IT : Where supply of design to merge flats into a duplex constituted only a marketing strategy to boost sale of flats and assessee constructed flats in accordance with plan approved by authorities it was entitled for deduction under section 80-IB
Sunday 14 December 2014
CIT(A) directed to pass order after hearing assessee and examining additional evidence on violation
IT : Where Commissioner (Appeals) admitted additional evidence but not called for remand report or had not examined said evidence matter was to be restored back
Synthetic Textile Makers Continue To Reel Under High Polyester Raw Material Prices
Despite crude oil prices continuing to fall, synthetic textile makers are reeling under high polyester raw material prices which has led to unchanged yarn prices.
Purified terephthalic acid (PTA) and mono-ethylene glycol (MEG), the two key raw materials used in making synthetic yarn have globally remained depressed but in India the same have risen by Rs 10-15 per kg in recent past and have remained at high levels, thereby putting yarn makers' margins under pressure.
According to synthetic textile makers, while crude oil prices may have continually declined, that of polyester raw materials such as PTA and MEG, that emerge out of crude oil have not correspondingly corrected. This, as a result, has led to prolonged high raw material prices of synthetic yarn and fabric players.
"There is a disparity in the prices of crude oil and polyester raw materials like PTA and MEG as well as polyester yarn. While crude oil prices have been falling, it is not getting translated into fall in polyester raw material and yarn prices. This has left the synthetic textile making industry reeling under low margins pressure," said Jitu Vakharia, president of South Gujarat Textile Processors Association (SGPA). Such has been the impact that margins have come down by 10-15 per cent.
However, speaking on the sidelines of an international textile conference in Gandhinagar recently, RD Udeshi, President (Polyester Chain) at Reliance Industries Limited (RIL) told Business Standard, "The raw material prices in the polyester chain have responded to the crude oil prices. If the crude oil prices in recent past have fallen by 30 per cent, raw material prices too have fallen proportionately."
It has been sometime since polyester yarn makers are feeling pressure on their margins with polyester raw material prices rising by Rs 10-15 per kg in weeks. What's more, according to industry players and experts, domestic prices of PTA and MEG saw a steep rise and have even crossed international levels.
"There are very few manufacturers and suppliers of the polyester raw materials PTA and MEG for making synthetic yarn. Yarn makers were mostly dependent on domestic raw materials but with prices rising steadily since last three months, they are being forced to go for imports," said industry sources.
In domestic market, polyester yarn raw materials prices, which are basically melt cost of PTA and MEG, are at Rs 120-125 per kg levels as against international prices which are at Rs 115 per kg levels. According to industry sources, the prices are termed as melt cost for PTA and MEG.
Source:business-standard.com
Falling Crude Prices May Adversely Impact India, Global Markets
Contrary to popular belief, the drop in crude oil prices can adversely impact global stock markets, including India. Soft crude prices are threatening growth in several oil-producing economies and this can have serious repercussions for India's foreign fund inflows as well as exports.
"Crude has created a lot of uncertainties in global markets which are adversely impacting the Indian market sentiment. The recent foreign fund sell-off in equities and decline in rupee's value can be attributed to this constant fall in crude prices," said Tirthankar Patnaik, India strategist and head of research of Mizuho Bank. "Hence, free-falling crude poses serious challenges for markets."
Market sentiment was further shaken after the International Energy Agency warned about potential financial defaults by Venezuela and Russia, while slashing crude demand forecast for 2015 to nine lakh barrels per day. Brent crude has tumbled 48% from its high in June this year to $60 a barrel on Friday.
Falling crude price means lower incomes for oil-exporting countries. This will slow down global demand, which will have an impact on Indian exports.
"The sources of funds that invest in India are primarily sovereign wealth funds, pension funds and insurance funds. If Norway, Saudi Arabia, Abu Dhabi, Qatar, or Kuwait are not going to see surpluses, then they will have less capital to send out, which means capital flows into India will not be as strong as they were," said Neelkanth Mishra, managing director and India equity strategist at Credit Suisse.
Foreign institutional investors have sold equities worth about Rs 1,850 crore in the past four trading sessions in India. The rupee hit a 10-month low of 62.50 against the dollar on Friday, on concerns over slower foreign fund flows.
In fact, FII inflows have hit a speed-breaker with only $17 billion investment into Indian equities this year so far, despite markets hitting new highs. India got more than $20 billon in 2013 and $24 billion the year before in FII investments.
"Weak global demand will hurt Indian exports as well, while capital flows will get impacted, too. I do not think decline in crude prices will boost the currency or balance of payment situation," said Mishra.
Analysts say with an expected rise in US interest rates, there are high chances of a significant decline in demand for the rupee from FIIs, leading to further depreciation of the currency.
"The depreciation of the rupee is lesser compared to most of the countries. However, if there is a sharp depreciation in currency, then there will be an impact on global fund flows to our markets," said Sanjay Dongre, fund manager at UTI Asset Company.
Source:economictimes.indiatimes.com
Nepal Tea Fakes A Threat To Darjeeling Tea
India has tightened import rules for thwarting the entry of Nepal's cheaper tea, which is giving tough competition to premium Darjeeling tea in the domestic market.
Although the new rules apply to imports from all countries, the rules have been made more stringent in view of the huge volumes of Nepal tea that is entering India and is being sold as Darjeeling tea, said a senior official of Tea Board, which framed the rules. "All these years, Indian traders have been importing teas from Indonesia and Vietnam for re-export.
They were never used for domestic consumption," said the official, adding that cheaper tea from Nepal is an exception. With new rules in place, all importers bringing in tea for distribution in the country will be required to furnish information on the place of storage to the nearest Tea Board office within 24 hours of entry of the consignment. The importer will also have to specify the origin and contents of such imported teas at each stage of distribution.
"No such imported teas shall be passed off as teas of Indian origin. Random samples of teas may be collected from the stock of such imported teas for distribution in India by Tea Board for the purpose of ascertaining whether such samples conform to the requirements laid down," the official said. Retailers say it is difficult to segregate Darjeeling and Nepal teas, which is why the tea from the Himalayan kingdom is making its way to retail shelves. According to them, Nepal tea is available at Rs 250 a kg while Darjeeling tea is available for Rs 350 per kg in the domestic market.
"We were feeling the heat of competition from Nepalese teas and so we met Union commerce minister Nirmala Sitharaman to discuss the issue," said SS Bagaria, chairman of Darjeeling Tea Association. He said the association urged the minister that all tea imports from Nepal should be registered with the Tea Board.
In Sri Lanka, he said, all tea imports have to be registered with the country's tea board. Tea industry officials said that though the tea distribution and export control order makes it mandatory to register any imports with the Tea Board, sometimes tea from Nepal enters India through the porous border.
"Trade relations between India and Nepal should improve but we should know how much tea is entering the country," said a senior official. India had imported 19.23 million kg of tea in 2013-14, from countries including Vietnam, Indonesia and Nepal. To protect the GI (geographical indication) for Darjeeling tea in overseas markets, the planters have roped in legal firm KS Partners. "We will also seek funds from the ministry for promotion of Darjeeling tea in India and abroad. KS Partners is helping us with a promotion strategy in the backdrop of a legal framework," Bagaria said. Some Darjeeling tea experts feel the quality of Darjeeling tea should be improved to ward off rival Nepal tea.
Source:economictimes.indiatimes.com
Black Money Returns Via Bullion? Swiss Gold Imports To India Near Rs 1 Lakh Cr In 2014
Amid concerns of bullion trade being used for routing of black money, Switzerland's gold exports to India have risen further and is fast approaching Rs one-trillion mark for the entire 2014.
The Swiss gold exports to India stood at over 2.8 billion Swiss francs (over Rs 18,000 crore) in October, up from about 2.2 billion Swiss francs in the previous month, shows the latest data from the Swiss Customs Administration.
This has taken the total Swiss gold exports to India since January this year to 14.2 billion Swiss francs (nearly Rs 93,000 crore), as per the data compiled by Switzerland's cross-border trade monitoring agency.
This surge in gold shipments has made India the largest destination for the yellow metal exports from Switzerland.
There are concerns that gold trade could be a possible route for laundering of unaccounted wealth, suspected to be stashed by Indians in Swiss banks, although there has been no official word from either countries so far in this regard.
The Supreme Court-constituted SIT, however, said in its latest report on black money that a dedicated institutional mechanism needs to be put in place to examine "mismatch between export/import data with corresponding import/export data of other countries on at least a quarterly, if not a monthly basis."
The SIT said that this suggestion has been made by the Financial Action Task Force (FATF), while citing the Data Analysis and Research for Trade Transparency System adopted by US, to control over/under invoicing to some extent.
"It is established since years that over invoicing or under invoicing is known method for stashing black money outside the country. Main question is how to control this malady.
"If there is proper vigilance to a large extent by the Customs Department, mis–invoicing can be controlled because, now–a–days, price of various goods/machineries is known in the international markets.
"For this, data is also published and is available on computer at any point of time. Hence, it was suggested that in a Bill of Export/shipping Bills, an entry should be included, namely, what is the international market price of the goods/machineries which were sought to be exported," the SIT said.
The government has informed the SIT that this suggestion is already under consideration and is likely to be implemented within a short time.
As per the data from the Indian government, gold imports jumped 280 percent to $4.17 billion in October. In September as well, gold imports increased manifold to $3.75 billion. This means Switzerland alone accounted for 60-70 percent of the gold that came to India during these months.
Undermounting global pressure, Swiss government started publishing trade data monthly from 2014 and included information on trade partners.
Data on imports and exports of gold, silver and coins was available on quarterly frequency as a separate product up to 2013 but data by trade partner was not available.
While industry watchers attribute the surge during October and September partly to increased demand for yellow metal during Diwali and other festivals in India, the sudden spike is also being seen suspiciously in the backdrop of gold being used for 'layering' purposes to move funds from Swiss banks amid growing scrutiny for suspected black money.
According to banking industry sources, banks operating in Switzerland, including those headquartered in the Alpine nation and the Swiss units of other European banks, have turned wary about dealing with their Indian clients in the wake of a growing scrutiny of such accounts.
A number of Swiss banks, including three with significant global presence, have begun telling their Indian clients to sign undertakings that are aimed at 'derisking' the banking institutions from potential risks arising out of regulatory actions against the bank customers by foreign governments.
Some banks are also telling their clients to close their accounts if they are not ready to take such risks, or if they have apprehensions about such accounts not being compliant to regulatory requirements in their home countries.
Through these 'derisking' undertakings, the customer agrees to take responsibility for any possible regulatory or administrative compliance with international norms.
A new strategy of 'layering' through gold and diamond trade came to light earlier this year at Swiss banks to thwart any attempt for identification of real beneficiary owners of funds entrusted with them, government and banking sources have said.
There is a growing suspicion that a portion of gold and diamond trade is being used to route funds from Swiss banks to India and other destinations.
'Layering' is a key stage in money laundering and involves moving illicit funds around financial system through a complex series of deals to complicate the paper trail.
This layering typically takes place between the first stage -- placement of black money in the financial system either in cash vaults, or through a series of cash or sham financial transactions -- and before the final 'integration' stage when money is put back into the financial system through
various transactions for the benefit of its final recipient.
There has been a huge political uproar over Indian black money allegedly stashed in Swiss banks and the new government has said it is committed to tackling this menace.
As per Swiss National Bank's latest data, the total money held by Indians in Swiss banks stood at over Rs 14,000 crore as on December 2013, up by nearly 42 percent from a year ago.
Source:firstbiz.firstpost.com
Sum received for five-year maintenance contract of equipments couldn't be taxed in one assessment ye
IT: Entire amount of commission received on sale of medical equipments could not be offered for taxation in one assessment year when assessee had future obligation of maintenance service and necessary expenditure required for same
Applying one of possible views couldn't be said to be prejudicial to revenue; revision of order isn'
IT : Where two views were possible and Assessing Officer had taken one view with which Commissioner did not agree, it could not be treated as an order prejudicial to interests of revenue; therefore recourse could not be taken to section 263(1)
‘Make available’ defined in India-USA DTAA can be imported to interpret FTS clause of India-Netherla
IT/ILT: Where Authority for Advance Rulings refused to look into Indo-Portugese DTAA or Indo-USA DTAA and memorandum of understanding between India and USA on ground that only Indo-Netherlands DTAA needed to be looked into, matter was to be remanded to consider entire matter afresh
Petitioners aren't entitled to file oppression plea when their names aren't shown in register of mem
CL: Where name of petitioner as shareholder was not shown in register of members and compliance with articles of association of company and provisions of section 111 was not established, petitioners were not entitled to file petition seeking relief of oppression and mismanagement
ITAT choose CUP method for medical transcription services as it was adopted in earlier assessment ye
IT/ILT : Following CUP method adopted by Tribunal in earlier assessment year, impugned addition made by TPO to assessee's ALP by adopting TNMM in respect of rendering medical transcription services to its AE, was to be deleted
Tribunal may not discuss issues relating to limitation when it held in favour of assessee on merits
Service Tax : Where a member of Tribunal gives his findings on merit in favour of assessee, he is not required to give findings on other issues such as limitation, etc.
Hsbc Sees Indian Rupee To Be Best Asian Unit Next Year, At 62.5-63 Vs Dollar
Currency volatility will continue to plague Asian units as both global and local factors will exert pressure in 2015, but the rupee will be comparatively better off in the region, says HSBC.
Pegging the rupee at 62.5 to 63 to the US dollar next year, the leading brokerage said the domestic unit should only drift higher on the back of the fast weakening current account strains.
“Lower oil prices should mean a persistent improvement in the current account and inflation. The RBI is committed to lowering inflation expectations and now has the ability to curb excessive rupee weakness,” HSBC’s head of Asian forex research Paul Mackel said in the report.
“These factors could mean the rupee will be one of the more resilient currencies in Asia, although the RBI is wary of spot appreciation, given that its own REER measurement is showing signs of over-valuation and we see the rupee at 62.5 to 63 to the dollar in 2015,” he said.
It has picked the rupee as the safest bet in the new year amid soft growth and rising disinflationary pressures. It expects the rupee to be more resilient, as better terms of trade help bolster external balances via soft export volumes and commodity prices; and domestic growth can be supported by structural reforms and the ability to add leverage.
“This combination of global and local factors favours the rupee the most followed by the Indonesian rupiah and the Philippines peso…,” the report said.
“In our view, the RBI’s forex policy is still tilted towards exchange rate stability, particularly since it wants to move onto an inflation-targeting regime,” Mackel said.
The rupee had fallen to the lowest level of Rs 68.80 against the USD last year, but has recovered since then and among the more stable currencies.
He sees 2015 to be a tough year for most Asian currencies as a number of global and domestic factors will likely lead to meagre returns. He also sees every Asian currency weakening against the dollar as the US Fed’s expected tightening cycle and further easing by the Bank of Japan and the ECB should create greater regional forex volatility.
“As fears of a currency war are likely to intensify we expect a number of Asian currencies to suffer due to their tight relationships with the yen and/or the euro,” the report said.
Source:financialexpress.com
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