CIT(A) can enhance tax liability in an appeal preferred by assessee after issuing show cause notice

IT : If in assessee's appeal Commissioner (Appeals) wants to fasten additional liability, assessee must be put on notice

HC upheld sec. 68 additions as assessee failed to explain genuineness of gift received from unrelate

IT: Where assessee proved identity and credibility of donors but could not explain receiving of huge amounts as gift from two unknown donors, genuineness of transaction was not established

NR rendering support services to Indian affiliate via seconded employees constituted its service PE

IT/ILT : Where assessee, a foreign company seconded some of its employees to India to render their services to Indian subsidiary companies, those employees constituted assessee's service PE in India and salary cost of said employees reimbursed by Indian companies was taxable in India in terms of article 7 of Indian USA DTAA

Govt. or Director General of Foreign trade doesn't have powers to withdraw any export benefit with r

Foreign Trade: Neither Central Government, nor DGFT have power to amend Foreign Trade Policy or withdraw any export benefit with retrospective effect

Assessee's failure to explain bona-fide mistake would attract penalty even if ST was paid prior to i

Service Tax : Merely because service tax is paid prior to issuance of show cause notice, assessee cannot be exonerated from payment of evasion penalty under section 78, if there are circumstances warranting payment of penalty

Stainless Steel Makers Cut Prices By 7-10% To Match Imports, Call For Tariffs

Stung by cheap imports from ASEAN and free trade agreement (FTA) countries, stainless steel manufacturers have cut prices to 7-10% below the cost of production.

Stainless steel imports have witnessed a significant increase in the first nine months period between April – December of the current financial year. Against 307,266 tonnes in all of FY2013-14, total import of stainless steel in the first nine months of the current fiscal has been 423,894 tonnes, an increase of almost 38%. Another 100,000-150,000 tonnes of further imports in the last quarter of FY-2015 cannot be ruled out, according to industry experts.

Of the total imports so far, China accounts for the lion’s share of almost 35%. Imports have also increased from countries like Malaysia, Thailand and Vietnam where India has signed an FTA to import stainless steel duty free with a mandatory value addition of 35%.

“There is no room for 35 per cent value addition in stainless steel. Mills in Vietnam and elsewhere are importing hot rolled sheet to convert into cold rolled which entails not more than 10-15 per cent of value addition. Thus duty free import at the cost of domestic mills does not make any sense,” said N C Mathur, President, Indian Stainless Steel Development Association (ISSDA), and an advisor to Jindal Stainless Ltd.

India’s stainless steel industry has invested heavily on capacity addition over the last four years to over 5 million tonnes from 3.5 million tonnes.

China’s stainless steel industry, meanwhile, has 7 million tonnes of capacity – largely with government support – since 2010 to 17 million tonnes now. However, with demand increasing to 14.6 million tonnes, it still has a surplus of more than 2.5 MT. While raw materials like ferro chrome are available at low prices, the government has also subsidised electricity and interest on working capital loan used for stainless steel manufacturing. This, in turn, makes the Chinese cost of production 30-40% cheaper than India.

India’s largest stainless steel producer Jindal Stainless reported a loss of Rs 255 crore in the second quarter ended September 2014 on revenue of Rs 3,304 crore. During Q2, stainless steel sales volume increased by around 1% to 2.64 lakh tonnes from 2.61 lakh tonnes a year ago.

“Other stainless steel producers have also incurred losses as they continued to rationalise prices to match with imported products. Ultimately, they produce stainless steel to sell,” said Mathur.

In a letter to Prime Minster Narendra Modi, Muni Lall Gupta, president of Delhi Stainless Steel Trade Association, said, “On account of huge surge in imports particularly from China at extremely low rates, Indian stainless steel industry’s capacity utilization has fallen at 55 per cent with fear of further reduction in case urgent steps are not taken.”

On complaints from the industry, the Commerce Ministry has initiated an investigation into the impact of Chinese imports. Even as the inquiry is ongoing, domestic stainless steel producers have urged the government to levy an anti-dumping duty on Chinese stainless steel.

However, the user segment largely comprising utensil manufacturers, have opposed levying any such duty, given that they now have access to stainless steel at a third of domestic prices. This, in turn, helps them in export markets.

In a letter to the Directorate General of Safeguards, Customs and Central Excise, All India Stainless Steel Industries Association vice president Anil Agarwal, said “Levy of any safeguard duty will make stainless steel costlier which would make us uncompetitive in exports markets. In addition to a forex loss of Rs 2,500 crore, the safeguard duty levy will also put over 300,000 workers directly employed by utensil industry, at stake.”

Source:- business-standard.com

India's Coffee Exports To Fall 10% On Lower Arabica Output

India's annual exports of coffee are set to drop by more than a tenth in the marketing year ending September 30, hit by lower output of the arabica variety as farmers' demand for higher prices erodes overseas competitiveness.

Lower shipments by India, the world's sixth-biggest coffee producer, could further stiffen global prices of arabica, which jumped 50 per cent in 2014. Italy, Germany and Belgium are India's main coffee buyers.

"Exports will drop by at least 10 per cent," Ramesh Rajah, president of the Coffee Exporters' Association of India, told Reuters. "Indian coffee is too expensive compared to other destinations."

Attacks by the stem borer pest and dry weather have hit arabica output, prompting Indian planters to demand a hefty premium for both arabica and robusta grades over New York and London futures.

India, which exports three-quarters of coffee production, shipped 303,290 tonnes in the 2013/14 marketing year. But since the start of the latest season on October 1, exports have fallen 13 per cent to 75,179 tonnes.

Production of arabica, which makes up a third of India's total coffee output, could fall 12 per cent to 90,000 tonnes this season, Rajah said by telephone from the southern Indian city of Bengaluru.

Arabica harvesting has nearly been completed but farmers are not willing to sell, holding out for prices to rise.

"The price has been fluctuating a lot overseas, expecting a drought in Brazil," said Anil Kumar Bhandari, a planter and a member of the state-run Coffee Board. "Indian farmers are waiting for prices to climb up again so they can commit sales."

Adverse weather in top producer Brazil could widen a global coffee supply deficit in 2014/15 and prop up prices, a Reuters poll of 13 traders and analysts showed.

Arabica coffee is typically roasted and ground for brewing and can vary widely in quality, with some reaching top levels. Robusta, however, is more bitter, and either processed into instant coffee or added to a roasted blend to reduce the cost.

"A significant amount of arabica is still unsold," Bhandari said. "If prices stabilise, arabica exports can pick up from March-April onwards. Robusta supply will also start around that time."

Source:- economictimes.indiatimes.com

Gold Imports By India Said To Surge This Year As Curbs Scrapped

Gold imports by India, the world’s second-biggest user, jumped in the first 10 months of this financial year as the government eased curbs on overseas purchases.

Shipments jumped to about 940 metric tons from April through January, said two government officials with direct knowledge of the matter, asking not to be identified as the provisional data isn’t public. Finance Ministry spokesman D.S. Malik didn’t answer two calls to his mobile phone. Purchases fell 35 percent to 662 tons in 2013-2014, according to the Commerce Ministry.

Imports increased after the government in May allowed more agencies to bring in gold and scrapped a rule requiring shippers to re-export 20 percent of their shipments. India curbed imports in 2013 after the current-account deficit reached a record, pushing rupee to an all-time low. The South Asian nation accounted for 25 percent of global demand in 2013, according to the World Gold Council.

“Imports may be around 1,000 tons this fiscal and remain stable next year unless we see any fresh government regulations coming in,” Madhavi Mehta, an analyst at Kotak Commodity Services, said by phone from Mumbai. “The equity markets are doing well and prices are still a bit on the higher side, so we don’t expect any kind of surge in demand next year.”

India increased import taxes on gold three times in 2013 to 10 percent and introduced the 80:20 rule. It eased the controls after the deficit narrowed to about $32.4 billion in the fiscal year ended March 31, 2014, from a record $87.8 billion a year earlier.

“We imported the highest amount of gold this fiscal in November and that gold has not yet been sold in the market because of slow demand,” Bachhraj Bamalwa, a director at the All India Gems & Jewellery Trade Federation, said by phone from Kolkata. India probably imported about 840 tons in calendar 2014 and shipments this year may be the same, he said.

Gold for immediate delivery in London rose 0.6 percent to $1,268.22 an ounce at 4:20 p.m. in Mumbai. Futures on the Multi Commodity Exchange of India climbed 0.7 percent to 27,485 rupees ($445) per 10 grams.

Taxes from gold imports totaled 206 billion rupees in the 10 months through January, compared with 102 billion rupees in 2013-2014, the officials said. There is no proposal to cut the tax, they said.

Bullion in India is bought for weddings as part of the bridal trousseau and gifts. Demand also climbs during the festival season that runs from late August to October.

Source:- bloomberg.com

Gujarat Govt. mandates e-filing of monthly VAT returns and audit report; amends Gujarat VAT Rules

CST & VAT/INDIAN ACTS & RULES : Gujarat Value Added Tax (Second Amendment) Rules, 2014 – Amendment in Rules 19, 37 & 44 and Insertion of Form 101F

Continual ownership isn't a precondition to claim depreciation on asset discarded under sec. 43(6)

IT : Section 32 of the Income-tax Act, 1961 - Depreciation - Allowance/Rate of (Expiry of lease) - Assessment year 2008-09 - Assessee took a building on lease and spend money on furniture and fittings - Assessee used to claim depreciation on said amount - Lease period expired and 'furniture and fittings', to extent it was part of leasehold building, could not be removed by assessee on its vacation - No sum had been realized on discard of said asset - Even where amount under reference (or a part

Conversion of interest liability into equity shares is actual payment of interest; no sec. 43B disal

IT : Conversion of interest payable into equity shares is 'actual payment' for the purposes of section 43(1)(d) since it is discharge of liability and is not mere deferment of liability as contemplated under Explanation 3C to section 43B. Explanation 3C would apply only to deferment of interest liability by conversion into FITL and not where interest liability is discharged by any mode including by conversion into equity shares

Delay in filing appeal due to misleading guidance provided by CA was condonable

Service Tax : Assessees have reasonable belief to rely upon Chartered Accountant and therefore, where delay in filing appeal occurs due to improper guidance by Chartered Accountant, said delay has to be condoned

RBI cuts SLR of banks by 50 basis points

BANKING : Section 24 of the Banking Regulation Act, 1949 - Maintenance of Statutory Liquidity Ratio (SLR)

FPIs to make all future investments in corporate bonds with maturity of 3 years within corporate deb

FEMA/ILT : Foreign Investment in India by Foreign Portfolio Investors

Income of particular year in which return hasn’t been filed partakes the character of undisclosed in

IT: Failure to file return may result in treating such income as undisclosed one

Transmission of data via technical gadgets without any human intervention won't amount to technical

IT: Transmission of data via technical gadgets without any human intervention won't amount to technical services

ITAT denies to make TP adjustment for location saving relying on BEPS Action plan

IT/ILT: Whether where functional profile of a company was broadly similar to that of assessee company both being into contract research and development services same could not be excluded as comparable

TPAs aren't liable to withhold taxes from payments made to policy holders under health insurance pol

IT : TPAs are liable to deduct TDS u/s 194J from payments made to corporate hospitals. However, payments made to patient or policyholder would not be liable for deduction of TDS . It is nobody's case that a patient or a policy holder would be covered within the term "business or profession". A policy holder has not received the payment for rendering services in the course of carrying on medical profession or other professions. The patient is the receiver of the service but not a professional ser

CESTAT rejected plea of financial hardship as assessee had understated value of services in ST-3 ret

Service Tax : Argument of financial hardship can be acceptable only if assessee indicates correct value in ST-3 returns; hence, where value of services shown in ST-3 return was less than what was recovered, assessee was liable to evasion penalty

Penalty proceedings to be initiated afresh if CIT(A) had re-determined the undisclosed income assess

IT : Where undisclosed income determined by Assessing Officer was redetermined by Commissioner (Appeals), penalty proceedings was to be initiated afresh

AO couldn't revise assessment at enhanced rate of tax without issuing show cause notice

CST & VAT: CST - Where Assessing Authority passed revised order of assessment on assessee and levied tax on sales in question at enhanced tax without issuing show cause notice, impugned order was illegal

HC sets aside VAT penalty as department failed to appreciate objections of assessee

CST & VAT: Kerala VAT - Where penalty notice stated that no objections were filed by assessee while department took contrary stand that reply was available in file, matter was to be remanded to consider objections of assessee

No exclusion of loss making Co. from list of comparables if it wasn't shown as persistent loss makin

IT/ILT: Where a company was not a persistent loss making company, merely because it had incurred loss during impugned financial year, it could not be rejected from list of comparables