CA Terminal: 03/26/14

Wednesday 26 March 2014

Agricultural land won't lose its privileges even if sold in violation of State laws; not taxable as

IT : Merely because agricultural land was sold in favour of non-agriculturist in breach of law prevailing in State, said land would not lose its character as agricultural land and, hence, could not be treated as capital assets

Writ filed against TRO dismissed as its was passed after giving an opportunity of being heard to ass

IT: Where representation had been submitted by petitioner before TRO Prior to notice of attachment, petition filed against order of TRO was premature

Tribunal couldn’t make adverse observations on merits of case while dealing with stay application

Service Tax : Tribunal may, in exceptional cases, assess prima facie case treating same to be a hardship for maintaining appeal by dispensation of pre-deposit; however, Tribunal cannot observe adversely on merits of case

Assessee once admitted can't re-agitate disallowance of interest on funds diverted to sister concern

IT : Where assessee itself admitted that payment of interest to extent of loan utilised by sister concern had to be disallowed, it could not subsequently re-agitate said issue by contending that once funds were used by sister concern for its business purpose, there could not be any disallowance

Credit for TDS not claimed in original return but claimed in revised return filed within stipulated

IT : Where assessee had submitted revised return within prescribed period of limitation as provided under section 139(5) claiming credit/refund of TDS, which was not made in original return, assessee was entitled to credit of TDS

Order of CCE(A) is binding on Depart. even if revision proceedings are pending against it

Excise & Customs : Mere fact that order of appellate authority is not acceptable to department and is subject matter of an appeal/revision, cannot be a ground for not following it unless its operation is suspended by competent court

Sale deed to be executed in favour of applicant only when he pays sum due to liquidating Co., HC say

CL : Where certain dues were pending towards company-in-liquidation under lease-cum-sale deed of a property which was auctioned in favour of applicant, sale deed would be executed in favour of applicant only on payment of those dues

Cos with either huge turnover or extraordinary events couldn’t be taken as comparable for TP study

IT/ILT: Companies which are functionally different, have a very high turnover, have incomparable size, have exceptional circumstances and events like merger/demerger, which impact financial statements, cannot be selected as comparables

SC denies interest on interest on refund; directs HC to consider its earlier judgment in case of Guj

IT : Where High Court relying upon decision in case of Sandvik Asia Ltd. v. CIT [2006] 150 Taxman 591 (SC), directed revenue to pay interest on amount refunded as provided for under section 244(1A), order so passed was to be set aside and, matter was to be remanded back for disposal afresh keeping in view observations made in case of CIT v. Gujarat Fluoro Chemicals [2014] 42 taxmann.com 1 (SC)

SEBI releases standardized format of Auditor's Certificate under clause 24(i) of Equity Listing Agre

SEBI : Format for Auditors’ Certificate Required Under Clause 24(I) of The Equity Listing Agreement

Transporter Held For Evading Service Tax

The customs, central excise and service tax department on Tuesday arrested proprietor of a transport firm in the city for not paying Rs 2.35 crore service tax in the six months.

William Colaco, superintendent of central excise, preventive section (Surat-I) arrested Mahesh Ahir, proprietor of Khodiyar Earth Movers Ltd and Ambe Transport for the offence punishable under section 89(1)(a) and (d) of the Finance Act, 1994. Ahir has been sent in to judicial custody of the department. Official sources said that this is the fourth arrest by the service tax department in the last one month. Earlier, four persons running transport and labour contract firms in Hazira were arrested for evading huge amount of service tax.

Source:- timesofindia.indiatimes.com

Coking Coal Supply Talks Said At Six-Year Low Prices In India

Tata Steel Ltd, Steel Authority of India Ltd (SAIL) and JSW Steel Ltd are in separate talks with suppliers to sign coking coal contracts at the lowest price in six years, people with knowledge of the information said.

India’s top three steel makers are negotiating for deliveries at $125 a tonne for the month and quarter starting April, said three people, who asked not to be identified pending a settlement. The price is 13% less than the $143 for the three months ending March and the lowest since 2008, when annual contracts were the norm.

Increasing supplies from Australia and North America and a decline in output from pig-iron mills in China, Japan and South Korea have pulled down spot prices of coking coal and are set to impair benchmark contracts rates. A respite from floods, which wrecked Australia’s Queensland in 2010 and 2011 and sent prices soaring, has boosted shipments from the world’s biggest coking coal exporting region to a record.

“Low-cost producers, particularly BHP Billiton Ltd, have been pushing volume, leading to a surplus in the coking coal market,” said Daniel Morgan, an analyst for UBS AG in Sydney. “A seasonal pick-up in steel production rates in North Asia offers some support for prices but the market remains very well supplied from all key regions.”Metallurgical coal production at BHP increased 22% to a record 22 million tonnes in the six months ended 31 December, according to an 18 February statement.

“Discussions are underway,” Tata Steel spokesman Kulvin Suri said in an email, without giving price details. Arti Luniya, executive director at SAIL’s coal import group, declined to comment, while JSW Steel spokesman Manish Mallick didn’t respond to an email seeking comment.

Lower costs

Paying less for coal, a key raw material, would help India’s steel makers reduce their input cost and boost earnings at a time when demand from auto makers to builders has flagged. The three companies consume almost half of India’s 40 million tonnes of metallurgical coal imports. Tata Steel’s India business and SAIL are set to report their smallest profit margins in more than a decade for the year ending March, while JSW’s earnings have lagged estimates for five consecutive quarters.

“We’re both a seller and a buyer of coking coal and we are looking at a range of $125 to $135 a tonne for the quarter,” said K. Rajagopal, group chief financial officer at Jindal Steel and Power Ltd. The New Delhi-based company bought a controlling stake in Corrimal, New South Wales-based Wollongong Coal Ltd, which operates two coking coal mines in Australia and produces about 1.5 million tonnes a year.

Supply glut

Spot coking coal prices in China have declined 20% to $107 a tonne since 31 December, according to data from the Freight Investor Services index on Bloomberg. A supply glut is estimated by Morgan Stanley to be about the equivalent of 3% of annual seaborne trade. A reduction of at least 15 million tonnes is needed to restore tightness, Sanford C. Bernstein and Co. said in a report last month.

Tata Steel in India buys about half of its coking coal requirement from external suppliers. SAIL imports more than 70%, while JSW buys almost all of its needs.

“A fall in coking coal prices will be a big boost for local steel makers because they’ve been struggling to sell,” said Giriraj Daga, a Mumbai-based analyst at Nirmal Bang Equities Pvt. Ltd, who has a sell rating for all the three producers. “The demand cycle may not pick up before the end of the general elections.

Source:- livemint.com

U.S. Mulls Speedier Gas Exports To Help Ukraine, Europe

The U.S. shale gas boom should be used to counteract Russian influence in Europe and on Ukraine, a key senator said on Tuesday, as lawmakers weighed changes to export policy to take into account a shifting geopolitical landscape.

European worries about the security of energy supplies have skyrocketed since Russian forces seized control of the Crimean peninsula from Ukraine this month. Moscow has in years past cut gas supplies during regional disputes.

The Ukrainian crisis has led to intense scrutiny of export rules for U.S. liquefied natural gas. The regulations require the Department of Energy to grant permission for natural gas exports to all but a handful of countries, such as Canada, which have free trade agreements with the United States.

Hearings before the Senate and House energy committees on Tuesday focused on whether speeding up the Obama administration's review of two dozen pending export applications could help U.S. allies reduce their dependence on Russia for natural gas.

The export projects, once approved, would take several years to construct and actually ship gas.

"The last thing (Russian President Vladimir) Putin and his cronies want is competition from the United States of America in the energy race," Senate Energy Committee Chairwoman Mary Landrieu said at a hearing on Tuesday.

The hearing was the Louisiana Democrat's first as head of the Senate panel, after taking over in February from Oregon's Ron Wyden.

The session came a day after the Energy Department's sixth approval of LNG exports from a U.S. plant in the past 10 months.

The DOE has kept up a steady pace of approvals since May, and it was unclear whether recent rhetoric about the Ukrainian situation was affecting its timetable.

Opponents of unlimited U.S. gas exports have argued that shipping too much could cause prices to rise in the United States, hampering economic growth.

AUTOMATIC APPROVALS

The House Energy Committee considered a measure Tuesday, known as H.R. 6, that would allow U.S. natural gas exports to be made without government approval to any of the more than 159 countries that belong to the World Trade Organization.

While the administration has not officially taken a position on the measure, Deputy Assistant Secretary for Oil and Natural Gas Paula Gant told lawmakers the bill would essentially eliminate the need for Energy Department review.

She stressed that the department is considering applications as quickly as possible, even though export boosters are clamoring for more action.

"DOE understands the significance of this issue, as well as the importance of getting these decisions right," Gant said.

The top Democrat on the House panel, California's Henry Waxman, said he had concerns about the bill.

"Rubber-stamping unlimited LNG exports without any determination that they are in the public interest could have serious unintended consequences," Waxman said.

Among the opponents of unfettered U.S. exports, a coalition of industrial companies, led by Dow Chemical Co, has disputed claims that speeding up export approvals would help Ukraine or U.S. allies. They argue that substantial U.S. gas exports remain years away and that much of the exportable gas has been committed to countries like India.

Supporters of the bill argued that even with Energy Department approval, not all of the projects would be built. Companies would still have to secure investors for the multi-million-dollar plants, as well as permits from the Federal Energy Regulatory Commission.

At the Senate hearing, Lithuania's energy minister, Jaroslav Neverovic, urged lawmakers to allow allies such as his Baltic country to bypass the lengthy federal review process by designating shipments to those countries as being in the national interest.

"It would strengthen buyers so that we don't have to attach ourselves to these long-term (Russian) contracts because there will be gas in the market," Neverovic said.

Russia is Lithuania's sole supplier of natural gas. The country pays one of the highest prices for gas in Europe, due to disagreements with Gazprom, Russia's state-owned gas company.

Source:- worldbulletin.net

Cashew Kernel Exports Jump 17% In 11 Months Of Fy14

Cashing in on the depreciation in rupee value against the dollar, India's cashew kernel exports have recorded 17% rise in volume and 27% in value terms during the first 11 months of the current fiscal. For the period between April 2013 and February 2014, cashew kernel exports touched 109,958 metric tons compared to 93,841 metric tons in the same period last year.

The value of exports in rupee terms has gone up 27% to Rs 4,624.35 crore as against Rs 3,649.50 crore in the corresponding period last year. In dollar terms, the export earnings increased 14% to $765 million compared to $671 million in the year ago period, according to data available with Cashew Export Promotion Council of India (CEPCI).

The unit value realisation was moderately higher by 8.22% to Rs 420.56 per kg compared to Rs 388.90 per kg in the year ago period.

However, in the month of February, exports were lower at 7,009 metric tons as against 7,972 metric tons in the same month last year, showing a decline of 12%. The value of exports in dollar terms also went down 8.78% to $50.67 million against $55.55 million in the year ago period. In rupee terms, the export earnings in February 2014 were marginally higher at Rs 315 crore from Rs 299 crore last year.

With just one week remaining for the financial year to end, the cashew kernel exports are likely to register an all time high in value terms this year.

In value terms, the exporters have already surpassed last year's earnings of Rs 4,046 crore, in the first 11 months of the current fiscal. In volume terms, the exports are almost near the last year's level of 110,306 tonne.

During the current year, exports of roasted and salted kernels went up 6.37% to 1,718 metric tons compared to 1,615 metric tons last year.

For the first 11 months ended February 2014, the cashew processing units imported 732,478 metric tons of raw cashew nuts, a decline of 14% over the same period last year. Between April 2012 and February 2013, India had exported 852,183 metric tons of raw cashew nuts. In value terms, importers paid out Rs 4,246.37 crore, about 16.5% lower than last year. In 2012-13, the cost of imported nuts amounted to Rs 5,084.98 crore.

The average unit value of imported nuts was Rs 57.97 per kg, about 2.85% lower than the previous year. India requires an estimated 1.5 million metric tons of raw nuts. The domestic production is estimated at 700,000 metric tons.

Source:- business-standard.com

Sugar Exports Hit As Local Prices, Rupee Rally: Dealers

Sugar merchants are struggling to sign new export deals, as a surge in domestic prices to a seven-month peak and a firm rupee prompt buyers to wait for cheaper supplies from Thailand, dealers said on Wednesday.

Slower exports by the No.2 producer could support global sugar prices , which have slipped in the past two weeks partly on worries a record Thai output - estimated at 11 million tonnes - will swell an amply supplied world market.

"It is nearly impossible to strike new deals for white sugar. Indian sugar is too expensive," said Kamal Jain, managing director of Pune-based Kamal Jain Trading Services.

"Even in raw sugar, exports have slowed. Only Iran is buying in rupees. Others are not comfortable with current prices."

India is offering white sugar at around $492 per tonne free on board, versus offers from Thailand at $470 for comparatively better grade white sugar, dealers said. Thailand is the world's No.2 sugar exporter after Brazil.

Indian raws are being quoted at $438 per tonne, compared to Thai supplies at $381.

"Two months ago, mills in top producing state Maharashtra were willing to sell sugar below domestic prices. Since the announcement of an exports subsidy for raw sugar, they raised quotes," a Mumbai-based dealer with a global brokerage said.

Indian mills traditionally produce white sugar, but a global glut has made exports difficult. In an attempt to cut down stockpiles, the south Asian country has said it will provide an incentive of 3,300 rupees ($54.82) per tonne for the production of raw sugar for exports.

Rising seasonal demand from ice-cream and beverage makers ahead of the scorching summer months have also contributed to the jump in domestic sugar prices, which hit 3,077 rupees per 100 kg on Wednesday, the highest since August 2013.

"We are entering peak demand season. Prices can move higher from the current level. They are unlikely to fall," said Ashok Jain, president of the Bombay Sugar Merchants Association.

Also, a firmer rupee is prompting merchants to quote higher export prices, he added. The rupee rose to an 8-month top on Wednesday amid hopes of continued foreign fund inflows.

MARKET EYES WEATHER

Traders are now eyeing the weather forecast for more pricing cues. If El Nino returns this summer, it could curb sugar output and further boost prices. In 2009/10, a drought triggered by the weather pattern had forced India to import a record 4 million tonnes of the sweetener.

"There is uncertainty over next year's production. If there is a drought, then local prices will rise sharply. So there is no point in exporting sugar at lower prices now," said a senior official with a Maharashtra based sugar factory.

India exported 1.12 million tonnes in the first five months of the 2013/14 season that started on Oct. 1, including 520,000 tonnes of white and 600,000 tonnes raw sugar, the Indian Sugar Mills Association estimates.

The country had shipped out 348,000 tonnes in 2012/13.

"It would be very difficult for India to push exports in coming months. Some exporters are struggling to execute already signed deals," said a New Delhi-based dealer with an Indian trading firm that is exporting sugar to Iran.

Source:- economictimes.indiatimes.com

Telecom equipments are liable to entry tax as they are covered by the term ‘machinery’

CST & VAT : Goods purchased for purpose of transmission of voice from one place to another viz. telecommunication are 'electronic/telecom equipments' and are covered within expression 'machinery and spare parts thereof' and liable to entry tax

Sum incurred on transmission lines held allowable as it neither provided any title or enduring benef

IT : Where assessee incurred 35 per cent of entertainment expenditure on food and beverage for employees while they were entertaining assessee's customers, same had to be excluded from total expenditure and limit prescribed by section 37(2) had to be applied on balance amount

Rbi's Easing Of Norms May Lead To Twofold Increase In India's Gold Imports

The gold industry in India projects two consequences to Reserve Bank of India’s (RBI) decision to allow more private banks to import gold into the country. Firstly, the gold imports which has remained subdued since August last year following the tight curbs on imports of the yellow metal may increase twofold. Secondly, more banks importing gold can bring down the domestic gold prices.

Earlier, the RBI had announced its decision to allow five domestic private sector banks- HDFC Bank, Kotak Mahindra Bank, Axis Bank, IndusInd Bank and Yes Bank to import gold. Before, only six nominated public sector banks and three state-run trading agencies enjoyed rights to import gold. The industry forecasts monthly gold shipments to almost double to 40 tons when compared with the imports of 20 tons during the month of February.

According to KC Chakrabarty, Former RBI Deputy Governer, more banks importing gold can bring down the prices. The presence of more players will result in healthy competition to import gold at lower prices. Gold imports at cheaper rates will in turn help to improve the Current Account Deficit (CAD) situation in the country.

The RBI’s move is assumed as the first step towards easing the tough regulatory restrictions on gold imports. Now that more banks are allowed to import gold, the gold supply crunch is likely to alleviate to a certain extent. The industry also expects that the RBI decision may bring down the high gold premiums in the country.

Source:- metal.com

Rupee Up 23 Paise Against Dollar

The rupee continued its rally against the American currency in early trade for the fourth trading day, gaining another 23 paise to 60.25 per dollar on persistent selling of the US unit by banks and exporters on the back of sustained foreign capital inflows.

Weakness of dollar in the overseas market also boosted the rupee value, a forex dealer said.The Indian currency resumed higher at 60.28 per dollar as against the last closing level of 60.48 at the Interbank Foreign Exchange (Forex) Market and firmed up further to quote at 60.25 per dollar at 1000hrs (IST).

Sustained selling of dollars by banks and exporters in view of good foreign capital inflows into equity market was the main factor behind rise in rupee value.In New York market, the dollar cut its rise after a round of mixed US data on Tuesday, but held narrowly higher against key rivals.

Source:- thehindu.com

MCA further notifies major sections of Companies Act, 2013; effective from April 1, 2014

COMPANIES ACT, 2013/INDIAN ACTS & RULES : Section 1 of The Companies Act, 2013 - Act - Enforcement of - Notified Date from Which Specified Provisions of Said Act Shall Come Into Force

Product acquired from NR AE for resale in India to be benchmark by Indian rates and not rates in sou

IT/ILT: For benchmarking purposes product purchased by assessee from its American AE to be sold in India should be benchmarked by taking India specific prices and not prices in market of source country

Concealment penalty deleted as interest on FD held by firm was unknowingly credited in name of partn

IT: Where assessee-firm was advised to directly credit interest from fixed deposits in name of partners, which was later on found to be legally impermissible, penalty was not to be levied

Plea for rectification in register of member can only be made by depositories, Cos., participants an

CL: None other than five entities mentioned under section 111A(3), is entitled to file petition for rectification of register of members in respect of shares

Block assessment can't be initiated without first issuing search warrant in name of searched person

IT: When any person other than one named in warrant is searched and incriminating material is seized which belongs to that person and not person in respect of whom warrant is issued, if that person has to be assessed for block period, there should be a search warrant issued in his name as well because search and seizure is a condition precedent for passing a block assessment order

New Foreign Portfolio Investment Scheme notified to include FIIs, QFIs under reg. foreign portfolio

FEMA/ILT : Foreign Portfolio Investor - Investment under Portfolio Investment Scheme, Government and Corporate Debt

Resolution passed under sec. 293 of 1956 Act prior to Sep. 12, 2013 deemed as compliance of sec. 180

COMPANIES ACT, 2013/COMPANIES ACT, 1956 : Section 180 of The Companies Act, 2013 - Powers of Board - Restrictions on - Clarification with Regard to Resolution Passed U/S 293 of Companies Act, 1956 Prior to 12-9-2013 With Reference to Borrowings to be Regarded as Sufficient Compliance of Requirements of Section 180 for A Specified Period

ITAT explains interplay between Article 7 and Article 13 of India-UK DTAA

IT : Where special provision 'sends subject back to general provision', it is the general provision that applies

Income arising to banks from leasing out of defaulter's assets seized under SAFAESI Act were liable

Service Tax : Where a bank takes possession of factories/plants of its defaulting borrowers under provisions of SARFAESI Act and leases them out to recover its loan, lease rentals received by such bank are liable to service tax

Assessment already completed on basis of seized docs can't be reopened on mere change of opinion

IT : Where Assessing Officer on basis of documents impounded during survey, passed an assessment order under section 143(3), he could not initiate reassessment proceedings subsequently by merely taking a view that in terms of entries recorded on a loose paper impounded during survey, certain income chargeable to tax had escaped assessment

SAT upheld penalty imposed by SEBI on appellant as he failed to make disclosure required by Takeover

SEBI: For purpose of Takeover Regulations what is relevant is acquisition of shares and once acquisition of shares exceeds limits prescribed therein, provisions of Takeover Regulations are triggered

Rate of Bank guarantee to be adjusted before using it as comparable against corporate guarantee

IT/ILT : In course of transfer pricing proceedings, TPO cannot determine arm's length price of corporate guarantee by mechanically picking up bank guarantee rates as external /internal CUPs, as the case may be; however, said rates may turn out to be appropriate CUPs if they are properly benchmarked after making due adjustments in accordance with provisions of Rule 10B of 1962 Rules

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