IT/ILT: Where assessee entered into an royalty payment agreement with its AE and took approval of same from RBI, payment made by assessee in light of such agreements and as per approval of RBI were to be allowed
Friday 15 November 2013
Unutilized portion of Government subsidy meant to compensate loss of profit deemed as revenue receip
IT : Unutilised portion of textile subsidy received from Central Government as compensation for loss of profit would be treated as revenue receipt
Post offer for sale of shareholding of promoters relevant for making a delisting offer
CL : In terms of regulation 17(b) of 2009 Regulations, it is only current shareholding i.e. post-offer for sale (Post-OFS) shareholding of promoter group which has to be taken into consideration while making a delisting offer and, therefore, there can be no question of SEBI specifying a different criterion
Luckily delay in filing of appeal due to wrong advice of a CA considered as condonable by ITAT
IT: Rent from factory sheds which was not used for commercial activities but let out to holding company would be income from house property
Post offer for sale shareholding of promoters relevant for making a delisting offer
CL : In terms of regulation 17(b) of 2009 Regulations, it is only current shareholding i.e. post-offer for sale (Post-OFS) shareholding of promoter group which has to be taken into consideration while making a delisting offer and, therefore, there can be no question of SEBI specifying a different criterion
India's Stamp Duty Collections Can Be Raised To Rs 2 Lakh Crore.
15-Nov-2013
Collections from stamp duty and registration fees on property and capital transactions can be more than doubled and raised to Rs 2 lakh crore through an innovative approach, progressive policy and transparency, says a study by industry body Assocham.
"With property prices skyrocketing in most metropolis and price of agricultural land too rising sharply in recent past, a progressive policy in this regard is the need of the hour," Assocham Secretary General D S Rawat said.
In India, where property transactions are often regarded as shady and undervalued to avoid payments vis-a-vis stamp duty and registration fees, an innovative approach in this regard would result in much larger collection, he added.
According to the study titled Trade Policy & Tax Regime: State Level Initiatives, Maharashtra alone accounts for over 20 per cent of stamp duty/registration fees and taxes on property transactions as the state has streamlined compliance and tax administration, thereby curbing evasion.
Smaller states like Delhi, Kerala, Haryana and Punjab too maintain robust collections on this account, a fact reflective of the real estate industry in these states, the study said, calling on other states to emulate Maharashtra's example.
"As stamp duty and registration fees collections show strong growth, state governments should do away with land revenue and property tax or factor this at the time of sale or purchase and make it a one-time payment," the study suggested.
Taxes on property and capital transactions cover two important aspects-- stamp duty and registration fees-- besides land revenue and tax on urban immovable property tax.
The Assocham study further suggested a marginal raise in motor and commercial vehicle tax and urged the government to abolish the passenger and goods tax.
Besides, the study urged policy makers to focus on increasing efficiency of tax collections with a customer friendly approach.
Money will flow into government coffers if the policy initiatives focus on 'tax collection with human face', the study said.
Source : economictimes.indiatimes.com
Quickly Extend Mfn Status For Bilateral Trade, India Tells Pakistan.
India has asked Pakistan to quickly extend it the most favoured nation, or MFN, status so that the "intent" of the trade relaxations roadmap agreed to by the two countries in September 2012 could be "translated into action".
According to the roadmap, India was supposed to allow trade with Pakistan in all but 100 sensitive tariff lines by April 2013 while Pakistan was supposed to grant India the MFN tag by December 2012.
Pakistan has already overshot the cut-off date of giving India the MFN status by 11 months.
India had extended this privilege to Pakistan in 1996.
"The sooner Pakistan grants India the MFN status, the better it is for bilateral trade," Arvind Mehta, joint secretary in the department of commerce, told the India-Pakistan Economic Relations meet organised by industry chamber FICCI.
"The roadmap for enhancing trade is in place. Non-discriminatory access should be given (to Indian products)...there has been progress. But we still need to translate our intent into policy actions." Mehta said if Pakistan grants non-discriminatory access to India, the government will provide a reciprocal market access to Pakistan at a 0-5% duty rate, similar to what is being given to Bangladesh.
"Pakistan should recognise that by delaying non-discriminatory access to India, it was losing out to Bangladesh," he added.
This is India's most ambitious trade pact offer to any country, with just 100 product tariff lines kept outside the trade basket, unlike other pacts where trade in 900-1,000 products are excluded.
Naeem Anwar, minister of trade in the Pakistan high commission in Delhi, said the deadline for giving India the MFN status was missed as concerns were raised by some sectors such as pharmaceutical.
He, however, said that Pakistan has completed the consultation process with these sectors, hoping that negotiations will soon start again on the matter. Anwar said elimination of the negative list would help in enhancing economic ties as there is huge trade potential between the two neighbours.
He also said that there is a potential to open other points for land trade in addition to the Wagah-Attari route. Anwar called for a liberalised visa regime for smoother movement of businesses.
"It is important for both the countries to have high frequency of visits of businessmen," he said. Pakistan's business community also pitched for MFN status for India, saying every effort should be initiated to boost bilateral trade.
Source : economictimes.indiatimes.com
Kalyani Group Shows How Gis Can Help In Laying The Foundation For A Smart City.
Kalyani Group is developing one of India’s largest integrated development projects, “Khed City”, at the outskirts of Pune in western India. This is a joint venture between Kalyani Group, Bharat Forge and Maharashtra Industrial Development Corporation (MIDC). Initiated within the framework of the then guidelines of SEZ development under a public-private partnership, Khed City (envisioned to occupy about 5,400 hectares) is being developed in phases. The first phase of development underway accounts for 100 ha as an SEZ that will cater exclusive to export-oriented industries; about 110 ha for Domestic Tariff Area; nearly 1,500 ha of Integrated Industrial Area including residential, commercial and support services areas; and more than 25 ha for rehabilitation and resettlement of the project-affected community.
The organization was facing multiple issues due to silos of information, which was affecting the speed of the project. Data was decentralized with each department responsible for maintaining its own data, developing its own standards and procedures, and managing its own personnel resources. Apart from this, there were issues related to data integrity as the files were stored in a central file server, as well as individual desktops. To add to the complexity, data was stored in different file formats.
To resolve these issues, the group implemented a web-based Geospatial Information System (GIS). It established a centrally managed Geographic Database and GIS Architecture usable by multiple stakeholders. It then integrated GIS with other business systems like ERP and CRM.
The system includes regional data derived from external sources including information on general location, connectivity and access to the SEZ; topographic data based on the actual mapping of the terrain carried out using satellite imageries, DGPS and total station surveys of the land for the SEZ; and planning data derived from the master plan and other detailed design plans created for internal and external features in the SEZ including revised layout and subdivisions of plots and various utility networks proposed.
MIS reports/ internal financial reporting systems and the site-logs generated via GIS enable continuous monitoring of the resources, erection plans and usage of material on site and its updating. This ensures that even the smallest deviations in the construction/ erection plan are captured in advance. This has resulted in negligible ( < 0.1 percent) unforeseen costs. This saving is huge considering the fact that in the construction industry unforeseen costs are always projected at 10 percent of the project cost.
Earlier, multiple CAD software tools were used for viewing different information. Post deployment of GIS, all the end users refer to a single system, which has reduced expenses in managing these tools. This system also allows end users to access all drawings online, which has significantly reduced printing and storing efforts. Due to the availability of multilayer information of utility network, operational expenses have come down as the exact location of utility is now available.
Prior to GIS deployment, data duplication resulted in errors and significant costs on account of maintaining multiple copies of the same data. The problem has been resolved post deployment of the system. In addition, the system has provided new analytical capabilities including what-if analysis tool.
The GIS system is also being considered by other Kalyani Group companies. For example, the group’s Wind Energy Company has plans to utilize the system for land acquisitions requited for wind farms and to map existing assets on the GIS platform.
Source:- informationweek.in
India Nudges Pakistan On Mfn Status
India on Friday urged Pakistan to grant it most favoured nation status (MFN), a call for trade preference that was echoed by a visiting Pakistani business team. The call for India was made by Arvind Mehta, joint secretary in the commerce ministry, and for Pakistan by a business delegation to the annual India International Trade Fair in New Delhi.
Both Mehta and the members of the Pakistani delegation were speaking at a seminar organised by the Federation of Indian Chambers of Commerce and Industry (Ficci) in the capital.
Trade between the countries climbed to $2.6 billion in 2012-13 from $275 million in 2009-10, Mehta said. India’s main exports to Pakistan include oil meal, chemicals, rubber and petroleum, while imports include cement, gypsum and dry fruits.
Commerce was seen as the driver of the peace process that was renewed in 2011 after the freeze caused by the 2008 Mumbai terror attack. The renewed process notched up a few achievements in the arena of trade — India announced it would, in principle, allow foreign direct investment (FDI) from Pakistan, and both sides opened a new checkpoint at a land crossing in northern Punjab to accelerate commerce.
This could happen because of the strong backing provided by the commerce ministers of India and Pakistan, Mehta said, adding that for trade to grow, it should be insulated from tensions in other facets of the India-Pakistan relationship. “If we want traction we should not be hostage to what happens at the LoC (Line of Control),” said Mehta. Two Indian soldiers were beheaded in January and another five killed in an ambush in August. Pakistan, too, said its soldiers were killed at the LoC, causing the resumed peace process to stall.
For trade to progress, “there should be an uninterrupted and irreversible dialogue process. That is the only way out,” Mehta said. “Non-discriminatory access should be given (to Indian products)... we still need to translate our intent into policy actions.”
Mehta pointed out that Pakistan was uniquely placed for trading with India. “There is no country in the world (that’s a member of the World Trade Organisation, or WTO ) which does not give non-discriminatory access (to a WTO member),” Mehta said referring to Pakistan not giving India MFN status — something that was agreed would happen by December 2012.
The change in government in Pakistan earlier this year, with the election of the business-friendly Nawaz Sharif-led government, raised hopes of India being given MFN status, but the situation has remained unchanged.
“If Pakistan grants non-discriminatory access to India, India will provide a reciprocal market access to Pakistan at a 0-5% duty rate, similar to what is being given to Bangladesh. Pakistan should recognize that by delaying non-discriminatory access to India, it is losing out to Bangladesh,” Mehta said.
In the case of Bangladesh, India’s largest trade partner in South Asia, Mehta said, India had reduced tariffs on many items because there was no question of Bangladesh holding back on granting India MFN status.
“The Indian ready-made garment market size is about $30 billion and in the next 4-5 years, it will touch $100 billion,” Mehta said, adding that Pakistan would lose out on this huge slice of the market if it doesn’t give India MFN soon.
Zubair Ahmed Malik, president of the Federation of Pakistan Chambers of Commerce and Industry, supported Mehta’s call. “MFN status must be given to India — this is what I am urging to our government,” Malik said. “We want to see the trade flourish between the two countries and it can flourish if there will be a free movement of people, and for that, visa regime should be eased by both the governments,” he added, referring to a liberalized visa regime for businessmen implemented from this year.
Under the new rules, Indian and Pakistani businessmen will get one-year multiple entry visas and will be exempt from reporting to the police while travelling.
Naeem Anwar, minister-trade, at the Pakistan high commission in New Delhi, said Pakistan missed the December deadline for granting MFN status to India due to concerns raised by some sections in his country.
He added that Pakistan had completed an internal consultation process and hoped negotiations will resume soon. “Other points should also be opened for trade. New points will help in boosting trade,” Anwar said.
Source:- livemint.com
Possibilities Of China-India Jv In Non-Woven Textiles
The textile industry in China and India are exploring opportunities for joint ventures in the areas of non-woven and technical textile and other value added items in both countries.
A 12-member Chinese delegation, headed by Wang Tiankai, President, China National Textile and Apparel Council (CNTAC), were in the city as part of the last leg of their four-day visit to India, to explore opportunities for better cooperation and understanding in the textile sector.
After visiting some facilities in and around the city, Tiankai told reporters last night that there was huge potential for exporting grey fabrics and made-ups to his nation.
He also said there was a need to have broad discussions to encourage Chinese firms to invest in the Indian market.
The delegation, which has already visited Delhi, Vadodara and Mumbai, wanted to know the local situation and learnt that India was giving priority to textile machinery upgradation and that it was good time to discuss and explore opportunities, he said.
Tianki also said China would continue to import cotton yarn from India and had already shipped in 4.5 lakh tonnes of cotton yarn till September, which showed an increase of 100%.
To a question on the expected release of surplus cotton of nearly 10 million tonnes and its impact on global market, he said there would definitely be a price gap and Chinese buyers would continue to buy it from India.
T Rajkumar, Chairman, Southern India Mills' Association, said about 40% of India's cotton yarn exports were to China and there was tremendous opportunity to increase the same in the coming months.
Source:- business-standard.com
Indian Steelmakers Vie For Low-Quality Goan Iron Ore
Indian steelmakers are looking to bid for much of the 11.46 million tonnes of low-quality iron ore that the state of Goa will auction, after court-ordered restrictions on mining have cut off supplies.
The domestic steel mills have traditionally preferred ores with higher iron content but are now developing technology to use whatever ore they can lay their hands on.
Goa used to be India’s top exporting state, with sales of more than 40 million tonnes a year mostly to China. But it has not produced or exported any ore since the Supreme Court imposed a ban 14 months ago to curb illegal mining. The court on Monday said it would allow the auction of ore that was mined before the ban.
“We would definitely like to buy some from Goa,” said RK Goyal, managing director of Kalyani Steels Ltd. “The availability of Goan ore will also help us get a more competitive price than what we’re paying in Karnataka.” The company, which buys ore mainly from the southern state, has been able to get only 70% or less of the more than 100,000 tonnes of iron ore it needs every month.
The Supreme Court in April revoked a 2011 ban on mining in Karnataka, but operations have resumed in only about a dozen of its 115 mines.
Kalyani Steels, JSW Steel Ltd and Kirloskar Ferrous Industries Ltd are part of the Karnataka Iron & Steel Manufacturers’ Association that recently appealed to the Supreme Court to stop the export of the stockpiled Goan ore. Their appeal surprised miners in Goa because Indian companies have generally used high-quality ore from Karnataka and eastern Odisha state. The recent shortage, however, has forced steelmakers to adopt methods to use ore with an iron content of less than 52%.
Steelmakers such as JSW Steel, Essar Steel, Prakash Industries Ltd, Monnet Ispat & Energy Ltd, Adhunik Metaliks Ltd and Steel Authority of India Ltd are investing in plants that can process low-grade iron ore. Many small unlisted companies have also set up the so-called beneficiation plants, which extract waste material from ore and increase its iron concentration.
Kirloskar Ferrous plans to make use of one such plant, which will bid for the low-quality Goan ore that goes up for auction. Kirloskar Ferrous will buy its concentrated product, R.V. Gumaste, the steel firm’s managing director, said. The company needs more than 1 million tonne of iron ore a year but is making do with just 600,000 tonnes, Gumaste said.
Indian steel mills’ capacity utilisation hit an all-time low of 82% in the year to March 2013, according to lobby group Assocham. “Even though Goan ore is low grade, we can at least survive,” Gumaste said. “I was used to eating bread and butter but will have to be ready to eat dry biscuits now.”
Source:- livemint.com
Gold Futures Down 0.2% On Global Cues
15-Nov-2013
Gold prices declined by 0.26% to Rs 30,246 per 10 grams in futures trading today after participant trimmed positions, tracking a weak global trend.
At the Multi Commodity Exchange, gold for delivery in December declined by Rs 79, or 0.26% to Rs 30,246 per 10 grams in business turnover of 872 lots.
In a similar fashion, the metal for delivery in February traded lower by Rs 77, or 0.26% to Rs 29,790 per ten grams in 48 lots.
Market analysts said speculators trimmed their positions in tandem with a weak global trend mainly kept pressure on gold prices at futures trade.
Meanwhile, gold fell by $4.60 to $1,282.70 an ounce in London in early trade today.
Source:- business-standard.com
Veg Oil Import At All-Time High In Last 12 Months
15-Oct-2013
Vegetable oil import in the oil year gone by (November 2012-October 2013) was at an all-time high of 10.6 million tonnes, up 4.8 per cent from the previous year’s 10.1 mt, on the back of rising domestic demand, according to data released by the Solvent Extractors’ Association (SEA).
In the current oil year (Nov ’13 to Oct ’14) as well, domestic demand for vegetable oil is expected to continue to increase, by at least 500,000 tonnes, on rising demand.
Overall production of vegetable oils was almost stagnant at eight mt in 2012-13, compared to 8.1 mt the previous year, while consumption rose three per cent, due to increase in per capita consumption and population growth (1.76 per cent). The lower price of vegetable oils globally boosted import.
The inverted export duty structure in Indonesia and Malaysia also added to import of RBD palmolein, which substantially increased during the year. Import of refined palmolein during April-October 2013 jumped to a little over 1.6 mt, compared to 750,000 tonnes during the same period of last year.
India meets a little over 50 per cent of domestic demand through import. Palm oil is imported from Malaysia and Indonesia, while soyabean oil comes from Argentina and Brazil.
“India’s demand for edible oil is on the rise and even in the current oil year, we will import at least half a million tonnes. Imports of vegetable oil will also depend on the domestic production of oilseed,” said B V Mehta, executive director of SEA.
If the price remains low internationally, then import will be higher, he added.
Source:- business-standard.com
Import Prices Fall On Cheaper Energy, Weaker Yen
15-Nov-2013
Prices of goods imported into the U.S. fell in October at the fastest pace in more than a year. Overall import prices fell by 0.7% in October from a month earlier, largely driven by lower petroleum costs, the Labor Department said Friday. That was largely in line with expectations and marked the largest decline since June 2012. Prices were down 2% over the past year.
Excluding all fuels, import prices were unchanged for the month but declined 1.3% over the last year. That was the largest annual drop since October 2009, the Labor Department said. Falling import prices typically reflect weak demand abroad containing inflation pressures, a development that in turn has helped keep inflation at historically low levels in the U.S.
“With the prices of imported goods largely flat, domestic firms will have limited pricing power and that implies continued low or even decelerating inflation,” said Joel Naroff, president of Naroff Economic Advisors Inc.
Stimulus efforts by some central banks have helped make a variety of goods cheaper for American importers.
Prices from Japan, for example, continued to trend down in October, declining 3.2% over the past year — the largest 12-month drop since the spring of 2002. And prices for imported cars –a large share of which comes from Japan – dropped 1.4% since October 2012, the biggest decline since the Labor Department started collecting that data in 1981.
Lower prices from Japan are likely the result of a falling yen, and government officials have suggested in recent days they are prepared to fight to keep the currency weak. The Bank of Japan is in the midst of stimulus measures designed to boost growth in the country.
But lower import prices aren’t necessarily trickling down to U.S. consumers and pushing them to spend more.
“Not only are we importing disinflation, but we have an economy which is still stuck in a shallow growth trajectory,” said Steven Ricchiuto, chief economist at Mizuho Securities.
Low inflation domestically could encourage the Federal Reserve to maintain its $85 billion-per-month bond-buying program, which is aimed at keeping long-term interest rates low and in turn spurring hiring, spending and growth. Some economists think the central bank may rein in the program at its December meeting, while others don’t expect any changes until early next year.
Overall inflation remains well below the Fed’s 2% annual target. Its preferred gauge, the index for personal consumption expenditures, rose 0.9% year-over-year in September.
Source:- blogs.wsj.com
Oil Import From Iran On Slippery Terrain
If the proposed Rs 2,000-crore Indian Energy Insurance Pool is not operational by next month, say major crude oil importers, they will not be bringing in any from Iran.
This casts a big shadow on the petroleum ministry’s plan to import 11 million tonnes of crude from Iran in this financial year — the attraction in doing so from that sanctions-hit country is that it will accept payment in rupees, instead of scarce dollars.
In fact, the bigger hurdle is the size of the proposed insurance pool. According to sources, while oil companies were asking for a cover of Rs 9,500-11,000 crore, the government is offering only Rs 2,000 crore.
State-owned general insurers had also invited their private sector counterparts to be part of this pool but none of the latter accepted, citing the high associated risks.
Petroleum Minister M Veerappa Moily had a plan to save $8.47 billion on the year’s crude oil import bill by paying for 11 mt of Iranian crude in rupees.
Of this, Mangalore Refinery and Petrochemicals Ltd (MRPL), a subsidiary of government-owned Oil and Natural Gas Corporation, and Essar Oil (not state-owned) were to import at least eight mt.
“There is no clarity on the insurance front. The insurance pool was supposed to be finalised in August. Based on this assurance, we started our imports in August. Now, even in November, the insurance hurdles are not settled. Unless the government finalises it by December, we will not be able to import Iran crude this year,” said P P Upadhya, managing director of MRPL.
Of the Rs 2,000-crore insurance pool, the petroleum ministry was to contribute around Rs 1,000 crore through the Oil Industry Development Board and the finance ministry another Rs 1,000 crore. The latter had recently asked OIDB to provide Rs 500 crore with immediate effect.
Echoing Upadhya, a senior Hindustan Petroleum Corporation official said, “We were planning to import 800,000 mt of Iranian crude. But if we are unable to get the insurance issues sorted, we will be substituting it with Saudi Arabia or Kuwait.”
Indian insurers used to depend on European companies to re-insure their risks. However, with the sanctions on trade with Iran from both America and the European Union, these have refused to re-insure, making the proposed insurance pool vital for future import.
When asked about this, an official from a public sector insurance company said, “They require a cover between Rs 9,500 crore and Rs 12,000 crore. However, we will be able to provide a cover of only Rs 2,000 crore. Hence, the pool is stuck, as the industry feels the cover is inadequate.” This pool was to have the four state-owned general insurers — New India Assurance, United India Assurance, National Insurance and Oriental Insurance -- and the sole re-insurer, General Insurance Corporation of India, as members.
Till September-end (the first six months of 2013-14), India has imported only about two mt from Iran, of the proposed 11 mt. An Essar spokesperson refused to comment on the issue.
India imported 18.5 mt of crude from Iran in 2010-11, which came down to 17.4 mt in 2011-12 and 14 mt in 2012-13.
Source:- business-standard.com
Additions for unexplained investment not justified if such investments were duly disclosed in return
IT: Where investment in property in question was duly shown in balance sheet and also in return of income of wife of assessee, addition under section 69 in respect of such investment could not be made in case of assessee
AO couldn’t deny sec. 10(23FB) relief alleging breach of Venture Capital norms if SEBI didn’t revoke
IT: Exemption under section 10(23FB) cannot be denied by Assessing Officer on ground that assessee has violated provisions of section 12 of SEBI (Venture Capital Funds) Regulations, 1996 when registration granted by SEBI is valid
I-T Department lays down procedure to deal with e-returns held as ‘defective’ due to unpaid self-ass
IT/ILT : Section 139 of The Income-Tax Act, 1961 - Return of Income - Treating E-Returns of A.Y. 2013-14 Where Unpaid Self-Assessment Tax Exists on The Date of Filing of Return as Deemed Defective Returns
HC slams revenue for fixing value of property without considering assessee’s claim; matter remanded
IT: Where assessee objects before Assessing Officer that value adopted by stamp valuation authority under section 50C(1) exceeds fair market value of property on date of transfer, Assessing Officer may either accept valuation of property on basis of report of approved valuer filed by assessee or he may refer question of valuation of capital asset to DVO in accordance with section 55A
No disallowance for excess payment to affiliates if assessee substantiates charging less from unrela
IT: Where assessee purchased electricity from its sister concern against price paid and claimed deduction of same and Assessing Officer disallowed a certain amount as excess payment under section 40A, since sister concern had reasons for charging lower rates from two parties, impugned disallowance was not justified
‘Deemed registration’ to trust as CIT didn’t pursue request even after 6 month from date of ITAT’s o
IT : 'Deemed registration' to trust as CIT didn’t pursue request even after 6 months from date of ITAT’s order
CIT to look into objects of trust for registration; mere commencement of charitable activities not r
IT: For grant of registration, Commissioner should look into objects of trust; issue of receipt of donation or commencement of charitable activities is not relevant
SetCom order set aside as it didn’t deal with issues and contentions raised by revenue
IT: Where order passed by Commission under section 245D(2C) was not focussed on issues and contentions raised by petitioners and by revenue, same was cryptic and was set aside
Moisturex cream meant for curing skin is medicament; SC lays down principles to identity medicament
ST : 'Moisturex' cream having medicinal ingredients and meant for curing of skin ailments/diseases is a medicament (duty 15%) and not cosmetic (duty 70%)
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