IT : Where assessee-company paid certain amount to its holding company towards services rendered by it and claimed deduction of same, since assessee had not furnished calculation and other material in terms of section 40A(2), disallowance of 80 per cent of expenditure under section 40A(2) was justified
Thursday, 27 February 2014
Income from sale of shares treated as capital gain even when it witnessed higher frequency of transa
IT : Where assessee had shown income arising from sale of shares as long-term capital gain and she had treated purchase and sale of shares as investment, Assessing Officer was wrong in treating said income as business income on plea that assessee was indulged in frequent purchase and sale of shares and magnitude of some transactions was very high
Penalty can't be levied without first issuing show cause notice to that effect
CST & VAT : Penalty levied under Section 34(12) of Gujarat VAT set aside, when show-cause notice had proposed penalty only under Sections 12(7) and 34(7) and not under Section 34(12), as said penalty was violative of principles of natural justice
Reserve and surplus acquired on amalgamation is not revenue receipt; held not taxable under sec. 28(
IT : Where nine companies had amalgamated with assessee-company and as a result of amalgamation assessee acquired from amalgamating companies reserve and surplus, benefit accruing to assessee could not be considered for taxation under section 28(iv)
Rubber Imports To Go Up 47 Pc To 3.2 Lakh Tonnes In Fy'14
Natural rubber imports are likely to rise by 47 per cent to touch a new all-time high of 3.2 lakh tonnes in the current financial year on back of lower prices in the global market.
"Till last week, the inward shipments of natural rubber were at 2.9 lakh tonnes and as per our estimates the total imports by the end of 2013-14 fiscal will be around 3.2 lakh tonnes," a senior rubber board official said.
According to Rubber Board data, India's natural rubber imports in the financial year 2012-13 were at 2.17 lakh tonnes -- all time high so far.
Imports have increased notwithstanding the Centre raising import duty on natural rubber to Rs 30 per kg or 20 per cent, whichever is lower, in December. The basic customs duty on natural rubber earlier stood at Rs 20 a kg or 20 per cent whichever was lower.
"Imports have gone up as bulk of contracts for import of natural rubber were made in the period June to October before the import duty was raised. At that time, prices in the international market were down by Rs 35 per tonne as compared to domestic prices," official added.
During April-January period of this fiscal, consumption of natural rubber has marginally come down to 8.11 lakh tonnes from 8.18 lakh tonnes in the year ago period.
Production of natural rubber during April-January period in the current financial year has also dropped by 9 per cent to 7.23 lakh tonnes against 7.98 lakh tonnes in the same period previous fiscal.
The impact of decline in rubber production was visible in export trend, as outward shipments have fallen 66 per cent to 5,357 tonnes against 15,632 tonnes during the period under review.
Source:- business-standard.com
Successor gets depreciation on sum paid in acquisition towards goodwill comprising copyright, patent
IT : Where assessee-company acquired running business of a company for a lump sum consideration of Rs. one crore and it had recorded book value of net tangible assets in balance-sheet as Rs. 38 lakhs and balance part of Rs. 62 lakhs was allocated in balance-sheet as goodwill, assessee was entitled to depreciation on goodwill
Tribunal Finds Meal Vouchers Subject To Service Tax As Business Auxiliary Service
The Customs, Excise and Service Tax Appellate Tribunal recently determined the applicability of service tax in relation to Sodexo meal vouchers sold by the appellant under the taxing entry for business auxiliary services.(1)
The tribunal observed that it was the employer that had purchased the meal vouchers, not the employee. The tribunal further noted that under the voucher scheme, the user of the voucher (ie, the employee) was required to buy goods and services only from affiliates of the appellant. The tribunal argued that this restriction imposed on employees when redeeming the voucher was tantamount to promotion of the goods and services of the affiliates, and therefore the appellant provided business auxiliary services to its affiliates.
The appellant had contended that the meal vouchers were similar to credit or debit cards, but this argument was rejected by the tribunal on the grounds that with a debit or credit card, the cardholder can buy goods or services from almost any business establishment and is not restricted to selected affiliates, as is the case with vouchers. The meal vouchers were further distinguished from debit or credit card transactions on the basis that the appellant retained the entire amount, even in respect of unutilised vouchers.
The decision will have implications for other transactions of a similar nature (eg, issuance of gift vouchers by retail chains or e-commerce entities).
Source:- internationallawoffice.com
India Is Largest Shrimp Exporter To Us
Last year, India was the largest exporter of shrimps to the US, a first. Shrimp exports to the US, which stood at 94,000 tonnes (about half India’s overall shrimp exports), were valued at $1 billion. India is now the eighth-largest exporter of food items to the US.
Speaking to Business Standard, AJ Tharakan, president of the Seafood Exporters Association of India, said Thailand, the previous largest shrimp exporter to the US, had recorded low production last year, owing to the outbreak of a disease called the Early Mortality Syndrome (EMS). Aquaculture production in Thailand fell about 50 per cent due to the outbreak of EMS.
Thakaran said globally, shrimp prices had increased substantially, adding further increase was unlikely. In India, raw material costs for shrimp exports had increased to Rs 600 a kg. “So, further rise in export prices might affect our business with the US. The consumer resistance is already strong in markets such as the US and Europe,” he said.
Thakaran said the premium quality of Indian shrimps attracted importers in the US market. During her recent visit to India, Margaret Hamburg, the US Food and Drug Commissioner, said US authorities were largely happy with the quality of seafood India shipped to that country.
In a discussion with Tharakan, US Food and Drug Administration (FDA) officials accompanying Hamburg said through the years, the Indian seafood sector made various efforts to comply with US FDA import requirements. "Our seafood exports to the US are being treated fairly by the FDA, and we have no major issues on the inspection procedures followed by FDA for seafood imports," Thakaran said.
He, however, told the US FDA delegation when consignments were sampled for inspection, it sometimes took up to 60 days for the results to be known and containers to be released. This caused substantial financial stress for both the exporter, as well as the US importer concerned.
Between 2005 and 2010, exports to US had been hit by the imposition of anti-dumping duty. Imposition of countervailing duty (CVD) worsened matters. Thakaran said though CVD had been done away with and anti-dumping duty was low, he was concerned about CVD, as an appeal had been filed in this regard against the decision of US Department of Commerce.
Source:- business-standard.com
Energy Imports Will Rise To 84% In 2047 If Policy Not Changed: Planning Commission
India will have to import 84.4% of its energy demand in 2047 against 36% as of now, if the government and industry maintain a status quo on the policy and technology front across six major energy-consuming sectors in the country, the Planning Commission has warned.
India is the fifth-largest energy consumer in the world today, importing in excess of $100 billion worth of fuel per annum. However, the country's import dependence can be significantly brought down to 21% over the next 33 years if India achieves the highest level of production of coal, oil and gas as well as reduces its dependence on fossil fuel by moving to renewable energy sources, the commission says in its mediumterm projections for energy scenarios in the country.
The commission has pegged India's energy demand in 2047 at 23,679 TWh in the least-effort scenario and this is estimated to come down by nearly 40% to 14,732 TWh if there is greater usage of alternate fuels in the country.
"The energy scenarios projected for 2047 call for urgent action to ensure that we do not end up importing huge quantities of fuel as this would significantly impact India's current account deficit and put a question mark on the country's energy security," a senior Planning Commission official told ET.
According to the official, the projections made by the Planning Commission for India's energy demand and supply under four levels also suggest that going forward India's availability of oil and gas will shift in favour of gas, which is likely to constitute 60% of the total production against 40% now. "This would mean that the policies and efforts of the government as well as industry will have to be directed towards higher usage of CNG-run or electric vehicles if the transport sector continues to grow," the official quoted above said.
Planning Commission deputy chairman Montek Singh Ahluwalia will officially launch the Indian Energy Security Scenarios 2047 Tool on Friday.
Source:- economictimes.indiatimes.com
Coal Imports To Rise Just 3.4% In Fy14
In 2012-13, India’s burgeoning coal imports was among the finance ministry’s key concerns. This financial year, imports were seen rising at a worrisome 40%, owing to a domestic shortage, further increasing the country’s current account deficit (CAD). But 10 months into the current financial year, it appears the fears were grossly exaggerated.
Belying expectations, India’s coal imports rose a mere 16% to 131 million tonnes (mt) between April 2013 and January 2014. For the entire financial year, imports are likely to grow a subdued 3.4% to 150 mt, a stark contrast to the 42% growth registered in 2012-13.
The sharp drop in coal imports is due to rupee’s depreciation, as well as a slump in demand. These two factors offset the impact of depressed global prices.
While the 16% rise in imports in the April-January period led to a total foreign exchange outgo of Rs 56,588 crore, 27% more than Rs 44,539 crore in the year-ago period, this was lower than initial expectations. The calculation of the value of imports is based on an average price of Rs 4,300 a tonne (5,500 kilocalorie Indonesian coal, landed at the Visakhapatnam Port) this financial year, 8.9% more than Rs 3,945 a tonne in 2012-13.
“Last year, the rupee had touched 65/dollar. Since then, the rate has stabilised to about 62, which is still high for imports to pour in. The impact was already visible, as January 2014 imports stood at just 9.16 mt, a 33% fall year-on-year. For 2013, imports were just shy of 158 mt, 11% higher than in the previous year,” said Kalpit Dubey, analyst at commodities research firm OreTeam.
He added the lower growth in imports might not have any significant impact on the CAD, as this continued to be dominated by oil shipments. “India’s CAD is overburdened by crude oil imports; coal accounts for less than two% of the total imports, in terms of dollars.”
Last financial year, coal production in India rose a sluggish 3.3% to 557 mt, owing to delayed environmental clearances for new mines and the failure of captive miners to boost output. The supply gap had to be bridged by a 42% rise in imports at 145 mt.
From 73 mt in 2009, coal imports have almost doubled, leading to foreign exchange outgo of Rs 2,44,000 crore since then. However, due to a fall in imports, analysts expect imports this financial year to be just 3.4% more than 145 mt in 2012-13.
Coal is among the top five items in India’s import bill of about $415 billion a year. A weak rupee raises the bill, leading to higher inflation and a wider current account deficit. This strains the country’s foreign reserves and further strains growth in gross domestic product, which fell to a decade-low of 5% last financial year.
Source:- business-standard.com
Dollar Remains Flat Vs Rupee
The dollar remained flat against the rupee in the interbank market, dealers said on Thursday. It started the day’s trading at Rs 104.70 for buying and closed at Rs 104.70 for buying as compared to the previous trading session and Rs 104.90 for selling.
The euro shed strength against rupee as it started the day’s trading at Rs 143.87 for buying, fell Rs 56 paisas as compared to previous trading session and closed at Rs 143.31 for buying and Rs 143.59 for selling. The pound sterling weakened against the local currency as it initiated the day’s trading at Rs 174.60 for buying, decreased 3 paisas and closed at Rs 174.57 for buying and Rs 174.91 for selling.
Open market: The dollar dropped against the rupee, dealers said. It started the day’s trading at Rs 105.65 for buying, slumped 5 paisas and closed at Rs 105.60 for buying and Rs 105.85 for selling. The euro shed 75 paisas against the rupee as it started the day’s trading at Rs 144.50 for buying and closed at the rupee 144.25 for buying as compared to the previous trading session and Rs 144.50 for selling. The pound shed 50 paisas against the rupee as it started the day’s trading at Rs 176 for buying, declined 50 paisas and closed at Rs 175.50 for buying and Rs 175.75 for selling.
Source:-dailytimes.com.pk
Notification No. 91/2008 clarifying expression 'may be taxed' in context of DTAA shall have retro ef
IT/ILT: In pursuance of power conferred by sub-section (3) of section 90 with effect from 1-4-2004, Notification No. 91/2008 dated 28-8-2008 issued by Central Government clarifying phrase 'may be taxed' in context of DTAAs, is clarificatory in nature and, thus, it will have retrospective effect from assessment year 2004-05
Adda fees for bus parking is statutory fees, not liable to ST under business support services
Service Tax : Adda fees collected for bus parking is collected as a statutory fees and is not liable to service tax under Business Support Services; furthermore, land used for parking stands specifically excluded from 'renting of immovable property' services
SC raps HC for setting aside auction and depriving purchaser of legitimate purchased property at pub
Banking Laws: Where auction purchaser was a bona fide purchaser who had purchased property in furtherance of a duly publicized public auction, interference by High Court was uncalled for
RBI seeks to revive distressed assets; releases guidelines on refinancing of project loans and sale
BANKING : Framework for Revitalising Distressed Assets in The Economy - Refinancing of Project Loans, Sale of NPA and Other Regulatory Measures
RBI issues guidelines on formation of ‘joint lenders forum’ and adoption of corrective action plan
BANKING : Framework for Revitalising Distressed Assets in The Economy – Guidelines on Joint Lenders’ Forum (JLF) and Corrective Action Plan (CAP)
HC slams AO for referring matter to Valuation Officer even when high market rate of land was taken b
IT : To make reference under section 55A, Assessing Officer has to form an opinion that value claimed by assessee is less than fair market value
Delay in filing appeal due to lack of knowledge of impugned order is condonable, rules HC
CST & VAT : Where there was some serious confusion with regard to date of hearing fixed before Assessing Authority, which resulted in non-appearance of assessee and order passed by Assessing Authority was not immediately known to assessee, consequent delay in filing appeal further aggravated by assessee's illness is condonable
New auditor was not guilty of misconduct if ex-auditor couldn't prove outstanding undisputed audit f
CA Act : Where complainant CA failed to produce statutory required documents signed by both auditee and auditor indicating undisputed audit fee, it could not be alleged of professional misconduct on acceptance of assignment by other CA
Legal procedure to take over fractional shares can't be challenged if consolidation of shares made a
CL : Where consolidation of shares done by company was in accordance with Companies Act and Articles of Association, procedure adopted to take over fractional share of appellant-shareholder was legally sustainable
Appeal filed before issue of instruction delegating min tax effect for admitting an appeal shall be
IT: Appeal filed before issuance of circular dated 9-2-2011 having tax effect less than Rs. 10 lakh was allowed with a direction that order would not be treated as precedent in other matters
Basis of cost for PLI under TNM method is ‘total operating cost’ and not its fraction such as ‘direc
IT/ILT : PLI for TNMM computed w.r.t. 'costs incurred' should use total operating costs and not just direct costs
Cutting of carpet rolls and stitching its linings at edges to make mats would not amount to manufact
Excise & Customs : Cutting of carpet rolls into smaller sizes and subjecting them process of stitching linings at edges to make 'mats' does not amount to manufacture
Even stock revaluation loss was a 'speculative loss' if assessee was not carrying any business activ
IT : Revenue is fully entitled to rely on reports of its investigation wing which entailed serious doubt with regard to genuineness of share application money; however, assessee is to be given opportunity to confront those materials
Agricultural land confiscated as it was bought with foreign remittance received in contravention of
FEMA : Where appellant company had purchased agricultural land by utilizing foreign remittances obtained under Automatic Route, company had contravened section 6(3)(b) of FEMA
Revisionary powers of CIT are wide enough to rectify bonafide errors subject to compliance with othe
IT : Power under section 264 is wide enough to include rectification of a 'bona fide' error committed by an assessee, while claiming exemptions under section 54B
Commission agent's services are ineligible for input credit
Cenvat Credit : Services of commission agents (whether foreign agents or domestic agents) are ineligible for input service credit
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