IT : Object of development of muslim religion is charitable purpose
Tuesday, 17 June 2014
Assessment quashed as AO had passed final order instead of draft order under sec. 144C pursuant to o
IT/ILT : Where in course of transfer pricing proceedings, pursuant to order of TPO, Assessing Officer passed a final order under section 143 (3) instead of passing a draft assessment order under section 144C, there being a failure on part of Assessing Officer to adhere to statutory provisions of Act, impugned order was to be quashed and in such a case, even corrigendum issued by Assessing Officer could not cure defect existing in impugned order
Treatment of a sum in hands of counterparty couldn’t decide its taxability in hands of assessee
IT: Where assessee claimed deduction of interest and lease charges written off on account of non-payment of same by subsidiary company, even though amount so written off was offered by subsidiary as its income, it would not decide about taxability of said amount in hands of assessee and, thus, assessee's claim could not be allowed merely on aforesaid basis
India’S Exports Not Creating Enough Jobs, Says Crisil Report
Domestic value added (DVA) content and the employment intensity of India’s exports has been declining over time. To overcome this, a dramatic increase in the absolute size of exports was essential to match or exceed the spill-over effect of exports as seen in the past, suggested Crisil in a report published ahead of new export policy.
Crisil said it used the OECD value-added data base to analysed the patterns and compared them with China in its report. In the medium-term, the composition of exports will need to change with a focus on labour-intensive exports to generate more jobs, Crisil added.
The Union Government is expected to unveil the foreign trade policy for the medium-term in a few weeks’ time.
“This time around, the exports bar will need to be set much higher even to simply maintain the impact of exports on job creation and income generation,” the Crisil research report said.
“Gross export numbers are misleading in terms of the impact they have on jobs and incomes. As percentage of GDP, DVA – the proportion of exports that is truly produced within India – has fallen to 78 per cent in 2009 (latest year for which is available) from over 90 per cent in 1995, according to OECD.
“At the sectoral level, DVA in exports is now as low as 51 per cent in other manufacturing items, 73 per cent in chemicals and 76 per cent in transport equipment,” Crisil estimated.
“To add to this, the employment intensity of exports has been falling over time with the share of service exports rising rapidly. Employment intensity of service sectors, for example, business services, which include IT/ITES is one of the lowest, given high productivity of labour in this sector,” the report added.
It pointed out that because of greater integration with the global supply chain DVA was dropping and foreign value added (FVA) was increasing. “Higher FVA makes exports vulnerable to exchange rate fluctuation, impacting export competitiveness”, it said.
Crisil in another study earlier this year had estimated that labour intensity – number of workers required to produce one million of real GDP (in rupees) – was 7.2 for manufacturing and 1.4 for business services.
Source:- thehindubusinessline.com
Sugar Sector May See Turnaround This Year
The sugar sector is likely to see a turnaround this financial year, owing to an estimated increase in cash flow, following the export incentive scheme for raw sugar being extended till September 2015.
For every tonne of raw sugar export, the government offers Rs 3,300 as subsidy to sugar mills. For this financial year, the Centre has set an overall export target of four million tonnes (mt).
Back-of-the-envelope calculation shows the proposed extension in export subsidy will increase the sugar sector’s cash flow by Rs 13,200 crore. Of this,Rs 1,200 crore is estimated to go directly to farmers, while the remaining Rs 12,000 crore will go towards sugar mills, depending on their subsidy-refund claims.
“India’s sugar sector will turn around this year, provided mills are able to export the entire allocated quantity of four mt at prices higher than the prevailing rates in Indian markets,” said Abinash Verma, director-general, Indian Sugar Mills Association.
Source:- business-standard.com
India Exempts Bhutan From Any Ban Or Quantitative Restrictions On Food Exports
Seeking to push further the relationship with Bhutan, India today announced a number of measures and concessions including the exemption of Bhutan from any ban on export of milk powder, wheat, edible oil, pulses and non-basmati rice.
The two sides also reaffirmed their commitment to their cooperative partnership and agreed to further promote trade and investment.
In a joint statement issued at the end of Prime minister Narendra Modi’s two-day visit to that country, the two sides also noted that security was of mutual interest and “agreed not to allow each other’s territory to be used for interests inimical to the other.”
The two sides recalled the free trade arrangement between them and the expanding bilateral trade and its importance in further cementing their friendship.
India conveyed its decision to exempt Bhutan from any ban or quantitative restrictions on export of milk powder, wheat, edible oil, pulses and non-basmati rice.
On the issue of security, the two countries agreed to continue with their close coordination and cooperation on issues relating to their national interest and not allow each other’s territory to be used for interests inimical to the other.
The two sides expressed satisfaction at the excellent state of bilateral relations and reaffirmed their commitment to further strengthen their special friendship.
Bhutanese Prime Minister Tshering Tobgay conveyed his appreciation to the government and people of India for the generous development assistance since the 1st Five Year Plan in.
Source:- thehindubusinessline.com
Govt Hikes Import Tariff Value On Gold, Silver
The government today hiked import tariff value on gold and silver to USD 411 per 10 grams and USD 632 per kg as global prices have increased in the wake of escalating violence in Iraq.
In the first fortnight of this month, tariff value on imported gold stood at USD 408 per 10 grams and silver at USD 617 per kg.
The import tariff value — base price at which customs duty is determined to prevent under-invoicing — is revised on a fortnightly basis, taking into account the volatility in global prices.
The hike in tariff value on imported gold and silver has been notified by the Central Board of Excise and Customs, an official statement said.
In the last two weeks, global gold prices have increased due to rising violence in Iraq that has spurred demand for the precious metal. In Singapore, gold prices were ruling firm at USD 1283.90 per ounce, while silver stood at USD 19.79 per ounce at 1220 hours today.
Taking global cues, domestic gold and silver prices in the national market remained firm at Rs 27,790 per 10 grams and Rs 42,500 per kg, respectively.
The country’s gold imports have declined over 74 per cent to USD 1.75 billion in April this year due to restrictions imposed by the government on inbound shipments of the precious metal to narrow the current account deficit.
Gold is the second largest import item for India after petroleum. Due to several curbs, the country’s total gold and silver imports dropped 40 per cent to USD 33.46 billion in 2013-14, against USD 55.79 billion in the previous year.
These curbs include raising the import duty on the metal to 10 per cent and also making it mandatory for traders to export 20 per cent of the imported gold.
Source:- indianexpress.com
Coal Imports Rose 12 Per Cent In May On Heat Wave Research Firm
Indian coal imports climbed 12 per cent in May from the year before, provisional data from research firm OreTeam showed, with power companies scrambling to meet demand as scorching weather drove customers to crank up fans or air conditioning.
Electricity demand hit multi-year highs in many states over the last two months as temperatures soared, forcing the new government of Prime Minister Narendra Modi to firefight public anger over frequent blackouts.
Coal feeds more than half India's power generation and its share is growing despite a local shortage of the fuel.
That means imports continue to march higher, jumping to their biggest for the month of May in at least three years at 15.6 million, said OreTeam research head Prakash Duvvuri.
The country's coal imports stood at 13.9 million tonnes in May 2013 and 15.2 million tonnes this April, according to OreTeam.
The firm collects coal data from its representatives at ports and in mining regions. India's government does not regularly release such numbers.
A stronger rupee has also made imports more attractive. The partially convertible currency gained 2 per cent against the US dollar in May.
India has become the world's third-largest coal importer despite sitting on its fifth-biggest reserves of the commodity.
State-run Coal India accounts for about 80 per cent of the country's total output of 562.6 million tonnes, but the company has been falling short of its targets for the past few years due to difficulties in obtaining environmental nods, lack of railway access and employee strikes.
Indonesia is the main seller to India, but talk of limiting production and tightening exports there have prompted some Indian buyers to try and develop alternative suppliers in countries such as Malayasia, traders said.
But shipments would not be an issue in the short term, they added.
"There's a surplus in Indonesia and China's current buying is not typical - they have slowed down," said a Delhi-based trader who buys Indonesian coal. He declined to be named as he was not authorised to speak with media.
India's total coal-based power capacity rose about 1.2 per cent in May from April, according to the Central Electricity Authority.
Source:- businesstoday.intoday.in
Govt Panel For Merging Cbdt And Cbec
Recommending far-reaching reforms in tax administration, a government committee has suggested abolition of the post of Revenue Secretary, merger of CBDT and CBEC and broaden the use of Permanent Account Number (PAN).
The Tax Administration Reform Commission (TARC), headed by Parthasarathi Shome, also said the retrospective amendments to tax laws should be avoided as a principle and Income Tax Return should also include wealth tax details.
The panel, which has submitted its first report to Finance Minister Arun Jaitley, also pitched for a separate budget allocation to ensure time bound tax refund and a passbook scheme for TDS (Tax Deduction at Source).
"The post of revenue secretary should be abolished. The present functions of the Department of Revenue should be allocated to the two Boards (CBDT and CBEC). This would empower the tax departments to carry out their assigned responsibilities efficiently," the report said.
The tax administration, it added, needs to have greater functional and financial autonomy and independence from governmental structures, given their special needs.
It said, the revenue secretary, an IAS, is "likely to have little experience or background in tax administration at the national level and little familiarity with tax."
The 550-page report further said the two Boards must embark on "selective convergences immediately to achieve better tax governance, and, in next five years, move towards a unified management structure with a common Board for both direct and indirect taxes, called the Central Board of Direct and Indirect Taxes".
On PAN, the report said it should be developed as a common business identification number (CBIN), to be used by other government departments also such as customs, central excise, service tax, DGFT and EPFO.
"Both central excise and service tax should be covered under a single registration as both the taxes are administered by the same department and cross utilisation of credit is permitted between central excise and service tax under the CENVAT credit rules," it said.
The panel further said it is also necessary to provide for de-registration, cancellation or surrender of registration numbers and PAN.
It said the approach to retrospective amendments has resulted in protracted disputes, apart from having deeply harmful effects on investment sentiment and the macro economy and recommended "retrospective amendment should be avoided as a principle.
The panel suggested I-T returns should also include wealth tax return so that the taxpayer need not separately file wealth tax returns. These returns should also be processed together in the CPC at Bengaluru.
Besides, it called for a dedicated organisation for delivery of taxpayer services with customer focus and made a strong case for "pre-filled tax returns".
Source:- igovernment.in
Government Panel Calls For Overhaul Of Tax Regime
The tax administration and reforms commission headed by economist Parthasarathi Shome has called for a sweeping overhaul of the country’s tax administration to make it more friendly to both taxpayers and investors.
The panel has recommended large-scale structural changes and greater coordination in the functioning of both the direct and indirect tax arms of the government—the Central Board of Direct Taxes (CBDT) and Central Board of Excise and Customs (CBEC).
The report, submitted last month to finance minister Arun Jaitley and made public on Monday, proposed a complete revamp of the dispute resolution mechanism, widening the use of the permanent account number or PAN and spending 10% of the tax department’s budget to improve taxpayer services.
It called for the abolition of the post of revenue secretary, setting up of a tax council to develop a common tax policy and legislation for both direct and indirect taxes and merit-based promotions of officials in the tax administration.
Shome, a tax expert who also headed a panel that constituted guidelines for general anti-avoidance rules (Gaar), was last year given the task of heading the commission to streamline the country’s tax administration.
It remains to be seen if the Bharatiya Janata Party-led National Democratic Alliance (NDA), which came to power in the April-May general election accepts the recommendations of the commission appointed by its predecessor, the Congress-led United Progressive Alliance.
The Indian tax administration has been often blamed for its aggressive stance while raising tax demands, and also for the time taken to resolve disputes.
The administration is involved in tax disputes with companies including Vodafone Group Plc., Nokia Oyj, International Business Machines Corp. and Royal Dutch Shell Plc. that have been seen as tarnishing its image as an investment destination at a time when the country’s economic growth has slowed to decadal lows of below 5%.
The Shome committee report reaffirms the need for greater accountability and efficiency in the tax administration, said Rahul Garg, leader of the direct tax practice at the consulting firm PricewaterhouseCoopers.
“The tax department and taxpayer should have a service relationship rather than one of enforcement,” he said. “The tax department may resist such large scale changes but it can go through if there is political will. It is consistent with the best practices followed worldwide.”
The report was critical of the current way of functioning of the tax department. Stating that the tax administration had reached its nadir, it said the tax department’s singular objective of protecting revenue without accountability for the quality of tax demands has severely affected the investment climate in India and needs to be changed for investment to be revived.
The report highlighted the complete absence of customer focus in the running of the tax department. It went on to add that the lack of accountability of the tax officer in raising tax demands without accompanying responsibility for recovery had led to a situation where India has the “highest number of disputes between the tax administration and taxpayers with the lowest proportion of recovery of tax while arrears in dispute resolution are pending for the longest time periods”.
It also flagged the issue of tax department officers demanding bribes to repay refunds or drop tax demands.
To ensure better customer focus, the commission recommended issue of refunds within a set timeframe. It also suggested an online tracking system for resolving grievances and refund applications.
It suggested that for large taxpayers, services should be provided by CBEC and CBDT under one umbrella.
For greater accountability, the commission has proposed setting up an independent evaluation office to monitor the performance of the tax administration and evaluate the impact of tax policies.
It suggested that a tax council under the chief economic adviser in the finance ministry be set up to develop a common tax policy and legislation for both direct and indirect taxes. It proposed merging the two tax policy wings of CBEC and CBDT into a common tax policy and analysis unit comprising of economists, statisticians, tax law experts and social researchers.
For better performance of income tax officers, the department recommended merit-based promotions and greater freedom in functioning.
It suggested that PAN be developed as a common business identification number to be used by other government departments. Also, there should be a provision for de-registration, cancellation or surrender of registration numbers and PAN.
Source:- livemint.com
Rupee Ends Higher Against Dollar
The Indian rupee on Tuesday pared its losses and ended higher on Tuesday tracking the local equity markets and supported by suspected intervention by the Reserve Bank of India (RBI) in the currency market to curtail a sharp decline in the currency.
The rupee ended at 60.02 per dollar, up 0.24% from its previous close of 60.17. The currency opened at 60.36 per dollar and dropped to as low as 60.52, the weakest level since 29 April.
RBI was spotted selling dollars at around 60.49/50 rupee levels through state-owned banks to check the rupee’s sharp fall, Reuters reported citing traders. The central bank typically intervenes in the foreign exchange market to check excess volatility.
BSE’s benchmark Sensex rose 1.31% to close at 25,521.19 points.
The yield on India’s 10-year benchmark bond ended at 8.603%, compared with Monday’s close of 8.648%. Bond yields and prices move in opposite directions.The dollar index, which measures the US currency’s strength against major currencies, was trading at 80.515, up 0.05% from its the previous close of 80.47.
Since the beginning of this year, the rupee has gained 2.97% against the dollar, while foreign institutional investors have bought $9.94 billion from local equity markets.
On Monday, data showed that wholesale inflation accelerated to 6.01% in May from a provisional 5.2% a month ago, as food inflation quickened to 9.5% from 8.64%, while fuel prices were up by 10.53% compared with 8.93%.
Source:- livemint.com
Sums received to substitute names of prospective buyers of property amounted to ‘real estate agent’s
Service Tax : Transfer charges received for substituting names of new prospective purchasers of immovable property/real estate transactions in place of initial prospective purchasers, prima facie, amounts to Real Estate Agent's Services
HC rejected winding up plea of HSBC as its claim of overdue sums against respondent-co. was genuinel
CL: Merit of claim for non-payment of debt in respect of factoring services, being bona fide disputed was to be adjudicated before appropriate civil court; winding up petition was to be rejected
ITAT raps TPO for fixing profit margin without considering revenue from services provided to Indian
IT/ILT: Where division of assessee which was an industrial product manufacturer, rendered services to its AE as well as other units in India, notional revenue in respect of Indian division was to be considered while computing net operating profit
RBI allows export/import of Indian currency by NRs and residents upto Rs 25,000
FEMA/ILT/INDIAN ACTS & RULES : FEM (Export and Import of Currency) (Amendment) Regulations, 2014 - Amendment in Regulation 3
Time-limit for realization and repatriation of export proceeds to India reduced to 9 months
FEMA/ILT/INDIAN ACTS & RULES : FEM (Export of Goods & Services) (Amendment) Regulations, 2014 - Amendment in Regulations 9 and 10
FinMin sets-up 'Working Group' for implementation of common clearing system for commodity exchanges
SEBI : Setting Up of A Working Group (WG) on Common Clearing for Commodity Exchanges
RBI allows export/import of Indian currency by NRs and residents up to Rs 25,000
FEMA/ILT/INDIAN ACTS & RULES : FEM (Export and Import of Currency) (Amendment) Regulations, 2014 - Amendment in Regulation 3
RBI omits old Form for reporting of foreign Assets and Liabilities by Indian Cos accepting FDI
FEMA/ILT/INDIAN ACTS & RULES : FEM (Transfer or Issue of Security by A Person Resident Outside India) (Eighth Amendment) Regulations, 2014 - Amendment in Schedule 1
NR was liable to pay sec. 234B interest even if Indian payer failed to withhold sum from payment mad
IT : Where non-resident assessee accepted its liability to be taxed in India at first appellate stage, all consequences under Act including liability to pay interest under section 234 would follow; assessee could not be permitted to shift responsibility to Indian payers for not deducting tax at source from remittances, after leading them to believe that no tax was deductible
Retention money was to be taxed when it became payable to contractor as per terms of construction co
IT: Where assessee was awarded a construction contract and in terms of contract certain amount was withheld by employer of contract towards retention money for satisfactory execution of contract by assessee, retention money was to be taxed in assessment year relevant to 'previous year' in which it became payable to assessee as per terms of contract ie., after defect liability was over and after engineer-in-charge certified that no liability was attached to aassessee
Kerala High Court affirms denial of registration to trust established for benefit of religious minor
IT : Trust established for benefit of a particular religious minority to be denied registration
Revisionary order of CIT upheld as AO erroneously granted depreciation to both cos. involved in merg
IT : Where Assessing Officer allowed claim of depreciation raised by assessee, an amalgamating company, on WDV of assets, in view of fact that there was no intention of legislature to grant depreciation both to amalgamating company as well as amalgamated company twice in a particular assessment year, Commissioner was justified in passing revisional order directing Assessing Officer to examine depreciation claimed by assessee afresh
Valuation could be referred to DVO only after forming an opinion that value claimed by assessee was
IT : Formation of opinion by Assessing Officer that value claimed by assessee is less than its fair market value is sine qua non before referring matter to departmental valuation officer under section 55A
Fees for filing of appeal to be computed in reference to income assessed by AO and not income declar
IT: Filing fees was to be paid on basis of assessment order and not on basis that assessee had filed NIL return seeking exemption under section 11
Each new godown constructed for storage of food grains is an undertaking and eligible for sec. 80-IB
IT : Where assessee claimed deduction under section 80-IB(11A) in respect of new warehouses at various places, since each of new warehouses constituted an eligible undertaking, its claim be allowed
HC extends time-limit for making predeposit when assessee was ready to make pre-deposit
Excise & Customs : Since assessee was willing to make pre-deposit as directed in order of Tribunal, as upheld by High Court, and since department had raised no objection thereto, time-limit for making pre-deposit was extended
Revisionary order held valid as AO had not noted discrepancies while allowing exp. to assessee
IT : Where Commissioner specifically doubted certain expenses on which there was no application of mind by Assessing Officer, revision after examining each and every issue was justified
Fees for filing of appeal to be computed in reference to income assessed by AO and not income declar
IT: Filing fees was to be paid on basis of assessment order and not on basis that assessee had filed NIL return seeking exemption under section 11
Courts can condone delay in filing appeal to ensure that justice is done by giving hearing opportun
Excise & Customs : By and large, approach of court should not be so technical, but it should be always to ensure that substantial justice is done by giving an opportunity of being heard to both parties; hence, delay in filing appeal must be condoned
ESOPs received by an employee of a foreign co. after joining its Indian peer are taxable as ‘salary’
IT : Where ex-employee of foreign company was provided option of ESOP to purchase shares of company, consideration being services rendered by assessee in past, benefit therefrom was to be regarded as 'salary
Notification restricting relief to projects approved under slum rehabilitation scheme is dehors sec.
IT : Notification No. 1/2011 dated 5-1-2011 restricting eligibility of section 80-IB(10) deduction to projects approved under Slum Rehabilitation scheme on or after 1-4-2004 and before 31-3-2008 is inconsistent /contrary to proviso to clauses (a) and (b) of section 80-IB(10)
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