IT : Where it was apparent from records that assessee had sufficient funds for making investments in shares and interest free bonds and it had not used borrowed funds for such purpose, Assessing Officer was not justified in invoking provisions of section 14A in order to disallow one per cent of interest expenses incurred for earning exempt income
Sunday, 11 May 2014
Composite services classifiable as ‘works contract services’ with effect from June 1, 2007
Service Tax : Prima facie, composite services could not be classified as commercial or industrial construction services after introduction of works contract services from 1-6-2007
Industries Propose Buffer Stock Of Rubber For Lean Period
At a stakeholders' meeting held at Kottayam on Friday, tyre manufacturers and rubber products makers have proposed the setting up of a buffer stock for rubber, citing the disparity between the production and consumption levels in India.
"We put forward the idea of forming a buffer stock of 30,000 tonnes of natural rubber funded by the public-private partnership (PPP) model. During the peak production season, rubber could be stocked systematically and released during the lean months," said Rajiv Budhraja, director general of Automotive Tyre Manufactures' Association (ATMA).
All India Rubber Industries' Association (AIRIA) and ATMA also met Rubber Board officials and the representatives of rubber farming community to discuss the possibility of this proposal in Kerala.
Under the proposed model, the funding expenses would be met by the consuming industries or the state government on behalf of the producing community. "A third option is the funding by the central government through the department of commerce," said Budhraja.
According to him, India follows a unique demand-supply equation for rubber, with domestic production higher than consumption for four months in a year followed by consumption higher than production in the next four months. Both the production and consumption match only for one or two months. "With a buffer stock in place, industry can import rubber on a calibrated manner," he noted.
However, M C George, the national trustee of Indian Farmers' Movement (Infam), sounded quite skeptical of the industry's move and said: "This is like a cartel, with the government and the industry as members, trying to control the price of rubber."
According to S Ratnakumaran, MD of Kerala State Co-operative Rubber Marketing Federation (Rubbermark), the agency may soon be able to restart the procuring of rubber to stop the price fall in Kerala.
J Thomas, the rubber production commissioner with the Rubber Board, said the current decline in rubber price is due to the excess supply of the commodity in the global market.
Average price of RSS-4 grade natural rubber has slid to Rs 143.80 last month from Rs 162.38 per kg in April 2013. It further dropped to Rs 138 by the end of the first week of May.
Source:- timesofindia.indiatimes.com
Sensex Up Over 300 Points; Nifty Holds 6900; Top Ten Stocks In Focus
The S&P BSE Sensex surged over 400 points in trade on Monday, while Nifty too rose to its record high of 6975.70 in trade, supported by strong buying seen in banks, capital goods, oil & gas and power stocks.
Nifty has surpassed its previous swing's high of 6870 levels on Friday. Moreover, it has engulfed the candlestick of the previous nine days which makes it one of the most reliable bullish engulfing patterns.
At 10:30 a.m.; the 50-share index was trading at 6947.80, up 89 points or 1.3 per cent. It touched a high of 6,975.70 and a low of 6,862.90 in trade today. The S&P BSE Sensex was trading at 23,316.72, up 322 points or 1.40 per cent. It touched a high of 23410.36 and a low of 23,008.65 in trade today.
Here is a list of ten stocks which are in focus today:
Financial TechnologiesBSE 0.80 % Ltd: The Financial Technologies (FT) board said it would take two weeks more to attain a final bid for its stake in commodity bourse MCX and that all the shortlisted bidders continue to be interested in the divestment process.
At 10:30 a.m.; the stock was trading 3 per cent higher at Rs 270.
Reliance IndustriesBSE 2.68 % Ltd: Reliance Industries, along with its partners BP and NIKO have issued a notice of arbitration to the government of India seeking implementation of the revised price for gas produced from the Krishna-Godavari basin (KG-D6).
At 10:30 a.m.; the stock was trading 2.9 per cent higher at Rs 1027.
Dena Bank: Dena BankBSE 1.35 % today reported a 49 per cent jump in net profit to Rs 187.28 crore in the fourth quarter ended March 31. Total income increased to Rs 2,866.78 crore from Rs 2,539.74 crore.
At 10:30 a.m.; the stock was trading 1.5 per cent higher at Rs 63.90.
Tree House Education: Venture capital firm Matrix Partners has recorded a handsome return from the sale of a portion of its holding in school management firm Tree House Education and AccessoriesBSE 1.13 %. Matrix sold 4.84% stake in the company for Rs 50.4 crore on Friday according to data on the Bombay Stock Exchange.
At 10:30 a.m.; the stock was trading 0.8 per cent higher at Rs 285.70.
Tech MahindraBSE 0.48 % Ltd: IT services firm Tech Mahindra has entered the Mexican market, where it will focus on industries such as telecom, banking, energy and manufacturing and help create about 500 jobs in the next 24 months.
At 10:30 a.m.; the stock was trading 0.6 per cent higher at Rs 1784.55.
Central Bank of India: Central Bank of IndiaBSE 0.37 % recorded a 4 per cent decline in net profit to Rs 162.44 crore in the fourth quarter ended March 31. The state-owned bank had posted a profit of Rs 169.15 crore in the January-March quarter of 2012-13, according to a filing to the BSE.
At 10:30 a.m.; the stock was trading 0.5 per cent higher at Rs 54.10.
Chambal Fertilisers: Chambal FertilisersBSE -3.03 % today reported over 75 per cent fall in net profit at Rs 5.62 crore for fourth quarter ended on March 31, due to lower income. The company had posted the net profit of Rs 22.94 crore in the same quarter in year 2012-13.
At 10:30 a.m.; the stock was trading 2.8 per cent lower at Rs 40.05.
United Spirits Ltd: United Spirits LtdBSE -1.34 % agreed to sell its Whyte & Mackay scotch whisky unit to Emperador Inc in a 430 million pound ($729 million) deal that satisfies UK antitrust concerns and the Filipino company's thirst for growth.
At 10:30 a.m.; the stock was trading 0.6 per cent lower at Rs 2759.
Aditya Birla NuvoBSE 0.76 % Ltd: ABNL IT & ITES, a wholly-owned subsidiary of Aditya Birla Nuvo (ABNL), completed the divestment of Aditya Birla Minacs Worldwide to a group of financial investors, led by CX Partners and Capital Square Partners.
At 10:30 a.m.; the stock was trading 0.8 per cent higher at Rs 1120.
Andhra Bank: Andhra BankBSE 1.39 % reported a net profit decline of 75% after setting aside more money to cover bad loans in the three-month period ended 31 March. Revenue, or interest- and non-interest income combined, rose 9.3% to Rs.4,057.9 crore from Rs.3,713 crore.
At 10:30 a.m.; the stock was trading 0.6 per cent higher at Rs 65.20.
Source:- economictimes.indiatimes.com
Participation in proceedings ratified sec. 148 notice even if period for filing return wasn’t specif
IT : Even if period for furnishing return of income was not specified in notice under section 148 but assessee had participated in reassessment proceedings, such reassessment was valid
The Real Cost Of Exchange Rate Management
The sharp currency appreciation in March 2014 has dampened the sentiments of manufacturing concerns. Exporters are losing competitiveness while others are threatened by import substitution as imported finished goods are getting marginally cheaper to domestically produced ones.
Lets delve upon a few indicators to gauge the impact of unwarranted currency movement on competitiveness of domestic industries.
Firstly, the focus should be on real effective exchange rate (REER) that captures the rate of inflation differential with trading partners. According to the SBP, REER was appreciating till December which means the currency was depreciating and industry was gaining competitive edge. Ever since then, the curves topple over - REER has appreciated by 8 percent in the third quarter to reach at 109.67. In order to have the same REER as of December 2013, nominal exchange rate had to be at Rs105.8 per USD today.
Then according to the IMFs projections, Pakistans REER had to depreciate by 7.7 percent in FY14 but it has actually appreciated by 2.8 percent, so nominal currency has to devalue by 10.5 percent from today to June end to meet the funds expectations. This gives a good handle to see where the currency needs to be to counter the inflation difference with trading partners.
One may argue that the SBPs reserves have more than doubled since December to cover two months of imports and that explains the upward movement in currency. The other way to look is to see the relationship between the building of reserves and currency movement. Since March 2013 when reserves were similar to todays levels, REER has moved up by 4.7 percent (REER March 13: 104.7) and to be at equilibrium, the rupee should have been at 104.7 against the greenback. But it continues to hover around the promised number of 98.
Another gauge to measure competitiveness is to see what has happened to currencies of Pakistans trading competitors. The textile exporters are fighting for same trough with Turkey and Bangladesh in the EU. Then India and Thailand, particularly, is giving Pakistan a real tough time in garments.
The table illustrates the relationship of reserves to the currency movement in five competitive countries. Interestingly, Indonesia, Turkey and Thailand, where reserves are manifolds compared to Pakistans, have allowed their currencies to depreciate by a significant margin in the last year or so while the rupee today is hovering around where it was at the start of year.
While in India and Bangladesh, nominal currencies have appreciated or remained unchanged (similar to us), they are running huge export incentive regimes. This is to deal with monetizing the value of incentive to see the impact on actual exchange rate.
These incentives can be in the form of tax holidays, interest rates subsidies and so on. For instance, India has given tax breaks to its textile exporters upon Pakistan attaining the GSP+ status and that has diluted Pakistans edge. There is a striking finding from a study conducted by eminent economist Dr Hafiz Pasha that due to incentives, exporters in Bangladesh are getting effective exchange rate at Takka 112 per USD - 40 percent more than its nominal exchange rate.
Then we need to look at competitive disadvantages to Pakistan and compute how much we need to compensate through exchange rate and other fiscal incentives. For example, effective cost of electricity (including load shedding factor) is much higher in Pakistan. And to add to the ado, currency appreciation is causing import substitution too.
Sources reveal that nearly 25 percent of Pakistans yarn industry is recently (perhaps temporarily) replaced by cheaper product from India. Similarly ceramic players are finding it hard to keep prices at the levels or below the imported stuff from China of same quality.
The Ministry of Finance and the SBP need to conduct at least some back-of-the-envelope calculations and come up with some incentives through exchange rate depreciation, interest rate subsidy and import duties in the upcoming budget and monetary policy to counter the impact of adversaries, the industries are facing.
Source:- brecorder.com
Cotton Yarn Exports In Fy14 Estimated At $4.70 Billion
Country's cotton yarn exports for 2013-14 are expected to be around 1,350 million kgs valued at $4.70 billion.
A study conducted by the Cotton Textiles Export Promotion Council (Texprocil) has said that India's cotton yarn exports are meeting their targets, in spite of seasonal fluctuations generally witnessed every April and high raw cotton prices.
Statistics by Texprocil show that India exported 1,082 million kgs of cotton yarns valued at $3.75 billion in the first 10 months (April-January) of 2013-14. It is estimated that yarn exports for the entire 2013-14 would be around 1,350 million kgs valued at $4.70 billion.
The high quality of Indian yarns is ensuring firm orders from international markets.
April exports of cotton yarn had dropped in last the three and it happened in 2014 too. One reason is the high year-end exports which cause a drop in April. The temporary high prices during this period is another reason.
There is an increasing anxiety in the industry due to recent developments in Chinese cotton policy since China is the major importer of cotton and cotton yarns from India.
At present, the price difference between Indian and Chinese cotton is high, with the Indian yarn selling at much lower rates. Prices of Indian cotton yarns after payment of duty and taxes in China are still very much lower than the Chinese domestic yarn prices. "Given the better quality produced by Indian mills there will always be good exports of Indian yarns taking place, even if the difference between Chinese and international cotton prices narrows down substantially.
"Indian mills need not fear a drop in yarn exports happening beyond the seasonal fluctuations. However, profitability of exports will depend upon our price parity with international cotton prices," Texprocil Chairman Manikam Ramaswami said.
Texprocil facilitates exports from India of raw cotton, cotton yarns and blended yarns, woven and knitted fabrics, home textiles and technical textilesBSE 4.35 %.
Source:- economictimes.indiatimes.com
Ril, Bp And Niko Issue A Arbitration Notice To Govt Seeking Gas Price Implementation For Kgd6
Reliance Industries, along with its partners BP and NIKO have issued a notice of arbitration to the government of India seeking implementation of the revised price for gas produced from the Krishna-Godavari basin (KG-D6).
The 'Domestic Natural Gas Pricing Guideline 2014' was notified on January 10, 2014 after the government approved the Rangarajan formula doubling gas prices to $8.4 per unit from April 1. While the change was criticised by political parties and consumers, RILBSE 3.14 % defended it saying that the new price is still below the price of imported liquefied natural gas (LNG). The Election Commission stopped the government from announcing the new price until the election code of conduct is in force.
"The continuing delay on part of the Government of India in notifying the price in accordance with the approved formula for the gas to be sold has left the parties with no other option but to pursue this course of action. Without this clarity, the parties are unable to sanction planned investments of close to $4 billion this year," Reliance IndustriesBSE 3.14 % said in a press statement on Saturday.
The Mukesh Ambani-led energy major said that the continued delay by the government in notifying the price as per the approved formula will also delay the ability of the three partners to appraise and develop other significant discoveries made last year. The statement said that RIL, BP and NIKO were planning an aggregate investment of $ 8-10 billion in the next few years to significantly increase production from the KGD6 block, for which they require clarity on pricing.
"The three parties shall endeavour to work with the government to achieve a prompt and efficient resolution of this dispute," the statement said.
RIL said that the circumstances has "forced" it to go for a legal recourse and thus it served the notice to the government on May 9. In 2007, the government fixed a price of $4.2 per unit for gas from the KG-D6 for the first five years of production. The fields started production on April 1, 2009 and therefore the price expired on March 31, 2014. The pricing for gas from the KGD6 basin, for which RIL and its partners are operators, has been debated for over two years with a cabinet decision which approved a Rangarajan Committee price formula in 2013.
The deferment of Gas Pricing on the behest of the Election Commission has triggered speculation about the quantum of the price increase and also on whether it would be done on a retrospective basis. The speculations on the new government's stance on the gas pricing has also aggravated concerns since the Bhartiya Janata Party, which has emerged as taking the lead in most opinion polls, has indicated that it may explore different pricing models.
The pricing of the gas would be crucial for the fertiliser and power industry, which are the key consumers of the gas from the KG-D6 basin. Output at the Dhirubhai-1 and 3 gas fields is about 8 million standard cubic meters a day versus RIL's target of 80 mmscmd by this time. RIL blames geological complexities such as unanticipated water and sand ingress for the output drop. But oil ministry and its technical arm DGH feel Reliance Industry did not drill the committed quota of wells and had imposed a penalty of $1.8 billion penalty on the company.
Source:- economictimes.indiatimes.com
Tips To Cut Rough Gems Import Cost
India needs to strike free trade agreements with countries that produce raw materials imported by the gem and jewellery industry, according to industry association Assocham.
It said that the direct engagement with the mining source would spare the industry from paying steep prices.
About 90 per cent of raw materials are imported, and rough diamonds alone account for over 50 per cent of the imports.
In its study, Assocham has highlighted the necessity to secure raw materials at fair and competitive prices.
“As raw materials are not being sourced directly from the mining country, the prices paid by the Indian industry are high. The Indian gems and jewellery industry largely depend on imports of raw materials because the indigenous gems mineral production is far short of the actual requirements,” Assocham secretary-general D.S. Rawat said.
Besides, the industry remains susceptible to the impact of fluctuating demand and the variations in commodity prices and exchange rates.
Industry representatives, however, sought free trade pacts with major consumers of finished gems and jewellery products such as Russia, the EU and the US.
“What is required is the easing of tax and other compliances within the country. The income tax regime is so cumbersome that mining companies cannot sell in India. The necessary thing is to introduce presumptive tax. In any event, we already have zero duty on rough gem stones and diamonds while imports of gold are being discouraged,” said Pankaj Parekh, vice-chairman of the Gem & Jewellery Export Promotion Council.
Raw materials are often routed through Dubai, Israel and Belgium.
Source:- telegraphindia.com
Gold Imports Down 74 Per Cent To $1.75 Billion In April
Gold imports declined over 74 per cent to US $ 1.75 billion in April due to restrictions imposed by the government on inbound shipments of the precious metal to narrow the current account deficit.
Imports of gold in April 2013 stood at US $ 6.78 billion. In March, the imports of the precious metals were down by 17.27 per cent to US $ 2.75 billion from US $ 3.33 billion in the same month previous year. Lower imports helped to narrow the trade deficit to US $ 10 billion in the first month of the current fiscal (2014-15).
India's current account deficit (CAD), which is the excess of foreign exchange outflows over inflows, touched a historic high of 4.8 per cent of GDP in 2012-13, mainly due to rising imports of petroleum products and gold. A high CAD puts pressure on the rupee, which in turn makes imports expensive and fuels inflation.
Finance Minister P Chidambaram recently said the CAD was brought down significantly to US $ 32 billion in 2013-14 as against US $ 88 billion during 2012-13. The CAD in 2012-13 was at 4.7 per cent of GDP and in 2013-14 it will be only 1.7 per cent, the Finance Minister had said. The government had increased customs duty on gold to 10 per cent and banned import of gold coins and medallions, while the RBI linked imports of the metal to exports.
India is the largest importer of gold, which is mainly utilised to meet the demand of the jewellery industry. The Commerce and Industry Ministry is pitching for easing of the gold import restrictions to boost gems and jewellery exports, which declined by eight per cent in April to US $ 3.27 billion.
Source:- economictimes.indiatimes.com
'Mandi' fee collected by seller of agricultural products on behalf of purchaser is not part of sale
CST & VAT : Where assessee, a seller of agricultural product, collected mandi fee from purchaser of above product and deposited on his behalf with Mandi Samiti, mandi fee did not form part of 'sale price' as defined in section 2(36) of Rajasthan Value Added Tax Act, 2003
ICICI bank penalized on filing fake docs to steal a march over claim of other creditors in liquidati
CL : Where bank's application to be impleaded in winding up proceedings was found to be deliberate mischievous act, exemplary cost was to be imposed
No withholding taxes on commission paid to NR agents for services rendered abroad in absence of thei
IT/ILT : Where assessee made payments of commission to foreign agents for rendering services abroad, in view of fact that those agents did not have PE in India, commission was not taxable in India and, thus, assessee was not liable to deduct tax at source while making said payments
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