IT : Even where assessee deducted TDS and deposited same with Central Government within prescribed time, but failed to file statements in Form 26Q in time, penalty under section 272A(K) was to be levied
Wednesday 29 July 2015
Offences under FERA, punishment of which extends to seven years are non-bailable
FEMA : Offences under Foreign Exchange Regulation Act, 1973, punishment of which extend to a period of seven years are non-bailable
Tribunal can't import restrictions of sec. 35B of Excise Act to decide maintainability of appeal
Service Tax : Section 86(7) deals with hearing of appeals and making orders and cannot be used to decide on maintainability or competency of appeal by importing restrictions under section 35B of Excise Act; hence, matters relating to rebate of service tax on output services are appealable before Tribunal
AO gets flak from ITAT for reducing grant from cost of fixed assets without considering provisions o
IT : Where Assessing Officer reduced capital grant received by assessee-company from State Government from cost of fixed assets without considering provisions of section 43(1) and without deciding whether Government contributed amount as promoter's quota, matter was remanded for fresh consideration
Cheers To The Much-Awaited Gold Price Plunge
India has also replaced China as the biggest buyer of the metal last year, reclaiming the position it last held in 2012, after the jewellery demand leapt to the highest level since 1995, according to the World Gold Council.
The yellow metal described once by the celebrated economist John Maynard Keynes as a relic of the barbarian era has seldom failed to fascinate aficionados and critics alike with its price fluctuations. It is not surprising that in the present global context with a few positives surfacing to give a leg-up to the global economy and ending the extraordinarily long phase of ultra low interest rates in advanced countries, gold prices have plunged.
Early last week, global gold prices plummeted to their nadir in more than five years. The price declined by four per cent to as low as $1088 an ounce in Asian trade — the lowest since March 2010. Investors turned to the US dollar, which rose on the possibility of the Federal Reserve raising interest rates in a stronger US economy. The first sign of tightening of US monetary policy since 2006 and the retreat of negative yields in the eurozone are reasons enough for gold prices to tumble.
Interestingly, the price plunge occurred despite the Middle Kingdom, the world’s biggest consumer, announcing on July 17 that its gold reserves were up 57 per cent at the end of June, compared with the last time it disclosed reserve figures in 2009. Still, gold now accounts for 1.65 per cent of China’s total foreign exchange reserves, compared with 1.8 per cent in June 2009, in spite of the increase in tonnage.
For India, the price fall has not come a day too soon. In the wake of a mini balance of payments crisis partly triggered by an inordinate spurt in gold imports in the erstwhile UPA government’s second tenure, in 2013, the authorities had to raise the import duty thrice in that year. And link imports to re-exports to contain the deficit and the fall in the rupee value.
The steps helped pare down the deficit to $32.4 billion in 2013-14 from $87.8 billion the previous year, according to the Reserve Bank of India. The government allowed more agencies to import gold in May and scrapped the 20:80 rule requiring importers to sell 20 per cent of their purchases to jewellers for re-export in November, 2014. These measures kindled hope that the government might lower the duty.
The All India Gems & Jewellery Trade Federation, which had urged the government to cut the tariff to 2 per cent, said on Feb 28, 2015 that the industry felt let down by Arun Jaitley’s decision to retain the tax. But the savvy finance minister stuck to the duty not merely to fill the coffers but also to put paid to reckless import of the yellow metal so that the die-hard hoarders would find the going tough and expensive to sustain.
India has also replaced China as the biggest buyer of the metal last year, reclaiming the position it last held in 2012, after the jewellery demand leapt to the highest level since 1995, according to the World Gold Council.
India’s total demand in 2014 was 842.7 tonnes, 14 per cent lower than the previous year, while China’s sank 38 per cent to 813.6 tonnes, it said.
The pernicious fallout of high import duty on gold is that smuggling supervened on a larger scale than ever before. About 200 tonnes of gold were smuggled in 2014, after controls drove premiums paid by jewellers to as much as $160 an ounce over the London cash price, the bullion industry contended.
In a move designed to wean people away from putting their savings on inert metals like gold, the 2015-16 full-fledged NDA budget proposed a plan to monetise domestic gold that allows depositors to earn interest in their metal accounts and jewellers to receive loans against such deposits. It was also proposed to offer sovereign gold bonds to investors as an alternative to bullion with the bonds bearing fixed rate of interest that are redeemable in cash at the face value of the metal. How far this tack will succeed relies on how fast the sentimental hold of gold on people is systematically disabused by campaigns and strategies.
Source:dnaindia.com
CCI slaps 420 crores penalty on Hyundai for restricting supply of genuine spare parts in open market
Competition Act : Where opposite parties i.e., Hyundai, Reva and Premier held a dominant position in aftermarket for their own brand of spare parts and diagnostic tools, practice of OPs in denying availability of their genuine spare parts severely limited independent repairers and other multi brand service providers in effectively competing with authorized dealers of OPs in aftermarket and, thus, OPs abused their dominant position in contravention of section 4
Assessee couldn't take Cenvat credit when entire manufacturing and duty payment was done by job-work
Cenvat Credit : Where assessee did not do manufacturing activity and both manufacturing and duty payment were done by job workers, assessee cannot be considered as manufacturer for taking Cenvat credit
Duty can't be demanded in case of revenue neutral situation
Excise & Customs : No demand can be raised in case of revenue neutrality viz. if duty payable by one unit of assessee was available as credit to another unit
AO couldn't proceed with reassessment without disposing of objections of assessee which went to root
IT : Where assessee raised objection that he was not engaged in mining activities, rather it only purchased and exported iron ore, since objection went to roof of matter in determining whether related income was 'income from business' or 'other income', Assessing Officer could not initiate reassessment without disposing objection
Traders Jittery As Govt Plans To Hike Wheat Import Duty By 10 Per Cent
Traders and processors of wheat products from pasta to bread are concerned over a likely move by the government to impose a 10 per cent duty on the cereal grain to discourage imports. Analysts said the step is aimed at helping the Food Corporation of India offload wheat of poor quality on account of unseasonal rains. Traders have contracted to import over 5 lakh tonnes of wheat this year, they said.
"We have yet to receive the notification and even if it comes, we fail to understand why 10 per cent duty will be imposed. Import of 5 lakh or 10 lakh tonnes doesn't make any difference in a country where wheat production is 900 lakh tonnes," said Veena Sharma, joint secretary of the New Delhi-based Roller Flour Millers' Federation of India.
The 10 per cent import duty on wheat is aimed at protecting farmers from cheap overseas grain, a government official said. The commerce and revenue department will come out with the notifications, the official added. Sharma said the actual quantity of wheat imported so far does not exceed 1 lakh tonnes. "Where is the data that 5 lakh-10 lakh tonnes wheat contracts has been signed? This move will only increase prices of domestic highquality wheat and further on wheat products like atta, maida, suji and bran," said Sharma.
Flour millers typically mix premium quality Australian wheat with the local grain during milling, mostly to make high-end products such as pasta and noodles. However, according to trade analyst Tejinder Narang, the government is only trying
to offload its low-quality wheat in the market while trying to prevent the entry of high-quality wheat from Australia, which is cheaper. "High-quality Australian wheat at south Indian ports is at Rs 18,500-19,000 per tonne compared with domestic prices of Rs 20,000-21,000 a tonne," said Narang.
"Out of the 28 million tonnes of wheat procured by the government in the 2014-15 season, 90 per cent was of low quality, out of which 30 per cent is of extremely poor quality," said an official of a multinational trading company who did not want to be identified. Import duty would hurt the margins of small bakers and they would have to increase the cost of products, said Jagdish Narayan Kushawaha, president of the Society of Indian Bakers.
"Big players like BritanniaBSE -0.16 %, Hindustan Lever and Parle to small bakery stores will have to increase cost of products if import duty is imposed," he said, adding that small-scale bakers accounted for over 40 per cent of the Rs 30,000-crore industry.
Source:economictimes.indiatimes.com
Banks Need Import Duty Protection To Rescue The Steel Sector
Steel sector has seen its first casualty. Lenders have taken over control of Kolkata based Electrosteel Steels after the Reserve Bank of India cleared the path for banks to take over management of companies.
However, taking over of the company is not the end of the problem in the current scenario, especially in the steel sector. It is the beginning of a new one. Bankers have realised that there are no takers for these companies, not atleast at the price at which the bankers want to exit.
The problem with steel companies is that their debt is higher than their market capitalisation. Neelkanth Mishra of Credit Suisse has pointed out that the outstanding debt of the steel sector is nearly four times its market capitalisation. Unless banks are willing to take a hair-cut, there is little hope for the sector in the near future. And there is more to worry looking at the manner in which events are unfolding globally.
China is slowing down, which is catastrophic for the steel sector. China now exports more steel than the production of the second largest player in the world, Japan. A slowdown in domestic demand has resulted in China flooding the world market with steel. The country exported 52.4 million tonnes in the first half of 2015, up by almost 28 per cent compared to the same period of 2014. Monthly exports are growing at an annualized pace of around 107 million tonnes that's close to last year's production of the whole of North America.
Trade tensions globally are rising. U.S. Steel Corp. and ArcelorMittal are among group of producers in the U.S. who have filed a case against imports of cold-rolled steel. ArcelorMittal South Africa Ltd. said last week that they will fight against the import of steel from China, which is being sent to ports at prices as much as 25 percent below local output costs. ArcelorMittal wants the government to increase tariffs.
Indian companies too would want the government to increase tariffs. Total finished steel imports in India rose 53.1% in the April-June period on a year-on-year basis. The average spot price of hot-rolled steel sheets in China, a major exporter for steel to India, corrected 12% from April to June-end.
China’s slowdown of 1.3 per cent in the first half is expected to pick up as both the consuming sectors in the country – real estate and automobile are going through a rough patch. This would mean that imports will continue into India and steel companies will continue to face difficulties in servicing their debt.
Mishra pointed out that the total debt outstanding to Indian steel companies was nearly $50 billion. This was nearly ten times the industry’s Ebitda (earnings before interest, taxes and depreciation). Last year average Ebitda per tonne was just $63. But after that steel prices have come down by almost $160 per tonne, indicating that companies would have lesser money left in their hand to service debt.
Under such circumstances, finding a buyer for steel companies will be a tall task for the bankers. But with steel industry holding nearly $50 billion in debt, bankers have reason to feel jittery. India is one of the few countries where demand is growing at a respectable pace. What both the steel industry and bankers need is protection from imports. Hope the government has its ears to the ground.
Source:business-standard.com
Haldia Petro Might Get Relief Over Missed Exports
The Directorate General Foreign Trade (DGFT) may grant West Bengal’s showpiece industrial project Haldia Petrochemicals more time to pay a Rs 2,600-crore fine for failing to meet its export obligations between 2010 and 2013.
According to a government official in the West Bengal Industrial Development Corporation, the DGFT might also waive a portion of the fine. The technicalities were being worked out, he added.
Amit Mitra, West Bengal’s finance minister, met Arun Jaitley, Union finance minister, to seek his intervention in this matter. Jaitley assured Mitra steps would be taken to ensure Haldia Petrochemicals continued operations.
“Both of them had a serious discussion. There is hope the issue will be solved soon. This is of supreme importance for the industrial scenario of Bengal,” a government official said.
Earlier, Director General of Foreign Trade Praveer Kumar had said it had been decided to reject Haldia Petrochemicals’ plea for relaxation of customs duty for failing to meet export targets.
Haldia Petrochemicals had obtained permission from the DGFT for importing naphtha at zero duty under the advance licensing scheme. Accordingly, the company had to meet an export obligation of the finished product, which it failed to do.
Haldia Petrochemicals, run by the Purnendu Chatterjee-led The Chatterjee Group, has been operating at 85 per cent efficiency and production is on at full capacity.
A consortium of lenders led by Industrial Development Bank of India (IDBI) recently agreed to sanction a Rs 2,300-crore restructuring package for Haldia Petrochemicals. “We are closely watching the issue as there is a huge exposure to Haldia Petrochemicals,” said a banker.
“This liability was not mentioned in the quotation when we had bid for Haldia Petrochemicals, hence we are not bound to pay it,” a source in The Chatterjee Group said. The Chatterjee Group had agreed to buy 520 million shares — 30.8 per cent of Haldia Petrochemicals’ equity — from the West Bengal Industrial Development Corporation at Rs 25.10 each, matching the price offered by Indian Oil Corporation, after the government invited expressions of Interest last year.
Haldia Petrochemicals, one of the largest manufacturers of high-density polyethylene in the country, supplies different grades of polymers mainly in eastern India. According to industry estimates, Haldia Petrochemicals has a 12.8 per cent share of the polymer industry when it operates at the optimum level.
Source:business-standard.com
Donation can't form part of value of service when there is no connection between donor and service r
Service Tax : Where there was no nexus between donors and coaching aspirants, donations/grants received from donors cannot form part of value of coaching services provided to coaching aspirants
No Change In Cenvat Rules On Excise Duty For Textile Goods
There is no change in exemption from excise duty for textile goods as mentioned in central value added tax (CENVAT) Rules 2004, the Union Ministry of Finance has clarified.
The Central Board of Excise and Customs (CBEC) had issued a notification on July 17, 2015, which stated that the excise duty credit could be claimed by the manufacturers of end products only if the previous links in the manufacturing chain had paid the excise duty for the inputs at each of the stages.
This notification has created some confusion as the textile production chain remains scattered. Subsequently, a few representatives from the textile industry met senior officials in the ministry and sought clarification.
Through its Notifications no. 37, 38 and 39 of 2015, the ministry has clarified that there is no change in CENVAT Rules 2004 with respect to exemption from excise duty for textile goods.
The notification reads, “For the purposes of this condition (as mentioned in July 17 notification), appropriate duty or appropriate additional duty includes nil duty or concessional duty, whether or not read with any relevant exemption notification for the time being in force.”
Source:fibre2fashion.com
Rupee Gains 6 Paise Against Dollar In Early Trade
The rupee strengthened by 6 paise to 63.85 against the dollar in early trade on Wednesday on increased selling of the US currency by exporters and banks amid firm domestic equity markets.
Forex dealers said that weakness in the dollar against other currencies overseas also supported the rupee.
Yesterday, the rupee ended 25 paise higher at 63.91 against the US dollar on fresh selling of the American currency by banks and exporters.
Meanwhile, the benchmark BSE sensex rose 132.42 points, or 0.48%, at 27,591.65 in early trade today.
Source:timesofindia.indiatimes.com
Submission of affidavit of gift received from spouse didn't explain source of investments found in s
IT : Where during search and seizure, investments were found in name of assessee, presumption could only be that they formed part of unaccounted income of assessee and mere fact of producing affidavit of close relatives would not be sufficient explanation
Rectification couldn't be based on a new fact which wasn't mentioned in SCN and adjudication order
Service Tax : Where a fact/ground neither finds mention in show-cause notice nor in adjudication order, Tribunal cannot be said to have committed an error by passing an order in ignorance thereof; hence, rectification application on such a new ground cannot be sustained
Discount allowed by TeleCos to distributors on prepaid recharge coupons was liable to sec. 194H TDS
IT : Discount allowed by assessee to its distributors in respect of starter packs and recharge coupons for its prepaid mobile service amounted to payment of commission or brokerage requiring deduction of tax at source under section 194H
Share appreciation rights granted to a Managing Director won't be governed by Share based employee b
SEBI : Request For Interpretative Letter By Saregama India Limited
Share based employee benefit norms not applicable to 'Phantom Stock Scheme', says SEBI
SEBI : Request For Informal Guidance By Mindtree Limited
Portfolio Managers not required to be registered under Research Analyst norms, says SEBI
SEBI : Request for Interpretative Letter by Wealth Advisors (India) Private Limited
In absence of statutory provision, internal request made by AO to Commissioner doesn't construct ref
CST & VAT : Assam VAT - Under Assam General Sales Tax Act, there is no provision for reference, in absence of such a provision, internal request made by Assessing Authority to Commissioner for clarification regarding taxability of goods could not be construed to be a reference in law
Estimation of income by comparing gross profit of local suppliers was justified as books of assessee
IT : Where assessee's books of account and purchases and expenses shown therein were found non-reliable, books of account were rejected and income was estimated by comparing GP shown by suppliers from same locality
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