong rules of origin in the Early Harvest Scheme with Thailand that allows import of 82 items including gold at concessional duties. Gold exporters have to do at least 20 per cent value addition before they could claim concessional market access.

The Finance Ministry has long been suspecting traders of bringing in cheaper gold from other South East Asian countries through Thailand to escape the steep import duties.

Source:- thehindubusinessline.com

Cotton Prices May Be Under Pressure For 3 Months

23-Oct-2013

Indian Cotton Federation on Wednesday said prices of cotton are expected to remain under pressure for the next two to three months.



However, the Federation's cotton crop estimate for 2013-14 at 384 lakh bales, about 44 lakh bales above the forecast of the Cotton Advisory Board. .



Though the season started from October 2013, the crop is expected to be delayed by three weeks, with availability of good quality cotton, J Thulasidharan, President, ICF said in a press release.



The estimates were arrived at the ICF Board meeting. Gujarat is expected to top with 125 lakh bales (170 kg each), followed by Maharashtra and Andhra Pradesh with 75 lakh bales each.



While Punjab, Haryana and Rajasthan production would be 60 lakh bales, Karnataka and Madhya Pradesh crop at 19 lakh bales each, Tamil Nadu five lakh, Orissa four lakh and others two lakh bales, Thulasidharan said.



The Cotton Association of India has put the estimates at 381 lakh bales a couple of days ago.

Soruce:- business-standard.com

No TP adjustment if assessee was dealing with a entity before latter acquired controlling interest i

IT/ILT : Where assessee-company used co-brand trademark of another company since inception, even before latter acquired controlling interest in assessee-company, license agreement was held to be at arm's length

Services provided by factory canteen having AC or central air-heating, exempted

ST : Section 66E(l) of The Finance Act, 1994 - Declared Services - Service Portion in Catering or Restaurant Transactions - Services Provided by Factory Canteen Having Ac/Central Air-Heating and Maintained as per Factories Act, Exempted Vide Amendment to Mega Exemption

RBI releases detailed guidelines on opening of branches by scheduled commercial banks

BANKING : Section 23 of The Banking Regulation Act, 1949 - Relaxations in Branch Authorisation Policy

Banks to settle claims of persons lost in Uttarakhand disaster on basis of death certificate and ind

BANKING : Settlement of Claims in Respect of Missing Persons in Uttarakhand Disaster

SEBI releases modified formats for disclosures under Takeover Regulations

SEBI : Formats Under SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 - Modification of

Services provided by factory canteen having AC/central air-heating, exempted

ST : Section 66E(l) of The Finance Act, 1994 - Declared Services - Service Portion in Catering or Restaurant Transactions - Services Provided by Factory Canteen Having Ac/Central Air-Heating and Maintained as per Factories Act, Exempted Vide Amendment to Mega Exemption

'Equipment’ includes Ship and charter fees thereof is 'royalty'; HC refers to sec. 43(3) to define w

IT/ILT : 'Equipment' includes ship, fee paid for use of ship to be considered as royalty under section 9(1)(vi). Meaning of the word 'plant' as defined under section 43(3) would be relevant to determine meaning of the word 'equipment'.

No coercive recovery of tax demands on pretext of expired bank guarantee when it contains ‘auto-rene

IT/ILT : No coercive recovery of stayed tax demands on grounds of expired bank guarantee when bank guarantee has "auto-renewal clause"

TP adjustments set aside as ALP travelled to safe zone with exclusion of functionally dissimilar com

IT/ILT: Where in course of transfer pricing proceedings, TPO made certain addition to assessee's ALP, in view of fact that some of comparables selected by TPO were improper on account of functional difference and happening of extraordinary events resulting in abnormal profits and, if those comparables were excluded, assessee's profit margin was higher than remaining comparables, impugned addition made by authorities below was to be set aside

Customs Notification No. 25/2013-Customs (ADD) dated 22-10-2013

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

New Delhi, the 22^nd October, 2013

Notification No. 25/2013-Customs (ADD)

G.S.R 698(E).- Whereas, in the matter of import of vitrified and porcelain tiles, (hereinafter referred to as the subject goods), falling under Chapter 69 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) (hereinafter referred to as the Customs Tariff Act) and originating in, or exported from the People's Republic of China (China PR) or United Arab Emirates (UAE) (hereinafter referred to as the subject countries), the designated authority, vide its final findings in notification No.37/1/2001-DGAD dated the 4^th February, 2003 in the original anti-dumping case published in the Gazette of India, Extraordinary, Part I, Section 1, dated the 4^th February, 2003 had recommended imposition of anti-dumping duty on all imports of vitrified and porcelain tiles from subject countries in order to remove the injury to the domestic industry;

And whereas, on the basis of the aforesaid findings of the designated authority, the Central Government had imposed an anti-dumping duty on subject goods falling under Chapter 69 of the First Schedule to the Customs Tariff Act, originating in or exported from the subject countries and imported into India vide notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 73/2003-Customs, dated the 1^st May, 2003, published in Part II, Section 3, Sub-section (i) of the Gazette of India, Extraordinary, G.S.R. 376(E) dated the 1^st May, 2003;

And whereas, in the matter of sunset review of anti-dumping duty on import of the subject goods, originating in, or exported from the subject countries, the designated authority vide its findings, No. 15/17/2006-DGAD, dated the 21^st April, 2008, published in the Gazette of India, Extraordinary, Part I, Section 1, dated the 23^rd April, 2008 subsequently amended vide Notification No. 15/17/2006-DGAD, dated the 21^st May, 2008, published in the Gazette of India, Extraordinary, Part I, Section 1, had recommended continued imposition of the anti-dumping duty on the subject goods originating in, or exported from China PR in order to remove injury to the domestic industry;

And whereas, on the basis of the aforesaid findings of the designated authority, the Central Government had imposed an anti-dumping duty on subject goods falling under heading 6907 or 6908 or 6914 of the First Schedule to the Customs Tariff Act, originating in or exported from China PR and imported into India vide notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 82/2008-Customs, dated the 27^th June, 2008 published in Part II, Section 3, Sub-section (i) of the Gazette of India, Extraordinary, G.S.R. 485(E) dated the 27^th June, 2008;

And whereas, M/s Foshan Qiangbiao Ceramics Co. Ltd, China PR (producer) through M/s Sheen way Corporation Ltd., Hong Kong (exporter) had requested for review in terms of rule 22 of the Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 (hereinafter referred to as the said rules) in respect of exports of the subject goods made by them, and the designated authority, vide new shipper review notification No. 15/20/2011-DGAD dated the 19^th April, 2012, published in the Gazette of India, Extraordinary, Part I, Section 1, dated the 19^th April, 2012, had recommended provisional assessment of all exports of the subject goods made by the above stated party when imported into India, till the completion of the said review;

And whereas, in exercise of the powers conferred by sub-rule (2) of rule 22 of the said rules, the Central Government, after considering the aforesaid recommendation of the designated authority, vide, notification of the Government of India in the Ministry of Finance (Department of Revenue), notification No. 35/2012-Customs (ADD), dated the 10^th July, 2012 , published in Part II, Section 3, Sub-section (i) of the Gazette of India, Extraordinary, vide number G.S.R. 551 (E), dated the 10^th July, 2012 had ordered that pending the outcome of the said review by the designated authority, the subject goods, when exported by M/s Foshan Qiangbiao Ceramics Co. Ltd, China PR (producer) through M/s Sheen way Corporation Ltd., Hong Kong (exporter) and imported into India, shall be subjected to provisional assessment till the review is completed;

And whereas, the designated authority in the matter of new shipper review initiated vide notification No. 15/20/2011-DGAD dated the 19^th April, 2012, published in the Gazette of India, Extraordinary, Part I, Section 1, dated the 19^th April, 2012, vide its final findings in notification No. 15/20/2011-DGAD dated the 24^th July, 2013, published in the Gazette of India, Extraordinary, Part I, Section 1, dated the 24^th July, 2013 has concluded that no individual dumping margin is justified in respect of exports of the subject goods made to India by by M/s Foshan Qiangbiao Ceramic Co. Ltd, Foshan, China PR (Producer) through M/s Sheen way Corporation Ltd., Hong Kong and has accordingly recommended that M/s Foshan Qiangbiao Co. Ltd, China PR (Producer) and M/s Sheen way Corporation Ltd., Hong Kong (Exporter) shall be liable for payment of the residual rate of duty in Indian rupees at the rate of `155 per square meter as applicable vide notification No 82/2008-Customs dated the 27^th June, 2008 in respect of exports of vitrified and porcelain tiles falling under Chapter 69 of the Customs Tariff Act, 1975 originated in or exported from China PR;

Now, therefore, in exercise of the powers conferred by sub-section (1) of section 9A of the Customs Tariff Act, read with rules 18, 20, 22 and 23 of the said rules, the Central Government, hereby orders that all imports of the subject goods by M/s Foshan Qiangbiao Ceramics Co. Ltd, China PR (producer) through M/s Sheen way Corporation Ltd., Hong Kong (exporter) which have been subjected to provisional assessment pursuant to the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 35/2012-Customs (ADD), dated the 10^th July, 2012 , published in Part II, Section 3, Sub-section (i) of the Gazette of India, Extraordinary, vide number G.S.R. 551 (E), dated the 10^th July, 2012 shall be subjected to final assessment on the payment of anti-dumping duty of ` 155 per square meter.

[F. No. 354/ 214/2001-TRU (Pt.4)]

(Akshay Joshi)

Under Secretary to the Government of India

Income Tax Officer - 2(3) Smt. Neelam Mahesh Goyal Qureshi Mansion, 1st Floor A-5, Sai Aradhana CHS Ltd. Gokhale Road, Naupada Vs. Swagatam Complex, Jesal Park Thane (W) Bhayander (W), Thane

IN THE INCOME TAX APPELLATE TRIBUNAL "B" Bench, Mumbai Before Shri D. Manmohan, Vice President and Shri Sanjay Arora, Accountant Member ITA No. 546/Mum/2012 (Assessment Year: 2003-04) Income Tax Officer - 2(3) Smt. Neelam Mahesh Goyal Qureshi Mansion, 1st Floor Vs. A-5, Sai Aradhana CHS Ltd. Gokhale Road, Naupada Swagatam Complex, Jesal Park Thane (W) Bhayander (W), Thane PAN - AACPM0287H Appellant Respondent Appellant by: Shri Manvendra Goyal Respondent by: Shri N.M. Porwal Date of Hearing: 17.10.2013 Date of Pronouncement: 17.10.2013 ORDER Per D. Manmohan, V.P. This appeal by the Revenue is directed against the order passed by the CIT(A)-II, Thane and it pertains to A.Y. 2003-04. 2. The main ground urged before us is that the learned CIT(A) erred in holding that the order passed consequent to the notice issued under section 148 of the Act is bad in law; according to the AO the impugned assessment order was passed after duly serving notice under section 143(2) and 142(1) of the Act and hence the learned CIT(A) was not justified in deleting the consequent addition made therein. 3. The case was posted for hearing on 14.10.2013, on which date the learned counsel, Shri N.M. Porwal, appeared on behalf of the assessee and contended that the assessment was completed without proper service of notice under section 148 of the Act by the concerned AO. He has also adverted our attention to the assessment order as well as the order of the CIT(A) to submit that there is no dispute with regard to the fact that notice under section 148 of the Act was issued by the DCIT, Circle I, Kalyan but 2 ITA No. 546/Mum/2012 Smt. Neelam Mahesh Goyal upon alleged transfer of jurisdiction, the Income Tax Officer, Ward 2(3), Thane has never issued notice under section 148 of the Act but assumed jurisdiction and hence the assessment order deserves to be quashed for want of assuming proper jurisdiction. Since this is a Departmental appeal, we have directed the learned D.R. to obtain the record and also to furnish relevant details which may throw light upon the factual matrix of the case. The case was accordingly adjourned to 17.10.2013, on which date Shri Sanjeev Ghei, Jt. Commissioner of Income Tax, Range-2, Thane appeared and filed a letter dated 15.01.2013 addressed to the CIT-DR, which reads as under: - "Kindly refer to our telephonic conversation on the above cited subject. Since the AO vide his letter No. THN/ITO/WD/2(2)/NG/2013-14/nil number dated 15/10/2013 (copy enclosed for ready reference) addressed to undersigned has expressed his inability to provide the requisite details/ documents/records in the above cited case at a short notice, it is requested that sufficient time may kindly be sought from the Hon'ble ITAT, `B' Bench, Mumbai so that the concerned records could be traced and produced on the next date of hearing." 4. Under these circumstances we proceeded to dispose of the appeal on the strength of the material available on record. The facts in short are that the assessee is an individual engaged in private tuitions and she declared total income of `2,14,430/- before the AO, Ward 4(3), Thane, who had jurisdiction on the assessee at that point of time since assessee was residing at Bhayandar. No action was taken therein but the case was sought to be reopened by the DCIT, Circle-I, Kalyan by issuing notice under section 148 of the Act on the ground that the assessee and its group was engaged in fraudulent billing activities, etc. 5. As the jurisdiction of the case lies with the ITO, Ward 2(3), Thane the case was transferred to the ITO, Ward 2(3) who merely issued a notice under section 143(2)/142(1) of the Act on 11.10.2010. Vide letter dated 30.11.2010 the assessee requested the AO to furnish reasons for reopening of assessment, copy of notice, proof of service of notice and reasons recorded therein. The AO supplied the copies asked for except proof of service of notice. At this juncture the assessee challenged the reopening of the 3 ITA No. 546/Mum/2012 Smt. Neelam Mahesh Goyal assessment on the ground that the so called notice under section 148 of the Act was not served upon the assessee and, therefore, the proceedings initiated is bad in law. The AO rejected the contention of the assessee by observing that notice was issued under section 148 by the DCIT, Cricel-I, Kalyan and the case was ultimately transferred to the AO concerned, who in turn issued notice under section 143(2)/142(1) of the Act. He, therefore, proceeded to complete the assessment wherein he determined the total income at `14,58,297/-. 6. Aggrieved, assessee contended before the learned CIT(A) that she was regularly assessed to tax at Ward 2(3), Thane (earlier Ward 4(3), Thane). However, for A.Y. 2003-04 the case was stated to have been reopened by DICT, Kalyan, who has no jurisdiction over the case. It was also contended that under section 148 of the Act service of notice is a condition precedent to making the order of assessment. In the instant case there is no proof of service of notice. Reliance was placed upon several decisions in support of her contention that service of notice cannot be regarded as mere procedural requirement and in the absence of service of notice the entire proceedings should be treated as null and void. The learned CIT(A) called for the assessment records and notice. The natural jurisdiction of the case of the assessee was with the ITO, Ward 2(3), Thane but the DCIT, Circle-I, Kalyan sought to reopen the assessment, which is not in accordance with law. The issue was dealt with elaborately in para 5 of his order. In para 5.12 he ultimately held that the AO has not placed any evidence on record that the notice under section 148 of the Act was properly served upon the assessee as laid down in the law. In the absence of evidence on record he concluded that the notice in the instant case was without jurisdiction and the same was not properly served on the assessee as per law, which is a pre-requisite for making assessment. Consequently the assessment, based upon the so called reassessment proceedings initiated, are bad in law and hence the additions made therein were deleted by the learned CIT(A). 7. Even before us the learned D.R. was not able to place any material to contradict the findings of the learned CIT(A). It deserves to be noticed that 4 ITA No. 546/Mum/2012 Smt. Neelam Mahesh Goyal the first Appellate Authority passed the order on 13.10.2011 and the appeal was preferred in the month of January, 2012 and even thereafter the learned D.R. sought number of adjournments to obtain relevant record to support the grounds urged before us. However, the learned D.R. was unable to furnish any record. In fact, the AO has not even considered the objections raised by the assessee, which clearly indicates that the AO was aware of the lacuna in the matter of reopening of the assessment and hence chose not to deal with the issues urged before him in detail. Under these circumstances, in the absence of any evidence placed by the learned D.R., to contradict the findings of the learned CIT(A), we are of the view that the Revenue could not make out any case to support its contentions and hence the appeal filed by the Revenue is dismissed. Order pronounced in the open court on 17th October, 2013. Sd/- Sd/- (Sanjay Arora) (D. Manmohan) Accountant Member Vice President Mumbai, Dated: 17th October, 2013 Copy to: 1. The Appellant 2. The Respondent 3. The CIT(A) ­ II- Thane 4. The CIT­ I - Thane 5. The DR, "B" Bench, ITAT, Mumbai By Order //True Copy// Assistant Registrar ITAT, Mumbai Benches, Mumbai n.p.

Income Tax Officer - 9(2)(3) M/s. Magic Park (India) P. Ltd. Room No. 225, Aayakar Bhavan 3B, Girnar Apts, 55 Pali Hill M.K. Road, Mumbai 400020 Vs. Bandra (W), Mumbai 400050

IN THE INCOME TAX APPELLATE TRIBUNAL "B" Bench, Mumbai Before Shri D. Manmohan, Vice President and Shri Sanjay Arora, Accountant Member ITA No. 9091/Mum/2010 (Assessment Year: 2007-08) Income Tax Officer - 9(2)(3) M/s. Magic Park (India) P. Ltd. Room No. 225, Aayakar Bhavan Vs. 3B, Girnar Apts, 55 Pali Hill M.K. Road, Mumbai 400020 Bandra (W), Mumbai 400050 PAN - AAECM3597M Appellant Respondent Appellant by: Ms Divya Bajpai Respondent by: None Date of Hearing: 17.10.2013 Date of Pronouncement: 17.10.2013 ORDER Per D. Manmohan, V.P. This appeal is filed at the instance of the Revenue and it pertains to A.Y. 2007-08. 2. The only ground urged by the Revenue reads as under: - "1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs.1,86,19,875/- comprising share application money (Rs.1,85,97,640/-) and unsecured loan (Rs.22,235/-) ignoring the facts on record which indicates that these amounts were found credited in the book in the relevant assessment year." 3. The case was originally posted for hearing on 22.07.2013 wherein the learned counsel for the assessee, Shri Stany Saldanha, submitted that there is no fresh loans/increase in share application money during the year and hence there is no case for making an addition under section 68 of the Act and in support thereof a paper book was filed. Schedule forming part of the Balance Sheet as on 31.03.2006, shows unsecured loan of `22,235/- as well as share application money of `1,85,97,640/- was reflected in the Balance Sheet for the previous year ending on 31st March 2006 and the same figures appear as on 31st March, 2007 which implies that there is no fresh capital 2 ITA No. 9091/Mum/2010 M/s. Magic Park (India) P. Ltd. introduction or loan in the year under consideration. The Revenue, however, appears to have claimed that these amounts were credited in the relevant assessment year and hence the learned DR was directed to furnish evidence in support thereof and also directed to find out from the office of the Registrar of Companies as to what was the share application money received in the immediately preceding year and whether there is any fresh amount received in the year under consideration. Accordingly the case was adjourned for hearing on 17.10.2013. However, at this stage the learned counsel requested for an adjournment on the ground that he has to appear in a Civil Court in another matter and hence would not be able to appear in person. 4. Under these circumstances we called upon the learned D.R. to furnish the evidence, if any, to support the stand taken before us. The learned D.R. fairly admitted that no information is supplied by the AO in support of the contention that these amounts were found credited in the books of the assessee in the previous year relevant to A.Y. 2007-08. 5. The learned CIT(A), in fact, categorically mentioned that the financial statements of the assessee clearly reflect that there is no fresh inflow in the year under consideration and hence no case was made out by AO to make the impugned addition. In the absence of any evidence to contradict the findings of the CIT(A), we do not find any merit in the appeal filed by the Revenue. We, therefore, proceeded to dispose of the appeal exparte, qua assessee. Since no material, whatsoever, was furnished to contradict the findings of the learned CIT(A), we affirm the order of the CIT(A) and dismiss the appeal filed by the Revenue. 6. In the result, as pronounced in the open court, appeal filed by the Revenue is dismissed. Order pronounced in the open court on 17th October, 2013. Sd/- Sd/- (Sanjay Arora) (D. Manmohan) Accountant Member Vice President Mumbai, Dated: 17th October, 2013 3 ITA No. 9091/Mum/2010 M/s. Magic Park (India) P. Ltd. Copy to: 1. The Appellant 2. The Respondent 3. The CIT(A) ­ 20, Mumbai 4. The CIT­ 9, Mumbai City 5. The DR, "B" Bench, ITAT, Mumbai By Order //True Copy// Assistant Registrar ITAT, Mumbai Benches, Mumbai n.p.

DGFT Policy Circular No 07 (RE-2013/2009-14 dated 23-10-2013

Government of India

Ministry of Commerce and Industry

Department of Commerce

(Directorate General of Foreign Trade)

[ISO 9001:2008 Certified Organisation]

Udyog Bhawan, H-Wing, Gate No. 2,
Maulana Azad Road, New Delhi-110011

Tel. (EPBAX No.): 011-23061562

Fax No: 011-2306 2225

Web Site: http://dgft.gov.in

E-mail: dgft@nic.in

*****

Policy Circular No. 07 (RE-2013)/2009-14

Dated 23/10/2013

To,

All Regional Authorities/All Customs Authorities/FIEO/EPC’s/All Concerned

Subject: Operationalisation of provisions of Para 5.11.2 of Hand Book of Procedure Vol.-1 (2009-14) [RE: 2013]

Para 5.11.2 of the Hand Book of Procedure Volume 1 (HBP v1) permits re-fixation of Annual Average Export Obligation, in case the export in any sector/ product group declines by more than 5%. This implies that for the sector/product group that witnessed such decline in 2012-13 as compared to 2011-12, would be entitled for such relief.

2. A list of such product groups showing the percentage decline in exports during 2012-13 as compared to 2011-12 is enclosed.


3. All Regional Offices are requested to re-fix the annual average export obligation for EPCG Authorizations for the year 2012-13 accordingly. Reduction, if any, in the EO should be appropriately endorsed in the licence file of the office of RA as also in the Amendment Sheet to be issued to the EPCG Authorisation holder.


4. Regional Offices while considering requests of discharge of Export Obligation will ensure that in case of shortfall of Export Obligation Policy Circulars earlier issued in terms of Para 5.11.2 of HBP 2009-14 are also considered before issuance of demand notice etc. This stipulation should also form part of Check-Sheet for the purpose of EODC.


5. This issues with the approval of DGFT.

(Akash Taneja)

Joint Director General of Foreign Trade

Tel. No. +91 11 2306 1562 / Ext. 217

E-mail: akash.taneja@nic.in

(Issued from File No. 01/36/218/133/AM-14/EPCG-I)

Enclosure: List of Product Groups which experienced a decline in exports in 2012-13 as compared to 2011-12 (11 pages)

Service Tax Notification No 14/2013 (ST) dated 22-10-2013

Government of India

Ministry of Finance

(Department of Revenue)

Notification No. 14/2013-Service Tax

New Delhi, 22^nd October, 2013

G.S.R.____ (E).- In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994, (32 of 1994), the Central Government, 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.25/2012-Service Tax, dated the 20^th June, 2012 , namely:-

In the said notification, in the opening paragraph, after entry 19, the following entry shall be inserted, namely:-

“19A. Services provided in relation to serving of food or beverages by a canteen maintained in a factory covered under the Factories Act, 1948 (63 of 1948), having the facility of air-conditioning or central air-heating at any time during the year.”.

[F. No. B1/13/2013-TRU]

(Akshay Joshi)

Under Secretary to the Government of India

Note.- The principal notification was published in the Gazette of India, vide notification No.25/2012-Service Tax, dated the 20^th June, 2012 , vide G.S.R.467(E), dated the 20^th June, 2012 and was last amended by notification No.13/2013-Service Tax, dated the 10^th September, 2013 vide G.S.R.616(E), dated the 10^th September, 2013.

One unit can’t take credit of services meant for another separately registered unit

ST : Being a manufacturer having one factory and setting up second factory, assessee can easily and correctly take credit of services availed at Unit-2 in Unit-1 also, but since assessee took a separate registration for Unit-2, credit could only be taken in Unit-2

UNISON HOTELS LTD. Vs. aDEPUTY COMMISSIONER OF INCOME TAX

$~23. * IN THE HIGH COURT OF DELHI AT NEW DELHI + INCOME TAX APPEAL NO. 89/2013 Date of decision: 10th October, 2013 UNISON HOTELS LTD. ..... Appellant Through Mr. Siddharth Shankar Dev, Advocate. versus DEPUTY COMMISSIONER OF INCOME TAX ..... Respondent Through Ms. Suruchi Aggarwal, Sr. Standing Counsel. CORAM: HON'BLE MR. JUSTICE SANJIV KHANNA HON'BLE MR. JUSTICE SANJEEV SACHDEVA SANJIV KHANNA, J. (ORAL): This appeal by the assessee under Section 260A of the Income Tax Act, 1961 (Act, for short), relates to Assessment Year 2005-06 and arises out of order of the tribunal dated 23rd March, 2012. 2. By order dated 10th July, 2013, the following substantial question of law was framed:- "Whether the order of the Income Tax Appellate Tribunal confirming penalty under Section 271(1)(c) of the Income Tax Act, 1961 is justified as the appellant-assessee was assessed and had paid tax under MAT ITA No. 89/2013 Page 1 of 4 provisions?" 3. As is apparent from the question itself, income of the appellant- assessee has been assessed under Section 115JB of the Act. As per the income tax return filed on 31st October, 2005, the appellant-assessee had suffered loss of Rs.12.28 crores under the normal provisions. The Assessing Officer while examining the profit and loss account and statement of income prepared under the normal provisions, disallowed donation of Rs.50,98,500/-, which had been claimed as expenditure in the profit and loss account. Under the heading "operating and general expenses" schedule (xviii) the appellant-assessee had specifically under "donation" mentioned this amount. However, the Assessing Officer computed the income on book profits under Section 115JB after noticing that the assessee had earned profit of Rs.14,47,91,067/- in the said assessment year. No adjustment towards book profits was made, except on account of provision for wealth tax and excess depreciation charged on electrical fittings. Accordingly, minimum alternative tax was computed. 4. The Assessing Officer thereafter initiated penalty proceedings under Section 271(1)(c) of the Act and imposed penalty of Rs.24,94,596/-. While calculating the penalty, the Assessing Officer records that the returned income was at loss of Rs.12,27,93,403/- and the assessed income was at the positive figure of Rs.14,47,91,067/-. ITA No. 89/2013 Page 2 of 4 The amount in respect of which inaccurate particulars were furnished was taken at Rs.50,98,500/- plus foreign commission of Rs.18,89,158/- (addition towards foreign commission was deleted by the tribunal and, therefore, is not subject matter of the present appeal and penalty has not been sustained by the tribunal on the said amount). 5. In the first appeal filed before the Commissioner (Appeals), it was stated that donation of Rs.50,98,500/- was given to charitable organisations and deduction under Section 80G of the Act was assessable. This amount was shown as an expense under the head "administrative expenses" in the profit and loss account and the relevant schedule of the balance sheet. It was stated that by mistake, the appeallant-assessee inadvertently had failed to add back or disallow Rs.50,98,500/- while computing the taxable income in the statement of accounts. This was an inadvertent error as the amount paid was clearly disclosed under the entry "donation" in the heading "administrative expenses". There was no concealment. 6. The Commissioner (Appeals) confirmed the said penalty and by the impugned order penalty imposed has been sustained by the tribunal. 7. Learned counsel for the appellant has relied upon decision of the Supreme Court in Price Water House Coopers Private Limited versus Commissioner of Income Tax, (2012) 348 ITR 306(SC), but we need ITA No. 89/2013 Page 3 of 4 not examine the said aspect as the appellant is entitled to succeed in view of the decision of the Delhi High Court in Commissioner of Income Tax versus Nalwa Sons Investments Limited, (2010) 327 ITR 543 (Delhi) wherein it has been held that when taxable income is computed on book profits under Section 115JB and not under the normal provisions, Explanation (4) has to be accordingly applied. In view of the said Explanation, the additions made by the Assessing Officer under the normal provisions are totally irrelevant. Thus, there cannot be imposition of penalty under Section 271(1)(c) of the Act for addition made under the normal provisions. 8. Question of law is accordingly answered in favour of the appellant-assessee and against the respondent-Revenue. The appeal is disposed of. No order as to costs. SANJIV KHANNA, J. SANJEEV SACHDEVA, J. OCTOBER 10, 2013 VKR ITA No. 89/2013 Page 4 of 4

COMMISSIONER OF INCOME TAX: DELHI-I Vs. ARCANE DEVELOPERS PVT. LTD.

$~5. * IN THE HIGH COURT OF DELHI AT NEW DELHI + INCOME TAX APPEAL NO. 41/2013 Date of decision: 8th October, 2013 COMMISSIONER OF INCOME TAX: DELHI-I ..... Appellant Through Mr. Abhishek Maratha, Sr. Standing Counsel. versus ARCANE DEVELOPERS PVT. LTD. ..... Respondent Through Nemo. CORAM: HON'BLE MR. JUSTICE SANJIV KHANNA HON'BLE MR. JUSTICE SANJEEV SACHDEVA SANJIV KHANNA, J. (ORAL): Revenue impugns order dated 22nd June, 2012 in this appeal, which relates to Assessment Year 2007-08. 2. The issue raised is whether interest of Rs.1,26,64,315/- paid to M/s Dharti Investments and Holding Limited on loan of Rs.25 crores could be allowed as expenditure under Section 36(1)(iii) of the Income Tax Act, 1961 (Act, for short) and Rs.2,32,582/- on account of travel/statutory fees/audit fees etc can be allowed as expenditure under ITA No. 41/2013 Page 1 of 7 Section 37 of the Act. 3. The Assessing Officer had disallowed the said amounts as expenditure under Section 37/36(1)(iii) on the ground that the business of the assessee had commenced/was set up on 5th July, 2006. Loan from M/s Dharti Investments and Holding Limited, it is stated, was taken on 16th May, 2006. Learned counsel relies upon judgment of this Court dated 9th July, 2013 in ITR No. 131/2010, titled Commissioner of Income Tax versus Samsung India Electronics Limited. Our attention was drawn to the fact that Memorandum of Understanding between the respondent and third parties is dated 30th May, 2006 and not 31st March, 2006, as recorded in the impugned order. 4. The respondent-assessee is a company, which was incorporated on 4th August, 2005. The main objects for incorporation of the company are as under:- "1. To carry on the business as owners builders, colonisers, developers, promoters, proprietors, occupiers, lessors, interior decorators, civil contractors, maintainer of residential, commercial and industrial buildings, colonies, mills and factorys sheds and buildings, workshops buildings, hospitals & nursing homes, and to deal in all kinds of immovable properties whether belonging to the Company or not. 2. To undertake and carry on the business of purchasing, selling and developing any type of land or plot whether residential, commercial, ITA No. 41/2013 Page 2 of 7 industrial, rural or urban that may belong to company or to any other person of whatever nature and, to deal in land or immovable properties of any description or nature on commission basis and for that purpose to make agreements to sell the land of the company or of any body else and to deal in building material electrical and civil materials. 3. To erect and to construct houses, buildings or civil and constructional works of every description on any land of the company or upon any other lands or immovable property and to purchase, take on lease, or otherwise own, hold, occupy, construct, erect, alter, develop, colonies, decorate furnish, pull down, improve, repair, renovate, build, plan, layout, set, transfer, mortgage, charge assign, let out, hire, sublet or sublease all type of lands, plots, buildings, hereditaments, bungalows, quarters, offices, flats, swimming pools, chawls, warehouses, godowns, shops, stalles, markets, hotels, and restaurants building, banquet halls, houses, structures, construction, tenements, roads, bridges, land, estates and immovable properties whether freehold or lease hold of any nature and description and where ever situated in way and partly consideration for a gross sum or rent or partly in one in other or any consideration. 4. To act as an agent for purchasing, selling, and letting on hire, land and houses whether multi-storey, commercial land/or residential buildings on commission basis. 5. To consolidate or subdivide, develop, maintain, purchase, sell and letting on hire into farms and sheds and to let out the same on rental or license basis. 6. To acquire, purchase and for the construction of multi-storeyed buildings and to ITA No. 41/2013 Page 3 of 7 licence the flats therein on suitable terms and conditions and to do the consultancy business in the construction and allied activities." 5. In Western Indian Vegetables Products Limited versus CIT, (1954) 26 ITR 151, Bombay High Court had examined the concept and noticed the difference between "commencement" and "setting up" of business and it was observed as under:- "The important question that has got to be considered is from which date are the expenses of this business to be considered permissible deductions and for that purpose the section that we have got to look to is section 2(11) and that section defines the ,,previous year and for the purpose of a business the previous year begins from the date of setting up of the business. Therefore it is only after the business is set up that the previous year of that business commences and in that previous year the expenses incurred in the business can be claimed as permissible deductions. Any expenses incurred prior to setting up of a business would obviously not be permissible deductions because those expenses would be incurred at a point of time when the previous years of the business would not have commenced. xxxxxx It seems to us, that the expression ,,setting up means, as is defined in the Oxford English Dictionary, ,,to place on foot or ,,to establish, and in contradistinction to ,,commence. The distinction is this that when a business is established and is ready to commence business then it can be said of that business that it is set ITA No. 41/2013 Page 4 of 7 up. But before it is ready to commence business it is not set up. But there may be an interregnum, there may be an interval between a business which is set up and a business which is commenced and all expenses incurred after the setting up of the business and before the commencement of the business, all expenses during the interregnum, would be permissible deductions under section 10(2)." 6. The aforesaid distinction is relevant when we examine and refer to the definition of ,,previous year. It is well settled that "date of setting up of business" and "date of commencement of business" may be two separate dates. 7. In the present case, as noticed above, the respondent company was incorporated on 4th August, 2005, i.e., in the last Assessment Year 2006-07. It had entered into a Memorandum of Understanding dated 31st May, 2006 with third parties in respect of a project near Chandigarh, Mohali, Punjab. Subsequently, joint venture agreement dated 5th July, 2006 was executed between the respondent and third parties. The said factual positions are not disputed. Loan of Rs.25 crores was taken by the respondent-assessee on 16th May, 2006. We do not think that the date of joint venture agreement, i.e., 5th July, 2006 should be and can be as a date of setting up of business. This is the second year of operation and for the earlier year, i.e., Assessment Year 2006-07, return of income was filed on 29th November, 2006 declaring business loss of Rs.6612/-. Date of setting up of business depends ITA No. 41/2013 Page 5 of 7 upon facts and the nature of the business. This is the reason why we have referred to the objects for incorporation of the company and the main business activities in which the respondent-assessee was engaged. The first appellate authority examined the whole issue in depth and has pointed out that the Memorandum of Understanding required payments. The respondent-assessee had, therefore, arranged for funds. Memorandum of Understanding is culmination of the negotiations started and undertaken earlier and subsequently fructified on payment by the respondent-assessee into the joint venture agreement. Setting up of business takes place when the business is ready and first steps are taken. In case of real estate business, the said setting up of business was complete when first steps were taken by the respondent-assessee to look around and negotiate with parties. There can be a gap between setting up and when first steps were taken by the respondent and finalisation of the first written agreement. Business activities of the respondent did not require construction of a factory, machinery etc. Negotiations are required to enter into a written understanding and it is obvious that the loan was taken for business and to proceed further and conclude the deal. The aforesaid facts have been examined and highlighted by the first appellate authority. The said findings of fact have been affirmed by the tribunal. A pragmatic and a practical view has to be taken. ITA No. 41/2013 Page 6 of 7 8. No other contention has been raised or argued. Keeping in view the facts founds by the first appellate authority and the tribunal, we do not find any merit in the present appeal. In fact, decision in the case of Samsung India Electronics Limited (supra) does not support the appellant, but supports the findings recorded by the tribunal. The appeal is accordingly dismissed. SANJIV KHANNA, J. SANJEEV SACHDEVA, J. OCTOBER 8, 2013 VKR ITA No. 41/2013 Page 7 of 7

Reassessment held invalid if eligibility of assessee for sec. 10B already considered during original

IT: If in original assessment, after appreciating assessee's response to specific queries, section 10B deduction was reduced and further, in subsequent rectification same issue was again considered, reassessment after 4 years to withdraw section 10B deduction was illegal due to change of opinion

Period of holding of inherited property to include duration of possession of asset by previous owner

IT : In computing long term capital gains on sale of inherited asset, indexed cost of acquisition is to be computed with reference to year first held by previous owner

Loss of advance sum given to acquire a profit earning apparatus isn’t allowable as revenue loss

IT : Where amount advanced was incurred towards cost of acquiring profit earning apparatus, same was not allowable as revenue loss

Appellants can allege oppression against a co. if ties with co. as shareholder couldn't be fully ter

CL : Where appellants, heirs of a shareholder of respondent-company, had not received entire sum awarded in arbitration proceeding, they could file application alleging oppression and mismanagement, on cancellation of their shares in violation of statutory procedures and directions of arbitrators, as their connection with respondent-companies did not stand severed

HC affirms 23% interest claim on loan from sister concern as revenue didn’t object to rate in earlie

IT: No part of interest paid by assessee on loan taken from sister concern can be disallowed under section 40A(2) when interest at same rate on same loan had been accepted by department in earlier year

Transportation of coal within mines via tipper trucks deemed as ‘Cargo Handling Services’

ST: Loading/unloading/handling of coal into tipper trucks and its transportation from coal face surfaces to coal stockyard (within mines) amounts to 'Cargo Handling Service' and not 'Mining Services'

Diwali bonus for Goa government employees by this month-end

PANAJI: Despite loss in revenue due to ban on mining exports, the Goa government has decided to give Diwali bonus to government servants by this month end.

The bonus would be given to around 45,000 government servants before Diwali, a senior state finance department official told PTI today.

Diwali will be celebrated on November 3. He said that there are total 60,000 government servants employed but only 45,000 are eligible for the benefit of bonus according to rules.

The bonus would put an additional liability of Rs 35 crore on the state exchequer.

The state government has also increased the dearness allowance (DA) of the government servants by 10 per cent which will be paid from retrospective effect from the month of July onwards.

"The arrears of DA would be paid in next month which would amount to Rs 30 crore," he said, adding that the additional liability due to revised DA would be Rs 7.5 crore monthly.

The state government has been paying Rs 130 crore monthly as salary to government servants.

Sum collected for allotment of convertible debenture is neither loan nor deposit; out of clutches of

IT: Where assessee received certain amount by way of subscription money for allotment of debentures under optionally fully convertible debentures scheme, subscription collected under said scheme was neither loan nor deposit within meaning of section 269SS

Sales Tax Tribunal Bar Association vs. State (Bombay High Court) (No. 2)