IT/ILT : Payment received by foreign company from Indian franchisee for international marketing activities is not "royalty" under Article 12(4) of DTAA even if its on the basis of % of gross revenue. In order to cover any amount within the purview of "royalties" as per Article 12 (4) of the DTAA, it is imperative that the payment must be a consideration for use or right to use any copyright of the literary artistic work etc. or any patent, trademark etc. (collectively referred to as the 'defined
Thursday, 18 July 2013
Sum incurred on interior decoration in a leasehold premises for a newly set-up business is a capital
IT: Expenditure incurred for interior decoration on leased premises, for purpose of setting up a new business is capital in nature
No concealment penalty on disallowance of a claim unless assessee has concealed particulars of such
IT: Where assessee-hospital furnished entire details of medical equipment deployed in its hospital on which depreciation was claimed, disallowance of excess depreciation could not attract penalty under section 271(1)(c)
Rebate notification as on date of export would be applicable to determine rebate available on export
ST : Claim for refund/rebate accrues upon actual export; therefore, rebate notification as it stands on date of export is applicable for grant of rebate
Allocating an onshore contract by an AE to Indian affiliate is an 'International Transaction' subjec
IT/ILT: Where AE of assessee entered into four agreements with Power Grid Corporation of India Limited (PGCIL) and later on it with consent of PGCIL had assigned portion of onshore contract to assessee, assignment agreement between AE and assessee had all ingredients of an international transaction within meaning of section 92B and price paid for such transaction had to pass ALP test
Replacement of building destructed in fire isn’t current repairs as it brings into existence a new a
IT : Replacement or repairs of building and plant and machinery on destruction of same by fire can not be considered as current repairs or revenue expenditure because said replacement results in bringing into existence of a new asset giving enduring benefit to assessee
Rupee Opens Flat At 59.71 Per Dollar
On Friday the Indian rupee opened flat at 59.71 per dollar versus 59.67 Thursday.
Pramit Brahmbhatt, Alpari India said, "The rupee will continue to trade weak due to a stronger dollar and high dollar demand from internal importers. The rupee has started discounting the RBI measures and is now reacting to FII pullout and other global factors. However, a strong equity market will cap the downfall. The range for the day is seen between 59.32-60.22/USD."
The euro slipped to sub 1.31 to the dollar. The dollar index was around 82.90 mark. The dollar-yen was above 100.
Source:-www.moneycontrol.com
Cement Exports To India Halve As Rupee Plunges
July 18, 2013
Cement exporters are facing tough times as shipment to India almost halved recently due to a steep fall of the rupee.
In the face of weak demand, some manufacturers have already stopped exporting to the neighbouring country, which is the only export destination for Bangladeshi cement.
The fresh blow comes after exports plunged 57.82 percent to $14.58 million year-on-year in fiscal 2012-13, according to Export Promotion Bureau.
“Our exports fell by 45-50 percent in the last couple of months,” said Alamgir Kabir, additional managing director of MI Cement Factory, a leading exporter who markets the Crown brand.
They exported 5,600 tonnes of cement last month to the Northeast states of India, compared to 9,760 tonnes in May, Kabir said.
The rupee nosedived 10 percent against the dollar just in the last two months, resulting in a surge in import cost for the Indian traders, he said.
The dollar traded at Rs 59.33 yesterday and rose as high as Rs 61.05 on July 8, from Rs 54.83 on January 1, according to Reserve Bank of India.
In contrast, the Bangladeshi currency gained against the dollar due to higher foreign exchange reserves and lower imports. The taka has advanced 2.5 percent to Tk 77.75 against the dollar since January.
“Our export price has come down by around 5 percent due to the devaluation of the Indian currency,” Kabir said.
Echoing him, Ali Bashar, managing director of Seven Circle (Bangladesh) that makes Seven Rings brand, said: “The Indian exporters are still offering the same prices they offered before the depreciation of the rupee. We can’t accept it.”
“We didn’t make any shipment last week as the offered price did not match our expectation,” he said, adding that his company usually exports 2,000 tonnes to 2,500 tonnes of cement a month.
Bashar said the trend may continue until the Indian importers adjust their local price with the depreciated value of the rupee.
However, Mostafa Kamal, chairman and managing director of Fresh Cement, said the situation is temporary.
He said non-tariff barriers such as certification and bank guarantee from the Indian part and weak infrastructure on the Bangladesh side are some impediments to cement export. Bangladesh exports 15,000-20,000 tonnes of cement a month to India.
Currently, the cement production capacity of the country is around 22 million tonnes per year, while the annual demand is around 16 million tonnes.
Source:-www.thedailystar.net
Govt Forum To Hear Industry Views On Tax Disputes
The finance ministry has constituted a forum for exchange of views between the government and industry groups on tax-related issues or disputes.
The forum would be chaired by Parthasarathi Shome, adviser to Finance Minister P Chidambaram. It would meet every Wednesday at 3 p.m.
The first meeting would be held Aug 7.
Chambers of commerce, industry associations and industry groups have been asked to first submit a memorandum to Shome and then seek an appointment. An appointment will be fixed for them on a suitable Wednesday.
They will be given a hearing by Shome and officers of the Tax Policy and Legislation (TPL) wing of the Central Board of Direct Taxes (CBDT) and the Tax Research Unit (TRU) of the Central Board of Excise and Customs (CBEC).
The forum will give the government the platform to explain its stand on tax related matters as the industry has been demanding that there must be a forum where their views can be heard.
Source:-www.smetimes.in
Exporters Ask Government To Take Steps To Boost Exports
July 18, 2013
New Delhi: Amidst volatile rupee, exporters today asked the government to take measures, including providing sops, bringing down transaction costs and implementing flexible labour laws, to boost trade.
The Delhi Exporters Association (DEA) said the weakening rupee is adding to the woes of exporters already hit by low demand in key western markets like the US and Europe.
The association said it has asked the government to intervene, especially, at a time when the rupee has been falling.
"We have made an appeal to Prime Minister Manmohan Singh to intervene in the on-going rupee volatility which has led to devaluation and restore Indian currency to its past glory," DEA President Tilak Raj Manaktala said.
"Continuous fall in rupee value vis-a-vis the dollar. In this about 97 percent of India's international trade is conducted and it is a grave matter. It is an economic crisis like situation...," he added.
The government should focus on reactivating the Micro, Small and Medium Enterprises (MSMEs) particularly the export related segment which needs support and the best is to incentivise them, the association said.
Besides, it said there is a need to amend the labour laws according to today's economic scenario, if India has to compete with the rest of the world.
The rupee extended losses for the second day, dropping 33 paise to 59.67 against dollar, after Fed's comments strengthened the US currency and RBI could drain only a fifth of its Rs 12,000-crore target in an auction to curb liquidity.
India's exports were down by 1.41 percent at USD 72.45 billion in April-June period this fiscal over the same period last year. However, imports during the period were up by 5.99 percent at USD 122.6 billion.
The country's exports in 2012-13 declined 1.76 percent to USD 300.6 billion mainly on account of slowdown in the global economy. In 2012-13, India's trade deficit had touched an all time high of USD 190.91 billion compared to USD 183.4 in the previous fiscal.
Source:-zeenews.india.com
Software Exports From Odisha Grows By 22%
July 18, 2013
Odisha has recorded about 22 per cent growth in software exports in 2012-13. In value terms, the software exports from the state reached Rs 1,970 crore from Rs 1,611 crore in 2011-12.
Exports by IT units, registered with the Software Technological Parks of India (STPI) and Special Economic Zone stood at Rs 1,710 crore and Rs 260 crore respectively.
Infosys is the biggest software exporter from the state followed by Tata Consultancy Service (TCS), Tech Mahindra and Exilant Technologies, sources said.
The software export from the state in 2011-12 was valued at Rs 1,611 crore. This grew by 17 per cent from Rs 1,377 crore in 2010-11.
With the expansion of Tata Consultancy Services (TCS) and Mahindra Satyam (now Tech Mahindra) this year, we are expecting a similar growth rate in this fiscal, said Madhusudan Padhi, state IT secretary.
IT bellwether, TCS currently has a headcount of 1,000 and the expanded facility can accommodate 4,000 more employees. TCS had set up its development centre in the city - TCS Kalinga Park in 2009 on a 46-acre plot.
It may be noted, the state government has set a target of Rs 20,000 crore worth of software exports by 2020 in its new Information and Communication Technology (ICT) policy. The new policy envisages to attract top ten IT developers and five best Electronic System Design and Manufacturing (ESDM) companies to create 60,000 jobs in the state. The policy has incentives for both the software and hardware industries.
Source:-www.business-standard.com
Concentrate Imports For Cider Annoy Fruit Growers
Apple and pear farmers say they aren't enjoying the full benefit of the booming cider industry.
Demand for the craft beverage has doubled over the past five years, according to business analysts IBIS World.
Boutique cider brewer Michael Stafford says farmers should be experiencing greater demand for apple and pear juice because of the cider revolution.
But he says that isn't happening because the big brewers are using cheap imported concentrate to make cider instead.
"It distorts the market price here, in that it sets a very low floor price," Mr Stafford said.
"It would certainly be to the Australian growers' benefit. The more local juice we could use and sell at a higher price, or getting a higher price back to the primary producer, would be better.
"The major brewers have been contacted for a response, but one is yet to be provided."
Source:-www.abc.net.au
Coal India Gives Ntpc A Breather On Imports
Jul 18, 2013
Coal India has assured NTPC, its biggest customer, that it will go beyond fulfilling its commitment under the fuel supply agreement (FSA) and try to lessen its woes over import of coal.
“Possibly, with the exception of the Simhadri unit, there is no plant of NTPC which is receiving less than 80% of the annual contracted quantity. If we make a little more effort, we can even fulfil 80% supply to that unit as well,” S Narsing Rao, chairman and managing director (CMD) of Coal India, said on Wednesday.
To recall, in February, NTPC was forced to temporarily shut down a unit of the 2,000 mw Simhadri Super Thermal Power Station due to want of coal.
Under the new FSAs being signed with power producers, Coal India’s obligation is limited to 80% of the annual requirement of any plant. For the balance 20%, NTPC and other power producers have to arrange the coal themselves through imports or by sourcing from auctions.
But there is a catch. Of the 80% FSA coal quantity, Coal India is obliged to supply only up to 65% from domestic sources at notified prices and the balance 15% through imports – at higher prices, which have to be borne by the power producers.
An assurance of up to 80% domestic coal, therefore, is music to NTPC’s ears, more so because higher imports mean higher costs, which translate into higher tariffs.
“If Coal India is meeting our requirement from domestic sources, then nothing like it, because that’s what keeps power prices low,” said Arup Roy Choudhury, CMD of NTPC.
NTPC recently floated tender to import 5 million tonne of imported coal for 18 of its plants as part of a plan to get 17 million tonne from overseas during the whole of the year.
The power producer is also open to sourcing it from Coal India, an option given under the FSAs.
“We don’t mind sourcing imported coal from Coal India. We have been importing coal for the past 3-4 years and we would like to have them as our preferred supplier. But what’s important for us is the price, and we have to ensure that price is reasonable as that’s what gets passed on to consumers,” said Choudhury.
Choudhury and Rao on Wednesday signed six FSAs for 3,890 mw of generation – out of 29 FSAs for an aggregate 14,010 mw the companies are supposed to sign. To be sure, NTPC has already signed two FSAs with CIL subsidiary ECL for a generation capacity of 1,000 mw on June 11. Rao said CIL was committed to finalising the third party sampling by end-August and that would be made effective from October 1.
Source:-www.dnaindia.com
SAT reduces penalty levied on Co. merely because it was a sick co. and was undergoing financial exig
SEBI : Where penalty was imposed upon appellant-company for its indifferent attitude and delay shown in redressing grievances of investors, penalty was to be reduced as appellant was a sick industrial company having financial constraints
Certificate of registration as Income Tax Practitioner is mandatory for representation before revenu
IT : Mere possession of educational qualification without undergoing departmental examination by the Board itself was not sufficient to have any right to practice as Income Tax Practitioner. Representative can't appear before revenue authorities without any certificate of registration as Income Tax Practitioner
Assessment concluded prior to 1-4-2011, which is effective date of proviso to sec. 44BB, can’t be re
IT/ILT : Since proviso to section 44BB is applicable from 1-4-2011, completed assessments for accounting years prior to same cannot be reopened on such issue
Receipts from a creditor, who just opened a bank account and filed his first return, held not genuin
IT : Where creditors had opened bank account and filed return for first time, they could not be held as genuine and money claimed to be received from them was to be added as cash credit
How to open a PINS account
Jul 15, 2013, 08.00AM IST
(PINS is mandatory for NRIs…)
The Portfolio Investment NRI Scheme (PINS) is mandatory for Non-resident Indians (NRIs) and Persons of Indian Origin (PIOs), who want to deal in shares and convertible debentures of Indian firms on a stock exchange in the country. All buy and sell transactions in listed securities of NRIs are routed through their PINS accounts in a designated bank, which maintains and reports the NRI investments to the RBI.
PINS account
A PINS account in the bank is identical to the NRE account. Even if the NRI has an NRE account, he must open a separate PINS account for trading in shares. An NRI/PIO can have only one PINS account at a given point of time.
Bank branch
A PINS account can be opened only in designated branches of banks (authorised dealers) as authorised by the RBI under the Portfolio Investment Scheme (PIS). The addresses of designated branches are usually available on banks' websites.
Application form
The application for PIS permission can be made through the bank by filling an application form. The details of all shares purchased through the primary market need to be enclosed. A PINS demat account opening form must also be enclosed.
Documents
A copy of the current passport, valid work permit or employment visa, PIO card (if applicable) and address proof need to be enclosed along with the application. The form with required documents needs to be submitted at the designated branch.
Points to note
* The seafarers employed by foreign shipping companies can open a PINS account by submitting the required documents, such as the Continuous Discharge Certificate.
* The PINS account can be debited only for transfer of funds to NRO/NRE account, remittances outside India or for payments to brokers for shares purchased.
(The content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre and Arti Bhargava.)
What are the conditions under which borrowing is a good option?
Jul 8, 2013, 08.00AM IST
(There are, indeed, instances…)
Ashwin Murthy, who works in a multinational company and earns a decent salary, believes that he does not need a credit card. He is single and looks ahead at his life with the confidence of a disciplined saver. He thinks he should save money, instead of borrowing it, in order to buy the things he needs. Murthy is of the opinion that loans are traps laid out by lenders and wonders why one should borrow at all. What are the possible flaws in Murthy's way of thinking?
Ashwin Murthy follows the rule book of the righteous elders, who strongly discourage borrowing. There are, indeed, instances where people have suffered because they have borrowed. To save is to set aside money for yourself, but to borrow is to use money that you have not earned. However, this conservative reasoning may not always help in asset building. Borrowing offers the benefit of leverage, which, if used judiciously, could turn out to be a smart way to build assets.
For instance, buying a home might be tough if Murthy plans to fund it entirely with his savings. In the period that he accumulates this amount, the housing prices could move up, making it tough for him to buy this asset. He may find that borrowing, especially with the tax concessions, might result in a low-cost loan to acquire an appreciating asset such as property.
While Murthy may want to avoid needless loans, he may find it useful to take the ones that can help him tide over temporary requirement without much pain. He must remember that in order to be able to access loans, when needed, he will need a credit track record. A credit card, for which payments have been made regularly, provides the required credit history to take a loan. It will do Murthy well like to consider the advantages of reasonable amounts of borrowings without completely closing himself to the possible benefits.
The content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre and Arti Bhargava.
RBI/2013-14/145 A.P. (DIR Series) Circular No. 13 dated 17-07-2013
Reserve bank of India
A.P. (DIR Series) Circular No.13
July 17, 2013
To
All Category - I Authorised Dealer Banks
Madam / Sir,
Exim Bank's Line of Credit of USD 35 million to the Government of the Republic of Ghana
Export-Import Bank of India (Exim Bank) has entered into an Agreement dated December 14, 2012 with the Government of the Republic of Ghana, for making available to the latter, a Line of Credit (LOC) of USD 35 million (USD Thirty- Five million) for financing eligible goods, services, machinery and equipment including consultancy services from India for the purpose of financing a sugar plant project in the Republic of Ghana. The goods, services, machinery and equipment including consultancy services from India for exports under this Agreement are those which are eligible for export under the Foreign Trade Policy of the Government of India and whose purchase may be agreed to be financed by the Exim Bank under this Agreement. Out of the total credit by Exim Bank under this Agreement, the goods and services including consultancy services of the value of at least 75 per cent of the contract price shall be supplied by the seller from India and the remaining 25 percent goods and services may be procured by the seller for the purpose of Eligible Contract from outside India.
- The Credit Agreement under the LOC is effective from June 27, 2013 and the date of execution of Agreement is December 14, 2012. Under the LOC, the last date for opening of Letters of Credit and Disbursement will be 48 months from the scheduled completion date(s) of contract(s) in the case of project exports and 72 months (December 13, 2018) from the execution date of the Credit Agreement in the case of supply contracts.
- Shipments under the LOC will have to be declared on GR / SDF Forms as per instructions issued by the Reserve Bank from time to time.
- No agency commission is payable under the above LOC. However, if required, the exporter may use his own resources or utilize balances in his Exchange Earners’ Foreign Currency Account for payment of commission in free foreign exchange. Authorised Dealer Category- l (AD Category-l) banks may allow such remittance after realization of full payment of contract value subject to compliance with the prevailing instructions for payment of agency commission.
- AD Category-I banks may bring the contents of this circular to the notice of their exporter constituents and advise them to obtain full details of the Line of Credit from the Exim Bank’s office at Centre One, Floor 21, World Trade Centre Complex, Cuffe Parade, Mumbai 400 005 or log on to www.eximbankindia.in.
- The Directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act (FEMA), 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.
Yours faithfully,
(C. D. Srinivasan)
Chief General Manager
RBI/2013-14/145
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