No penalty for claim wrongly made under old law when assessee had paid taxes when it was brought to

IT : Where revenue brought to notice of assessee that capital gain was to be taxed in view of change in law from current year and assessee paid tax accordingly, there being no suppression, no penalty could be levied

Car parking area can’t be treated as part of built-up area of residential unit while computing sec.

IT: Assessee 'engaged in business of developing and construction of housing project need not be owner of property so as to claim deduction under section 80-IB(10)

Payment of data storage charges to NR doesn't constitute either royalty or 'FTS'

IT/ILT : Payment of data storage charges made by assessee to a non-resident did not fall either under royalty or fee for technical services and, thus, assessee was not required to deduct tax at source while making payment of said charges

Exporters Need More Policy Support

India’s Foreign Trade Policy (FTP) 2015-20 sets an ambitious target of $900 billion in merchandise and services export by 2020. Which means, exports of goods and services must grow at CAGR of over 15 per cent in the next five years to double from its current levels of $ 450 billion.

The new FTP seems to be guided by the following considerations: keeping tabs on how much money goes out on account of export incentives given the fiscal constraints; WTO obligations to phase out export subsidies; linking the FTP to the Make in India initiative; and improving FTAs utilisation in trade.

Thus, the number of countries covered under the new merchandise export from India scheme (MEIS) that replaces five existing incentive schemes, including FPS and FMS, has been pruned to a keep a tab on fiscal outgo. The quantum of export subsidies is lower than earlier.

Reduction of export obligation by 25 per cent under the EPCG (export promotion capital goods) scheme is expected to boost indigenous production of capital goods.

The introduction of online filing of documents is to reduce trade transaction cost and help manufacturing exports by increasing their cost competitiveness. Merchandise falling under the categories of handloom products, books/periodicals, leather footwear, toys and customised fashion garments, with fob values of up to ?25,000/consignment and their sale finalised through e-commerce, would get the benefit of FTP.

The exports from SEZs suffering from high MAT would now be eligible for incentives. Another notable positive is the introduction of transferability of duty free scrips and allowing them for payment of customs, excise duties and service tax without any conditionality. However, it would be worth examining how effective the new FTP would be in pushing India’s merchandise exports.

It is very difficult to decode what forms the basis of categorising India’s export destinations into three groupings as well as allocation of MEIS rates for different commodities. What could explain the exclusion of countries such as Brazil, Bangladesh and China for export promotion with respect to top textile products?

Again, increasing exports to China should have been top priority, but there is no real incentive for China in the new FTP even though it is a top export destination for cotton fibre and yarn.

From a strict reading of the FTP, only direct export to Japan and the US should be eligible for MEIS. The problem is India mostly exports fabrics to Bangladesh, Indonesia, Myanmar and Vietnam for conversion into garments that are ultimately shipped to Japan and the US.

It is worth mentioning that some of India’s well intentioned trade policy actions (to help LDCs like Bangladesh), though outside the purview of the FTP, are hurting indigenous manufacturing.

For instance, allowing duty free, quota free import of garments from Bangladesh (or Myanmar) without imposing sourcing obligations promotes the backdoor entry of Chinese textile material into India, and hurts the whole textile value chain in the country from fibre to yarn, fabrics and apparel.

The FTP needs to follow up with other actions like making the use of fibres, yarns and fabrics of Indian origin mandatory for allowing duty free imports of apparel from Bangladesh and other LDCs seeking preferential market access on non-reciprocal basis.

It’s not that India would be the first country to impose sourcing restrictions for allowing duty free imports of apparels. The US imposes sourcing restrictions in all its existing and proposed trade pacts. Why can’t India?

Because of India’s FTAs and other trade deals such as Information Technology Agreement (ITA), India’s manufacturing sector has to suffer what is called inverted duty structure, that is, high import duties on inputs/ raw materials and lower duties on finished goods. Thus, one can import an apparel item duty free in India but its basic raw materials are subject to 5 to 10 per cent import duties. The last Union Budget did attempt to address some of the cases of inverted duties, but only partially.

Again, increasing the use of FTAs would require addressing non-tariff barriers in partner countries. For instance, Japan, as per the terms of the India-Japan CEPA, allows duty free import of apparels from India only if all the material used for the manufacture of apparels are either of Indian or Japanese origin.

Indian businesses should realise that the days of export subsidies are numbered because of WTO obligations. To deal with slowing demand and rising cost on a long-term basis, businesses must develop suitable global strategies for sourcing, production and trade.

Source:thehindubusinessline.com

Rupee Strong Against Dollar

THE rupee displayed a strong performance against the dollar last week, aided in part by the increase in foreign exchange reserves following the $1.2bn HBL transaction. However, the local currency lost value against the euro.

The rupee started the week in the interbank market by picking up one-paisa for buying and two paisas for selling, as the dollar slipped to Rs101.85 and Rs101.86 in the first trading session, against the previous week’s close of Rs101.86 and Rs101.88.

It then rose by six paisas for buying and four paisas for selling in the second trading session, sending the greenback down to Rs101.79 and Rs101.82. The rupee picked up a further 12 paisas for buying and 13 paisas for selling in the third trading session, pushing the dollar down to Rs101.67 and Rs101.69.

The rupee’s rising streak continued in the fourth trading session, as it rose by another two paisas, sending the dollar down to Rs101.65 and Rs101.67. It then went up by a further 15 paisas for buying and 12 paisas for selling in the last trading session, as the dollar closed the week at Rs101.50 and Rs101.55.

During the week, the dollar depreciated by 36 paisas for buying and 33 paisas for selling in the interbank market.

In the open market, the rupee displayed a largely stable performance against the dollar last week. It remained unchanged from the prior week’s closing level of Rs102.40 and Rs102.60 in the first two trading sessions of the week.

In the third trading session, the rupee edged up by five paisas, sending the greenback lower at Rs102.35 and Rs102.55. However, the dollar rebounded in the fourth trading session, picking up five paisas to revert to Rs102.40 and Rs102.60.

The rupee-dollar parity then remained unchanged at this level in the last trading session. As a result, the dollar remained flat against the rupee on a net basis in the open market last week.

Meanwhile, the rupee weakened against the euro last week after its recent rising streak. Yet, it had started the week by gaining 50 paisas in the first trading session, sending the euro down to Rs108.25 and Rs108.50 against the prior week’s close of Rs108.75 and Rs109.00.

It rose by a further 55 paisas in the second trading session, as the single currency dropped to Rs108.20 and Rs108.45. However, the euro bounced back in the third trading session, regaining five paisas against the rupee to close the day at Rs108.25 and Rs108.50.

The rupee then suffered a bigger fall of 125 paisas in the fourth trading session, as the euro ended the day at Rs109.50 and Rs109.75.

The single currency finally picked up a further 65 paisas in the last trading session to close the week up at Rs110.15 and Rs110.40. As a result, the euro appreciated by a net 90 paisas against the rupee last week.

Source:dawn.com

Interest on loan given to NR-AE is leviable at rate prevailing in that country and not at rate preva

IT/ILT : Where assessee advanced loans to its AE situated in Germany, rate of interest was to be determined on basis of rate prevailing in Germany where loan had been consumed

Banks not prohibited from publishing photos of wilful defaulters, rules Bombay High Court

SARFAESI Act : Where there is no legal bar either in rule 8 of Securitisation Rules or under any provisions of Securitisation Act, which expressly prohibits bank from publication of photographs of its defaulters

Assessee could cross-examine third party from whom department had gathered info to make reassessment

CST & VAT : Haryana VAT - Where Assessing Authority passed reassessment order and relying on information gathered from third party held that assessee had suppressed purchases, since section 31 itself requires grant of reasonable opportunity before an adverse order of reassessment is passed against assessee, cross-examination of third party was warranted