IT/ILT: The Assessing officer cannot substitute the method of 'cost plus mark up' with the method of 'cost plus mark up on FOB' value of exports without establishing that assessee bear significant risks or AEs would enjoy geographical benefits
Thursday 19 December 2013
Transaction value of related parties acceptable for excise if it's in line with price charged from o
Excise : Where assessee is selling his produce to independent buyers and also to related person at same prices, rule 8 of Valuation Rules is inapplicable for valuing sales to related party because said rule applies only if there is no sale; payment of duty based on transaction value charged from related party cannot be faulted
Review Marketing Of Agricultural Products
The Reserve Bank of India may have given it some relief by not hiking interest rates despite high inflation in its December monetary review policy, but the fact that India’s Wholesale Price Index jumped to a 14-month high of 7.52 per cent in November should be a cause for worry for the government. Its rise in November mirrors a similar spike in Consumer Price Index that hit 11.24 per cent during the month. The unchecked rise in food prices is the single major driver for this, pushing up food inflation to a 41-month high of 19.93 per cent. Given that food accounts for over 60 per cent of expenses in India’s poor households, it inflicts a “hidden tax” on them.
A significant feature of the current food inflation is its changing contours. While the prices of pulses, sugar and edible oils tended to moderate, those of staple cereals and perishables like fruits and vegetables are pushing it upwards. The blame for this lies with faulty agricultural marketing policies of the Centre and state governments. The Centre should review its open-ended procurement-based food management system that is constraining grain supplies in the market. As recommended by the Commission for Agricultural Costs and Prices, surplus stocks should be offloaded in domestic or export markets. This will bring down open market prices and save Rs 80,000 crore per year in excess storage cost.
Simultaneously, the states should reform their agricultural produce marketing committee (APMC) laws to cut down unduly high marketing costs. In India, the agriculture markets are regulated through the APMC Act in each state. Every APMC can collect market fees from the traders in the prescribed manner on the sale of notified agriculture produce. Although the Centre had come up with a model APMC Act to stimulate organised retail and contract farming in 2010, only 17 states have amended their laws to allow direct marketing, contract farming and markets in the private and co-operative sectors.
Source:- newindianexpress.com
Assessee can opt for any method under sec. 92C for computing ALP if it proves to be the most appropr
IT/ILT : Assessee is at liberty to adopt any of appropriate methods specified in section 92C, as long as it can show it to be most appropriate method for determining arm's length price
Assessee not allowed to argue otherwise as lower authority confirmed additions on method devised by
IT : Where assessee itself contended before lower authority that assessee would earn profit in ratio of 35 per cent on on-money and same should be considered assessee's income, subsequent claim of assessee that it had incurred some expenditure to earn said profit and same should be reduced could not be accepted
Raw Sugar Holds Above 3-1/2 Year Low, Coffee Eases
Raw sugar futures on ICE hovered above a 3-1/2 year low on Thursday, after the Federal Reserve sent stock markets higher with its plan to start scaling back its bond-buying stimulus .
Cocoa was firm, helped by the positive investor sentiment generated by the Fed decision, but coffee eased.
European shares rallied after the Fed accompanied its decision with a promise to keep record low interest rates in place even longer than previously signalled.
"Sugar is looking for any story to stop the rot and it's grabbed this with both hands," said James Kirkup, head of sugar brokerage at ABN AMRO.
ICE March raw sugar futures held above the previous session's 3-1/2 year low, trading up 0.05 cent or 0.3 percent at 15.94 cents a lb at 1518 GMT. The front-month fell to 15.86 cents on Wednesday, its lowest level since July 2010.
Dealers said it was unlikely the bounce was sustainable given the bearish fundamentals of the sugar market, including expectations that government supports in India could increase the volume of Indian sugar supplies on the world market.
India's cabinet will consider interest-free loans to sugar mills, Farm Minister Sharad Pawar said, to help them pay government-set rates to cane growers at a time when sugar prices have fallen.
"If they're going to be helping the Indian sugar industry to export its surplus onto the world market, it's not going to help the world market in price terms, developments there are not helpful," Kirkup said.
March white sugar on Liffe edged down 30 cents or 0.1 percent to $433.10 per tonne, after dipping to $432.10 on Wednesday, the lowest level for the front month since May 2010.
The whites-over-raws sugar premium, a measure of refining profitability, has been subdued for months but looks set to rebound as buyers take advantage of multi-year price lows.
LARGE CROP IN VIETNAM
Liffe March robusta coffee eased $19, or 1.1 percent, to $1,680 a tonne with many expecting a large crop in Vietnam will eventually drive prices down.
Robusta coffee prices are expected to slide after being one of the best performing commodities in recent weeks, analysts said.
Dealers said arabica prices had derived support from the strength of the robusta market and now appeared overvalued given more than ample supplies and the prospect of a huge crop in Brazil next year.
"We hold a bearish stance on arabica due to oversupplied fundamentals," Kona Haque, analyst at Macquarie Capital said.
March arabica futures on ICE fell 1.15 cents or 1.0 percent to $1.1480 per lb.
In cocoa, May futures on Liffe traded up 8 pounds, or 0.45 percent, at 1,769 pounds a tonne, remaining stuck inside its recent range of 1,711 pounds to 1,788 pounds, in which it has traded for over a month.
Dealers said the market lacked clear near-term direction.
"The longer-term picture still retains its constructive potential but in the short term we are very much rangebound and trendless," a U.K.-based broker said.
London's structure was in backwardation, meaning nearby contracts traded at premiums to later dated contracts, indicating expectations of tightening supply.
"The structure is a good sign for the future, that's the type of structure that comes along with bull trends," the broker added.
Source:- brecorder.com/markets
Iron Ore, Met Coal Prices Slump As Australia Ramps Up Exports
The price of iron ore slumped to a 7-week low and metallurgical coal traded at its lowest level since August on Wednesday.
The benchmark CFR import price of 62% iron ore fines at China's Tianjin fell to $133.40 a tonne on a level last seen at the end of October, while FOB premium Australian coking coal declined to $136.30 a tonne, the lowest since August 2, according to data provided by SteelIndex.
Pushing prices down were renewed worries whether economic growth in China, the world's number one importer of the steelmaking raw materials, would be sufficient to absorb a massive increase in supply.
China buys roughly 65% of the world's 1.2 billion tonne seaborne iron ore trade and after an astonishing 30% jump in 2013 to an estimated 92 million tonnes absorbs almost a third of all coking coal exports.
Chinese mills are still forging steel at a rate of more than 2 million tonnes per day – almost as much as the rest of the world combined – but the industry suffers from chronic overcapacity and low profitability.The questions now becomes whether surging supply is about to overwhelm demand
Cargoes from the world's largest exporters in Brazil, Australia and South Africa have been edging out generally low-quality domestic supply, with imports into China reaching a record high of 77.8 million tonnes in November, but the questions now becomes whether surging supply is about to overwhelm demand.
New research by Australia's Bureau of Resources and Energy Economics (BREE), the country's official forecaster, show another sharp increase in exports of iron ore and coking coal, which may coincide with a slowdown in China as the country's red hot construction sector cools and the country moves from an investment to a consumer-led economy.
BREE predicts that while Chinese iron ore imports will grow 7.4% next year, the world's top exporter Australia will increase cargoes a whopping 22.1% to 709 million tonnes as projects by Rio Tinto (LON:RIO), Fortescue Metals Group (ASX:FMG) and BHP Billiton (LON, ASX: BHP) come on stream.
Brazil, led by world number one iron ore miner Vale (NYSE:VALE), is set to up exports 9.1% to 352 million tonnes.
India, which has seen exports fall from 120 million tonnes to close to just 11 million tonnes this year, will also re-enter the market as a self-imposed ban on exports expire and stockpiles are sold on.
With more limited supply growth and no new major projects coming on stream, the outlook for the coal price is better.
Chinese imports will increase a still respectable 7.8% and met coal exports will show more modest growth with Australia, which at 168 million tonnes is expected to export three times more than second placed US, growing at just under 4%.
US exports will decline for the the third year in a row, dropping 4.6% in 2014.
Iron ore is second only to the seaborne crude oil trade and represents close to 25% of global dry bulk cargoes with coal a close second.
More than 35% of mined iron ore is shipped and 12% of global coal production is carried by sea.
Source:- mining.com
Cotton Ekes Out Gains After Fed Decides To Taper
CE cotton prices eked out small gains on Wednesday after the Federal Reserve announced it will rein in its massive US stimulus program, signalling its confidence in the economy and boosting hopes for improving retail demand. The most-active March cotton contract on ICE Futures US settled at 83.0 cents per lb, up 0.05 cent, or 0.1 percent after trading in a tight 0.70-cent range on the day.
Volumes were low, with just 6,004 lots of March contracts changing hands. Cotton held onto early gains after the Fed said it would scale back economic stimulus. Wall Street stocks rallied and the dollar rose, rebounding from a quick drop after the central bank's announcement. Growing confidence in the US economy will fuel hopes about growing demand for apparel.
Even so, any pressure on emerging market currencies resulting from the tapering could "change the dynamics of Pakistani imports and Indian exports," said INTL FCStone analysts said. That would make cotton grown in the United States, the world's biggest exporter, even less competitive on the export market, traders warned. Technically, fibers remain close to being overbought, with a relative strength index reading of 65, which leaves the market vulnerable to a correction lower.
Traders were also bracing for weekly export sales due on Thursday, which will give a glimpse into how mill demand responded to last week's move higher. "(Chinese) reserve purchases are still humming along, but mills are showing a growing reluctance to buy," said INTL FCStone analysts.
Source:-brecorder.com
Qe Cut Unlikely To Hurt Indian Stocks
A day after Reserve Bank of India Governor Raghuram Rajan surprised markets by keeping key rates unchanged, it was US Federal Reserve Chairman Ben Bernanke’s turn to surprise the Street by advancing the bond-buying taper to January 2014.
Analysts had expected the US central bank to start the taper in March. The bond-buying programme, popularly known as the third round of quantitative easing (QE3), has seen emerging markets such as India attract $19 billion in foreign institutional investor inflow so far this year. Of this, about $7.5 billion came after September, when the US Federal Reserve (US Fed) decided to postpone the taper to 2014.
Fuelled by this liquidity, the benchmark indices — the S&P BSE Sensex and the CNX Nifty— touched all-time highs.
Andrew Holland, chief executive officer, Ambit Investment Advisors, says: “The announcement does not come as a surprise per se. However, while most expected the taper to start in March 2014, we always believed it could start as early as December-January. My personal view is growth in the US and an improvement in the economy may happen faster than what people are expecting.”
Economists at Bank of America Merill Lynch (BofA-ML) expect a balanced taper of $10 billion at every subsequent Federal Open Market Committee meeting, subject to the Fed’s forecasts. “We expect the Fed to deliver a gradual taper through 2014 and to further strengthen its guidance. We continue to expect the first rate hike in the first quarter of 2016,” says Indranil Sen Gupta, India economist, BofA-ML.
Deven Choksey, managing director and chief executive, K R Choksey Shares and Securities, says, “The most important take-away from the commentary is they have not preset any programme for tapering the quantitative easing. They want to see how the economy shapes up and take a call accordingly. If the economy improves and the recovery is sustainable, the withdrawal will take place in quick succession, else it will be gradual.” So, what is the likely impact on emerging markets, especially India? Will the taper curtail flows? What is the road ahead for equity markets and how will bond yields and the rupee pan out?
BofA-ML believes a recovery in the US will be positive for India. There are three ways in which a US recovery supports India: First, higher growth in the US will raise export demand, narrow India’s current account deficit and spur growth. Second, withdrawal of US easing will likely stabilise oil and other commodity prices and help narrow the current account deficit. Third, stable oil prices should also help contain ‘imported’ inflation pressures. Experts expect dated Brent to settle at $105/barrel in FY15. For emerging markets, the impact will have to be examined from two points — currency viewpoint and outflow of money. Outflow of money on the debt front may accelerate if US bond yields start rising. This will happen only if the US economy is progressing well.
Analysts suggest bond yields in the US will go up gradually. This will take care of the movement in the rupee, which may remain in a range of 61.5/dollar and 62.5/dollar.
“As regards equity markets, the tapering is likely to have a limited impact. We don’t see withdrawal on account of this event. Fortunately, we don’t have froth in our market, with valuations remaining inexpensive. The market’s attention will now shift to the general elections. We believe the Nifty is likely to remain range-bound at 6,050-6,650,” Choksey says.
Indranil Sen Gupta of BofA-ML feels if the markets panic about shrinking G-3 liquidity, the rupee may see some volatility in the short run, given India’s inadequate import cover of 7.5-eight months. “If the dollar trades at about 1.3/euro, we will hold on to our base case of 60-65/dollar. Any sharp up-move in the dollar to, say, 1.2/euro-levels could test the 68/dollar level again. Second, a US recovery should be positive for India and the rest of the world in the medium term. Finally, the rupee typically gains when the Fed begins tightening. The very growth that pushes the Fed into tightening should also whet the risk appetite for investing in relatively high-growth emerging markets such as India,” he says.
Gautam Chhaochharia, head of India research, UBS Securities, says given their base case of the market direction being positive for 2014, the Nifty may touch 6,900 in 2014. He is ‘overweight’ on information technology, telecom, media, oil & gas, private banks and power; ‘underweight’ on auto (two-wheelers), consumer discretionary, infrastructure & capital goods and public sector banks; and ‘neutral’ on auto (four-wheelers), rural-focused consumer staples, metals & mining and pharmaceuticals.
For Bhuvnesh Singh, managing director and head of research, Barclays India, the top picks for 2014 include Infosys, ITC, Lupin, NTPC, Power Grid, Tata Motors and Tata Steel.
Source:- business-standard.com
AO can’t open his office in assessee's front yard and summon him to give statement for IT proceeding
IT: Assessing Officer/Commissioner does not have authority and jurisdiction to open his camp office in residence of assessee and call assessee's attendance in connection with proceedings under Income-tax Act
Stringent Norms De-Pulp Mango Export
Mango export this year is likely to decline, again due to stringent quality norms set by importing countries, including America and Japan, two important markets.
Despite a 12.4 per cent decline in volumes, exports of mangoes in general rose 26.2 per cent in value terms in 2012-13, to Rs 265 crore. In volume, these were 55,585 tonnes in 2012-13, as compared to 63,441 tonnes the previous year.
Japanese authorities are emphasising on a mandatory Vapour Heat Treatment (VHT). US importers want strict pack house inspection (PHC) and handling.
In a letter to the Agricultural and Processed Food Products Export Development Authority (Apeda), the Japanese authority has said it wants to send inspectors for supervision of the processing operation at each VHT facility in India. Imports from India were banned in 1986 because of suspected infestation by fruit flies. Japan lifted the ban in 2006 but exporters did not pursue the market aggressively. Only 67 tonnes were sent to Japan in 2011-12 and, with the VHP and other stringent norms, none at all in 2012-13.
American authorities, meanwhile, have also asked India to register all pack houses and farmers with the authorities here and in the US, with a weekly schedule of exports, for easy inspection and monitoring of Indian facilities.
Exports to the US fell in quantity terms to 242 tonnes in 2012-13 from 353 tonnes the previous year; however, in value terms, shipments rose to Rs 5.8 crore from Rs 2.2 crore in the same period. The United Arab Emirates and Britain are the two largest importers of mango from India — Rs 163 crore (37,599 tonnes) and Rs 32.5 crore (3,304 tonnes) in 2012-13, respectively.
Source:- freshplaza.com
Rupee Opens At 62.39 Vs Us Dollar Against Thursday's Close Of 62.12
The rupee slipped in the early trade today. It has opened lower by 27 paise at 62.39 per dollar versus 62.12 Thursday. The dollar index gains to 80.7 levels, while the euro is a tad subdued and the yen faces pressure in early trade ahead of the outcome of a Bank of Japan meeting at which policymakers were expected to maintain their commitment to ultra-easy monetary policy.
Himanshu Arora, Religare said that, "Rupee expected to lose versus dollar in short-term as US Fed's decision to commence tapering of bond buying program is expected to hammer the rupee." "Month-end dollar buying by oil companies will also keep the rupee under further pressure. Range for rupee seen between 61.94 -62.55/dollar," he added.
Himanshu Arora, Religare said that, "Rupee expected to lose versus dollar in short-term as US Fed's decision to commence tapering of bond buying program is expected to hammer the rupee." "Month-end dollar buying by oil companies will also keep the rupee under further pressure. Range for rupee seen between 61.94 -62.55/dollar," he added.
Source:- ibnlive.in.com
HC dismissed winding up petition as respondent wasn't deliberately avoiding payment of its taxes due
CL: Where there was nothing on record to show that respondent company was deliberately avoiding to make payment inspite of undertaking, winding up petition against it was to be dismissed
Real estate developer can't be prevented from parting with its fixed assets; such sale isn't a part
IT: Where assessee doing business of purchase and sale of land/developing real estate purchased agricultural land and reflected same in balance-sheet as a fixed asset and later on it had sold said land on profit, merely because land was sold for profit, it could not be said that income arising from sale of land was taxable as profit arising from adventure in nature of trade
RBI releases FAQs on Inflation Indexed National Saving Certificates
IT : FAQs on Inflation Indexed National Saving Securities - Cumulative (IINSS-C)
Courts can’t interfere with powers of SEBI to issue notice seeking safeguarding of interest of inves
SEBI : Notice and direction issued by SEBI to safeguard interest of investors cannot be interfered by Court
Waste or scrap isn't excisable if it isn't a manufactured product
GST : Explanation to section 2(d) of Central Excise Act, 1944 deals with marketability aspect only; therefore, even if end cuttings of wire emerging in course of manufacture of wiring harness is marketable, since it is not a manufactured product, it cannot be liable to duty
Receipts from letting out of property for commercial activities held taxable as business receipts
IT: Receipt on account of exploitation of immovable property by way of complex commercial activity, is business income
Cut and polished granite is mineral; export thereof not be eligible for sec. 80HHC relief
IT : Cut and polished granite would also be a mineral and export thereof would not qualify for special deduction under section 80HHC(2)(b) as it stands prior to amendment by Finance Act, 1991
Cut and polished granite, where's a ; entitled of section 80HHC relief a mineral oil
IT : Cut and polished granite would also be a mineral and export thereof would not qualify for special deduction under section 80HHC(2)(b) as it stands prior to amendment by Finance Act, 1991
Arms imported without license may be sold under sec. 48; sec. 150 not applicable for such sale
Customs : In case arms are sought to be imported without valid license and said arms are detained prior to clearance, then, they may be sold as per section 48 of Customs Act (section 150 does not apply to such sale)
No evasion penalty on wrong availment of credit if credit was reflected in records and returns were
Excise : Where credit is availed by reflecting same in statutory records and proper ER-1 returns are being filed and issue involved was one of legal interpretation of provisions of law, it cannot be said that there was any suppressions or misstatement with any mala fide intent on part of assessee, so as to levy penalty
Subscribe to:
Posts (Atom)