IT : Where under a development agreement with a developer assessee merely realised sale proceeds of capital asset held for 30 years, same would give rise to 'capital gains', and not 'business income'
Sunday 26 January 2014
No addition under sec. 69B as sums were paid by directors in their individual capacity and not by as
IT: No addition could be made in hands of company under section 69B for on money payment to purchase land by directors individually
Lower Realisations To Worsen Sugar Firms' Losses
Sugar mills’ financial health is unlikely to see a significant change soon, due to a continued price decline in the sweetener and uncertainty on allied products, despite the government’s short-term relief measures.
Fundmentally, mills’ cost of producing sugar is substantially more than the price they get. And, the latter continues to decline. The average price (M-30 variety) at the major wholesale Agricultural Produce Marketing Committee market at Vashi (Navi Mumbai) near here fell 13 per cent to Rs 3,124 a quintal in the October-December quarter, compared to Rs 3,583 a qtl a year ago. The price has fallen a further four per cent this month, to Rs 3,000 a qtl. This spot price is at least Rs 250-300 a qtl lower than the cost of production in major producing states.
“Sugar mills in Uttar Pradesh will continue to suffer losses due to high cane prices (Rs 280-290 a qtl), despite their close integration with by-products, including co-generation and distillation. But by-products will prove a saviour for integrated mills in Maharashtra, as their cane cost stands at Rs 240-250 a qtl,” said Chaitanya Raut, an analyst with CARE Ratings. Port-based sugar mills are able to export at competitive prices, enabling them to recover the production cost, a benefit not available to UP mills.
In the past two financial years, this situation has persisted, of a higher cost of production than actual realisation from core and allied activities. The losses have deepened steadily in the past two quarters, due to a rising interest burden on the working capital raised by companies during the crushing season. Poor offtake by state governments for supply through the Public Distribution System has swelled the inventory.
Leading producer Bajaj Hindusthan incurred a loss of Rs 509 crore in the September quarter, on a turnover of Rs 1,327 crore; it was one of the biggest quarterly losses in the company’s history. In the June quarter, it had a loss of Rs 157 crore on a turnover of Rs 1,256 crore.
Shree Renuka Sugars had a loss of Rs 63.6 crore on a turnover of Rs 1,937 crore in the June quarter, deepening to a Rs 120-crore loss on a turnover of Rs 1,535 crore in the September quarter.
Sugar mills' fortune will not change till a long-term formula is devised to align the cane price with sugar realisation, said Sanjay Tapriya, chief financial officer, Simbhaoli Sugar Mills.
Last month, an Empowered Group of Ministers (EGoM) recommended to the Cabinet Committee on Economic Affairs to allow four million tonnes more of sugar export. The sector has this much surplus but prices in the global markets are lower than in India, said Abinash Verma, director-general, Indian Sugar Mills Association.
The EGoM’s other recommendation was to raise the compulsory blending of ethanol with petrol up to 10 per cent from five per cent. However, oil marketing companies (OMCs) are not willing to pay the Rs 44 a litre demanded by the mills. In the first tender for five per cent mandatory ethanol blending, the OMCs had invited supply orders at Rs 34-36 a litre.
In the Indian markets, the average cost of sugar production works out to Rs 3,250 a qtl against the average realisation between Rs 2,900 and Rs 3,100 a qtl. There has been a further fall of Rs 150 a qtl in the past
Source;- business-standard.com
Dispute on clubbing of clearances for SSI exemption was related to rate of duty; issue appealable to
Excise & Customs : Dispute as to whether clearances of two or more persons are to be clubbed for SSI-exemption is related directly to rate of duty applicable and, hence, appeal involving said issue would lie before Supreme Court and not High Court
Another Year Of Bumper Crop And Bumper Prices
Current spot prices at Rs 20,500 a bale (170 kg) are 12 per cent below the levels seen at the beginning of the Indian cotton season October 1, 2013. This was expected as the cotton crop was expected to make new records in 2013-14. What has come as a surprise is prices have rebounded by 10 per cent since they bottomed in the first week of December at around Rs 18,500 a bale. Different scenarios could play out regarding the direction in the days to come.
So far, robust demand has supported the price. Export numbers suggests till mid-January, 5.5 million bales have been exported. This means 65 per cent of the total estimated exports of 8.5-9 million bales has been achieved in the first four months of the season. As against this, arrivals have been one-third of the total expected crop of 37.5 million bales during the same period. Clearly, higher demand has driven the prices since December. Consumption seems to be on the ascending path for the rest of the season that ends in September.
In the January-March quarter, 53-55 per cent of the total crop is expected to arrive, amounting to a little over 20 million bales. Because of delayed rain, a lot of cotton is still maturing. As against this, exports might dip a little at 3.5 million bales, compared with 4.4 million in the first quarter. Recently, import parity emerged and 200,000 bales of imports were contracted. Clearly, the quarter would be supply-heavy.
And yet, prices are unlikely to dip below the previous lows, as the annual cotton balance sheet of India remains tight. Assuming a crop of 37.5 million bales and exports of nine million bales and consumption of close to 30 million bales, ending stocks would look similar to what it was last year, which is close to 4.5-5 million bales. Prices will not fall in anticipation of higher prices in the second half.
Since the last couple of years, cotton yarn has emerged as a proxy to cotton imports from China. Cotton imports attract 40 per cent import duty, while cotton yarn attracts none. India remains the top supplier of yarn, and its yarn remains the cheapest in world. As a result, robust cotton exports and equally robust demand from domestic consumers will keep cotton demand in a very healthy shape.
Internationally, too, cotton prices have rallied quite sharply and the demand rationing has not really appeared at higher levels. The rally is supported by the understanding that US ending stock is the lowest in four years.
On the other hand, China with 60 per cent of total global stocks and 162 per cent stock to use ratio, has declared it would discontinue its controversial stock reserve policy in 2014-15. As a result, as we get closer to 2014-15, chances rise of global prices coming under pressure. While a lot will depend on the 2014-15 acreage and crop, the prices will remain under selling pressure in anticipation.
It can be concluded the prices are currently running ahead of their time. Reduced activity on account of the Chinese New Year holiday might provide a much-needed break to the current price rise. A five to seven per cent correction in the January-March quarter cannot be ruled out. The second half of the cotton year will see firm prices, as the Indian balance sheet is tight; a rally of 10-15 per cent after the correction is most likely. If the demand-side story remains strong, we might end up revisiting the prices seen during last year-end at Rs 23,000 a bale
Source;- business-standard.com
Lic Agents Protest Levy Of Service Tax On Insurance Premium
The introduction of service tax of 3.09 per cent on traditional products is unnecessary; the insurance business has been on decline for the last three weeks”
Over 7,000 LIC agents from Tamil Nadu, Kerala and Puducherry assembled here on Friday to oppose the levy of service tax on insurance premium, with effect from January 1 and sought its immediate withdrawal.
The rally was spearheaded by Life Insurance Agents’ Federation of India Southern Zone president V. Ganeshan to raise awareness on the levy of service tax that was bound to give a blow to the public’s saving habit and to the livelihood of insurance agents.
Participating in the Golden Jubilee celebrations of southern zonal council meet, the Federation president H.M. Jain said, “At a time when we are asking the management to extend more benefits to the policyholders and introduce user-friendly policies, the introduction of service tax of 3.09 per cent on traditional products is unnecessary. It will pinch their pockets as it is an extra burden. This will force most of them to discontinue the policies. There are over 11.4 lakh LIC agents in the country and equal number of agents in the private sector. LIC has 30 crore policyholders and they should not be exploited in the name of new taxes.”
Federation secretary general N. Gajapathi Rao mentioned that the insurance business was on the decline for the last three weeks and said as a next step they would meet officials concerned during the second week of February seeking withdrawal of service tax.
In his welcome address, Mr. Ganeshan said the service tax would affect LIC’s business as more than 20 crore policyholders are from lower and middle-income groups.“In the coming days, it might delay settlement of death claims or maturity claims and affect LIC reserves too,” he added.
Source:- thehindu.com
Oil Groups Pressed To Restrain Spending
It seems someone was listening. A short time later, Shell dropped plans to build a new gas-to-liquids plant in Louisiana – a highly ambitious project that would have tied up several billions of dollars.“The penny seems to have dropped,” says Mr Wheaton, manager of Allianz Global Investors’ Global Energy fund.
Mr van Beurden has probably been inundated by such advice in the past few months from irate shareholders alarmed by what is afoot at Shell. A fortnight ago, it issued its first profit warning in ten years, telling the market its fourth-quarter earnings would be $2.9bn – down 48 per cent year on year.
Analysts at Credit Suisse say the warning was a harbinger of weak results across the European oil sector, which has been hit by factors ranging from weak refining margins and higher exploration expenses to unrest in Libya. The bank cut its earnings-per-share estimates for the European group by 22 per cent.
Despite all the headwinds, western oil companies are holding up well against some of their rivals. Last year, majors such as Total of France and Chevron of the US outperformed national oil companies from China, Russia and Brazil in terms of stock market valuation.
But by other comparisons, they are doing worse. Morgan Stanley says Europe’s integrated oil companies underperformed the broader European equity market by about 37 per cent since the start of 2012.
Meanwhile in the US, Chevron’s shares have risen 1 per cent and Exxon’s 5 per cent over the past year, while the S&P 500 is up 22 per cent.
The root of the problem is concern about spending. Over the past few years, all the western majors have increased capital expenditure as they venture into ever more challenging regions and take on more complex projects.
But, at a time when industry costs are rising and oil prices are stagnant, many think companies should be spending less, not more. Pressure is building on them to plough their earnings into higher dividends and share buybacks rather than increasingly expensive new ventures.
“Investors are fed up with always being so low down in the queue for cash flow,” says Mr Wheaton.
Shell stands out in this regard. Europe’s largest oil company by production, Shell’s capital investment rose from $27bn in 2007 to $44.3bn in 2013 – but that has not translated into a better financial performance. Instead, Martijn Rats of Morgan Stanley wrote in a recent note, the company has seen falling profits, weakening returns and deteriorating free cash flow.
Shell’s return on average capital employed – a key metric in the oil industry – was relatively steady at about 20 per cent during the mid-to-late 2000s, but more than halved to 9 per cent last year, Mr Rats says.
Meanwhile, free cash flow is not growing nearly as quickly as Shell management said it would. The company said in 2012 that it would generate $200bn of operating cash flow over the ensuing four years. But so far, it has only realised about $40bn a year, putting it well behind its target.
That is a dilemma for Mr van Beurden, who moved into the top job at Shell at the start of January. Many expect him to modify or even abandon some of Shell’s objectives when he gives his first strategy presentation in March.
“He has to reset the cash flow target,” says Charles Whall, co-portfolio manager at Investec Asset Management. “He has to do it from a credibility perspective.”
But such issues are not unique to Shell. Even ExxonMobil which reports fourth-quarter earnings this Thursday – a day ahead of US rival Chevron – is no longer generating enough cash to cover capex and payouts to shareholders, according to Robert Kessler of Tudor Pickering Holt & Co.
He says its free cash flow fell short of shareholder distributions by $10bn in 2012, and the gap will be $9bn in 2013. Meanwhile, net debt has risen as the group borrows to cover the shortfall.
Mr Kessler thinks something has got to give – and ultimately it will be spending levels. “In future, the majors are going to be more selective about capex,” he says. “They’ll complete their big capital projects and then let free cash flow grow.”
Already, there are signs of this more choosy approach. Norway’s Statoil, in particular, has deferred a number of oil projects in the North and Barents seas, and recently shelved an export plan for its Kristin gasfield in the Norwegian Sea because of rising costs.
Total cheered investors last July when it said its capex would peak in 2013 and start falling in 2014. Chevron also said it planned lower capital spending this year than in 2013, which it described as a relative peak year for investments.
The spending slowdown is being combined with an increase in the pace of divestments. BP said in October that it would sell a further $10bn of assets by the end of 2015, on top of the $38bn in disposals made since the 2010 Deepwater Horizon disaster.
Shell is also expected to speed up divestments. Analysts say it must sell at least $14bn worth of assets if it is to stay within its current financial framework. It took a first step along that road last week, announcing the sale of its stake in the Wheatstone LNG project in Australia to a Kuwaiti company for $1.14bn.
Investors appear to be giving Mr van Beurden the benefit of the doubt. Shell’s shares have moved up by 7.6 per cent since the start of December. “A new face brings hope,” says Neill Morton of Investec. “People were taking a bet that he would do things differently.”
Tellingly, even Shell’s profit warning failed to put a big dent in the rally. For Mr Wheaton, that was a sign that, despite the drip-drip of bad news from the sector, “people want to own Big Oil”.
The majors may be languishing, he says, with valuations at multiple-year lows – but “there’s a feeling that a turnround is coming. And investors want to buy into it”.
Source;- ft.com
Assessment of a person, other than searched person, can be done only under section 158BD and not und
IT: Assessment of a person, other than searched person, based on materials recovered during search is authorised only under section 158BD and not under section 158BC
Coming, Additional Export Incentives For Select Industries
Exporters of garments, chemicals and pharmaceuticals can look forward to some additional sops soon.The Government is working on a small package of incentives for select sectors to help exporters tackle the difficult global market.
The package, which is likely to include a bonus amount for garments and chemicals exports to Europe linked to the value of shipments, is awaiting clearance from the Finance Ministry.
The Commerce Ministry has also proposed reimbursement of registration fees for pharmaceutical exporters.
CAD worries
It is important that exports, which have posted sluggish growth so far this year due to continuing slowdown in the Western markets, get back on the growth track to keep the widening current account deficit in check.
“Discussions are on with the Finance Ministry and a nod is expected soon. But it remains to bee seen whether all the demands are accepted because of the fiscal constraints,” a Commerce Department official told Business Line.
The Finance Ministry’s focus on keeping the fiscal deficit in control is the main reason why the size of the package is small. Other products would have to wait till the new Government assumes office and announces the annual Foreign Trade Policy for the year.
But this could take a few months as the General Elections are due not before mid-April.
“The idea is to give incentives to items that urgently need help and cannot be made to wait for a few months,” the official said. Exporters of garments and chemicals to Europe have a strong fight in store this year as the sectors have graduated out of the EU’s Generalised System of Preferences (GSP) scheme and would no longer be eligible for lower import duties.
Not only will these products have to face full import duties, ranging between 6 per cent and 12 per cent, exporters will have to face competition from countries such as Pakistan and Bangladesh that can export to the EU duty free under the GSP plus scheme.
“Although a number of other items including leather, auto and minerals will also be affected, it is garments and chemicals that are likely to be hit the most,” the official said. The Government is considering a 2-3 per cent incentive for the two items.
Pharmaceutical exports have been registering low growth over the past few months due to growing competition from China and stricter quality control procedures in the US and the EU.
“Reimbursement of registration charges for drugs can be a big help to exporters as in markets such as the US, the amount is substantial,” the official said.
In the first three quarters of 2013-14, exports posted a growth of 5.9 per cent to $230.33 billion compared to April-December 2012-13.
Source;- thehindubusinessline.com
India Imports Of Inorganic Chemicals, Organic Or Inorganic Compounds Of Precious Metals Of Rare-Earth Metals And Radioactive Elements Of Isotopes Rise To Us$ 421.16 M In December- 2013
New Delhi, Delhi, January 24, 2014 /India PRwire/ -- InfodriveIndia.com, India's premier research company in export import data, announced today that India's Inorganic Chemicals, Organic or Inorganic Compounds of Precious Metals of Rare-Earth Metals and Radioactive Elements of Isotopes imports in December- 2013 has grew to US$ 421.16 M, a increase of 0.6% compared to November 2013.
This finding is based on India Import Market data of Inorganic Chemicals, Organic or Inorganic Compounds of Precious Metals of Rare-Earth Metals and Radioactive Elements of Isotopes of InfodriveIndia.com and is compiled from Imports bills of entry filed at Indian customs through December- 2013 at more than 170+ ports in India like JNPT, Bombay Air and Sea , Chennai Air & Sea , Delhi IGI Air, Delhi Tughlakhabad ICD, Delhi Patparganj, Kolkata Air and Sea, Bangalore Air and many more. InfodriveIndia.com India Inorganic Chemicals, Organic or Inorganic Compounds of Precious Metals of Rare-Earth Metals and Radioactive Elements of Isotopes Import database is considered to be the most comprehensive, up-to-date and authentic information on India's foreign trade of Inorganic Chemicals, Organic or Inorganic Compounds of Precious Metals of Rare-Earth Metals and Radioactive Elements of Isotopes.
According to Pradeep, Chief Research Associate of InfodriveIndia.com, compared to November 2013, a increase of USD 421.16 M in December- 2013 has been noticed. He further gives a analysis and break up of major product categories , major countries and major Indian ports under Inorganic Chemicals, Organic or Inorganic Compounds of Precious Metals of Rare-Earth Metals and Radioactive Elements of Isotopes as follows .A. Imports of Ammonia and Anhydrous has grew month on month basis by 19.03%.
Total value of imports in December- 2013 was 103.2 M, compared to November 2013 , there is a increase of 16.5 M in December- 2013, growth rate in percentage terms is 19.03%, the major destination countries were Saudi arabia, Iran, Russia, Ukraine and Qatar and major Indian ports were Paradip, Kakinada, Vizag Sea, Kandla and JNPT .
B. Imports of Diphosphorus Pentaoxide, Phosphoric Acid and Polyphosphoric Acids has fallen month on month basis by -19.27%.
Total value of imports in December- 2013 was 93.53 M, compared to November 2013 , there is a decrease of -22.32 M in December- 2013, growth rate in percentage terms is -19.27%, the major destination countries were Morocco, United States, Senegal, China and Taiwan and major Indian ports were Kandla, Calcutta Sea, Kakinada, Goa Sea and Paradip .
C. Imports of Radioactive Chemical Elements and Radioactive Isotopes has grew month on month basis by 168.6%.
Total value of imports in December- 2013 was 24.41 M, compared to November 2013 , there is a increase of 15.32 M in December- 2013, growth rate in percentage terms is 168.6%, the major destination countries were Russia, United States, Israel, France and Turkey and major Indian ports were Hyderabad Air, Bombay Air, Delhi Air, Bangalore Air and Calcutta Air .
D. Imports of Sodium Hydroxide (Caustic Soda), Potassium Hydroxide (Caustic Potash) and Peroxides of Sodium or Potassium has grew month on month basis by 86.91%.
Total value of imports in December- 2013 was 24.4 M, compared to November 2013 , there is a increase of 11.34 M in December- 2013, growth rate in percentage terms is 86.91%, the major destination countries were Iran, Saudi arabia, Korea, Republic of, Japan and Qatar and major Indian ports were Vizag Sea, Bombay Sea, JNPT, Kakinada and Madras Sea.
Pradeep says that the above information is on major product categories, and users requiring detailed analysis and reports on their specific products can contact Sales team at InfodriveIndia.com with detailed description of their product, brand names and its uses.According to Pradeep, usually InfodriveIndia.com team delivers most of the projects within 3 working days.
InfodriveIndia.com analysis and research is done from India import market data from customs statistics which is based on the Bills of Entry filed at various ports, InfodriveIndia reporters collect this data from every Indian port, and InfodriveIndia database yields the most timely, accurate, comprehensive information available on trade through India Ports. Recently after a long and persistent lobbying with Indian Govt, InfodriveIndia.com has been able to release India Import Statistics almost on realtime basis, bringing the backlog time to just 3 days, compared to Govt sources which are around 6 months old. Another unique feature of InfodriveIndia.com database is unparalleled coverage of 170+ ports in India.
InfodriveIndia.com is 16 year old market leader and primary source of India export import market intelligence in India. The India Import Export data bank, which is at the core of InfodriveIndia.com trade information services is unique and has been categorized by Harmonized system in over 25,000 product codes. InfodriveIndia researchers provide expert data analysis and interpretation tools, Charts, Pivot reports in MS Excel and detailed item wise records to support decision-marking for International Trade, supply-chain management, competitive intelligence and brand protection.
World's top market research companies, Export promotion councils, trade associations, domestic and foreign governments, and over 16,000 corporates from more than 65 countries rely on InfodriveIndia.com for meaningful export import trade intelligence to guide their International business strategies
Source:- indiaprwire.com
Case remanded to allow assessee to file additional evidence in support of its claim that cost was al
IT/ILT: Where in course of transfer pricing proceedings, TPO made certain adjustment in respect of cost allocation from AEs, in view of fact that in appellate proceeding assessee sought to file certain additional evidence in support of its claim that cost allocation had been made at arm's length price, impugned adjustment was to be set aside and, matter was to be remanded back for disposal afresh
Department can’t levy interest if no custom duty is payable on goods due to exemption notification,
Excise & Customs : Its only when duty is payable, interest is chargeable; since, because of an exemption, as in case of production of advance licences, no customs duty was payable in respect of warehoused goods, no interest was chargeable
Combination ensuing acquisition of marginal share in market held valid as no adverse effect found on
Competition Act : Where proposed combination relating to acquisition by acquirer of electrical transmission and distribution equipment did not have an appreciable adverse effect on competition in India, same was to be approved
Rupee Slips To 62.78 Per Dollar, Awaits Rbi Policy For Further Cues
The Indian rupee on Monday opened lower against the dollar, tracking losses in Asian currencies, ahead of the Reserve Bank of India (RBI) monetary policy review on Tuesday.
At 9.04am, the Indian currency was trading at 62.78 per dollar, down 0.16% from its previous close of 62.68. Majority of the Asian currencies were trading lower against dollar.
Dealers will closely watch for RBI intervention at current levels after the central bank was suspected to have sold dollars in late session on Friday.
Since the beginning of this year, the rupee has lost 1.55% against dollar and has recovered better than its peers, unlike Korean won and Thai baht which have fallen the most.
Most traders are expecting RBI to keep key rates unchanged on Tuesday but the tone of the policy will be crucial.
Recent comments from the central bank chief Raghuram Rajan and the monetary policy panel report suggest rates may remain elevated for some time to come.
Source:- livemint.com
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