Tuesday 29 October 2013
No rectification if an issue was consciously omitted while adjudicating question of law, says HC
Unutilized capacity to be considered by TPO while determining ALP of manpower support services
Coal Blocks Auction May Be Delayed Further To March
29-Oct-2013
The auction of coal blocks to private firms may get further delayed to March next year as the Coal Ministry has sought from consultancy firm CMPDIL a report on reserves of four more mines.
Coal Minister Sriprakash Jaiswal had earlier said that auction of mines would begin in December.
"The auction of mines is likely by March next year," an official source said.
The Coal Ministry has asked CMPDIL, the mine planning and consultancy company of Coal IndiaBSE 0.94 %, to assess the reserves of four more mines and submit its report by next year, the official added.
The government which was initially planning to auction six mines in the first tranche is targeting to auction 10 blocks now, the official said.
The Cabinet had earlier approved the methodology for auctioning coal blocks, providing for upfront and production -linked payments and benchmarking of coal sale prices.
Coal blocks will be put up for auction after environment ministry reviews them and bidders have to agree to a minimum work programme, an official statement had said recently.
The policy provides for production-linked payment on a rupee per tonne basis, plus a basic upfront payment of 10 per cent of the intrinsic value of the coal block.
The government had earlier said that exploration activities in identified blocks are at an advanced stage and are likely to be completed soon.
The government had earlier allocated 14 coal mines to central and state public sector units, including four to NTPCBSE 0.38 %, in July.
It had earlier planned to auction 54 coal blocks with total estimated reserves of about 18 billion tonnes.
Source:- economictimes.indiatimes.com
Dollar At One-Week High As Markets Priced For Fed To Hold Policy
The dollar touched a one-week high against a basket of major currencies on Wednesday as investors further trimmed bearish positions ahead of the outcome of the Federal Reserve policy meeting.
Investors had sold the greenback heavily in the run up to the Oct 29-30 meeting on growing expectations the U.S. central bank will maintain its massive bond-buying stimulus program through to early next year.
The dollar index inched up 0.1 percent to 79.648.DXY, having touched a high of 79.692 earlier on Wednesday, its highest level since October 22. Just last Friday, the dollar index had plumbed a nine-month low at 78.998.
"Fed meetings have not been friendly to the USD this year, with the dollar weakening following every meeting in 2013 with the exception of June," analysts at BNP Paribas wrote in a client note.
"However, with markets already having adjusted to a much more dovish view on the Fed outlook heading into today's meeting, we think the USD is likely to hold up better this time."
The euro held steady at $1.3741, having backed off from a 23-month peak of $1.3833 set just a few days ago.
Traders said the currency's repeated failure to cleanly break above $1.3800 had made it vulnerable to a correction. Since September, the common currency has gained roughly 7 U.S. cents.
Against the yen, the dollar held steady at 98.17 yen, clinging close to a one-week high around 98.28 yen set on Tuesday.
"It's basically some short covering of the dollar, which had been sold earlier," said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore.
Market players will probably hold off from aggressive dollar buying, given the uncertainty about the U.S. economy's outlook in the wake of this month's 16-day partial government shutdown, Okagawa said.
The lack of clarity may also help limit dollar selling versus the yen in the next few months, he said.
"Even if you get one or two strong figures, or weak numbers... I think it will be hard to tilt positions too heavily," Okagawa said.
Economic indicators due later on Wednesday include a reading on U.S. private sector employment in October from payrolls processor ADP, which comes ahead of the closely watched nonfarm payrolls data for October due on November 8.
A majority of U.S. primary dealers polled by Reuters last week said the Federal Reserve would not start cutting its monthly bond purchases until March of next year and said the recent government shutdown and standoff over raising the U.S. debt ceiling had significantly impacted on the Fed's timing.
The Australian dollar touched a 2-1/2 week low after having fallen the previous day following the Reserve Bank of Australia's latest attempt at talking down the currency.
The Aussie held steady at $0.9477. It fell to $0.9459 earlier on Wednesday, its lowest level since October 14.
Source:- reuters.com
Medical reimbursement as part of salary can be paid even before exp.; Bangalore ITAT reaffirms
INCOME TAX APPELLATE TRIBUNAL NEW DELHI CONSTITUTION OF BENCHES FROM 28.10.2013 TO 31.10.2013 AND 04.11.2013 TO 07.11.2013
Income tax department to issue directive on safe harbour rules
The income tax department will issue a directive to its officers on the implementation of safe harbour rules in a move that is aimed at allaying fears of companies regarding various aspects of these and which should make transactions between multinationals and their Indian subsidiaries easier and, possibly, litigation-free.
The circular is expected to state that the relatively higher profit margins under safe harbour rules cannot be taken as a benchmark by the transfer pricing officer (TPO) and will not be counted against the company in subsequent evaluations.
In September, India’s finance ministry issued safe harbour rules to reduce transfer pricing litigations after taking into account feedback from all stakeholders on the draft provisions. Safe harbour rules are circumstances under which the tax department will accept the transfer price given by the assessee. Information technology (IT) and Information technology enabled service (ITeS) companies, contract research and development (R&D) centres in IT and pharma sectors, and auto component manufacturers are expected to benefit from these provisions.
Transfer pricing refers to the practice of arm’s length pricing for transactions between group companies based in different countries to ensure that a fair price—one that would have been charged to an unrelated party—is levied. It has been an area that the income tax department has been aggressively pursuing to garner revenues but has also led to large scale disputes between companies and the tax department.
Companies have to declare a higher operating profit margin—much above what will be considered an arm’s length price—to avail the safe harbour provisions but there was a fear that the transfer pricing officer may quote this margin in all future transactions.
“Apprehensions have been raised by the industry after we notified the safe harbour rules. We will issue written directives to the officers on how to handle these cases. In the event a company does not qualify for safe harbour, the TPO cannot take that price as the benchmark. The TPO will have to do his own analysis and decide on the right price,” said a finance ministry official who did not want to be identified. “A few other concerns have also been raised which will be addressed through the directive,” the official said.
Another finance ministry official said that the concerns of the industry will be addressed. “Reducing disputes related to transfer pricing was one of the main reasons for the introduction of safe harbour norms. So if industry has concerns, they will be addressed by CBDT (Central Board of Direct Taxes),” the official said.
Safe harbour rules were part of the Finance Act of 2009 but due to the lack of consensus, the rules were not notified. The need for safe harbour rules gained momentum after Prime Minister Manmohan Singh set up a committee under N. Rangachary, former chairman of CBDT and Insurance Regulatory and Development Authority (Irda), to address the concerns of the industry around transfer pricing and recommend safe harbour rules.
The tax department has been aggressively scrutinizing cases related to transfer pricing, leading to an increase of Rs.60,000 crore in claims.
Samir Gandhi, a partner at Deloitte Haskins and Sells, said the safe harbour regime will take at least a year to settle down and for the issues to be addressed.
“The government is trying to ensure smooth implementation of safe harbour and the promised directive to the cadre is one such step. Safe harbour markups should not be considered or deemed arm’s length pricing,” he said. “However, there will be issues as it will not be easy for the TPO to determine whether a company is providing software service or acts as a contract R&D centre for software services.”
It is important that the government ensures that this does not become a detailed and long exercise, he added.
Indian Firms Seek To Renegotiate $10.8 Bln Afghan Iron Ore Deal
29-Oct-2013
A consortium of Indian companies led by Steel Authority of India is seeking to renegotiate the terms of an iron ore deal in Afghanistan worth up to $10.8 billion, a senior official at the Ministry of Mines said on Tuesday.
The situation arose after India's finance ministry refused to help finance the consortium without a detailed study about the commercial viability of the project.
Investment in Afghanistan's mining sector is considered one of the greatest hopes of the country attaining economic independence and the halt will add to concern that it will not be able to support itself economically as aid flows shrink.
"The negotiations are suspended for some reason ... (but) they haven't withdrawn from this process," the official told Reuters, asking for his name to be withheld because he was not authorised to speak to the media.
An Indian official with knowledge of the matter said the finance ministry had told the consortium to draw up a fresh viability study, adding that the studies submitted by the companies dated back to the 1950s and 1960s.
"They are asking for government funding. But that cannot be done without first evaluating the profitability of the project," said the official, who asked not to be identified.
India's economic slowdown has hit the country's finances, forcing the ministry to consider spending cuts to prevent a budget blow-out. However, the official said the initial proposal was not rejected to trim expenditure and that the project would be looked at again once the consortium improved its pitch.
The Steel Authority of India and the two countries' mine ministries were not immediately available for comment.
The Afghan official did not give a reason for the suspension, but the investment, at the Hajigak mine, is in the once peaceful province of Bamiyan where increasing insurgent attacks mean it is now only safely reachable by air.
About two months ago, Chinese firms demanded a review of the country's landmark deal to produce copper in Afghanistan, agreed in 2007. [ID:nL6N0GS1ZB] According to the ministry official, the suspension of talks with the Indian firms was partly owed to a Chinese refusal to build a railway as initially planned.
The 900-km railway under consideration was to run from northern Pakistan, through Kabul, and then across the country up to Uzbekistan in the north.
"The Chinese were going to build the railway for the Aynak mine, and now the Chinese company don't want to build this railway, so the question is (how to find) another, alternative way to export iron," the official said.
He added that other issues in the contract that had come up for review included a plan to build a steel plant.
"Maybe within a month or two months we will restart the negotiations," he said.
The Hajigak deposit contains an estimated 1.8 billion tonnes of ore, with an iron concentration of 62 percent, according to the ministry, basing its figures on a survey carried out in the 1960s.
It is located in mountainous Bamiyan, where Afghanistan's world famous ancient Buddha statues once stood in the cliffs before being bombed to rubble by the Taliban.
It was once considered Afghanistan's most peaceful province due to the dominant local Hazara tribe's opposition to the Taliban, who are mostly ethnic Pashtuns and who massacred thousands of Hazara during their austere rule.
But now that foreign combat troops are withdrawing, with plans to exit by the end of 2014, violence is returning to the province and insurgent attacks make its roads dangerous.
Source:- in.reuters.com
Tata Steel Says Could Cut Around 500 Uk Jobs
29-Oct-2013
Tata Steel (TISC.NS), Europe's second-largest steel producer, said on Tuesday it could cut around 500 jobs under plans to restructure the part of its British business that supplies the construction and engineering industries.
Changes to its long products business - which makes tubes, rails and rods, used in many industrial sectors - will affect management and administrative jobs at sites in northern England, primarily Scunthorpe, where 340 positions could be lost, Tata said.
It blamed a prolonged downturn in demand, particularly for construction steel in Britain, a market which is at about half of 2007 levels.
"European steel demand this year is expected to be only two-thirds of pre-crisis levels after falls in the past two years," Karl Koehler, CEO of Tata Steel's European operations, said.
"On top of the challenging economic conditions, rules covering energy and the environment in Europe and the UK threaten to impose huge additional costs on the steel industry."
The $500-billion-a-year steel industry, a gauge of the health of the global economy, has suffered from a drop in demand from austerity-hit Europe and worries about the outlook for the Chinese economy.
Tata has battled tough conditions in Europe almost since taking over steelmaker Corus in 2007, just before the global financial crisis, and Tuesday's cuts follow a major restructuring of its long products unit in 2011, with the loss at the time of about 1,500 jobs in Britain.
Tata said then that it was mothballing parts of its Scunthorpe plant to refocus on high-value markets.
Source:- in.reuters.com
Govt To Consider Lowering Wheat Export Price
With government’s effort to liquidate 2 million tonnes of wheat evoking poor response from traders due to high base price, the cabinet committee on economic affairs is soon expected to consider a proposal to lower the base price of such exports from the existing $300 per tonne (Rs 18,372 per tonne assuming an exchange rate of 61.42) to $260 per tonne (Rs 15,969.2 per tonne).
However, how far the proposal will be carried through remains to be seen as some ministries and department are against the move to lower the base price and increase the burden on the exchequer at a time when there is a possibility of international wheat prices firming up in the next few months.
BY lowering the base price, officials said it will enable FCI get more bidders for the wheat offered by it and enable quicker liquidation of its inventories. The cabinet could also consider allow FCI time till June 30 to export wheat from its warehouses as against the current deadline of March 31.
The government has planned to export around 2 million tonnes from central pool over and above the already exported 4.5 million tonnes to create space for the new harvest.
However, it had fixed a base price of $300 per tonne for exports, while the market rate dropped much below $300 due to arrival of fresh wheat from Russia. In the last tender invited by FCI the highest bid to export wheat came at around $269 per tonne, almost $31 per tonne less than the base price fixed by the government.
The result was that the entire tender was cancelled by FCI. “If the CCEA reduces the base price of wheat then there is possibility that Indian wheat might get some buyers,” a senior official from a global grain trading firm said.
He said Indian wheat has the potential to sell at around $270-275 per tonne as its quality is somewhat better than some of the alternatives available in the global market.
“But, if someone feels that Indian wheat will quote $300 per tonne in the international market, then he has not read the market properly as global prices are much lower than that,” the official said.
India produced around 92.4 million tonnes of wheat in 2012-13 crop year that ended in June, around 2.53% less than the previous year. State-run agencies like FCI procured around 26 million tonnes of the same.
According to latest FCI data, as on October 1, foodgrains stocks in state-run warehouses is estimated to be around 55.13 million tonnes as against a requirement of 21.2 million tonnes. Of this wheat comprises of 36.1 million tonnes, while the rest is rice.
Source:- business-standard.com
CAT annuls appointment of senior revenue official
The Central Administration Tribunal (CAT) has quashed the appointment of Central Board of Direct Taxes (CBDT) member Parvinder Sohi Behuria, seven months after she took charge.
This is for the first time that a serving member’s appointment has been declared invalid on the grounds that the vacancy did not exist when the orders were issued. The 1977 batch Indian Revenue Service officer is handling the charge of revenue at the administrative body for collecting income tax.
The appointment was challenged by a Chief Commissioner of Income Tax, Dileep Shivpuri, also in the fray for the post. In his petition, he alleged finance secretary R S Gujral, who was handling the revenue portfolio at that time, had “unduly favoured” Behuria.
He alleged she didn’t meet the criteria of one year of regular service in the post of chief commissioner or its equivalent, and had less than one year’s residual service on the date of occurrence of vacancy.
Behuria was appointed member in place of S S Rana, who retired on March 31. The CAT has ruled that since no vacancy existed on that day, no selection or appointment could have been made against the post before April 1. The government will now have to make a fresh selection for the post.
The CAT, however, did not accept the objection raised by the petitioner on relaxing criteria regarding working on an equivalent post outside the cadre. Before her appointment as CBDT member, Behuria was secretary at the Public Enterprises Selection Board (PESB) in the rank of chief commissioner.
“Since others also had been given such relaxation in similar circumstances in the post, we would feel that this constitutes a category in itself,” it said.
It also refused to get into comparative evaluation of the merits of Shivpuri’s application for the post and allegations of “undue favour” being made against him by Gujral.
Behuria, a doctorate in business administration, is married to heavy industries secretary, Sutanu Behuria,. She was appointed PESB secretary on January 1, 2008. She was part of the core team that implemented the Income Tax Department’s Permanent Account Number for tax payers.
At CBDT, she is handling all matters relating to revenue budget, including the assigning of budgetary targets among chief commissioners throughout the country, recovery of taxes, write-offs of income tax demands, all matters relating to widening of tax base, and general coordination of the work.
India's Iran Oil Imports Drop As Refiners Await Insurance Fund
29-Oct-2013
India's crude imports from Iran fell 40 percent in the first nine months of this year as some refiners cut purchases from the sanctions-hit nation while waiting for New Delhi to back local insurers covering plants processing the oil.
European reinsurers, due to Western measures targeting Iran's disputed nuclear programme, have added a clause in contracts with Indian refiners that could mean claims arising during the processing of Iranian oil would not be met.
New Delhi has decided to set up a sovereign fund to back local insurers covering such refineries, hoping to boost imports paid for in rupees to ease its current account deficit.
But the fund has yet to start and this could lead to import cuts larger than the goal of about 15 percent.
Despite a near doubling of Iran oil shipments from August as one refiner stepped up purchases, the year-to-date volumes are still down sharply from a year ago.
India's imports of Iranian oil have fallen to 194,000 barrels per day (bpd) for January-September, down from 324,000 bpd in the same period last year, trade data made available to Reuters shows.
September barrels from Iran rose to 296,100 bpd from 151,000 bpd in August, partly due to Indian Oil Corp (IOC.NS) taking 2 million barrels of oil from Tehran, the data showed.
The September volumes were down 8.1 percent from a year ago.
Despite signs of a thaw in relations between Washington and Tehran, Iran's Asian oil buyers - its main clients - are not ready to risk letting imports creep higher.
To win waivers from the U.S. sanctions, Iran's oil customers must continually reduce their shipments. Japan won its fourth six-month waiver last month, while Iran's other top buyers - China, India and South Korea - will have their exemption from sanctions reviewed in early December.
Iran's oil sales in October will fall to their lowest in months, according to sources who track tankers, indicating no sanctions relief to Tehran despite its apparent willingness to compromise on its disputed nuclear work.
Iran's deputy foreign minister said he had made proposals to the U.N. nuclear watchdog chief on Monday after pledging "a new approach" to easing international concerns about Tehran's nuclear programme.
GAINING GROUND
Overall shipments in June-September were about 34 percent less than the average of December-May period, the data shows.
The comparison with the previous six months will be most relevant to the renewal of India's sanctions waiver in December.
Refiner Mangalore Refinery and Petrochemicals Ltd (MRPL.NS) was the biggest importer of Iranian oil in September, replacing Essar Oil (ESRO.NS) by shipping in 133,000 bpd, the data showed.
MRPL resumed imports from Iran in August after a four month halt over the insurance issue, while Hindustan Petroleum Corp Ltd (HPCL.NS) has decided against buying oil from Tehran in the fiscal year that began April 1.
Iran was the fourth biggest crude oil supplier to India in September, improving its ranking from ninth place in August.
India imported about 51 percent more oil from Latin America in the first nine months of the year as the Iranian shipments dropped. Crude imports from Iraq over the same period increased by 20 percent.
Overall, Asia's third-largest economy shipped in slightly more oil in September than a year ago, while imports for the January-September period rose about 11 percent, the data showed.
Source:- in.reuters.com
Govt’S Onion Import Plans Come To Nought
29-Oct-2013
The Government’s plans to import onion to rein in its high prices have come a cropper as five of the six bids received were invalid and one eligible supplier quoted high price.
On government’s instruction following retail price soaring up to Rs 100 a kg, co-operative major Nafed floated a tender on October 23 to import onion from Pakistan, Iran, China and Egypt. The bids were opened on Tuesday.
“We have received a total of six bids, but only one is valid and it does not suit our requirement,” NAFED Managing Director Sanjeev Chopra said.
The valid bid quoted Rs 50 per kg at ex-Delhi price for Chinese onion. “At this rate, we are getting onion in the domestic market and import at this price does not work out to our favour.”
Five bids were found invalid for various reasons and a detailed report on this is expected tomorrow, he added.
“We cannot take a decision based on one valid bid. As per CVC guidelines, at least 3 tenders should be there,” he said.
Source:- thehindu.com
Complaint for dishonour of cheque allowable if accused fail to justify such dishonour
Consumer inflation-linked savings plan for retail investors by year-end
The rate of interest on these securities will be a fixed rate plus inflation based on the new (combined) consumer price index. The instrument will be distributed through banks.
The move aims to revive small investors' interest in financial assets. With unabated inflation, investors have been moving away from financial assets such as bank fixed deposits and small savings schemes, instead opting for physical assets such as gold.
Experts say IINSS will offer investors a good option to hedge against inflation.
Some say the government can make it more attractive by making the securities tradable. "This is a good option for investors who are of the view that inflation is going to rise," Joydeep Sen, senior vicepresident, advisory desk, fixed income at BNP Paribas Wealth Management, said. "However, since the returns will be received only at the time of redemption, these bonds should be made more liquid by listing them on exchanges. This, and a wide investor base, will make the instrument more attractive," he added.
The Union Budget 2013-14 presented in February had proposed a saving instrument to protect small investors from inflation. RBI governor Raghuram Rajan too had talked about such an instrument when he assumed office last month.
Inflation-linked bonds now available are linked to wholesale price indices. They have not taken off in a big way, partly because the returns on these are lower than consumer inflation, thus eroding the value of one's financial savings.
Inflation based on the wholesale price index for September was 6.46%, while consumer price inflation was 9.84%. As for bank deposits, the returns are in the range of 8-9%.
Unlike bank deposits where the individual has an option to receive interest payments at regular intervals, the return on these securities would be compounded half-yearly and paid cumulatively at redemption. Individuals, Hindu undivided families (HUFs), trusts and charitable institutions will be eligible to buy these securities.
Data processing cost couldn’t be deemed as royalty under IT Act; no disallowance for TDS default
IRDA sets deadline for corporate surveyors to comply with revised norms on Insurance Surveyors and L
SEBI strives for transparency in complaint redressal system; revises format for disclosing investor’
SEBI simplifies norms for transmission of securities from deceased person’s account
Reassessment can't be initiated if excess managerial fee is paid in violation of law and disclosed i
Software exports can claim credit of ST paid on rent, security and maintenance of AC
An order by ITAT without cogent and convincing reasons would be in violation of principles of natura
Subsidy on sales tax, entry tax and electricity duty to be treated as revenue receipts
Land adjoining factory utilized for industrial purposes wouldn't be liable to wealth tax
No sec. 54 relief for payment of legal fees for acquisition of a new asset if actual work not yet st
Upcoming projects of different developers rule out dominance of one player in that relevant market
Small investors to get inflation-linked savings scheme soon
"It is proposed to launch Inflation Indexed National Saving Securities (IINSSs) for retail investors in November/December 2013 in consultation with the government," the RBI said today in its Second Quarter Review of Monetary Policy 2013-14.
The inflation-indexed securities for retail investors will be linked to the new (combined) consumer price index (CPI). The interest on these securities would comprise of a fixed rate plus inflation.
"Interest would be compounded half-yearly and paid cumulatively at redemption. These securities will be distributed through banks to reach out to the masses," the RBI said.
Eligible investors would consist of individuals, Hindu undivided families, trusts and charitable institutions.
The Union Budget for 2013-14 had proposed introducing instruments that would protect savings from inflation and provide an alternative to gold as an investment avenue for individuals.
Both the government and the RBI have imposed a host of restrictions on the import of gold, one of the major reasons for the record high current account deficit in the previous financial year.
In another decision, the RBI allowed banks to pay interest on savings and term deposits at shorter-than-quarterly intervals. Banks are currently required to pay interest on such deposits at quarterly or longer intervals.