CA Terminal

Tuesday, 21 April 2015

Parking charges collected on vacant land were taxable even if developer was following project comple

IT : Where assessee developer was following project completion method for payment of taxes, parking charges collected by him on vacant land belonging to him had nothing to do with completion of assessee's project; assessee was obliged to pay on parking charges in current year

HC dismissed writ against SCN seeking service tax on 85-year lease by City Development Authority

Service Tax : Where department issued notice invoking extended period to demand service tax on premium for leasing out property for 85 years by City Development Authority, High Court dismissed writ against said notice citing availability of alternate remedy of adjudication and appeal

Iran, Major Steel Exporter To Iraq

Iran’s Trade Promotion Organization has announced itself as the major steel and other mineral exporter to Iraq in 2013. Iran’s state news agency IRNA report quoted the Organization’s publications showing that Turkey, Ukraine, China, Jordan, Italy, India, Russia, South Korea, Germany and Czech Republic as Iran’s major rival countries in exporting steel and iron to Iraq.

In 2013 Iran exported steel worth $187.3mn, constituting only 3 per cent of Iran’s total exports to Iraq.

Iran competed with Turkey, Pakistan, India, Oman, China, Jordan, Spain, Egypt, the US, and Saudi Arabia in exporting salt, sulfur, and other ores, with exports worth $716mn of ores, which was a 11.8 share in Iran’s total exports to Iraq in 2013.

In export of ceramic products, Iran competed for Iraqi market with China, Turkey, Spain, India, Germany, Egypt, Italy, Austria, Britain and the US; Iran’s ceramic exports to Iraq totalled $437mn, which was 7.2 per cent of total exports to Iraq. In exports of finishd steel products (steel girders and rebar), Iran was in thrid place, with Turkey, China, Italy, South Korea, India, Germany, Saudi Arabia, Jordan, Russia, and Brazil as rivals in finished steel and iron markets.

Iran exports to Iraq total $12bn annually, and government projections estimate the fiture would rise to $26bn.

Figures provided by Iran’s Customs Office indicate that in fiscal year ending in March 21, 2013, Iran’s non-oil exports totalled 93 million tones, worth $41.7bn, which displayed a growth in weight, of 16.7 per cent and in value of 0.4 per cent compared to that in the year before.

Source:en.mehrnews.com

Govt May Hike Sugar Import Duty To 40% To Check Price Fall

The government is likely to raise import duty on sugar to 40 per cent from the current 25 per cent to check sliding price of the sweetener and enable mills to clear mounting cane arrears of about Rs 20,000 crore.

A meeting of informal group of ministers, headed by Food Minister Ram Vilas Paswan, today decided to recommend a hike in import duty of sugar.

A consensus also emerged on the issue of creating buffer stock, restructuring of loan, promotion of ethanol output, export subsidy on white sugar among others to help solve the current crisis faced by farmers and millers.

"We discussed the suggestions made by farmers and state governments for early clearance of cane dues. Looking at the plight of farmers and unprecedented situation which sugar industry is facing, we have arrived at a consensus on couple of them to help in solving the problems in short term as well as long term," Paswan told PTI after the meeting.

To implement some of the suggestions, the Cabinet proposals will be moved, while import duty can be hiked by the Finance Ministry through an executive order, sources said.

In August last year, import duty on both raw and refined sugar was raised to 25 per cent from 15 per cent to bail out the cash-starved sugar industry.

Besides Paswan, Transport Minister Nitin Gadkari, Agriculture Minister Radha Mohan Singh, Commerce Minister Nirmala Sitharaman, Petroleum Minister Dharmendra Pradhan, Women and Child Development Minister Maneka Gandhi and Minister of State for Agriculture Sanjeev Balyan were present in the meeting. On April 15-16, Paswan had called two separate meetings of farmers and chief ministers to resolve the cane arrear crisis.

Sugar industry is finding difficulty in paying cane price to farmers as mills have been incurring losses for the last few years due to low realisation and high cost of production.

The Centre has recently provided a subsidy of Rs 4,000 per tonne for the exports of 1.4 million tonnes of raw sugars to improve cash-flow of millers.

Industry body ISMA has been demanding that the government give exports subsidy on white sweetener, create buffer stock of 2 million tonnes and also restructure millers' debt over Rs 36,000 crore. Ex-mill prices of sugar have fallen to Rs 21-24/kg in the country, while the cost of production is over Rs 30/kg.

Sugar production of India, the world's second largest producer, is estimated to be higher than the domestic consumption for the fifth year in a row this season.

The government has pegged sugar output at 26.5 million tonnes for the 2014-15 marketing year (October-September), as against 24.3 million tonnes in the previous year. The annual domestic demand is about 24.8 million tonne.

Source:business-standard.com

Coal India Output Won’T Keep Imports Low

Despite Coal India reporting the sharpest production growth in two decades in FY15 and the momentum expected to remain in the current fiscal, the country’s coal imports are set to accelerate. Power companies, one of the major consumers of coal, have firmed up plans to import 73 million tonne of coal this fiscal, up more than a third from last year.

Higher imports have been scheduled because of the fuel’s declining prices in global markets and the transportation bottlenecks that made domestic coal relatively unattractive for coastal power stations.

With the planned hike in coal imports by power plants, the consensus estimate of the overall coal imports for the fiscal—up 10% at 220 million tonne—could go awry. The relentless rise in coal imports in recent years has put pressure on the current account, along with the heavy oil import bill, which has been a perennial issue for India.

The current account deficit (CAD), which had hit a record 4.8% of GDP in FY13, dropped to 2.3% in FY14 and further to 1.7% during April-December 2014.

In what could be a relief to the managers of the country’s current account balance, the higher coal imports in the current fiscal won’t add too much to the country’s import bill, unlike in FY13 when the prices of the commodity skyrocketed. Global coal prices have declined dramatically over the last two years from a high of over $100 per million tonne to a modest $50 per million tonne, currently.

The import bill for FY15 was around Rs 64,500 crore, nearly 40% cheaper than in the previous year, although the volume of imports increased from 170 million tonne in FY14 to 200 million tonne in FY15.

According to sources, the Central Electricity Authority (CEA) has finalised the list of power developers, which have raised the demand for importing coal. “The demand for import has risen because of capacity addition and falling imported coal prices, making the prospect attractive to power producers in view of congested and inefficient transportation available for procuring domestic coal,” a CEA official told FE on the condition of anonymity.

The CEA’s “approval” is sought by the power companies to import coal because it allows them to pass on the additional cost, if any, to the distribution companies.

Recognising that transportation constraints need to be removed for CIL to supply coal to coastal power units, the government is exploring forming joint ventures among the Indian railways, CIL and mineral-rich states to build rail connectivity to pitheads. CIL’s plan to augment production to 1 billion tonne relies heavily on improving railway infrastructure, including in many cases, last-mile connectivity to coal mines.

CIL’s production stood at 494.23 million tonne in FY15, up 7% over the previous year. The company has set a target of 550 million tonne for the current fiscal.

The largest thermal power developer NTPC will alone import 30% of the total CEA-approved coal imports in FY16, at 22 million tonne. “NTPC has 11 new units. Given that CIL only assures 67% of the total requirement to plants commissioned after 2009, we need to tie up imports,” a company official told FE. He, however, added that the company would cease to import coal in five years as its own mines will start producing.

Source:financialexpress.com

"Expeditious Customs Clearance Of Goods" Reaches Centre's Table

The Revenue Department has decided to set up a high-level administrative body at all seaports and airports to ensure expeditious Customs clearance of goods. The goods are subjected to certain legal and procedural formalities before any decision is taken.

Any delay in securing the approval from one regulatory agency holds up the Customs permission, said the Central Board of Excise and Customs (CBEC).

"Accordingly, the Board has decided to set up a Customs Clearance Facilitation Committee (CCFC) at every major Customs seaport and airport with immediate effect," it said.

The CCFC will be headed by the Chief Commissioner of Customs/Commissioner of Customs in charge of the seaport and airport concerned.

It will have as members the senior-most functionary of Food Safety Standards Authority of India/Port Health Officer, plant quarantine and animal quarantine authorities, Drug Controller of India, and Port Trust/Airport Authority of India/Custodians, and Railways/CONCOR, among others.

The CCFC has been tasked with monitoring and ensuring speedy clearance of imported and export goods in accordance with the timeline. It has also been asked to identify and resolve bottlenecks, if any, in the clearance procedure.

"The CCFC shall meet once a week or more frequently, if considered necessary by the chair," the CBEC circular read.

The government, in recent times, has taken a number of steps to create a more friendly business environment and trade facilitation, and setting up of the CCFC is a step in that direction, it added.

Source:dnaindia.com

Don't Pay 14% Service Tax As Yet, It's Illegal

Finance Minister Arun Jaitley, in his budget speech of 2015, had hiked service tax to 14% from the current 12.36%. Parts of the service industry, including restaurants, started charging their customers are higher rates from April 1.

However, they missed an important detail. The higher service tax is not yet in force as the Indian Parliament is yet to pass the Finance Bill.

In an interview to CNBC TV 18, Kaushal Srivastava, Chairman of Central Board Excise and Customs (CBEC) said that it is illegal for the industry to charge higher service tax and warned it against doing so.

He said that the service tax rate is still 12.36% across the board and all industries must charge only this and not 14%. Many consumers have reported that restaurants have started charging for higher service tax from April 1 pushing up their food bills.

CNBC reported him saying, "“We have already issued instructions to our field formations that it should be made known to the public by issue of public notices. If any instances of overcharging of service tax rate coming to notice of any members of the public, they are welcome to report it to our local officers.”

So, the next time you go to your favourite restaurant for that sumptuous meal, do keep an eye on what service tax it charges you.

Source:dnaindia.com

Electrical installation in hotel building has to be treated as plant; entitled to 25% depreciation

IT : Electrical installations and sanitary fittings, even if, installed in a hotel building would be regarded as plant and same were entitled to depreciation at rate of 25 per cent

HC quashed reassessment as impugned issue was decided by SC in favour of assessee in earlier year

IT : Reassessment on ground that assessee had paid commission without deducting TDS to advertising agents, could not be upheld where Supreme Court had decided same issue in assessee's favour in earlier assessment year

Akshay Tritiya: Gold Imports May Rise 89% In April

India's gold imports is likely to rise more than 89 per cent at 100 tonnes this month compared with last year, mainly due to weakness in international prices and easing of restrictions by the RBI, an industry body said.

The gold import stood at 53 tonne during April last year, according to data given by The All India Gems and Jewellery Trade Federation (GJF).

"Till now we have imported nearly 100 tonnes of gold. So we are expecting the total imports to be a little over 100 tonnes," GJF's new Chairman Manish Jain told PTI here.

However, imports will be lower than March, when India had shipped in 159.5 tonnes of gold as jewellers were stocking up in preparation for Akshaya Tritiya and the marriage season, Jain said. The country had imported 72.5 tonnes gold in March last year, he said.

In the first three months, the country has imported 286.2 tonnes gold compared with 137.5 tonnes in the corresponding period last year.

In 2013, the government had imposed several restrictions, including increasing the import duty and introducing 80:20 scheme, under which at least 20% of the imported gold had to be exported before bringing in new lots.

In November last year, the Reserve Bank had scrapped the 80:20 scheme citing that the current account deficit level is comfortable.

However, the government has so far refused to bring down the import duty to 2% from the current 10%, as demanded by the industry.

Source:dnaindia.com

Indian Rupee Off 100-Day Low As Exporters Sell Dollars

The Indian rupee on Tuesday (21 April) came off the tax shock-driven low of the previous day as exporters cashed their dollar stocks after sharp gains in the greenback.

The USD/INR pair slipped to 62.75 from Monday's close of 63.11, further off the previous day's intra-day high of 63.17, which was its highest since 8 January.

The sharp rise in the pair over Friday and Monday had weakened the rupee by 1.2% against the dollar and at Tuesday's low of the pair, the Indian unit has recovered 0.6%.

The surprise government move over the weekend to issue notices to several foreign firms asking them to pay tax dues was the main drag on the rupee over Monday.

Another development in the market that weighed on the rupee was Indian pharmaceutical firm Sun Pharma coming under selling pressure as its Japanese stake holder Daiichi Sankyo offloaded its entire stake through multiple block deals.

Sun Pharma shares fell more than 10% on the announcement adding to the pressure on the rupee as Daiichi repatriating its proceeds will increase demand for the dollar.

According to the latest official data, foreign investors pumped in more than $3bn in the Indian capital markets last month, and total foreign inflows during the first quarter of 2015 touched $13bn. The dollar rally since Friday (17 April) and month-end dollar demand form oil importers are also weakening the rupee.

Source:ibtimes.co.uk

Now insurance broker shall be deemed as person carrying designated business or profession under mone

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

Deeming fiction of Sec. 50C not be considered while computing exemption under Sec. 54

IT : When a property is acquired by inheritance, cost of acquisition and period of holding of previous owner is to be taken as cost and holding period of assessee

Bank couldn’t defer deduction of tax and wait for lower TDS certificate from depositor; held as asse

IT: Bank cannot simply defer deduction of tax at source on interest on deposits and keep on waiting for certificate under section 197 to be obtained by depositor; it is liable to deduct tax as per mandate of section 194A

HC couldn’t reject winding up plea just because trustee of bondholders didn’t agree to debt restrict

CL: Where winding up petitioner providing trusteeship service to bondholders of respondent-company rejected scheme proposed by respondent-company for securing debt due to bondholder it was to be held that petitioner was trying to protect interest of bondholders and, hence, winding up petition filed by it was to be admitted

Royalty for know-how of manufacturing taxable at its situs while know-how for product functionality

IT/ILT : When royalty is for use of a technology in manufacturing, it is to be taxed at situs of manufacturing product, and, when royalty is for use of technology in functioning of product so manufactured, it is to be taxed at situs of use

VAT paid on goods consumed in manufacturing of taxable goods is eligible for set off even if by-prod

[2015] 56 taxmann.com 187 (Madhya Pradesh)

AO couldn’t take into account profit margin of principle-contractor to estimate profit of sub-contra

IT: On rejection of books of account under section 145, profit margin of assessee, a sub-contractor, is to be estimated at rate much less than average profit margin worked out by Assessing Officer of its principal (i.e., contractor)

Addition of unexplained bank deposits upheld on failure of assessee to prove that they were disclose

IT : Where Assessing Officer made addition with respect to income of Electro Medical maintenance centre not included in return of income but assessee showed that said income had been offered in return of subsequent year, matter was remanded back to Assessing Officer for verification

Monday, 20 April 2015

Govt. grants excise duty exemption on machinery supplied for setting up of power project of 'Rattan

EXCISE LAWS/NT : Section 5A of the Central Excise Act, 1944 - Power to Grant Exemption from Duty of Excise - Exemption to Specified Excisable Goods - Provision of Concessional Rate of Central Excise Duty on Specified Goods - Amendment in Notification No.12/2012-C.E., Dated 17-3-2012

If assessee forgoes excise exemption on deemed exports, he may claim its refund in terms of Foreign

Excise & Customs : FTP : In case of deemed exports, assessee has two options : (a) first, to claim exemption; or (b) seek refund of duty paid by him; hence, where assessee had not availed of exemption, refund of 'duty paid' cannot be denied

No TP adjustment on interest rate charged from AE if it was higher than rate computed by LIBOR

IT/ILT : Where in terms of agreement, assessee was entitled to receive 2 per cent extra mobile phones along with its purchased quantity from Chinese parties, in view of fact that apart from confirmation from suppliers, assessee brought on record bill entry, purchase invoice etc. in support of its claim that value of said swap units was duly accounted for, impugned addition made in that respect by Assessing Officer was to be set aside

Cancellation of house allotment due to non-payment of deposit didn't amount to unfair trade practice

MRTP : In a complaint filed against GDA under MRTP Act for unfair trade practice no direction could be issued for delivery of possession of flat allotted to complainant when that flat had already been issued to another person and complainant had not challenged cancellation of allotment

Pressure cooker is taxable at 12.5% under Assam VAT Act

CST & VAT : Assam VAT - Pressure cooker being sold by assessee would fall under residuary Entry No. 1 of Fifth Schedule to VAT Act and was liable to tax at rate of 12.5 per cent

No pre-deposit of interest if pre-deposit of principal demand of service tax is waived off

Service Tax : Where pre-deposit of principal demand of service tax is waived off, Tribunal cannot order pre-deposit of mere interest component, as interest is consequential; hence, direction of pre-deposit of interest was set aside

Organizing seminar by State forum of bankers club for benefit of bank employees wasn't charitable ac

IT: Where assessee-trust was rendering service to banks by organizing lectures and seminars for benefit of bank employees, same was not charitable activity and assessee was not entitled for recognition under section 2(15)

Cme: Asian Demand Influencing World Meat Markets

The report is published in April and October and can be found on the web at the following

Over the years, global trade in livestock and poultry has become a significant factor, in part because of the surge in demand from emerging markets but also due to the emergence of large global producers in Asia and South America, challenging traditional exporting countries in North America, EU and Oceania.

Shifts in global meat trade have significant implications for prices in the US domestic market and thus deserve attention.

The data set from USDA covers all large players and USDA offers three updated forecasts for a given year, becoming an important resource for market participants.

Some may not realise that the US is the largest world beef importer in the world. Most of the beef coming here is lean manufacturing beef that goes into hamburger production, and a strong US dollar and record high lean beef values have made the US the most valuable grinding beef market in the world.

As a result, most beef suppliers to the US have ramped up shipments. US beef imports for 2015 currently are projected at 1.320 million MT (carcass wt.), revised by 95 thousand MT compared to the October forecast but still slightly lower than in 2014.

However, note that US beef imports are 387,000 MT (+41%) higher than in 2011. China has emerged in recent years as a global beef buyer and the latest USDA data confirmed that position.

Combined beef imports of China Mainland and Hong Kong in 2015 are projected at 1.250 million MT, revised lower from the 1.265 MMT projected in October but still about 18 per cent higher than in 2014. It is truly impressive than in 2011, combined beef imports from China/Hong Kong were a mere 181,000 MT.

The growth in Chinese beef demand has certainly transformed beef world trade. China has been able to fill its growing needs through both direct purchases from Australia and Uruguay as well as indirect flows from Hong Kong, which in turn relies on USA and Brazil for its beef.

But if China has been the major market mover on the import side, India has become by far the largest beef exporter in the world. Keep in mind that almost all Indian beef exported comes from water buffaloes, otherwise called carabeef.

Its products are shipped across Asia, the Middle East and Africa. Some product likely finds its way into China through grey channel trade but because of its FMD status it does not compete directly with the US.

As with China, India beef supply bears watching as it has an outsize influence on global beef trade.

Brazil exports in 2015 are currently forecast to be 2 million MT, revised down by 235 million MT compared to the October forecast but still 5 per cent higher than a year ago and 50 per cent higher than in 2011.

World beef trade has been shifting, with more product available in South America and India and increased demand in North America and Asia.

Source:thecattlesite.com

Sharp Decline In Rubber Production In Kerala, Output Declines More Than 15%

Production of natural rubber in Kerala has declined by more than 15 per cent during last fiscal as against the yield for the corresponding previous year as unremunerative prices kept rubber growers away from tapping.

Production of natural rubber during 2014-15 was 6,55,000 tonnes which is 15.4 per cent lower than 7,74,000 tonnes produced in 2013-14, according to the latest figures released by the Rubber Board.

Kerala accounts for more than 90 per cent of the total rubber production in the country. The total area under rubber cultivation in the state is 5.45 lakh hectares. Besides, some 11.50 lakh farmers, most of whom are small-holders, are engaged in cultivation of the commodity.

"The main reason for reduction in production is that rubber growers desist from tapping due to sharp fall in prices of natural rubber," Cochin Rubber Traders Association President N Radhakrishan told PTI.

Production decreased by 26.6 per cent to 35,000 tonnes in March 2015 from 47,700 tonnes during March 2014, Rubber Board said. Total rubber consumption by various industries, including tyre manufacturers, was 10,18,185 tonnes during 2014-15 which was 3.7 per cent more than the previous year. Total rubber imports for 2014-15 were 4,14,606 tonnes, an increase of 54,000 tonnes over previous year.

Natural rubber production was at a low ebb ever since the prices nosedived to as low as Rs 120 a kg from as high as Rs 250 a kg two years ago.

"The poor return and high labour cost has forced many of the growers, 75 per cent small and marginal farmers, to keep away from tapping," Radhakrishnan said.

Mathew, a small-farmer, said rubber has become a "very unattractive venture. The unrestricted massive imports by tyre companies have also pushed down domestic demand," he said.

Hiking import duty on rubber and bringing port restrictions would push up the domestic demand for the commodity, thereby providing provide relief to farmers, he added.

source:economictimes.indiatimes.com

India Exports 10.81 Million Tons Of Rice In First Eleven Months Of Fy 2014-15, Up 8.5% From Last Year

India exported around 10.81 million tons of rice (including basmati and non-basmati) in the first eleven months of FY 2014-15 (April - March), up about 8.5% from around 9.96 million tons exported during the same period in FY 2013-14, according to provisional data released by the Agricultural and Processed Food Products Export Development Authority (APEDA).

In value terms, India’s total rice exports have earned around Rs.43,722 crore (around $7.16 billion) during April 2014 – February 2015, up about 2% from around Rs.42,733 crore (around $7 billion) earned during the same period in FY 2013-14. In USD terms, value of rice exports during the eleven-month period increased by about 2% y/y.

India's basmati rice exports have declined about 4% to around 3.3 million tons in April 2014 - February 2015 from around 3.44 million tons exported during the same period in FY 2013-14.

In value terms, basmati rice exports declined to about Rs.25,087 crore (around $4.12 billion) during the first eleven months of FY 2014-15, down about 5% from around Rs.26,515 crore (around $4.4 billion) earned in the same period in FY 2013-14. In USD terms, India’s basmati rice exports declined by 6% y/y in April 2014 – February 2015.

India's basmati rice exports were primarily impacted due to Iran's ban on rice imports since November 2014.

India’s non-basmati rice exports in April 2014 - February 2015 increased to around 7.51 million tons, up about 15% from around 6.52 million tons recorded in the same period in FY 2013-14.

In value terms, non-basmati rice exports earned about Rs.18,635 crore (around $3 billion), up about 15% from around Rs.16,218 crore (around $2.67 billion) in the same period in FY 2013-14. In dollar terms, non-basmati rice exports increased by 12%y/y during the ten-month period.

Source:oryza.com

‘India To Cut Down 10% Crude Import By 2022’

The Bharatiya Janata party (BJP)-led government at the Centre would cut down India’s crude oil import by at least 10 per cent in the next seven years and bring it down to 67 per cent of the country’s total demand, Dharmendra Pradhan, Union minister of state (independent charge) for petroleum and natural gas, said.

Simultaneously, domestic output would be also increased, he said. “Right now we import about 77 per cent of our crude oil requirement. It is a matter of shame that we are importing such a huge quantity of crude oil even after 68 years of Independence.

By the time Independence completes 75 years, we want to bring this down to 66 per cent, for which we will of course have to step up our domestic output,” Pradhan said. He was addressing a press conference at the end of his four-day tour of Assam.

Source:hellenicshippingnews.com

Builder entitled to deduction of interest if bank loan was transferred to housing society as per dev

IT : Interest paid to bank on borrowed fund which was advanced by builder to housing society and recoverable later on from purchasers of flats, would be allowable

Mmtc To Import Lng From The Spot Market

Source:hellenicshippingnews.com

No tax recovery from director of public Co. without issuing notice of lifting corporate veil to dire

IT : Director of a public limited company could not be treated as director of a private limited company, by lifting corporate veil under section 179 without issuing show cause notice to him

Actual management of operations is 'Business Auxiliary Service' and not Management Consultancy Servi

Service Tax : Management of a factory is different from management consultancy and such management services which are executory in nature would merit classification under 'Business Auxiliary Service' and not under 'Management Consultancy Service'

Removing moisture from raw honey is deemed as manufacturing activity for sec. 10B relief

IT : Activity of removing moisture from raw honey and thereupon repacking and exporting same to various countries amounted to 'manufacturing' activity eligible for exemption under section 10B

Earlier assessments couldn't be held erroneous on ground of non-genuine transactions of subsequent y

IT/ILT: Where Assessing Officer passed earlier assessment order after examining all facts and evidences relating to transaction of know-how and DMF, Only because TPO in subsequent year took a view that purchase of technical know-how and DMF was not genuine; assessment order could not be revised under section 263

Commission paid to NR agent for procurement of export orders outside India wasn't taxable; not liabl

IT : Where commission paid by assessee to non-resident agent for procuring export orders was not chargeable to tax in hands of said agent, assessee was not liable to deduct tax at source

HC admits winding-up plea against company on its wilful failure to pay an admitted debt

CL: Where a company wilfully neglected to pay an admitted debt, winding up against company was to be admitted

No assessment of escaped turnover solely on basis of statements collected by enforcement wing during

CST & VAT : Tamil Nadu VAT- Assessment cannot be mechanically done by placing reliance on statement collected by enforcement wing; it is to be done by Assessing Officer independently

Sunday, 19 April 2015

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

Saturday, 18 April 2015

A merchant banker isn't functionally comparable with an investment advisor for TP study

IT/ILT: Merchant banking and investment banking services are functionally different from investment advisory support services

Sum appropriated by co-operative bank towards education fund out of earlier year wasn't deductible

IT :Where assessee, a co-operative bank, credited one per cent of profits earned in earlier years to Co-operative Education Fund maintained by National Co-operative Union, since amount paid was not out of profits of year which were subjected to tax it could not be allowed as deduction

Losses of eligible business were to be reduced while computing sec. 80-IA relief even if they were a

IT: While computing profits from eligible business for allowing deduction under section 80-IB, deduction of losses set off against profits from other business has to be taken into consideration

Co. having huge turnover and brand value in comparison to assessee is excludible from list of compar

IT/ILT : Where TPO made addition to assessee's ALP in respect of rendering software development services to its AE, in view of fact that some of comparables selected by TPO were inappropriate on account of turnover, brand value and functional difference as they were involved in development of softwares, impugned addition was to be set aside and, matter was to be remanded back for disposal afresh

Decision by third judge due to difference of opinion between two judges couldn’t be termed as decisi

IT : Decision of the High Court u/s 259(2) by referring to a third Judge where the two Judges hearing the appeal differ in opinions is not the same as a decision rendered by a Bench of three Judges with one dissenting. Therefore, past Division Bench judgments of the same HC would bind the third Judge(referee Judge) who is hearing on the point of difference between the two Judges

'Digital decoder' and 'set-top box' are analogous; taxable at 5% under Rajasthan VAT Act

CST & VAT: Rajasthan VAT - Digital decoder and set-top box are one and same product and in terms of notification dated 12-7-2004, digital decoder is liable to be taxed at rate of 5 per cent

Sale proceeds of diamonds weren't unexplained when assessee had furnished details of buyer and manne

IT : Where in support of sale of diamonds not only particulars of persons who purchased diamonds were furnished but also manner of payment was disclosed, impugned addition made under section 68 in respect of sale proceeds of diamonds was to be set aside

Govt. directs Development Commissioner to allow setting-up of power plants only in non-processing ar

SEZ : Guidelines for power generation in Special Economic Zones

Chemicals used in developing photos couldn't be held as sale under Rajasthan Sales Tax Act

CST & VAT : Rajasthan VAT - Where assessee was doing business of photography and it purchased chemical after payment of tax and used same in photographic work, whatever chemical had been used while preparing photographs could not be said to be a sale directly or indirectly to customers by assessee

Even investment in name of partners would provide sec. 54EC relief to partnership firm

IT : Where partners of assessee-firm introduced land and building as their capital contribution to firm, said land and building became property of firm and, therefore, capital gain arising on sale of said property was taxable in hands of assessee-firm

Sec. 54F relief available in entirety if investment exceeds sale proceeds, irrespective of usage of

IT: Where even before sale of agricultural land, assessee borrowed housing loan and started construction on site belonging to him and after sale of agricultural land, amount spent towards construction of house was more than consideration received, assessee was entitled to benefit of section 54F

Govt. directs Development Commissioner to allow setting-up of power plants only in non-processing ar

SEZ : Guidelines for power generation in Special Economic Zones

SEBI grants 18 months' time to Cos of non-operational Stock Exchanges to obtain listing in a recogni

SEBI : Exclusively listed companies of de-recognized/non operational/exited stock exchanges

SC: High Court's direction to Court receiver to sell property was void as DRT was established to set

RDBFI Act : In view of fact that DRT had been established in Mumbai and proceedings before High Court were automatically transferred to it in view of section 31, it was impermissible in law for High Court to direct Court receiver to sell property of respondent in public auction by executing Court decree, which action of Court receiver was void ab initio in law

HC didn't interfere with depreciation allowed on asset which was purchased and leased back without o

IT : Where assessee purchased assets from an unrelated party and leased them back to said party and there was no overvaluation of assets so as to claim higher depreciation for reducing tax liability, Explanation 3 to section 43(1) could not be applied to deny depreciation

Supervising of member co-operatives by apex co-operative in discharge of statutory obligation isn't

Service Tax : Where assessee, an apex co-operative and a nodal agency, was Supervising or Guiding or Managing its member-cooperatives in discharge of its obligations under State Act/law, said activity did not amount to 'Management Consultancy Service' and was not liable to service tax

Now AD- banks need to use 'Virtual Private Network' for accessing e-Biz portal for reporting under F

FEMA/ILT : Foreign Direct Investment (FDI) – Reporting under FDI scheme on e-Biz platform

Friday, 17 April 2015

TPO gets flak from ITAT for comparing a trading concern with manufacturing concern for TP purposes

IT/ILT: Where assessee-company was engaged only in trading of Grey Bentonite Clay, a company engaged in manufacturing of Bentonite could not be selected as comparable

ITAT reduces disallowance as claim was reasonable even if certain vouchers were self-made and not ve

IT: Deduction on account of 'raw material discarded' could not be allowed to assessee where it could not furnish any relevant detail to satisfaction of Assessing Officer

Reassessment upheld as assessee claimed sec. 80-IB relief without declaring that he didn't have lice

IT : Where during original assessment proceedings, assessee-company had not declared to department that it did not possess factory license to manufacture and claimed deduction under section 80-IB, initiation of re-assessment proceedings was justified

ST demand on services provided to holding-co. won't arise if corporate veil of subsidiary-co. is lif

Service Tax : Where corporate veil is lifted and Indian subsidiary is treated as 'alter ego'/'establishment' of foreign holding company, then, for period prior to 1-7-2012, they would amount to 'same person' and any service between them would be a 'self service' not liable to service tax

Petitioner had violated FEMA norms by payment of customs duty payable by NRI on import of Car: HC

FEMA : Payment towards customs duty payable by non-resident Indian while importing a car was in violation of provisions of FEMA

TPO gests flak from ITAT for comparing a trading concern with manufacturing concern for TP purposes

IT/ILT: Where assessee-company was engaged only in trading of Grey Bentonite Clay, a company engaged in manufacturing of Bentonite could not be selected as comparable

Collection centers working for Path Labs can't be compared with trader of goods to decide TDS liabil

IT : Traders of goods cannot be compared with service providers / collectors/ aggregators working with pathological laboratories, as latter provide only agency services

Govt. promotes ease of doing business in India; eases SEZ rules for removal of goods to DTA

SEZ : Simplification of Sez Rules – Inter Unit Transfers

Order pronounced by ITAT beyond 90 days from date of conclusion of hearing isn't bad in law

IT : Order of ITAT does not become bad in law if pronounced beyond 60/90days as prescribed in Rule 34(5)(c)

CBDT directs its officials to complete PAN migration activity as per new jurisdiction orders by Apri

IT : Section 139A of the Income-Tax Act, 1961 - Permanent Account Number (PAN) – Completion of PAN Migration Activity as Per New Jurisdiction Orders Post Restructuring

HC allows sec. 54F relief even if sale proceeds not deposited in CG scheme as assessee intended to i

IT: Where assessee had already started construction of a residential house within one year prior to date of sale of land and utilised entire sale consideration within three years from date of transfer of land, he could not be denied exemption under section 54F

Glazing and wall cladding works on commercial building is liable to service tax

Service Tax : Structural glazing, spider glazing and wall cladding works on high rise and commercial buildings is liable to service tax, prima facie, on amounts billed but credit on inputs is available thereagainst

AO of searched person has to record satisfaction that undisclosed income belongs to other person u/s

IT : Satisfaction of Assessing Officer of person searched or against whom an order under section 132A has been passed, that any undisclosed income belongs to a third person, is prerequisite before proceedings under section 158BD are initiated

Doctrine of unjust enrichment won't apply where price charged for services was inclusive of all taxe

Service Tax : Where prices are inclusive of all taxes, refund of excess tax if any paid by service provider cannot be hit by 'doctrine of unjust enrichment', as there is no specific collection of service tax

Construction of Women Hostel and Synthetic Track in University weren't ‘Commercial/Industrial Constr

Service Tax : Construction of 'Women Hostel' and 'Synthetic Track' in University awarded by National Highway Department does not, prima facie, amount to 'Commercial or Industrial Construction Services', as said constructions are not 'commercial'

Sum received under MOU entered with owner to identify buyers for property was taxable as business in

IT: Where assessee entered into a memorandum of understanding with owner of property for a consideration, to identify buyers of property, and he had no intention to acquire capital asset in lieu of transfer and only facilitated transfer of capital asset from owner to purchaser and made profits, such profits would be assessible as business income and not capital gains

Construction of Women Hostel and Synthetic Track in University weren't 'Commercial/Industrial Constr

No TP addition by AO on basis of notional price instead of using actual price charged from non-AE un

IT/ILT : It is actual transaction of charging or paying price in a comparable uncontrolled transaction which is to be considered for purposes of determining ALP under CUP method and there can be no question of substituting such actual price charged with a notional price which could have been charged

Confirmation of postal authorities is sufficient to prove service of assessment order in time

IT : Where postal authorities evidenced that assessee had received copy of assessment order within prescribed time, contention of assessee that he received same late, was unjustified, and, revision petition filed by him against said order was time barred

ITAT directs AO to make same disallowance u/s 14A which was made in earlier year, as facts remained

IT : Where in earlier assessment year, Assessing Officer had worked out disallowance under section 14A at 10 per cent of exempt income from composit activity, on similar fact in current year, basis of disallowance was to be same

No reassessment on basis of auditor's objections when AO was aware of controversy at assessment stag

IT : Where reassessment proceedings made on basis of audit objection and mere change of opinion on same set of evidence on record, available at time of assessment, reassessment was to be quashed

Delay in filing plea for recalling winding up order couldn't be condoned as there was no sufficient

CL : Where there was no sufficient cause for delay in filing application for recall of order of admission of winding up petition after same had been advertised, application was to be dismissed

Comparable excluded/included earlier had to be given same treatment in later years if facts remained

IT/ILT: Where a company had been included/excluded from list of comparables in earlier years, consistent with view taken in earlier years and there being no change in facts and circumstances in instant year, same had to be included/excluded in list of final comparables

Thursday, 16 April 2015

Sugar Stocks Gain On Talks Of Import Duty Hike

Among other stocks - Sugar stocks were in focus on the back of reports indicating that the government may soon consider hike in import duty on sugar.

According to media reports, Food Minister Ram Vilas Paswan on Wednesday was quoted as saying that his department would soon recommend increasing the import duty on sugar to 40 percent from the current 15 percent to bring down the surplus.

Select sugar stocks pared gains and ended in red at close. However, Bajaj Hindustan, Balrampur Chini, Shree Renuka Sugars, Triveni Engineering, KCP Sugar and Andhra Sugar were up 0.5-1 percent each.

Source:indiainfoline.com

Coal India To Import About 2 Million Tonnes Of Coal In Fy16

State-owned Coal India will import about 2 million tonnes of coal, to be supplied to power producers, in the current fiscal. “Coal India (CIL) will import 1.6 million tonnes of coal for power producers in financial year 2015-16,” a source said.

CIL had earlier engaged MMTC through a competitive bidding for arranging such imported coal. In the just-ended fiscal, CIL imported 0.48 million tonnes of coal for power plants, the source said.

Earlier this month, state-run MMTC had said that it has received orders for import of steam coal from CIL and Andhra Pradesh Power Development Company Ltd.

MMTC got the order to supply about 2.35 million tonnes of imported steam coal during 2015-16. CIL had earlier asked power firms to contact its supplying companies in case they need to import coal through them for FY16.

“In order to make necessary arrangements for supply of imported coal, interested and eligible power utilities are requested to approach the supplying coal companies immediately with whom they have signed for further course of action,” Coal India (CIL) had said in a notice.

The PSU further said that it offers to supply imported coal for the year 2015-16, under the provisions of fuel supply agreement (FSA) entered with the power utilities “in the post 2009 FSA model”.

In terms of the Presidential Directives issued in 2012 and 2013, CIL board had earlier decided that under fuel supply pacts for new power plants commissioned after 2009, out of the minimum assured quantity (80 per cent of Annual Contracted quantity), 15 per cent shall be supplied from imported coal.

It was decided that such imported coal supply was to be made through a PSU importing agency under a back-to-back supply agreement with power plants opting to take imported supply from CIL.

Source:hellenicshippingnews.com

Government Raises Import Tariff Value On Gold At $388 Per 10 Grams

The government today raised import tariff value of gold to $388 per 10 grams, taking cues from global price trends. However, the import tariff on silver has been cut to $524 per kg.

During the last fortnight of March, the tariff value on imported gold was $385 per 10 grams and on silver at $543 per kg. The import tariff value is the base price at which customs duty is determined to prevent under-invoicing. It is revised on a fortnightly basis taking into account global prices.

The increase in tariff value on imported gold has been notified by the Central Board of Excise and Customs, according to an official statement.

Gold in Singapore, which normally sets price trend on the domestic front, rose by 0.4 per cent to $1,207.70 an ounce and silver by 0.3 per cent to $16.40 an ounce.

In the national capital, gold prices rose by Rs 210 at Rs 27,080 per 10 grams and silver also gained Rs 200 at Rs 37,000 per kg on increased offtake by industrial units and coin makers.

Gold is the second-largest import item for India after petroleum. Higher gold import bill adversely affects the country's current account deficit (CAD). The government has been repeatedly asking people to desist from buying gold and instead invest in other saving instruments.

Source:economictimes.indiatimes.com

Volkswagen isn't a dominant player in passenger car segment in India; it can't be said to have abuse

Competition Act : Where OP i.e. Volkswagen Group, had a very negligible share in passenger car segment in India which was dominated by a number of players, OP could not be said to be dominant and as such question of abuse of dominance would not arise

HC directed assessee to re-file appeal before Tribunal as same was returned without passing any orde

CST & VAT : Tripura VAT - Where against order of Commissioner, assessee filed appeal before Tribunal and same was returned without passing any order, assessee was to be directed to re file appeal before Tribunal and thereafter it shall act in accordance with law

No penalty for wilful non-disclosure of turnover on basis of inspection carried out in middle of AY

CST & VAT : Tamil Nadu VAT - Where Assessing Authority inspected business premises of assessee in middle of assessment year, there being no assessment, non-disclosure of turnover would not fall under case of 'escaped turnover' so as to levy penalty under section 27(3)

Mandatory pre-deposit not required if dispute arose before 6-8-2014 even if appeal was filed thereaf

Service Tax : Right of appeal is governed by law prevailing at date of institution of suit or proceeding, and not by law that prevails at date of its decision or at date of filing of appeal; hence, in case where dispute arose in 2012 i.e., before 6-8-2014, assessee's right of appeal would be governed by erstwhile provisions and not by amended provisions mandating 7.5% /10% pre-deposit

No exclusion of comparable on basis of info obtained u/s 133(6) without making available such info t

IT/ILT: Where Assessing Officer has excluded a company from comparable list on basis of information obtained under section 133(6) but does not make available said information to assessee, comparability should be considered afresh

AO couldn’t deny sec. 80-IC relief to manufacturer of LCD monitors merely by doubting genuineness o

IT: Where LCD monitors manufactured by assessee was covered under Schedule XIV and Assessing Officer proceeded on basis of doubts as to genuineness of claim rather than some concrete material, disallowance of deduction under section 80-IC was not justified