CA Terminal: 08/20/15

Thursday, 20 August 2015

ITAT rejects comparables due to huge turnover and high related party transactions

IT/ILT : Where TPO made addition to assessee's ALP in respect of rendering software development services to its AE, since some comparables selected by TPO developed their own software products and thus there existed functional difference where some other comparables were found inappropriate on account of huge turnover and high RPT, impugned addition was to be set aside

TDS recovery can be made from TDS defaulter at any time if payee doesn't pay due taxes

IT : Where deductor fails to deduct tax at source, after deductee's tax liability is determined and found payable after considering self-assessment tax paid under section 140A, that TDS - to that extent, could be recovered by Revenue from deducto rat any time; interest liability on TDS, which is sought to be collected per section201(1A) follows, being compensatory, i.e., is consequential or concomitant. However, where there is no such outstanding demand, i.e., of determined tax liability of

High Court denied to interfere with DRT's order rejecting stay plea as there was no breach of natura

SARFAESI : Where DRT rejected securitisation application for stay after extensive hearing, there was no breach of principles of natural justice to enable High Court to exercise its extraordinary jurisdiction when efficacious remedy of appeal was available

EOU isn't exempt from Additional Duty of Excise on High Speed Diesel levied under Finance Act 1999

Excise & Customs : Since Notification No. 22/2003-CE did not exempt purchases by EOU from 'Additional Duty leviable under Finance Act, 1999'; EOUs were liable to pay said duty on purchases of High Speed Diesel (HSD)

Sec. 69 addition rightly deleted as revenue failed to prove that assessee had made undisclosed inves

IT : Section 69 addition rightly deleted as revenue failed to prove that assessee had made undisclosed investment in flat

Levy of sec. 234B interest affirmed on basis of tax computation form, ITNS 150 as it formed part of

IT : Interest under Section 234B forms part of income-tax computation form ('I.T.N.S. 150') as it contained a calculation of interest under Section 234B payable on the tax assessed. Accordingly, this form must be treated as part of the assessment order. Therefore, levy of interest under Section 234B was not invalid even assessment order did not contain any direction for payment of interest under Section 234B

Credit can't be denied on capital goods if depreciation claim on duty element is reversed in revised

Cenvat Credit : Where depreciation was originally claimed on 'duty paid on capital goods', but, later revised return was filed reversing said depreciation claim and accepted by Income-tax authorities, same amounted to compliance with rule 4(4) of CENVAT Credit Rules, 2004 and hence, credit could not be denied

Interest bearing loan taken from debtor resulted in diversion of income; ITAT disallows interest

IT: Where assessee-company received loan of certain sum from its holding company, 'F' and claimed interest on said loan, since 'F' was a debtor of assessee-company of more than double amount of loan, allowance of deduction was amount to diversion of income of assessee-company; interest paid was to be disallowed

Indian Tea Industry Eyes Russian Market; Delegation To Visit Moscow In September

India's tea industry is eyeing Russia with renewed interest after a gap of 10 years as exports to two key markets of Egypt and Pakistan are not picking up.

A delegation of Indian tea producers, merchant exporters and auctioneers is set to visit Russia, the world's fourth-largest tea consumer, next month. The delegation plans to hold talks with buyers at WorldFood Moscow, which will be held between September 14 and 17.

Exporters are looking at the entire Commonwealth of Independent States (CIS) region, comprising former Soviet bloc countries, said Azam Monem, vice-chairman of Indian Tea Association.

"We are not only looking at Russia to increase our exports. Our aim is to increase our presence in the CIS region," said Monem."Russia and CIS are two traditional markets for Indian exports. But for long, we have not done much to develop these markets further so that more teas can be exported.With production increasing, we also need to develop export markets for our teas." Russia and CIS countries - including Ukraine, Kazakhstan and Azerbaijan - consume 200-220 million kg of tea annually. India exports 50 million kg to the region.

Russia was earlier an orthodox tea-consuming country but now it has also taken to CTC teas. Sri Lanka is the major exporter of tea to Russia and CIS, and it sends 6065 million kg to the region. Russia also imports teas from Kenya and Indonesia.

ndian traders are also looking at Georgia in a big way as the country can become a major tea hub. Georgia is a country in the Caucasus region of Eurasia located at the crossroads of western Asia and eastern Europe. It is bounded to the west by the Black Sea, to the north by Russia, to the south by Turkey and Armenia and to the southeast by Azer baijan.

"If we can make our presence felt in Georgia, then we can easily access Turkey through Georgia. Turkey is a major tea-drinking nation in the wo rld," said Monem.

In 2014, India exported 207.44 million kg of tea. The total exports in the six months to June stood at 88.94 million kg, 9% less than 97.67 million kg a year ago. The prices of CTC and dust teas are currently hovering around Rs 165.05 a kg and Rs 168 a kg respectively . Orthodox teas are fetching a price of Rs 247.56 a kg.

Source:economictimes.indiatimes.com

Indian Toy Makers Seek Govt Help To Stop Flood Of China Imports

All it will take for Indian toy makers to capture a major pie of a Rs.13,000 crore ($2 billion) opportunity is a little push from the government by way of promoting indigenisation to replace the flood of imports largely from China, Taiwan and Italy, manufacturers say.

The Toy Association of India (TAI), while pegging the country's market at Rs.13,000 crore during 2015-16, has, however, painted a grim picture as far as Indian manufacturing is concerned.

"Currently, only about 20 percent of the market is served by Indian manufacturers and the rest by import of toys from different countries, mainly from China and Italy," TAI vice president Pawan Gupta told IANS, implying that Indian firms, in the current scenario, will be able to harvest only Rs.2,600 crore from the gigantic pie.

According to TAI, India's overall toy imports increased at a Compound Annual Growth Rate (CAGR) of 25.21 percent between 2001 and 2012 while imports from China and Italy surged at a CAGR of 30 percent and 38.6 per cent respectively during this period.

The Indian manufacturers' base in the segment comprises mostly of some 4,000 micro-medium firms. Seventy-five percent of these are in the unorganised sector, thereby limiting their scope to upscale production or compete with global brands.

"Competitive countries like China have humongous manufacturing capacities and they flood the markets with their products," he said.

Lack of adequate finance and distinct clusters for toy manufacturing and low level of product conceptualisation and design have been cited as the primary impediments for the industry.

Additionally, hurdles in procurement of critical raw materials have been highlighted as plaguing the Indian small-scale toy makers. Gupta said the government needs to design simpler procedures for indigenous toymakers to raise capital. "The success of SMEs in the toy industry can grow manifold if they start working in self-sufficient clusters in certain regions", he said.

Reputed toymaker Funskool echoed the need for a change in the government's outlook to boost the industry. "For toymakers to produce in India and join the Make in India campaign, fundamental changes in the way the government looks at the toy industry is needed", Funskool (India) CEO John Baby told IANS.

The company highlighted installation of proper infrastructure support like R&D, tool-making facilities and testing labs, among others, to enable the growth of indigenous toy manufacturing.

While the sector at present employs around three million people at various skill levels, Baby said the present labour laws do not support the industry to undertake high volume one-run production.

The industry further highlighted the health hazards children may be exposed to when the quality of the materials in the toys are compromised for pricing.

"The cheaper imports of toys, especially from markets like China are available in the market at a lesser price, but their quality is a matter of concern," Gupta said.

Further, while many global brands are in the process of making their India entry, which will give rise to further innovation and boost the economy, an existing problem has been that most imported toys don't cater to the needs of Indian children.

"Domestic manufacture also ensures that the Indian buyers get quality and safe toys for their children at affordable prices", the Funskool official said.

But cheaper imports from the land of the Hans and Tangs alone cannot be blamed for endangering the health of children.

Among the local manufacturers in India, about 59 percent are still focussing on the production of cheap and unbranded toys, thereby compromising on quality.

"In the future it is expected that these companies will shift towards branded toys as well to stay competitive with international companies," TAI's Gupta said.

"The coming times are really bright for the toy industry", Mayank Aggarwal, director of Playwell Implex, a toy distribution company, told IANS.

He said the industry may touch the Rs.13,000 crore mark by the end of 2015 on account of increasing consumerism and spends from a rapidly expanding middle-class that could comprise over 200 million people by 2020.

"The market size is increasing by at least 20 to 25 percent", Aggarwal told IANS. India's toy industry caters to an estimated 304.8 million children in the 0-12 age group years and 50 million babies in the 0-2 age group.

Source:thehansindia.com

Value-Added Sector Opposes Duty On Yarn Import

This move is primarily aimed at protecting the spinning sector, but it will have a negative impact on the rest of the industry, they say.

“Value-added textiles in general and the apparel sector in particular are under severe pressure due to fierce competition in the international market being faced from countries like Bangladesh, Vietnam and Cambodia,” said Pakistan Hosiery Manufacturers and Exporters Association (PHMA) North Zone Chairman Usman Jawaad. Squeezing the apparel manufacturers would lead to a decline in export earnings coupled with unemployment, he said.

At present, importers are enjoying zero customs duty on yarn import from India. The value-added sector prefers Indian yarn as it is cheaper than Pakistani product and has good quality due to long staple, which is used for lawn and other cloth manufacturing.

According to experts, India is producing fine-quality yarn because its textile industry is growing and is making new investment in machinery to compete globally.

The All Pakistan Textile Mills Association (Aptma) – a body of spinning units – is continuously voicing concern over the declining domestic fibre consumption in value addition and is pressing for a 15% regulatory duty on the import of yarn and fabric meant for domestic consumption.

According to Aptma statistics, Pakistan is using only 28% of domestic textile, whereas India is using 60% of its local production and thus has the capacity to absorb a sudden crisis.

Pakistan’s per capita fibre consumption is 10 kg, of which only 2.8 kg is produced locally, whereas 7.28kg is either being imported legally or smuggled.

However, the value-added sector insisted that it was the quality not the price that encouraged them to import yarn from India.

They said Pakistan’s value-added sector was facing stiff competition globally and the government should not put additional burden on them, when the cost of doing business was increasing due to energy shortages.

Source:tribune.com.pk

Non-Ferrous Metal Exports To China Falls 36% In June

In the midst of debate on the impact of slowdown in the Chinese economy on rest of the world, India’s engineering exports have started witnessing a negative fallout with a drop of 36 per cent in export of non-ferrous metals to China in June, 2015, an analysis by the EEPC India has shown.

Exports of these metals dropped to USD 85.09 million in June 2015 from USD 132.67 million a year ago. “China is the topmost importer for Non ferrous Metals importing around 19 per cent of India’s total export of these metals,” said Chairman of the EEPC India Mr Anupam Shah.

He said in the non-ferrous metals, the slowdown impact in China is being directly felt on India’s engineering exports , while in several other items, the indirect impact would be felt once the domino effect spreads.

For overall exports of engineering goods , as a sector, China recorded drop of 25 per cent in June 2015 due to fall in Chinese import demand.

The total shipments of all the engineering goods to China during the month dropped to USD 152 million from USD 202 million a year ago.

Signals for the spread of slowdown due to China factor are already visible in Germany, Colombia and the Netherlands where demand for non-ferrous metals is showing significant fall. “The Chinese cut in demand has affected the sentiment in rest of the world,” the EEPC said.

The situation in rest of the world is no better, necessitating that the drawback rates be increased along with interest subvention by the Indian government.

For China, same is the situation with regard to industrial machinery which reported a decline of 18.25 per cent in June this fiscal over the same month last year from USD 32.76 million to USD 26.78 million.

Source:rtn.asia

Tribunal can't dismiss appeal without decision on merits

Excise & Customs : So long as Parliament has not intervened to take any steps to amend or clarify legal position, it has to be held that Tribunal could not have dismissed appeal without adjudication on merits

TPO to determine whether foreign AE compensated Indian entity for AMP exp. incurred by latter: ITAT

IT/ILT : While determining cost/value of international transaction of brand/logo promotion through AMP expenses incurred by Indian entity for its foreign AE, it is necessary to determine whether foreign AE has compensated Indian entity; matter remanded

Gold Smuggling In India Likely To Shrink On Falling Demand

The gold smuggling in India is estimated to drop significantly during 2015, when compared with the previous year. According to industry estimates, the volume of smuggled gold during the entire year 2015 is likely to total 150 tonnes, 40% lesser when compared with the 200 tonnes smuggled during 2014.

According to Indian Bullion Jewellers Association (IBJA), there are several reasons to assume that gold smuggling will see a slowdown during the current year. Firstly, the demand for gold has dropped sharply during recent times. In fact, there is hardly any demand for gold in the country. Despite the sharp fall in international gold prices, gold intake in the country has not witnessed much momentum, especially due to the absence of wedding season. The gold demand in the country had dropped nearly 25% during the quarter ending June this year. Secondly, the implementation of strict security measures and deployment of state-of-the-art security equipment at airports have reduced the instances of gold smuggling.

IBJA expects gold smuggling to increase during Diwali and Dhanteras, as gold purchases by Indians are bound to increase during this period. The advent of wedding season will further hike gold demand in the country. Despite higher demand forecast towards end-2015, the yearly smuggling figure for the year is not expected to surpass 150 tonnes. Also, the Association noted that reduction in gold import duties would result in zero gold smuggling in the country.

PR Somasundaram, Managing Director, World Gold Council India, believes that illegal gold imports into the country have dropped dramatically as incentives to smuggling remains very low currently. Gold prices in India are currently trading at a discount to London prices. Higher imports by banks and other agencies have made the availability of gold easier.

Source:metal.com

Indian Rupee Falls To 2-Year Low At 65.50 Per Dollar

The Indian rupee fell to as low as 65.50 to the dollar on Thursday, its lowest since September 2013, tracking losses in Asian currencies after a slump in Chinese equities reinforced concerns about the world’s second-largest economy.

The rupee was at 65.4750/4800 at 03.33 pm (1003 GMT), compared with its close of 65.2650/2750. The Shanghai Composite Index lost 3.4 per cent, in a new stumble that underscored fragile investor confidence in the market and pushed emerging Asian currencies lower.

Source:financialexpress.com

Commissioner can issue circular insisting on dealers to submit digitally signed declaration forms un

CST & VAT : Kerala VAT - Commissioner had power and jurisdiction to have issued Circular No. 8/2014, dated 22-4-2014 insisting dealers for digitally signed Form 15 declaration, procured online, to support transportation of goods dealt with by them

Capital gain exempted under sec. 47 isn't liable to MAT as it doesn't fall in definition of income

IT : If a receipt/gain is not "income" within the meaning of section 2(24), it cannot be subjected to MAT u/s 115JB .Capital gains from transfer of asset by holding company to its Indian Wholly Owned Subsidiary which is tax exempt u/s 47(iv) is not chargeable to capital gains and consequently is not "income" within meaning of section 2(24)(vi) and hence cannot be included in computation of "book profit" for MAT purposes u/s 115JB

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