CA Terminal: 09/14/15

Monday 14 September 2015

Book entry don't create income but recognizes it; income doesn't arise merely on reversal of wrong e

IT : Where assessee credited her capital account with amount of sundry creditors written back but failed to furnish anything except name of parties and even reason for write back was not stated, impugned sum was assessed as income from other sources under section 56

Dispatching notice intentionally at incorrect address couldn't be deemed as valid service of notice

Excise & Customs : Where department was aware of assessee's correct address as per certificate of registration, dispatching notice/order at different/incorrect address does not amount to 'service' thereof; therefore, entire proceedings are liable to be set aside for violation of principles of natural justice

Forex loss in forward contract isn't speculative as contract is made to hedge loss in export-import

IT : Foreign exchange loss incurred by assessee on account of entering into forward contracts with banks for purpose of hedging loss in connection with its import/export business has to be regarded as business loss subject to condition that maturity of hedge does not exceed maturity of underlying transaction

Ponds specially designed for breeding of prawns to be treated as plant for depreciation purposes

IT: Ponds which were specially designed for rearing/breeding of the prawns have to be treated as tools of the business of the assessee and the depreciation was admissible on these at the rates applicable to plant and machinery

Imported goods eligible for SAD exemption only if VAT is leviable thereon: Apex Court

Customs : If goods are tax-free and not chargeable to sales-tax on their resale by importer, the said goods cannot be exempted from Special Additional Duty (SAD) of customs or special CVD at time of import

Order of AO wasn't erroneous if he had taken net profit rate of contractor above normal rate after s

IT: In case of civil sub-contract normal profit rate was about 5 per cent; where Assessing Officer worked out same to be 6.4 per cent in assessee's case, after scrutiny, said order could not be regarded as erroneous

India: Pomegranate Exports May Hit Record 60K Tonne

Maharashtra is all set to export record 40,000 to 60,000 tonne of pomegranates in the coming season beginning November. In 2014-15 season, the state had exported a record 40,000 tonne of pomegranate, an increase of nearly 33% compared to the previous season.

Prices have picked up after a poor start and doubled from R40-50 per kg to R100 per kg for farmers, said Prabhakar Chandane, chairman, Maharashtra Pomegranate Growers Research Association.

While the deficient monsoon has affected other crops, for pomegranates, less rains mean lesser possibility of fungal infections, he pointed out. Cultivation of pomegranates is on the rise not only in the state but also across the country, Chandane said.

In addition to Maharashtra, pomegranates are now being cultivated in Gujarat, Madhya Pradesh and Karnataka. Around 1.25-1.3 tonnes of production is expected in the coming season.

While the government quotes figures of 9 million hectares, the association says the crop is cultivated on some 14 million hectares, 1.5 times more than the earlier acreage, he said.

Maharashtra contributes 90% to the country’s total pomegranate production. The second season of harvesting is to come up in January-February period. The first season for the crop comes up in the July to September period.

Normally, the export season begins in November every year and is completed by March. However, the season extended up to April this year, Chandane said.

For exports, West Asia continues to remain one of the biggest markets for India, Chandane said. This year, India also exported pomegranates to countries such as Bangladesh, Bahrain, Sri Lanka and the Netherlands.

Although Russia emerged as a new market last year, traders are not keen to send products there owing to payment issues in the previous year, Chandane said. The UK, the UAE, the Netherlands, Egypt, Turkey, Bahrain and Kuwait are other important markets for the fruit.

In addition to increased acreage, new markets are also opening up, he said. In all likelihood markets in the US are also expected to open up next year.

Source:freshplaza.com

Lease rentals paid to start a new project wasn't preoperative exp. if such project formed part of ex

IT : Where a project was not a new business of assessee but was part and parcel of same business, lease rent expenses and hire purchase charges in respect of said project was allowable as revenue expenditure

Bangladesh Rice Farmers Face Double Whammy With Lower Prices And Higher Supplies

Bangladesh rice farmers are not happy despite the country achieving record 34.708 million tons production (milled basis) in FY 2014-15 (July - June) due to prevailing low prices, according to local sources.

They are the current prices are not even sufficient to cover their production costs. Most of the farmers are receiving Tk 460 per 40 kilograms (around $145 per ton) for hybrid and high-yielding varieties, about 20% lesser than the production costs.

Farmers have been complaining of lower prices since April this year due to increased local production and higher imports from India. The country reportedly imported about 1.45 million tons of rice during FY 2014-15, about four times more higher than in 2013-14, despite a record production due to prevailing low global rice prices, according to the Ministry of Food. They told local sources that the total availability of rice has crossed the local consumption demand of around 3 million tons and has put a downward pressure on prices.

Also farmers and traders are mainly concerned that increased imports have lowered demand for local rice further pushing down the prices. Average price of coarse rice currently stands at around Tk 30-34 per kilogram (around $377-$428 per ton), compared to around Tk 32-37 per kilogram (around $402-$465 per ton) in April this year and around Tk 35-38 per kilogram (around $440-$477 per ton) during the same time last year, according to data from Trading Corporation of Bangladesh.

They noted that the imposition of 10% duty on rice imports did not provide the desired effect as the Indian suppliers lowered their rates. They are expecting the current floods that are affecting some rice growing areas to push up the prices to some extent.

Floods that are a result of heavy rains have damaged more that 260,000 hectares of Aman crop land, local sources quoted the Department of Agricultural Extension (DAE). Farmers are reportedly encouraged to grow flood-tolerant rice varieties such as BRRI dhan51, BRRI dhan52, BINA dhan11 and BINA dhan12 to ensure that the production is not impacted.

USDA estimates Bangladesh’s MY 2015-16 (July 2015 – June 2016) milled rice production at around 35 million tons, slightly up from an estimated 34.5 million tons in MY 2014-15. It estimates Bangladesh to import around 1.2 million tons of rice in 2015.

Source:- Oryza.com

Imported Pulses To Arrive In India From Sept. 23

At the second meeting of the Inter Ministerial Committee on Prices and Availability of essential food items here on Monday and it was appraised that 2500 MT of the imported Tur will arrive in three tranches at Chennai Port and similar quantity of around 2500 MT of Tur will arrive in four tranches beginning from 23rd September, 2015.

The entire consignment of 5000 MT of Tur would be received at the two Ports by 20th October, 2015. To further improve the availability, import of additional 5000 MT of Tur has also been approved. MMTC has already floated a tender of procurement of Tur on 11th September, 2015 with the bid opening date of 21st September, 2015.

With respect to Urad MMTC indicated that 5000 MT of Urad from Myanmar will be received at the Chennai and JNPT. Both the port will received around 2500 MT each by 20th October, 2015.

As regards imports of Onion MMTC informed that about 1000 MT is expected by 1st week of October, 2015 and another 1000 MT by 2nd & 3rd week of October, 2015 at JNPT, Mumbai. As directed by Union Minister for Consumer Affairs and Public Distribution in the review meeting held on 10th September, 2015 MMTC have also floated a tender for import of 1000 MT of onion on 11th September, 2015 and the bid would be opened on 18th September, 2015.

These imports are expected to improve the availability of pulses and onion and moderate their prices.

Source:business-standard.com

Depreciation includes depletion of natural resources; deductible for computing book

IT : Where voting power of assessee company had been unconditionally acquired by company in which public is substantially interested, assessee company would become a company in which public was substantially interested; assessee-company's claim of brought forward losses would be allowed under section 79

India To Impose Uniform Import Duty On Some Steel As Imports Surge

India will soon impose a 20 percent import tax on some hot-rolled steel products for 200 days, two sources said on Monday, as the government investigates a threat to domestic companies from rising supplies from China, Japan, South Korea and Russia.

The products together accounted for more than half of the 5.5 million tonnes of steel imported last fiscal year into India, the world's only major growing market at a time when top consumer and seller China is slowing.

Struggling to compete due to higher borrowing and raw material costs, Indian steel companies had successfully lobbied to get duties on some products raised to 12.5 percent and quality checks strengthened in recent months.

But the duties did not apply to Japan and South Korea, countries with which India has free trade agreements, prompting the companies to seek a safeguard duty that applies to all.

An Indian steel company executive, who declined to be named, said the so-called safeguard duty would not completely halt imports of the products but prevent foreign suppliers from "predatory pricing" when local production is rising.

Acting on a complaint from Steel Authority of India (SAIL), JSW Steel and Essar Steel, the Directorate General of Safeguards said last week any delay in implementing the duty would cause such damage to the local industry that would be "difficult to repair". (bit.ly/1Oa7c7e)

The government has accepted its recommendation and a notification on a temporary duty for hot-rolled flat products of non-alloy and other alloy steel in coils of a width of 600 mm or more would come out soon, said the sources aware of the matter but who are not authorised to talk to the media.

News agency NewsRise quoted two senior finance ministry officials to say a duty may be announced as early as Monday. Reports of the duty pushed up shares of SAIL, JSW, Tata Steel, Jindal Steel and Power and Bhushan Steel.

Imports made up 5 percent of the country's total production of the under-investigation steel products in the year to end-March 31, 2014. But they have increased since then and are on course to hit 13 percent this fiscal year, or 3.4 million tonnes, according to the companies that sought the duty.

Source:in.reuters.com

Government To Resurrect Country's Dormant Gold Mining Industry

The ministry of mines has planned to resurrect India's dormant gold mining industry. "We're going to auction threefour gold mines in Karnataka, Madhya Pradesh and Rajasthan in two-three months. With amendment of the Mines and Minerals Development and Regulation (MMDR) Act, we are pursuing with the states to move ahead with these auctions," Union Mines Secretary Balvinder Kumar told Mail Today.

India is the world's leading importer and consumer of gold but policy handicaps and inadequate investments and technology mean vast gold ore reserves have largely remained unexplored. For example, despite geological similarity with India, Australia mines 280 tonnes of gold a year. An increase in gold production will cut India's rising gold import bill and boost economy.

"Gold mining in India is negligible. Kolar Gold Fields was our main project but that's been defunct for 14 years now. We're trying to revive it, but the idea also is to tap unexplored sites," Kumar said.

India's gold production dropped 8 per cent to 1.43 tonne in 2014-15 compared to 1.56 tonne in 2013-14 financial year. Gold production from Hutti Gold Mines Co. in Karnataka and Manmohan Industries in Jharkhand was 1.43 tonne in 2014-15 as against 1.56 tonne. In 2014-14, gold import stood at 782 tonnes, while for 2013-14 it was 661.71 tonnes.

Steps such as second-phase mine construction at Hutti gold mines have been taken for increasing the production of metal. At the Hira-Buddini and Uti gold mine, the second phase of mining by shaft sinking and mine development is in process.

Overall, the 12 mineral producing states will put 82 mining blocks containing various minerals for auctioning by October-November this year, Kumar said. The entire process will take 2-3 months.

Source:indiatoday.intoday.in

Rupee Trading Strong At 66.31 On Fresh Dollar Selling, Positive Economic Data

The rupee was trading strong at 66.31 against the dollar in the evening session on fresh dollar selling by banks and exporters amid positive economic data.

Forex dealers said that besides dollar selling, a firm domestic equity market and weakness of the dollar against other currencies supported the rupee.

The dollar inched lower with investors sticking to the sidelines as the countdown begins on whether the Federal Reserve will hike interest rates for the first time in nearly a decade.

The euro edged up 0.1 per cent to $1.1350, holding on to last week's 1.8 percent gain. The dollar eased 0.1 per cent to 120.42 yen.

Against a basket of six major currencies, the dollar eased 0.1 per cent to 95.067. The rupee opened strong by 14 paise to 66.40 against the dollar in early trade at the Interbank Foreign Exchange market today.

It further strengthened to 66.30 before being quoted at 66.31 at 4.10 pm local time. The domestic currency moved in a range of 66.49 and 66.30 in the evening trade.

On Friday, the rupee had lost 11 paise at 66.54 against the US dollar on sustained demand for the American currency from banks and importers amid a higher greenback overseas. Meanwhile, the benchmark BSE Sensex ended higher by 246.49 points or 0.96 per cent at 25,856.70.

Source:thehindubusinessline.com

No sales tax on oil products sold to distributors, as Oil Co. hadn't purchased substantial part from

CST & VAT : Assam VAT - Where assessee purchased petroleum products from IOC and thereafter sold it to dealers and sale price collected from dealers was above 40 per cent of sale price paid to IOC, since quantity of goods sold to assessee by IOC was only 4.5 per cent of its total production, sale effected by assessee did not amount to a first sale under section 8 and was not taxable

Payer can't escape TDS liability on basis of Form 15G if amount of interest exceeds basic exemption

IT : Payer of interest cannot justify non-deduction of tax at source by taking shelter of ultimate tax effects of payee

Credit availed as a service provider can be used to pay excise duty payable as manufacturer

Cenvat Credit : Rule 3 does not stipulate maintaining separate account as a manufacturer and as a service provider; hence, credit availed as a service provider can be used to pay excise duty payable as manufacturer and vice versa

Payment made to sub-contractors disallowed as vouchers issued to them were suspicious in nature

IT : Where Commissioner (Appeals) disallowed payments made to sub-contractors on ground that vouchers issued to them were highly suspicious in nature and even nature of work did not require involvement of sub-contractor, Tribunal could not set aside said order, particularly when none of major points highlighted by Commissioner (Appeals) was answered

AO to rectify his order as he failed to consider an amendment to which retro-effect was given by HC

IT : Where Assessing Officer made disallowance under section 40(a)(ia) for not depositing tax deducted at source within time stipulated under section 200(1) but subsequently section 40(a)(ia) was amended providing to make such disallowance only in case of not depositing tax deducted before due date specified under section 139(1) and such amendment was held to be retrospective by jurisdictional High Court, Assessing Officer should have rectified his order by deleting impugned disallowance

Dept. couldn't forfeit taxes collected by 'Indian Oil' on petrol when it was a taxable commodity

CST & VAT : Assam VAT - Where assessee purchased oil products from two oil companies after payment of tax and sold same to dealers in Assam and collected taxes from them, since oil companies were not specified oil companies at that time and goods were not exempted goods, levy of penalty was bad in law

Running a Pre-School is a charitable activity for getting registration as trust

IT: Where assessee-trust was only running a pre-school by collecting fees for imparting education to children, assessee's main objects were covered by charitable purposes 'education' under section 2(15) and it was entitled for registration under section 12AA

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