Thursday, 23 April 2015

Customer/supplier base acquired along with business was intangible asset; entitled to depreciation

IT: Where assessee acquired a business which included intangible assets such as customer base, technical know-how, manpower, etc., depreciation under section 32(1)(ii) was to be allowed on same as intangible assets

India Likely To Remain Net Importer Of Iron Ore In Fy16

India is likely to remain a net importer of iron ore in 2015-16 as the falling international prices might encourage steel majors to continue import of key steel-making raw material through the current year. However, the quantity of imports may not be as high as last fiscal owing to an expected increase in the domestic production of iron ore.

In 2014-15, India imported 15 million tonnes of iron ore, an all-time high and for the second consecutive year the country's imports will far exceed exports. Exports out of the country is pegged at a meagre 4.5 million tonnes.

During this year, imports are likely to be around 10 million tonnes. This is despite reopening of mines in Odisha and the huge pile ups in several mines. But, the fact that international prices are continuing their downward journey and are ruling at below $50 per tonne CFR China would keep the interest of importers in the global seaborne trade. Also, inconsistency in supply of iron ore and availability of high grade ore at cheap prices will be encouraging for the steel mills to keep their import intact.

Indian steel mills, which do not have captive mines, require around 95 million tonnes of iron ore per annum.

JSW Steel, which was the largest importer last year at 10 million tonnes, will continue to be the major importer in FY16. Other importers include Tata Steel and Welspun among others.

"This year, we are going to increase our capacity utilization above 90%. Though the availability of domestic iron ore will improve during the year, we will continue to import to meet the requirement at our plants. However, we may not import as much as last year and might end up at around 6 million tonnes from places like South Africa," Vinod Nowal, deputy managing director, JSW Steel said.

Tata Steel, which imported around 2 million tonnes last year, is expected to import this year too to feed its Kalinganagar steel plant, which will be operational, analysts tracking the sector said.

Last year, imports took place at $70-90 per tonne and this year, prices are hovering around $50 per tonne, which is a good enough reason for the mills to import iron ore containing very high grades, Nowal added.

He, however, said price correction carried out by NMDC last week was not enough. Instead of Rs 500 per tonne reduction in prices of fines, they should have reduced by at least Rs 1,000 per tonne, he said.

"The recent correction of Rs 500 per tonne in domestic prices of iron ore fines by NMDC is welcome. However, more downward correction in ore prices are required to ensure imports are totally avoided. We need to continuously evaluate this domestic pricing aspect of iron ore fines vis a vis import offers in view of continued pressure on global steel pricing as well," H Shivramkrishnan, Chief Commercial Officer, Essar Steel said.

The production of domestic iron ore is pegged at 137-140 million tonnes for 2014-15 and for the current financial year, a growth of 15% is expected. The growth will come from NMDC, mines in Karnataka and Odisha. Recently, Rungta has received EC nod for 16.5 million tonnes in Odisha. NMDC has announced that it would increase production by 20% to 35 million tonnes as against 31 million tonnes in FY15.

In Karnataka, production is set to increase by over 20% to 22 million tonnes in 2015-16. Goa is also likely to commence production towards the second half of this year.

"With the current prices in international market, there will be no scope for Goan miners to export. Moreover, the prevailing 30% export duty on iron ore and differential freight tariff charged by the Railways will not encourage exports to happen,"  an analyst said.

Source:- business-standard.com



Low Global Prices To Encourage Iron Ore Import

 India is likely to remain a net importer of iron ore in 2015-16 as falling international prices might encourage steel majors to continue importing the key raw material.

The quantity imported might not be as high as in the last financial year. However, with an expected increase in domestic production of iron ore.

In 2014-15, India imported 15 million tonnes of iron ore, an all-time high. Exports were a meagre 4.5 million tonnes.

This year, the country’s imports will again far exceed exports.

During this year, imports are likely to be around 10 million tonnes despite the reopening of mines in Odisha and the huge pile-ups in several places. However, the downward trend of international prices will keep importers interested in the global seaborne trade. CFR China would be below $50 per tonne.

Also, inconsistency in the supply of iron ore and availability of high-grade ore at cheap prices will be encouraging for the steel mills to keep their import intact.

Indian steel mills, which do not have captive mines, require around 95 million tonnes of iron ore per annum.

JSW Steel, which was the largest importer last year at 10 million tonnes, will continue to be the major importer in FY16. Other importers include Tata Steel and Welspun.

“This year, we are going to increase our capacity utilisation above 90 per cent. Though the availability of domestic iron ore will improve during the year, we will continue to import to meet the requirement at our plants. However, we may not import as much as last year and might end up at around 6 million tonnes from South Africa,” Vinod Nowal, deputy managing director, JSW Steel, said.

Tata Steel, which imported around two million tonnes last year, is expected to import this year, too, to feed its Kalinganagar steel plant, which will be operational, analysts tracking the sector said.

Last year, imports took place at $70-90 per tonne and this year, prices are hovering around $50 per tonne, which is a good enough reason for the mills to import iron ore containing very high grades, Nowal added.

He, however, said price correction carried out by NMDC last week was not enough. Instead of the reduction of Rs 500 per tonne in prices of fines, they should have reduced by at least Rs 1,000 per tonne, he said.

“The recent correction of Rs 500 per tonne in domestic prices of iron ore fines by NMDC is welcome. However, more downward correction in ore prices are required to ensure imports are totally avoided. We need to continuously evaluate this domestic pricing aspect of iron ore fines vis-a-vis import offers in view of continued pressure on global steel pricing as well,” H Shivaramkrishnan, chief commercial officer, Essar Steel, said.

The production of domestic iron ore is pegged at 137-140 million tonnes for 2014-15. For the current financial year, a growth of 15 per cent is expected. The growth will come from NMDC and mines in Karnataka and Odisha.

Recently, the Rungta mines received environmental clearance for 16.5 million tonnes in Odisha. NMDC has announced it would increase production by 20 per cent to 35 million tonnes, as against 31 million tonnes in FY15.

In Karnataka, production is set to increase by over 20 per cent to 22 million tonnes in 2015-16. Goa is also likely to commence production towards the second half of this year.

"With the current prices in international market, there will be no scope for Goan miners to export. Moreover, the prevailing 30 per cent export duty on iron ore and differential freight tariff charged by the railway will not encourage exports," an analyst said.

Source:- business-standard.com



China Import Curb Has Hit Milk Producers Badly

Milk producers are going through a slump and those in Maharashtra are among the worst affected, said RS Sodhi managing director of Gujarat Cooperative Milk Marketing Federation Limited (GCMMF) which sells the Amul brand.

Sodhi was in the city to deliver a lecture at National Academy of Direct Taxes (NADT). Speaking to TOI after the function, he said the dairy industry is going through a global slump with China being a major reason for the situation.

China, which was a major importer of dairy products, has curbed purchases from previous year. This has coincided with a glut in New Zealand as well as Europe. Exports by Amul, which stood at Rs510 crore in the 2013-14, came down to Rs280 crore 2014-15. This also led to crashing of rates. The international prices of milk powder have come down to $2,000 a metric tonne as against $4,500 last year, which has ultimately hampered the competitiveness of the Indian industry, said Sodhi.

"On the other hand, there has been a rise in the price of dry fodder, leading to an increase in the cost for milk producers. However, there is little scope for an increase in procurement rates. The situation is comparatively better in states like Gujarat or Karnataka where the dairy cooperatives are organized. In Maharashtra, the procurement rates are down to Rs17 a litre from Rs25-26 for cow's milk," he said.

However, the slump will benefit consumers. With no immediate chances of increase in the procurement rates, the price of milk will also not go up, said Sodhi.

India exports milk and its products to countries like Pakistan, Afghanistan, Middle-East and also China. China has been a biggest importer world over. The going was good when China was buying but it has now left the entire industry in a desperate situation. Though the dairy business is expected to revive in the coming year, it may be too late for many of the producers, he said.

Source:- timesofindia.indiatimes.com



Gem & Jewellery Export Slightly Down, Might Do Better This Year

Gem and jewellery (G&J) shipments, nearly 13 per cent of India’s overall merchandise export, fell a marginal 0.4 per cent in financial year 2014-15.

Data compiled by the Gems & Jewellery Export Promotion Council (GJEPC) showed overall G&J export was $39.9 billion in 2014-15, as compared to $40.15 bn the previous year. In rupee terms, shows data compiled by the G&J Export Promotion Council, export rose marginally to Rs 243,885.8 crore from Rs 242,837 crore a year before.

“The industry battled several economic issues — downturn in China, political and terrorist unrest in the Middle East, a declining European market and the suffering Russian rouble, which had a direct and adverse impact on export. However, foresight and agility helped survive these trying times, owing to significant action in the US and UAE to boost export,” said Vipul Shah, chairman of GJEPC.

It had organised several buyer-seller meets in the US and participated aggressively in Dubai trade fairs, both important jewellery export destinations. Also, continuous dialogue with key G&J entities in the US, with offers of value-additions, and trend forecast seminars for Indian manufacturers, had helped.

Gross export of cut and polished diamonds fell 5.5 per cent in dollar terms to $23.2 bn versus $24.5 bn a year before. In rupee terms, it was a a decline of 4.5 per cent to Rs 141,514 crore. This can be attributed to a decline in volume terms of the gross import of rough diamonds (‘roughs’ in industry parlance), at 14.73 mn carats, or 9.1 per cent, from the year before.

The lower costs of importing roughs through the notification of a special economic zone in this regard is expected to benefit the Indian industry substantially in the coming years. The industry is optimistic about maintaining the current level of performance and intends aligning with global diamond mining companies to promote diamond jewellery.

For this financial year, which began on April 1, Shah said the first quarter was set to remain flat. "Gradual growth is expected during the second quarter and onwards. The entire year is set to end with single-digit growth in G&J export,” he said.

The diamond jewellery segment, which contributes around half, is likely to remain flat but shipment of gold and silver ornaments is expected to see good growth.

Source:- business-standard.com



Rupee Loses 11 Paise Against Dollar In Early Trade

The rupee declined by 11 paise at fresh three-month low of 63.43 against the US dollar in early trade today at the Interbank Foreign Exchange on renewed demand for the American currency from banks and importers amid foreign capital outflows in the equity market.

Besides, a lower opening in the domestic equity market weighed on the local currency but the dollar's weakness against other currencies overseas capped the rupee's losses, forex dealers said.

The rupee had plummeted to over three-month low of 63.32 by losing 50 paise against the US dollar in yesterday's trade on renewed demand for the American currency from banks and importers amid foreign capital outflows in the equity market.

Source:- dnaindia.com



Mere visit of officers of foreign service provider in India doesn't impose ST liability on service p

Service-Tax : A foreign company having no business establishment or operations in India, cannot be asked to pay service tax on services provided by it to Indian recipient merely because of a visit of its officers in India in course of providing service

Regional director entitled to voice his apprehension before Court at time of sanctioning of scheme o

CL : If Regional Director nurtures any doubt qua any of clauses in a scheme of amalgamation, and finds that same is contrary to law or apprehends that on strength of such a clause contained in scheme, company, after obtaining sanction from Court, may use or misuse same for contravention of any law including provisions of Income-tax, he is entitled to voice his doubt/apprehension before Court, at time Court considers grant of sanction to scheme

AO’s order granting partial stay after examining materials needs no interference as AO had discretio

IT: Power of stay governed by clause (c) of section 220 is a discretionary one

No denial of sec. 54 relief to eligible assessee just because he had inadvertently made claim under

IT: Where assessee fulfilled all conditions prescribed for claiming deduction under section 54, claim could not be denied for mere fact that he raised claim inadvertently under wrong of section 54D in return of income

Summoning of petitioner for FEMA offence in a mechanical manner is bad in law : HC

FEMA: Legal bar imposed in proviso to section 61 of FERA is ought to have satisfied at first instance before issuance of process about compliance of proviso to section 61(2) about factum of opportunity given to accused and his satisfaction to this effect must be there before taking cognizance against petitioner in exercise of this legal duty, as there is a statutory bar imposed upon ACMM from taking cognizance

Co. involved in development of software products isn't comparable with co. rendering ITES services

IT/ILT : Where TPO made addition to assessee's ALP in respect of rendering ITES services to AE, in view of fact that some comparables selected by TPO were developing software products and, thus, there existed a functional difference, impugned addition was to be set aside and, matter was to be remanded back for disposal afresh

No denial of sec. 54F relief on pretext of two houses when assessee had gifted one of them orally un

IT : No denial of section 54F relief on pretext of two houses when assessee had gifted one of them orally under Muslim law

Jobbing or arbitrage transaction carried out by broker to hedge its business loss isn't a speculativ

IT: Where assessee-broker's business was trading in shares on behalf of its clients, loss sustained by assessee was a business loss which could be set off against income from other sources

Sec. 11 relief available to Indian Medical Association if it was endorsing health products to promot

IT : Where assessee, Indian Medical Association, engaged in promoting public health, endorsed products of various companies on claims of health and nutritional benefits, said activity could not be regarded as violative of provisions of section 2(15) and, thus, assessee's claim for exemption of income was to be allowed

Govt. notifies Registrar/Sub-Registrar as person carrying on designated business under Money Launder

MONEY-LAUNDERING/FEMA/ILT : Section 2(1)(sa)(vi) of the Prevention of Money-Laundering Act, 2002 - Person Carrying on Notified Activities - Notified Activity

AO can’t examine reasonableness of exp. while allowing deduction under sec. 37(1)

IT : Whether or not advertisement or brand building expenditure should have been incurred is prerogative and right of assessee and Assessing Officer cannot question and challenge same

No denial of sec. 12AA registration to educational institution just because it was eligible for sec.

IT: Where assessee was carrying out its object of imparting education by establishing an educational institutation, merely because it was also preparing students for compertitive entrance exams, it could not be said that it was not a charitable institution

IRDA issues updates of syllabus for Insurance agent's exam in line with Insurance Laws (Amendment) B

INSURANCE : IRDAI (Appointment of Insurance Agents) Guidelines, 2015 – Revised IC-33 And IC-34 Syllabus