CA Terminal: 05/07/14

Wednesday 7 May 2014

No reassessment when assessee had filed return before wrong AO as he was unaware of change of jurisd

IT: Where assessee was subjected to search operations and he filed returns of income before his original Assessing Officer, who accepted same, and subsequently Assistant Commissioner (Investigation) sought to reopen completed assessments on sole ground that assessee had filed returns with his original Assessing Officer with mala fide intentions, since in affidavit filed by department nothing had been pointed out to show that assessee with mala fide intentions filed returns before his original As

No penalty under Punjab VAT Act if driver of vehicle failed to generate declaration of goods due to

CST & VAT : Where assessee carrying on business in Haryana State sold goods to a party carrying on business in Punjab State and driver of vehicle carrying said goods entered ICC (Import), Shambhu set up by Punjab Government and a stamp was affixed by concerned clerk on documents accompanied with goods, merely because driver out of ignorance being illiterate did not generate declaration at ICC, no penalty could be imposed upon assessee under section 51(7)(c) of Punjab VAT Act

IRDA issues guidelines on usage of 'Trade Logo' of promoting partners by insurers

Insurance : Guidelines on Usage of Trade Logo of Promoting Partners of Insurance Companies

RBI dispenses with penal charges on non-maintenance of minimum balance in inoperative accounts

Banking : Levy of Penal Charges on Non-Maintenance of Minimum Balances in Inoperative Accounts

Receipt of share money after deposit of sums in applicant’s a/c showed illicit transaction; sec. 68

IT : Where assessee received certain amount as share application money, in view of fact that amounts used to subscribe to shares were deposited in bank accounts of parties on same day or on proximate days, and pay order given for applying to shares was issued from a far off bank branch, authorities below rightly concluded that transaction in question was sham and, therefore, share application money was to be brought to tax under section 68

Mere foreign decree against respondent couldn't be a basis of winding up if it was not on merits

CL : Where foreign decree, whether of a reciprocating or non-reciprocating territory, was not on merits or did not otherwise satisfy requirements of section 13 of CPC, same was not a debt due and could not be a basis of a winding up petition

In absence of India-Hongkong DTAA taxability of royalty would be as per sec. 9(1)(vi) as amended by

IT/ILT : Where assessee-company, located in Hongkong, rendered services of processing of data to an Indian company, in view of fact that there did not exist India - Hongkong DTAA, taxability of amount received for rendering aforesaid services was to be examined under domestic provisions which were amended by Finance Act, 2012 by way of insertion of Explanations 4, 5 and 6 to section 9(1)(vi)

Even reimbursement is liable to VAT if it was claimed after adding mark-up value

Service Tax : Where assessee had added mark-up over actual charges payable for services availed directly from third party on behalf of client, said amount was includible in value of taxable services

Tyre Manufacturers Association Stresses On National Rubber Policy

The Automotive Tyre Manufacturers Association (ATMA) has reiterated its demand for a comprehensive National Rubber Policy on the lines of auto sector policy in the country.

This was raised at the meeting when the tyre industry leaders met Amitabh Kant, new Secretary of Department of Industrial Policy and Promotion (DIPP), before the stakeholders’ consultations at Rubber Board’s headquarters in Kottayam on May 9.

The tyre industry group included Rajeev Anand (Managing Director Goodyear India and Chairman ATMA), Raghupati Singhania (CMD JK Tyre and Vice Chairman ATMA), Anant Goenka (MD Ceat Tyres and Past Chairman, ATMA) and senior representatives from leading tyre companies who are members of ATMA.

The ATMA committee urged for the need and imperatives of a comprehensive National Rubber Policy to be framed outlining the medium-long term objectives, roadmap and recommendations, sectoral competitiveness etc, which is under consideration by the Commerce Ministry.

According to Singhania, much like the auto policy which envisions a long term roadmap for the industry, the country also needs a National Rubber Policy as rubber touches the lives of over 10 lakh growers and has a rich and diverse value chain encompassing tyres, other rubber goods like conveyer belts, auto components, footwear, medical supplies, sports equipment etc. Each segment of the rubber sector has its own set of complexities which need to be addressed in a policy document with defined growth parameters, he said.

For the last several years, the domestic consumption rubber has outstripped its availability. According to Rubber Board figures, the gap between domestic production and consumption widened to 1,33,400 tonnes in the just concluded year 2013-14.

The industry estimates that during the current fiscal year also the production will lag behind consumption by around 1,00,000 tonnes. According to ATMA, rubber imports are therefore imperative to plug the demand supply mismatch.

Source:- thehindubusinessline.com

Ambit Of Focused Export Schemes May Not Be Widened

The government is likely to turn down the industry's demand to widen the scope of focused export schemes for pushing exports in the Foreign Trade Policy (FTP) 2014-19. Instead, it is exploring other options which do not have a fiscal implication and are compliant with the World Trade Organisation (WTO) norms.

Officials said both the commerce ministry and the finance ministry are not in favour of making more additions to the Focused Market Scheme (FMS) and Focus Product Scheme (FPS) as it would have revenue implications. Besides, the government fears this kind of export promotion would not be WTO compliant.

"Most of the items are already covered in these schemes and if you keep on expanding the list by adding every small item it will lose relevance. If we include everything then it is not focused. We are looking at other alternatives to boost exports," said an official who did not wish to be identified.

Exports of a particular product or exports to a particular market get relief under these schemes. FMS includes 83 countries, while there are 29 countries in New Focus Market scheme and 41 under Special Focus Market scheme. FPS includes 548 items and another 144 items are included under Market-Linked Focus Product scheme.

A counter view is that reward schemes like FMS and FPS, which offer duty credit scrips, are the best way to promote exports and most countries resort to that.

"The countries with which we have Foreign Trade Agreements, Bilateral Investment Promotion & Protection Agreements, and Comprehensive Economic Partnership Agreement should also be brought under FMS. This will give double advantage of low tax in those countries and benefits of FMS. In FPS the commerce ministry will evaluate performance of products. We can see a few products where we have developed strength moving out and others coming in," said Ajay Sahai, CEO and Director General of Federation of Indian Export Organisations.

But officials said this year the government is planning to restructure the FTP and not focus only on giving incentives. The focus of the new policy would be on consolidating the markets, products, services and standards.

"FMS and FPS are outright reward schemes. The revenue loss is rising because of the sops given in these schemes. So non-tariff measures could be considered to boost exports," said another finance ministry official.

Though the FTP will be unveiled by the new government, the bureaucratic machinery has already started preparations on it by taking representations from the industry. A brief is being prepared for the next government.

The commerce & industry ministry is planning to roll out the FTP immediately after the Budget is presented (possibly in July beginning). As the current FTP will expire by July, the new one might be rolled out by August.

"Instead of just giving a plethora of incentives under FMS, FPS and other schemes, the focus will be more on analyzing the fiscal instruments," a top official, involved in the framing of the policy, stated.

India's exports recorded 3.15% drop in March to stand $29.58 billion. For the entire year (April-March 2014) exports stood at $312.35 billion, against $300.4 billion in 2012-13-a growth of about 4%. The government, on the other hand, had set a target of $325 billion.

Source:- business-standard.com

No adjournment for collection of doc evidence when assessee had plenty of time for such purpose; Lon

CST & VAT : Where assessee sought adjournment on ground that 'documentary evidence was not ready', Tribunal declined same holding that assessee had plenty of time in which to assemble documentary evidence

Assessee couldn’t raise new plea in writ proceedings; case remanded to AO to consider said plea in r

IT : Where assessee filed a writ petition challenging initiation of reassessment proceedings by taking a new plea that loan taken from its directors and family members was nothing but margin money which stood reflected in Schedule VIII to balance sheet, since aforesaid plea was not raised in statements of objections filed before Assessing Officer matter was to be remanded back to Assessing Officer with a direction to consider said plea in course of reassessment proceedings

Eurofer Update On Imports Of Steel In Eu

EU customs data for steel imports into the EU28 show a rather erratic monthly pattern so far in 2014 with high imports of semis and finished product levels in January (rising 41% respectively 10% YoY) and somewhat lower tonnages of finished steel imports in February (falling 11% YoY).

First indications for March signal that imports probably remained at an overall high level. It is estimated that total imports in Q1 2014 were very close to those registered in the same quarter of last year.

The breakdown of the available customs data on steel trade into the specific view by product signals that imports of flat finished products fell almost 10% YoY over the first two months of 2014, whereas long products imports rose by more than 40% YoY.

Within the flat product segment, imports of most products were on a downward trend, the main exception being quarto plate which saw third country import supply rising 29% YoY. Meanwhile, all long products registered a marked increase in imports over the January-February period, but particularly so imports of reinforcing bars which rose 70% YoY.

With regards to the main countries of origin, Ukraine and the Russian Federation continue to dominate semis’ imports, accounting for more than 90% on total semis imports.

The main exporters of finished products to the EU are Russia, China Ukraine, India and Turkey; particularly Indian exports rose significantly in the first two months of this year (+83% YoY). While flat product exports from China have fallen, there was a massive rise in long products (+345% YoY, mainly in rebars and merchant bars). Total imports in 2014 are forecast to increase, attracted by the rise in demand and the strong Euro.

Source:- steelguru.com

Sword Of Damocles Hanging On Gsp+

According to J. A. Schumpeter, an economist, UK owes its predominance to a single industry--the textiles. Can the same be said of Pakistan? Pakistans textile exports touched $10.3 billion mark in 9M FY14, a growth of 7.9 percent over the corresponding period of last year, as per Pakistan Bureau of Statistics.

The increased growth was mostly attributable to rise in export of raw cotton, low value-added (such as cotton cloth and made-up products) and value-added (knitwear and bed wear) products due to depreciation of rupee.

However, the readymade garments (RMG) sector grew 9.36 percent in 9M FY14 to reach $1.43 billion. Compare that to Bangladesh where official figures show RMG exports for the same period at $18 billion.

On monthly basis, textile exports witnessed a paltry growth of over 6 percent in March 2014 (it was 9.2 percent in February 2014) over the corresponding month of last year. It seems like Pakistan is failing to fully capitalize GSP+ status gains extended by the EU, by not removing the supply-side bottlenecks.

According to an industry analyst, Pakistans daily wages per hour are $0.51, while these are $0.38 in India and $0.32 per hour in Cambodia. Similarly, electricity tariff in Pakistan is $0.17 per unit, whereas it is $0.13 in India, jacking up the cost of doing business in Pakistan.

As stated by a member of APTMA, the textile lobby, the Punjab textile sector is subjected to eight hours of electricity and five days of gas outages, due to which the industry there is making a loss of Rs80 billion per annum.

He further adds that the appreciation of the rupee against dollar is limiting the gains estimated to be brought about by the GSP+ status. Moreover, he warns that the withdrawal of the duty exemption on import of cotton yarn by the ECC will lead to a rise in cotton yarn prices, hampering the countrys exports to the EU markets under the GSP+ status.

In addition, Indian yarns, both fine and coarse, are said to be seeping into Pakistani market because the domestic downstream or value-added textile sector finds it more profitable to use cheaper imported yarns. Likewise, competitive marketing by Indian yarn exporters also triggered setback to Pakistani spinners who earlier enjoyed benefit in the Chinese market.

In this era of severe competition, to benefit from the GSP+ status from the EU, where styles change continually, Pakistans textile sector must cut the time it takes to initiate new styles. It also needs huge investments in developing infrastructure and capacity-building of factories that can meet the global demand.

Its time to put emphasis on the resurgence of exports by distributing gas and power to the industry on a priority basis, lowering the costs of doing business, compensating manufacturers for huge exchange rate losses, and backing up exporters against their regional competitors in the global market before it is too late. It is not easy to re-establish a factory once it shuts down.

Source:- brecorder.com

SC: CBI can probe into corruption charges even against high ranking bureaucrats without Govt's appro

CL : SC strikes down sec. 6A of DPSE Act for violation of Art. 14 its propensity to shield high-ranking corrupt officials

India Coal Imports See First Dip In Three Months In April

India's coal imports fell 6 percent in April from a year ago to 15.2 million tonnes, the first dip in three months, as power and steel producers used up stocks piled up in previous months, according to provisional data from research firm OreTeam.

Overseas coal purchases by India, the world's third-largest importer, rose in all but one month of the year that ended on March 31, mainly spurred by lower prices and as power companies added capacity.

"The fall in April can be attributed mainly to adequate stocking in previous months," said OreTeam research head Prakash Duvvuri. "Also, a good stockpile of coal is visible at ports with no disruptions expected in the coming months."

OreTeam collects coal data from its representatives at ports, mining regions and companies. The firm did not provide the split between imports of thermal coal, used in power generation, and coking coal, used in making steel. India's government does not regularly release data on coal shipments.

State-run Coal India Ltd (COAL.NS) accounts for about 80 percent of the country's total output, but the company has been falling short of its targets for the past several years due to difficulties in obtaining environmental nods, lack of railway access and employee strikes.

The country's production in the 11 months through February was 497.2 million tonnes, according to data from the Ministry of Mines. Output was 557.8 million in the whole of 2012/13.

OreTeam says that according to its data, India imported 158.8 million tonnes of coal in 2013/14.

The Ministry of Coal said in February shipments hit 145.8 million in 2012/13, with more than half of that coming from Indonesia. Australia, South Africa and the United States are India's other main suppliers.

Source:- in.reuters.com

Indian Buyers Snap Up Top Quality Alphonso Mangoes After European Union Bans Imports

Indians are feasting on some of the world's most succulent mangoes after the European Union banned imports of the fruit from India this month, producing a glut and rock-bottom prices for local consumers.

Starting May 1, the EU banned imports of Indian mangoes including the Alphonso, considered the king of all the mango varieties grown in South Asia, because a large number of shipments were contaminated with fruit flies. The pests are considered a threat to crops grown locally in Europe.

"Those jittery Europeans have taken fright at some fruit flies in our mango exports, flies which they fear will wreak havoc on their tomatoes and cucumbers," the Times of India wrote in a gleeful editorial. "Imagine sacrificing the king of fruits for salad!"

For years, the Alphonso mangoes had been out of the reach of most Indians as the best of the fruit was shipped to the supermarkets of Europe and other parts of the world where it commanded a premium price.

In Mumbai, the capital of the main Alphonso growing region, the fruit is now selling for 150-550 rupees ($2.50-$9) a kilogram, about $2-3 below prices last week. And sellers say they expect the prices to fall even further.

Mangoes start arriving in Indian markets in April, providing a juicy, delicious respite from summer temperatures and humidity as they start climbing to oppressive levels.

Piles of mangoes are cooled in refrigerators or buckets of ice-cold water or pureed to create refreshing drinks that cut through the scorching heat.

The Alphonso, with its golden yellow flesh and distinct aroma, is a favourite and is especially prized because the best varieties are either exported or prohibitively expensive.

This year, however, the stores in the crowded lanes of Mumbai's Crawford market are piled high with crates and baskets of perfectly ripe Alphonso.

"There is difference in the size and texture. The moment you touch it, you feel the difference. When you cut it, you get this aroma which fills the room. The taste is definitely superior," he said.

"I have had these mangoes while living abroad and now I am seeing the same quality here."But the EU ban is likely to disappoint legions of Indian mango fans in Britain, an EU member nation where the fruit has become popular not only in the substantial Indian community but also among foodies who look forward to the 10-week Alphonso mango season, said Jenny Linford, known for her London Food Chronicles blog.

She said the Alphonso mango has a unique texture, aroma and flavour unmatched by other varieties.

"They are valued and celebrated," she said.She said mangoes found in British supermarkets are often dreadful, rock hard and with little flavour, while mangoes sold in smaller Indian markets are extremely tasty and less expensive.

"The ban has serious implications for Asian green grocers in London," she said.Monica Bhandari, whose family business Fruity Fresh depends on the short Alphonso mango season, is petitioning the British government to overturn the ban. So far, however, the "e-petition" she has posted on the government website has not attracted enough electronic signatures to force a government review.

She said seasonal jobs will be lost because of the EU's refusal to consider a compromise, such as vapour heat treatment of all Indian mangoes before they are brought to Britain to assure they are pest free.

"We are frustrated," she said. "It's a short season. We can't afford to wait weeks and weeks for a response. We are told there'll be a debate in Parliament; I hope it happens."

Indian mango exporters are worried, as well. They say they may lose the hold they have over European markets. Alphonso mangos are sold from mid-April through June.

Exporters are likely to lose 500-600 million rupees ($8-10 million) in business, according to Sanjay Pansare, a fruit exporter in Mumbai.

"The loss of money this season isn't our biggest fear. We are worried that we may lose the export market that the Alphonso mango has captured."The Indian government is also trying to work out a way to have the ban revoked.

Source:- timescolonist.com

Gold Smuggling Surges Six-Fold, Says Regulator

Gold smuggling surged six-fold in the year ended 31 March from the previous year after the government raised the import duty on gold to narrow the current account deficit, according to data from the Central Board of Excise and Customs (CBEC), the body that regulates and administers customs, service tax and narcotics.

In 2013-14, CBEC seized smuggled gold worth Rs.564.8 crore, with the number of seizures at around 1,757. In the corresponding period in 2012-13, it had seized gold worth Rs.99 crore and number of seizures was recorded at 871.

The spurt in smuggling came about because the government raised the import duty on the precious metal four times over the last two years.

The rise in import duty led domestic prices to spiral. Spot gold prices in India are as much as 10-11% higher than in Dubai, compared with a difference of 0.1% in 2008. Gold is smuggled into India mostly from Dubai.

Higher import prices also meant that there was a 63% decline in gold imports between July and October 2013 from a year earlier, according to a February 2014 report by the World Gold Council.

There was an increase in gold imports in neighbouring countries such as Nepal, Bangladesh and Myanmar from where gold is smuggled into India by land. Dubai, Bangkok and Singapore are the main centres for smuggling by air, according to a March 2014 note by Macquarie Research.

The World Gold Council report said, “We have seen some increase in demand in other countries which have close links with India, some of which may be making its way back to the country through illicit channels, which have reopened in recent quarters following a long period of inactivity.”

The Rs.564.8 crore worth of seized smuggled gold is almost insignificant compared to the value of India’s gold imports—$39 billion (around Rs.2.34 trillion today) till December. And the figure is only for seizures— the actual amount of gold smuggled into India is likely to be much more, according to a senior official of the Directorate of Revenue Intelligence who asked not to be named, who admitted that nine out of 10 cases go undetected.

Analysts expect the trend in smuggled gold to reverse after the general election—the rupee has appreciated 16% from its August lows and the current account deficit narrowed to a four-year low in the fiscal third quarter at 0.9% of gross domestic product (GDP).

“We expect the regulations imposed on gold imports might be eased over the coming months; this may include a partial roll-back of import duty on gold (currently at 10%) and some relaxation of the 80:20 rule,” said Tanvee Gupta Jain, India Economist at Macquarie Capital Securities (India) Pvt. Ltd. India enforced the so-called 80/20 rule in July 2013, making it mandatory to export at least 20% of all gold imports.

Source:- livemint.com

Rupee Off One-Month High At 60.08 Per Dollar

The domestic currency slid back to 60 levels in the afternoon after strengthening to as much as 59.96 to a dollar in intra-day trade, the highest level since 9 April.

State-run banks were also seen stepping up demand for the greenback putting pressure on the local exchange rate. Still, the dollar demand has tapered off from what it was in the last few weeks.

At 3.07pm, the rupee stood at 60.08 per dollar, up 0.03% from it’s previous close of 60.10. The rupee touched a low of 60.12 per dollar in the intra-day trade.

Currency traders are wary of taking positions in the local currency as the general elections results are due in a week’s time. The trading volume has thinned this week.

According to a foreign exchange dealer with a bank, the Reserve Bank of India (RBI) is absent from the market but dollar demand from state-owned banks have lessened. The state-run banks were heavy buyers of dollars from the market on behalf of their clients.

Overall, the dollar also remained weak against a basket of major currencies till Tuesday but has started inching up. The dollar index, which measures the greenback’s strength against major global currencies, was trading at 79.109 from 79.093 on Tuesday.

BSE’s benchmark Sensex index fell 0.6% to 22,373.21 points.

Since the beginning of this year, the rupee has gained 2.92% as foreign institutional investors (FIIs) have bought $5.43 billion from local equity markets.

The yield on India’s 10-year benchmark bond trades at 8.771%, compared with its Monday’s close of 8.736%. Bond yields and prices move in opposite directions.

Source:- livemint.com

No Cenvat Credit if assessee makes payment for input services but never uses them for his business

Cenvat Credit : Where buyer pays for insolvency/liquidation services availed by seller of its assets, buyer cannot claim credit of tax paid on said services, as services are never received by it

Change in method of input credit is available for particular line of business and not for particular

CST & VAT : In case of input tax credit in relation to exempted as well as taxable supplies, one cannot take out a specific area of activity from a special method to seek change in method of accounting for that area without consideration of effect of that on appropriateness of existing special method as a whole

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