Tax-free bonds may be your best bet to gain from softer interest rates

Tax-free bonds have always been a favourite with investors. Now, there is an even bigger reason for investors to lap them up. The bonds of PFC, REC, Hudco and NHAI, all issued in the first quarter of 2012, have increased in value by 5-15 per cent as rate cut hopes drive up prices. The 15-year 8.3 per cent NHAI - N2 bond (face value of Rs 1,000 and interest paid annually), issued in January 2012, is quoting at Rs 1,170, a gain of 10.8 per cent in one year, while the 15-year 8.12 per cent REC bond has moved up from Rs 1,010 to Rs 1,175 in the same period. Though yields have fallen by 100-110 basis points (prices and yields move in opposite directions), experts are advising investors to stay invested and even buy some more as inflation slows and the interest rate environment becomes more benign. The calculation works this way. If inflation moves down and interest rates also move downward by another 50 basis points, the 10-year bond could see a capital appreciation of 2.5-3.0 per cent, while a 15-year bond could appreciate by another 4-5 per cent. "Investors should hold on to them," says Deepak Punjwani, head (debt markets), GEPL Capital. Investors with an appetite for tax-free bonds could even look to buy these from the secondary markets, he adds. The equity market's rough patch means that companies can raise money through tax-free bonds for long-term infrastructure projects at competitive rates. In the last two years alone, companies have raised Rs 55,000 crore through tax-free bonds. More such issues are expected this year as well but the advantage for investors in existing bonds is that the new issues will be priced at 100 basis points lower than the existing 10-year G-sec yields. Existing tax-free bonds are giving a yield of 6.9-7.19 per cent. Given the soft interest rate environment, new issuances could be at lower yields. "Investors with an appetite for tax-free bonds can consider buying these from the secondary markets," says Ajay Manglunia, SVP (fixed income), Edelweiss Capital. Financial experts are betting that lower inflation will push up bond prices. The declining price of food items, including fruits and vegetables, pulled down inflation to a three-and-ahalf year low of 4.89 per cent in April compared with 5.96 per cent in March 7.50 per cent in April 2012. "The central bank may cut rates by another 25 basis points by August or September," says Mahendra Kumar Jajoo, executive director and chief investment officer, Pramerica Mutual Fund. An interest rate cut could see bond prices move up. Take the case of 8.2 per cent Hudco - N2 option with a tenure of 15 years. The bond trades at Rs 1,110, giving a yield of 7.16 per cent. "For every dip in interest rates by 100 basis points, an investor could get a capital appreciation of 75-100 paise," says Deepak Punjwani. Now if interest rates were to drop by 50 basis points within the next one year, this bond could give you a capital appreciation of Rs 25-30, which translates to 2.5 per cent. That means after adding the coupon rate of 8.2 per cent plus the capital appreciation 2.5 per cent, you could get a return of 10.7 per cent. Similarly, AAA-rated, 8.3 per cent NHAI bond maturing in 2027, which trades at Rs 1,165 and offers a yield of 6.97 per cent per annum, could appreciate by Rs 25 if interest rates were to drop by 50 basis points. That means your total returns could go up to 10.8 per cent (adding the coupon rate of 8.3 per cent plus capital appreciation of 2.5 per cent). Those with an appetite for tax-free bonds could look at buying these from the secondary market as these are liquid and easily available. Tax-free bonds of NHAI, PFC, REC, IRFC and Hudco trade in the secondary market with a yield of 6.90 and 7.19 per cent. For example, the 8.02 per cent PFC bond maturing in 2022, trades at Rs 1,124, giving a yield of 7.03 per cent. So, while a 10-year bank fixed deposit from the State Bank of India gives 8.75 per cent, the effective after tax return for an investor in the high tax bracket would be 6.05 per cent.

Assessee can’t blame computer programme for stock discrepancy unless he proves it; sec. 69B addition

IT : Where assessee agreed to computation of closing stock, but later attributed discrepancy in stock to error in computer programme which was not established, addition of excess stock as undisclosed investments was justified

Import Of Long Staple Cotton Continues

12-Jun-2013

While export of cotton is rising, import of long staple cotton is continuing, despite high import cost due to rupee depreciation.



The landed cost of extra long staple at Indian ports is Rs 66,275 a candy (365 kg), but some mills are insisting on cotton yarn produced from US and Egyptian cotton, as it is of better variety. South Indian mills find it more viable to import cotton from Africa, as it is cheaper for them to import than have cotton transported from Gujarat or Maharashtra. The contamination level is lower in imported cotton.



"Indian mills are expected to import another eight to 10 lakh bales this cotton year, as it is cheaper for them to import cotton," said Shirish Bhai Shah, a Mumbai-based trader.



Till the end of the current cotton year, another 800,000 to one million bales are likely to be imported. So far, 1.2 million bales of cotton have already been imported. "Southern mills prefer importing cotton, as the landed cost of African cotton is cheaper than buying cotton from India itself," said Rahul Kotecha, a Coimbatore-based cotton indenting agent. The current price of cotton in the Indian market is around Rs 11,107 a quintal, while cotton imported from Africa costs around Rs 10,777 a quintal.

Source:-www.business-standard.com

Gold Imports Remain High Despite Positive Real Rates

Gold imports and real policy rates broadly share an inverse relationship (see chart). In the past, when real policy rates became positive, bank deposit rates became more attractive and investors parked their money in banks, reducing the lure of gold. But things seem to be different this time around, because gold imports as a percentage of the gross domestic product (GDP) have not fallen, even though real rates have ticked above zero.

One reason could be that consumer price inflation remains high. Consumer price inflation was slightly lower at 9.31% for May, suggesting that lower input costs are not being passed on to the consumers though growth is weak, thus keeping inflationary expectations high.

Also, monetary transmission of interest rates has been slow. The Reserve Bank of India (RBI) has cut rates by 125 basis points in the past year. However, banks have cut their base rate by only 30-40 basis points. One basis point is 0.01%.

It is not surprising that even credit growth has remained sluggish at 14.6%, as of 17 March. To buttress credit growth, banks may bring down their deposit rates once liquidity eases and RBI cuts interest rates further. But the central bank must ensure that real interest rates remain high, otherwise a rate cut may further buoy demand for the yellow metal.

photo

Another factor spurring higher gold imports recently is prices. Gold prices in rupees have corrected 17% from a high of Rs.32,460 per 10 gram to Rs.27,731 as of Wednesday. Kishore Narne, analyst at Motilal Oswal Securities Ltd, said that after 10-12 years they were seeing a major correction in gold prices and a lot of people who had postponed their purchases are buying the precious metal now.

There is another reason for high gold imports. Analysts say that businessmen and wealthy individuals, who were parking a lot of unaccounted-for money in real estate, are also moving to gold. The real estate sector is in trouble and inventory is high. Real estate as an investment avenue is losing its sparkle. The only option for investors is gold, said an economist who did not want to be named.

After strong demand for gold in April and May, gold imports may decline because of the hike in import duty and tightening of regulations by RBI. But as the chart shows, the key factors are high real rates on deposits and the direction of gold prices.



Source:-www.livemint.com

Shilling Slips As Oil Importers Push Up Dollar Demand

12-Jun-2013

The shilling weakened yesterday on the back of oil importers buying dollars to pay for their supplies, but traders said the local currency could recover on tea exporters' inflows.



Commercial banks quoted the shilling at 85.00/20 per dollar, weaker than Monday's close of 84.85/85.05. "The marginal decline was mainly attributed to demand from the energy sector as various bought dollars," said Bank of Africa in a daily note. "Slow demand during the mid-month cycle coupled with tea dollar inflows during mid-week, the shilling should remain supported and could likely dip back below the 85.00 mark towards end of this week."



Tea is Kenya's leading foreign currency earner and is sold in the port city of Mombasa every Monday and Tuesday. Exporters typically then convert their earnings into shillings to pay farmers and cover operational expenses.



The shilling has gained 1.2 per cent so far this year. Some traders, however, predict that the shilling could depreciate gradually in coming months on the back of a widening current account deficit. Kenya's current account deficit stands at above 12 per cent of GDP, driven by increased local demand for imports, having stood above 10 percent since 2011. A Reuters poll of eight analysts and traders gave a median forecast of 88.00 shillings per dollar by the end of this year.



"The appreciation risk to our forecasts is weaker commodity prices, which would lower Kenya's import costs, narrow the large current account deficit and limit shilling weakness," said Yvonne Mhango, Sub-Saharan Africa Economist at Renaissance Capital. "This would counter the depreciation risk of loose monetary policy," referring to the 950 basis points of cuts to the central bank's key interest rate since July 2012 to 8.50 per cent.



Source:-www.the-star.co.ke

Sales Tax Exemption On Tea Import Sought

Thursday, June 13, 2013 - Karachi—Tea traders are learnt to have urged the government to exempt sales tax on the import of black tea in the new budget to curb the commodity’s smuggling. Pakistan Tea Association (PTA) submitted a set of proposals to the government for incorporation in the new budget document, which proposed to the federal government to enforce a quantitative restriction on the import of tea via Afghan Transit Trade.



They insisted that 15,000 ton of ‘Green and Black Tea’ was being imported through Afghan Transit Trade (ATT), saying that green tea was the foremost beverage served in Afghanistan. “Therefore, a quantitative restriction will be more than sufficient for them”. Members of the tea association also advised the federal finance minister to levy and collect the same amount of CD/ST/IT from Afghan importers at entry point in Karachi and passing it on to Afghan government.



“This practice is in vogue in various landlocked countries.” In a letter sent to the prime minister, federal finance minister and FBR, tea traders called for declaring tea a zero-rated item, freeing it from the Sales Tax regime for at least a year to discourage smuggling and protect government revenue. The letter said that as much as 240,000 tons of tea was consumed in Pakistan, more than half of which was smuggled into the country via the Afghan Transit Trade. This practice, they said, was being encouraged because of “poor physical controls by customs and substantial high incentive to evade import duty and Sales Tax”. Chairman of Pakistan Tea Association Hamid S Khwaja said that the outgoing government in the last budget in June last year had reduced Sales Tax from 16 percent to 5 percent, besides imposing stiffer checks and control.

Source:-pakobserver.net

'Raised Limit For Online Transaction Will Boost Exports'

With an aim to arrest the Rupee volitality, the Reserve Bank of India (RBI) has recently raised the limit for online value of per export transaction upto USD 10,000, this will boost exports through e-commerce by 30 percent, the apex exporters body, Federation of Indian Export Organisation (FIEO) Wednesday said in a press statement.



"This move will help boost India's exports through the e-commerce route to grow by over 30 percent from the current level of USD 1 billion," President, FIEO, M Rafeeque Ahmed said, while welcoming the enhancement of limit per export transaction from USD 3,000 to USD 10,000 by RBI, through the online payment gateways.



"It has now been decided to increase the value per transaction from USD 3,000 to USD 10,000 for export related remittances received through OPGSPS (Online Payment Gateway Service Providers)," a RBI notification said, reports media. And made it mandatory for units in Special Economic Zones to repatriate full value of exports within 12 months.



Ahmed added that the sectors which will benefit most are like Gems and Jewellery, Healthcare, lab and life sciences, Antiques, collectibles and toys, Maritime equipments, Handicrafts, Carpets and Furnitures.



He said that despite growing opportunities the earlier limit of USD 3000 constrained the Indian exporters from exporting necklace sets, bridal jewellery, High end gem stones, diamonds, diagnostic equipments, dental chairs, surgical operating microscopes, industrial items, spare parts, paintings, high valued carpets, furnitures etc.



"The enhanced limit will also boost lot sales of items like apparels, semi precious jewelleries etc.," he added.



However, President FIEO suggested that exports through e-Commerce should be recognized as merchandise exports so that all applicable benefits are extended to such transactions making them competitive.

Source:-www.smetimes.in

Weakening Indian Rupee May Hurt Mobile Handset Makers

I still remember when I first arrived in India in March 2009, the exchange rate was approximately 40 rupees to US$1. Fast forward four years later, now it's 58 rupees against US$1. In the short term, while this may be one of the best times for foreigners to visit India as their home currency goes a longer way, this could be the start of bad news for handset makers.

indian-rupee-handsIndian consumers could get less bang for their buck if rupee weakens further.



According to TechGig.com, the depreciation of the rupee could in fact lead to a rise in input costs for manufacturers in India. Consequently, both revenues and profit margins will be eroded, and possibly lead to price hikes, if the situation persists.



So what does this mean for the average consumer?



In the short term, nothing too drastic as leading mobile makers such as Samsung and now Nokia are currently engaged in offering free devices for zero down payment and low Equated Monthly Installments (EMI), pending approval from banks and creditors. If anything, this might be the preferred route for consumers to purchase new handsets, as prices for mid range and high end devices are comparable to those in the West.



Looking at this scenario further, it's probable that Indian brands such as Karbon, Micromax, and even Onida could end up passing price hikes on to consumers, and to begin with, these are the middle to low tier devices available in India. However, they would have a direct advantage against all the entrants from China due to import duties and tariffs.



In the long run, perhaps Indian consumers will change their love affair with mobile devices and replace them every 1 to 2 years, as required, instead of the more frequent 6 to 12 months as is the norm.



Irrespective of personal disposable income, Indian consumers love to have the latest and greatest mobile devices and will save up months just to get their hands on the latest device. Hence, the purchasing power and behavior of Indian consumers when it comes to mobile devices could potentially offset any potential losses incurred by the mobile handset makers.



In that aspect, perhaps Samsung and Nokia have the lead by offering free devices as mentioned earlier. If others follow suit, even more Indian consumers will have their hands on newer devices, thus securing both revenues and profits for the mobile handset makers.

Source:-www.zdnet.com

India Port Conditions:Kochi

12-Jun-2013
Jun 12(Reuters) - - Port conditions of Kochi as of Wednesday

Port summary:
Working Vessels                                 04
Waiting Vessels                                 01
Expected Vessels                                24
Total Vessels                                   29
Vessels berthing today                          nil

Working Vessels 
---------------
S.NO Vessels name     Agent         Cargo    Arrival Berth  Sail   Load Unload    I/E Balance
                                              ------Dates------   Tonnes/Units    TEU  Tonnes
**********************************************************************************************
1)  Taba              O Exim       TimberLogs   08/06 08/06 -----    nil  1,721     nil   9,269
2)  Prudent           Cnehril      HSD          11/06 11/06 12/06    nil  3,833     nil  11,167
3)  Six Ace 12        Inter Ocean  MS           12/06 12/06 -----    nil   Uldg     nil  25,000
4)  Desh Samman       Jairam       Crude oil    12/06 12/06 -----    nil   Uldg     nil 102,567

Waiting Vessels 
---------------
S.NO   Vessels name   Agent        Cargo            Load   Unload     I/E  Arrival Date   
                                                     Tonnes/Units     TEU         TBT
**************************************************************************************
1)  Swarna Sindhu     Jairam       Crude oil         nil   55,000     nil   12/06    ---


Expected Vessels 
----------------
S.NO Vessels name     Agent        Cargo           Load   Unload     I/E   Expected
                                                   Tonnes/Units      TEU   DOA
*******************************************************************************
1)  Santos Express    ISS          CNTR              nil      nil 150/150   13/06
2)  Doric Pioneer     Atlantic     MS                nil   15,000     nil   13/06
3)  OEL Dubai         Relay        CNTR              nil      nil 400/430   13/06
4)  Guru Prasad       Pearl        Bauxite           nil    2,700     nil   13/06
5)  Bengal Orchid     GAC          Methanol          nil    2,000     nil   14/06
6)  Caravel Pride     Caravel      CNTR              nil      nil 231/260   14/06
7)  Jindal Kamakshi   Sujan        CNTR              nil      nil 150/150   14/06
8)  Gas Cat           Pearl        Ammonia           nil    8,400     nil   14/06
9)  Indira Gandhi     Jairam       CNTR              nil      nil 600/800   14/06
10) Lodestar Grace    GAC          Methanol          nil    2,000     nil   14/06
11) Jag _Prakash      Atlantic     MS/HSD       8000/300      nil     nil   14/06
12) OEL Kutch         Relay        CNTR              nil      nil 350/350   15/06
13) Arietin           Atlantic     FO             35,000      nil     nil   15/06
14) Darya Jaan        Kinship      Cement            nil   16,000     nil   16/06
15) OEL Kutch         Relay        CNTR              nil      nil 350/350   17/06
16) M Avon            Maersk       CNTR              nil      nil 550/550   17/06
17) Jawaharlal Nehru  Jairam       Crude oil         nil   55,000     nil   17/06
18) Gati Majestic     Poseidon     CNTR              nil      nil   100/0   17/06
19) Zim Europa        Zim          CNTR              nil      nil 200/150   18/06
20) PVT Eagle         Atlantic     Methanol          nil    5,000     nil   18/06
21) King Daniel       Inter Ocean  CBFS              nil   10,000     nil   20/06
22) OEL Dubai         Relay        CNTR              nil      nil 250/250   20/06
23) OEL Kutch         Relay        CNTR              nil      nil 250/250   21/06
24) M Avon            Maersk       CNTR              nil      nil 550/550   24/06

    
    
NOTE:-
-----
DOA:Date Of Arrival; ATF:Aviation Turbine Fuel; C.Mat:Construction Material; CU.CON.:Copper
Concentrate; DAP:Di-Ammonium Phosphate; EDC:Ethylene Dycloride; FO:Furnace Oil; HSO:High Speed
Oil; I.Sand:Industrial Sand; C.Oil:Crude oil; G.Cargo:General Cargo; P.Acid:Phosphoric Acid;
A.Nitrate:Ammonium Nitrate; I.Coal:Industrial Coal; LPG:Liquified Petroleum Gas; MOP:Muriate Of
Potash; RP:Rock Phosphate; SKO:Super Kerosene Oil; VCM:Vinyl Chloride onomer;ACN:Acrylonitrile;
ATF:Aviation Turbine Fuel; CAO:Coconut Acid Oil; CBFS:Carbon Black Feed 
Stock; CPO:Crude Palm oil; CPKO:Crude Palm Kernel Oil; CPS:Crude Palm Stearin; CSBO:Crude
Soybean Oil; DAP:Di-ammoniumPhosphate; DEG:Di-Ethyle Glycol; DSBO:Degummed soybean oil;
DRSO:Degummed rapeseed; EDC:Ethylene Dycloride; HSD:High Speed Diesel; LAB:Linear Alkyl Benzene;
MGO:Marine Gas Oil MOP:Muriate of potash; PFAD:Palm fatty acid distillate; RPO:Rubberized
Processed Oil; RSBO:Refined Soybean Oil; SPKFA:Split Palm Kernel Fatty Acid; SKO:Super Kerosene
Oil; CNTR: Containers; Comp:Completed; TEU:Twenty foot Equivalent Unit; TOCOM: to Commence;
CBFS: Carbon Black Feed Stock; (B): In Bulk;(Bg): In Bags; (U): UnitsTBT: To berth today;WIND
MILL BLADES: W.M.BLADES;ANTHRASITE COAL:A.COAL; SOYABEAN MEAL:SOYBM Bleaching Powder: B
POWDER;Crude Sunflower Oil:CS OIL;CRUDE PETROLEUM OIL :C.P.OIL;CRUDE SOYABEAN OIL
:C.SB.OIL;CRUDE PALM OIL : C PALM OIL 

Source:- in.reuters.com

Exporters Rejoice Currency Depreciation

12-Jun-2013

A cross section of exporters from the textile, leather and automobile components sector across Tamil Nadu have started breathing easy as the Indian currency hit a life-low of Rs 58.98 (before closing at Rs. 58.38) against dollar on Tuesday as against level of Rs 53.31 in January 2012.



Meanwhile, buyers have also started asking for a share in benefit, said the industry representatives.



Exporters from the textile hub of Tirupur, who do business based on spot rates, said that their margins are likely to improve by about 5-7% due to the rupee depreciation, though it will only be for short term. They also said that customers (buyers) have already started asking to share the benefit.



A Sakthivel, president, Tirupur Exporters Association said that the recent development will certainly help the industry here, to some extent, since almost 30% of the business is done through spot market. It may be noted, total exports from Tirupur were around Rs 12,500 crore last year. He also said that now customers are asking for price reduction or for a 50% share of the advantage. Buyers are now asking for reduction in prices or discounts.



M Rafeeque Ahmed, Chairman of Council for Leather Exports and President, Federation of Indian Export Organisations (FIEO) also agrees. He represents the industry which exports leather products worth around $5 billion from India.



He said, 30-40% of the exports is done through spot contracts. “This will be short-term benefit, but not long term for which we need a stable currency”.



Ahmed also said the rupee depreciation will also help to improve competitiveness of Made-In-India products and will control import of “unnecessary” imports since they will become costlier and in turn will improve trade deficit.



While there would be an immediate improvement in the viability and realisation of exports in the auto component industry, for which Tamil Nadu is one of the largest base in the country, one has to look at whether this is going to be a sustained depreciation or volatility, said a managing director of a company, which supplies to global and domestic OEMs both in India and abroad.



The strengthening of US dollars has resulted in currency devaluation in various other countries like Brazil, Turkey and Japan, and it is this competitive positions the country has to look at to determine whether the currency devaluation has benefited the industry of not. One also has to look at where Rupee is going to be as against US dollar over a longer period of time.



Besides, a lot of auto component industry is based on commodities and commodity prices are based on international market conditions. This would tend to show in the net impact of the currency depreciation and has to be taken into consideration to get a net picture of the impact, he added.

Source:-www.business-standard.com

Receipts for ground and technical handling charges by an airways Co. not taxable under Indo-Netherla

IT/ILT : Charges received in India by a Dutch aircraft company for providing ground handling and technical handling services, are covered under article 8 of Indo-Netherland DTAA and not taxable in India

Middle East Has Lot Of Potential For India's Software Exports

12-Jun-2013

DUBAI: The Middle East and North Africa region has huge potential for export of India's computer software and services sector, a leading industry official has said here.



Kamal Vachani, regional director of Electronics and Computer Software Export Promotion Council of India, said Indian exporters can expand their markets with their innovation, quality and cost effectiveness.



"Because of its strategic location and the facilities Dubai can be the gateway for exports of computer software products and services to the North Africa," Vachani said.



He said the upcoming India Soft event in November in Mumbai is an opportunity for the entrepreneurs from the Middle East region to join hands with the leaders in Mobile services applications, cloud computing, big data management, BPO, e-security, Banking, Finance, Insurance, Telecommunications, Media & Entertainment, Bio Informatics, Engineering Design and others.



The Electronics and Computer Software Export Promotion Council, ESC will host around 400 IT buyers from more than 75 countries including those from the Middle East and North Africa region for business networking.



Despite global economic slowdown, India's export of Computer Software and Services during 2012-13 registered an estimated growth of 10.26 per cent over the year 2011-12.



The export of computer software and services during 2012-13 has crossed $ 75 billion from $ 68 billion in 2011-12.

Source:-economictimes.indiatimes.com

Income can’t be attributed to LO in India if its operations are confined to assisting manufacturers

IT/ILT : Where assessee-foreign company's presence in India is limited to its liaison office which assist Indian manufacturers to manufacture goods according to specification for export to buyers in other countries (which are subsidiaries of assessee), it can be said that activities of non-resident assessee are confined in India to purchase of goods for export and hence income derived therefrom shall not be deemed to accrue or arise in India and shall be entitled to exemption under Explanation 1

Subsidy in entertainment duty to assist in construction of a multiplex theatre is a capital receipt

IT : Where object of entertainment duty subsidy was to promote construction of multiplex theatre complexes, receipt of subsidy would be on capital account

Mandatory filing of Form 3CEB in case of ‘Specified Domestic Transactions’, CBDT Notifies amended Ru

IT : Income-Tax (Sixth Amendment) Rules, 2013 - Amendment in Rules 10A, 10AB, 10B, 10C, 10D & 10E and Substitution of Form No.3CEB

Doc. free return filing by trust; mandatory e-filing of audit report by entities claiming specified

IT : Trust need not to file any enclosures along with the return. Audit reports shall be filed electronically if assessee is claiming certain deductions or exemptions

RBI allows banks to offer facility of repatriation of export proceeds upto USD 10,000 per transactio

FEMA/ILT : Processing and Settlement of Export Related Receipts Facilitated by Online Payment Gateways – Enhancement of the Value of Transaction

SEZ to realize and repatriate export proceeds to India within 12 months from date of export - RBI

FEMA/ILT : Export of Goods and Services-Realization and Repatriation Period for Units in Special Economic Zones (SEZ)

RBI issues clarification on prohibition placed on NBFCs from becoming partners in firms

NBFC : NBFCs Not to be Partners in Partnership Firms- Clarifications

No leverage of extended period if revenue itself confused about the relevant category to levy ST

ST : When department itself is confused as to category under which service tax is leviable on services, question of suppression of any facts by assessee cannot arise at all and, therefore, extended period of limitation cannot be invoked

AO can’t stretch re-assessment period for his own defaults; can’t pursue matters not examined origin

IT : Reopening of assessment after expiry of period of four years from end of relevant assessment year on ground that Assessing Officer during scrutiny assessment did not examine a particular claim made by assessee and allowed same not justified

Jewellery belonging to ladies isn't deemed as undisclosed income; CBDT's circular permits its exclus

IT : Jewellery belonging to family members of assessee, covered under CBDT circular permitting owning of jewellery by ladies, cannot be added as undisclosed investments

RBI/2012-13/528 A. P. (DIR Series) Circular No.109 dated 11-06-2013

Reserve bank of India

A.P. (DIR Series) Circular No. 109

June 11, 2013

To

All Category – I Authorised Dealer Banks

Madam / Sir,

Processing and Settlement of Export related receipts facilitated by Online Payment Gateways – Enhancement of the value of transaction

Attention of Authorised Dealer Category 1 (AD Category – 1) banks is invited to the A.P. (DIR Series) Circular No.35 dated October 14, 2011 in terms of which AD Category I banks have been permitted to offer the facility to repatriate export related remittances by entering into standing arrangements with Online Payment Gateway Service Providers (OPGSPs) for export of goods and services for value not exceeding USD 3000 per transaction, subject to the conditions stipulated therein.

2. The present instructions have been reviewed in the context of requests received for suitable enhancement of the value of the transaction from USD 3000. Accordingly, it has now been decided to increase the value per transaction from USD 3000 to USD 10,000 for export related remittances received through OPGSPS. The revised limit will come into force with immediate effect.


3. All other terms and conditions issued, vide A.P. (DIR Series) Circular No.17 dated November 16, 2010 , shall remain unchanged.


4. AD Category – I banks may bring the contents of this circular to the notice of their constituents and customers concerned.


5. Reserve Bank has since amended the Regulations vide Notification No. FEMA.274/2013-RB dated April 26, 2013 and notified vide G.S.R.No.343(E) dated May 29, 2013.


6. The directions contained in this circular have been issued under Section 10 (4) and Section 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/2012-13/528

Notification No 18 (RE-2013) / 2009-2014 dated 11-06-2013

Government of India

Ministry of Commerce & Industry

Department of Commerce
Udyog Bhawan

Notification No. 18 (RE–2013)/2009-2014

New Delhi, Dated The 11^th June, 2013

Subject: Import of live-stock products - Amendment in ITC (HS) 2012, Schedule 1 (Import Policy).

S.O.(E) In exercise of powers conferred by Section 5 of the Foreign Trade (Development & Regulation) Act, 1992 (No. 22 of 1992), read with paragraph 2.1 of the Foreign Trade Policy, 2009-2014, as amended from time to time, the Central Government hereby makes the following amendments in ITC (HS) 2012, Schedule 1 (Import Policy):

1. The following Policy Conditions are revised /inserted in Chapter 1:
   
   
   
   1. Policy Condition 2 (b) (iii) is revised and substituted as under:
      

      “A health certificate as per the India’s requirements issued either by the official veterinarian or by a veterinary doctor authorized to issue an export certificate by the Government of the country of origin shall be furnished at the time of custom clearance.”

      
      
   
   
   2. Policy Condition 2 (b) (iv) is inserted as under:
      

      “Importer shall furnish information on the age, sex and breed of horses as well as the purpose of import with supporting documents at the time of filing application to the DGFT”.

      
      
   
   
   
   


2. The following Policy Condition is inserted in Chapter 2 (Policy Condition 3); Chapter 3 (Policy Condition 3); Chapter 4 (Policy Condition 4); Chapter 5 (Policy Condition 4); Chapter 16 (Policy Condition 1); and Chapter 21 (Policy Condition 2):
   

   “Import of all live-stock products shall be subject to a sanitary import permit to be issued by Department of Animal Husbandry, Dairying & Fisheries, Government of India, as per Section 3A of Live-stock Importation Act, 1898, as incorporated by Live Stock Importation (Amendment) Act, 2001 (Act No. 28 of 2001, 29th August, 2001), or as amended from time to time.”

   
   


3. The following Policy Condition is inserted in Chapter 5 (Policy Condition 5):
   

   “Import of Bovine Embryos shall be subject to compliance of the guidelines issued by Department of Animal Husbandry, Dairying & Fisheries. The guidelines are available at ‘www.dahd.nic.in’ under icon ‘trade’ at ‘Procedure for Import’.”

   
   


4. The following Policy Condition is inserted in Chapter 23 (Policy Condition 1):
   

   “Import of all items / products under ITC (HS) Code 2309 ‘Preparations of a kind used in Animal Feeding’ shall be subject to a sanitary import permit to be issued by Department of Animal Husbandry, Dairying & Fisheries, Government of India, as per Section 3A of Live-stock Importation Act, 1898, as incorporated by Live Stock Importation (Amendment) Act, 2001 (Act No. 28 of 2001, 29th August, 2001), or as amended from time to time.”

   
   


5. The following Policy Condition is inserted in Chapter 41 (Policy Condition 2); Chapter 42 (Policy Condition 1) and Chapter 43(Policy Condition 1):
   

   “Import of all live-stock products covered in this Chapter shall be subject to the provisions of Notification No. S.O. 794(E) dated 28.3.2008.”

   
   

2. Effect of this notification:

Requirements of Sanitary Import Permit issued by Department of Animal Husbandry, Dairying & Fisheries, GoI have been incorporated under relevant Chapters of ITC(HS), 2012.

(Anup K. Pujari)

Director General of Foreign Trade

E-mail: dgft[at]nic[dot]in

(Issued from 01/89/180/118/AM-02/PC 2(A))

Valuation loss is allowable even if stock-in-trade shown as investment in compliance with RBI guidel

IT : Even though assessee-bank disclosed shares as investments in balance sheet to comply with RBI Guidelines, it is not estopped from treating the same as stock-in-trade for income-taxes and claiming valuation loss thereon where these shares have been consistently shown as stock-in-trade in income-tax in the past years also

Operational subsidies with direct nexus with profits of an undertaking are eligible for sec. 80-IB/8

IT : Revenue subsidies like Transport subsidy, power subsidy, insurance subsidy & interest subsidy which are operational subsidies are deductible under section 80-IB/80-IC as they have a first degree nexus with profits of industrial undertakings concerned

RBI/2012-13/527 A. P. (DIR Series) Circular No.108 dated 11-06-2013

Reserve bank of India

A.P. (DIR Series) Circular No. 108

June 11, 2013

To,

All Category - I Authorised Dealer Banks

Madam / Sir,

Export of Goods and Services-Realization and Repatriation period for units in Special Economic Zones (SEZ)

Attention of Authorized Dealer banks is invited to A. P. (DIR Series) Circular No. 91 dated April 1, 2003 . In terms of provisions of Para A of the said circular, time limit for realization and repatriation of export proceeds, for the exports made by units in Special Economic Zones (SEZs), was done away with.

2. It has now been decided that the units located in SEZs shall realize and repatriate, full value of goods/software/services, to India within a period of twelve months from the date of export. Any extension of time beyond the above stipulated period may be granted by Reserve Bank of India, on case to case basis.


3. The above changes will be applicable with immediate effect and shall be valid for one year, subject to review.


4. Necessary amendments to Notification No.FEMA.23/RB-2000 dated May 3, 2000 [Foreign Exchange Management (Export of Goods and Services) Regulations, 2000] have been issued vide Notification No.FEMA.273/2013-RB dated April 25, 2013 and notified vide G.S.R.No.342(E) dated May 29, 2013.


5. AD Category - I banks may please bring the contents of this Circular to the notice of their constituents and customers concerned.


6. The directions contained in this circular, have been issued under Section 10(4) and 11(1) of Foreign Exchange Management Act, 1999 (42 of 1999) and without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully,

(C. D. Srinivasan)

Chief General Manager

RBI/2012-13/527

An order to transfer case of assessee to facilitate coordinated investigation is a valid order

IT : Where grounds for transfer of case of assessee had nexus with object of co-ordinated and effective investigation calling for centralization of assessment, order of transfer could not be interfered with

Notification No 18 (RE-2013)/2009-2014 dated 11-06-2013

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Power subsidy given on actual power consumption is a trading receipt

IT : Where power subsidy was given on actual power consumption and same had nothing to do with investment subsidy given for establishment of industries or expanding industries in backward areas, amount of power subsidy/rebate was to be treated as a trading receipt and not a capital receipt

Reassessment to tax exceeded deduction under sec. 35AB quashed

IT: When all facts with regard to allotment of shares in consideration of technical know-how were disclosed by assessee by a letter during course of assessment, reopening beyond period of four years was not warranted to bring alleged exceed deduction under section 35AB to tax

Order to transfer cases to facilitate coordinated investigation and administrative convenience is va

IT : Where a number of enquiries were required to be conducted at Delhi and to some extent in North East and it might not be possible for an Assessing Officer in regular charge to undertake kind of detailed and co-ordinated investigations which was required, order of transfer of cases of assessee from Dibrugarh to New Delhi was valid

If AO didn’t examine the reasonableness and genuineness of exp. his order was erroneous

IT : Where Assessing Officer did not raise any question regarding reasonability and genuineness of expenses, assessment order was erroneous and prejudicial to interest of revenue

Car Sales In India Fall Over 12 Per Cent In May

11 June 2013

Indian automobile manufactures saw car sales decline by more than 12 per cent in May, raising the spectre of production cuts and job losses, as a slowing economy continued to affect consumer sentiment for the seventh consecutive month.



Local car sales dropped to 143,216 units in May, showing a 12.3 per cent year-on-year decline, data released by the Society of Indian Automobile Manufacturers (SIAM) showed.



This is the first time that car sales have fallen for seven months in a row since the association started compiling data 16 years ago, the data revealed.



SIAM attributes the declining trend in car sales to a variety of factors, including the overall economic slowdown, high interest rates and lack of confidence among customers of retaining income flows.



''This continuous decline is a combined factor of the overall economic situation,'' said SIAM director Vishnu Mathur, adding, ''People aren't confident of retaining their jobs.''



Also, even if these are overcome, loan rates are still high, despite the recent moderations, Mathur pointed out.



Mathur said some automakers and parts suppliers have started idling factories as they hold unsold stock and this could lead to job cuts.



''Obviously, if there is a decline in demand, there is an impact in the whole chain,'' said Mathur. ''More vulnerable are the suppliers. It has either started to happen or will happen soon if such a situation continues,'' he said.



Sales of motorcycles fell 0.7 per cent in May to 881,288 vehicles, SIAM said, while truck and bus sales were down 10.6 per cent to 55,458 vehicles.



Overall sales of passenger vehicles declined by 8.56 per cent during April-May 2013 over the same period last year.



Within passenger vehicles, sale of passenger cars and vans dropped by 11.33 per cent and 10.88 per cent, respectively, while utility vehicle sales grew marginally by 4.08 per cent during April-May 2013 compared to the same period last year.



During April-May 2013 overall automobile exports declined by (-) 8.62 per cent. Export of passenger vehicles and three wheelers grew by 7.34 per cent 26.53 per cent, respectively, while sales of commercial vehicles and two-wheelers dropped significantly by 19.62 per cent and 16.50 per cent, respectively, in April-May 2013 over April-May 2012.



The industry produced 1,737,548 vehicles in May 2013 as against 1,811,515 in May 2012, a decline of 4.08 per cent over the same month last year.

Source:-www.domain-b.com

Cheap Import, Gutka Ban May Drag Areca Prices

KOCHI: Arecanut ( supari) prices will be under pressure as Karnataka has decided to ban gutka. A jump in the import of inferior quality arecanut through Bangladesh will also hit local prices. Karnataka is the largest producer of arecanut followed by Kerala and Assam. But the fall may not be sharp as advance estimates show a drop in production for 2012-13.



Directorate of Arecanut and Spices Development data show that output has dropped 5% to 5,29,097 tonne mainly due to a 20% fall in production in Kerala where growers are increasingly turning to lucrative crops like rubber and nutmeg. "The gutka ban has made no major impact on demand but the announcement has played havoc with market sentiment, leading to a dip in prices," said Srinivasa Achar, president of All India Areca Growers Association.



In coastal Karnataka, the price of the new crop of white variety has fallen by Rs 5 to Rs 145 per kg. The market fears that cheap imports will do more harm to local prices than the ban since it continues to flood the market despite government curbs. The import duty is 108% and the minimum import price was raised recently to Rs 110 per kg from Rs 75.



"Poor quality arecanut from Indonesia is routed through Bangladesh and Nepal. The suppliers make use of concessional trade duty these countries have with India," said M Suresh Bhandary, managing director of Central Arecanut and Cocoa Marketing and Processing Co-operative based at Mangalore.



The processor has suggested that the Central Food Technological Research Institute be given the task of checking import quality. According to Homey Cherian, director at Directorate of Arecanut and Spices Development, total arecanut import during April-December 2012 reached 60,590 tonne as against 71,512 tonne the whole year of 2011-12. The indication is that imports could reach around 80,000 tonnes for the year.

Source:-economictimes.indiatimes.com

Rbi Hikes Cap For Online Repatriation Of Export Proceeds

MUMBAI: With an aim to arrest rupee slide by boosting forex inflows, RBI today raised the limit for online repatriation of export proceeds by over three-fold to $ 10,000 and made it mandatory for units in Special Economic Zones to repatriate full value of exports within 12 months.



The announcements come at a time the rupee has touched life time low of 58.98 against the US dollar. It has depreciated by 3.5 per cent against dollar in the last two days and by over 8 percent since April 30.



"...it has now been decided to increase the value per transaction from $ 3,000 to $ 10,000 for export related remittances received through OPGSPS (Online Payment Gateway Service Providers)," a RBI notification said.



Currently banks can offer facility to repatriate export related remittances through OPGSPs for export of goods and services for value not exceeding $ 3,000 per transaction.



In a separate instruction, the RBI asked the units in SEZs to repatriate proceeds of their exports within 12 months of the outbound shipments.



"It has now been decided that the units located in SEZs shall realize and repatriate, full value of goods/software/ services, to India within a period of twelve months from the date of export," the Reserve Bank said in a notification.



Earlier, there was no time limit for realisation of exports made by units in SEZs



The instructions have come into force with immediate effect.



Exports in April stood at $ 24.16 billion (Rs 1.31 lakh crore) as against $ 23.7 billion in same month of 2012.



India's total export in 20012-13 had totalled $ 300.6 billion (Rs 1635261.02 crore), of which the SEZs accounted for Rs 4.76 lakh crore.



So far, 166 zones are operational. SEZs contributed about 30 per cent to the country's overall exports. Andhra Pradesh has maximum number of operational special economic zones (38), followed by Tamil Nadu, Karnataka and Maharashtra

Source:-economictimes.indiatimes.com

Fish Oil Export Scam Busted, Two Held

The Visakhapatnam police on Tuesday busted a scam involving collection of deposits totalling Rs. 16 crore with the promise of high returns through the ‘export’ of oil extracted from fish.



The scandal involved collection of deposits, mostly from people belonging to Karimnagar and nearby areas, through a city-based firm. The city police arrested the kingpin behind the racket, N. Vamsi Krishna Reddy, and one of his associates, Pidakala Benarji. On receipt of complaints by the Karimnagar police, the Two Town police here conducted inquiries into fictitious firms, including Visakha Fisheries Pvt. Ltd, which had its office at Daba Gardens and caught Vamsi and Benarji.



Police said the main accused, an MSc and B.Ed graduate who founded Sri Sai Vidya Niketan in Karimnagar in 2001 and later forayed into the rice business, and Benarji, who worked as a teacher with him for sometime, hatched a conspiracy to dupe gullible investors after they went bankrupt.



Evasion of interest



Of the Rs.16 crore collected, they returned the principal amount of Rs.5 crore to some depositors and later evaded payment of interest to them on some plea or the other since three months. ACP (East) M.N. Mahesh and CI Mallikarjuna Rao told reporters that they suspect the involvement of some more people in the scam.



While the main accused belongs to Kothirampuram in Karimnagar, Benarji hails from Kovvur.

Source:-www.thehindu.com

Co. whose principal business is granting of loans/advances can set off speculative losses from inter

IT : Assessee is entitled to set off losses from sale and purchase of shares against profits of business of company from loans and advances

Fee for recruitment forms part of tonnage income if it’s incidental to core shipping business

IT : Since recruitment of personnel on foreign ships is incidental to core shipping business, recruitment fees received on same is includible in shipping income

Claim filed before right forum after approaching a wrong forum to be disposed off on merits

ST : If, on coming to know that claim was being sought before wrong forum, assessee files claim before proper authority, such authority should dispose of claim on merits, instead of driving assessees to file an appeal against order passed by wrong forum rejecting such claim

Auction under SARFAESI Act to be conducted after associating liquidator if already appointed

CL : Auction under SARFAESI Act should be conducted after associating official liquidator, if already appointed

Jewellery belonging to ladies isn't as undisclosed income; CBDT's circular permits its exclusion

IT : Jewellery belonging to family members of assessee, covered under CBDT circular permitting owning of jewellery by ladies, cannot be added as undisclosed investments

ALP of royalty paid to AEs on mark-up basis can’t be taken as nil if payment made for business purpo

IT/ILT: Where assessee made payment to its principal for using technical know-how on value added price, it constituted a payment for business purpose and, thus, impugned adjustment made by TPO taking value of royalty payment as nil while determining ALP, was to be set aside

CUSTOMS INSTRUCTION dated 03-06-2013

Ministry of Finance

Department of Revenue

Central Board of Excise & Customs

INSTRUCTION

New Delhi 3^rd June, 2013

To,

1. All Chief Commissioners and Directors General under the Central Board of Excise and Customs.


2. Chief Commissioner (AR), Customs, Excise & Service Tax Appellate Tribunal.


3. All Commissioners of Customs/Central Excise/Service Tax/All Authorised Representatives, CESTAT/Commissioner, Directorate of Legal Affairs.


4. <webmaster.cbec@icegate.gov.in>

Sub:- Reduction of Government litigation - providing monetary limits for filing appeals by the Department before CESTAT/High Courts and Supreme court - Regarding

I am directed to refer to Instruction of even number dated 17.8.2011 on the captioned subject.

Reference has been received regarding the application of the threshold limit prescribed vide Instruction ibid to cases where either redemption fine alone is in dispute or both redemption fine and penalty are in dispute. For example, in one case the Tribunal confirmed the duty but set aside the penalty of Rs. 5 lakhs and redemption fine of Rs. 15 lakhs imposed by the adjudicating authority. As the Instruction ibid did not specifically mention about redemption fine a clarification has been sought whether the word “penalty” mentioned in para 2 of the Instruction ibid would include redemption fine or otherwise.

The matter has been examined. Redemption fine is an option in the hand of the owner of goods to redeem goods confiscated by the department for violation of any provisions of the Customs Act. On the other hand, penalty is imposed on any person who violates the provisions of the Customs Act while importing or exporting the goods out of India. Therefore, the nature and scope of penalty is different from that of the redemption fine. While penalty is in persona, redemption fine is on goods.

However, both redemption fine and penalty are imposed for violations of the statutory provisions. Therefore, even though redemption fine cannot be said to be covered under the word ‘penalty’ the treatment given to both redemption fine and penalty is required to be identical and hence, redemption fine and penalty would need to be clubbed to decide the applicability of threshold limit prescribed.

-2-

Accordingly, it is clarified that if the imposition of redemption fine alone is the subject matter of dispute, and if such redemption fine exceeds the monetary limits prescribed, then the matter could be litigated further in Courts and Tribunal. Further, if both the amount of redemption fine and penalty are in dispute and if such redemption fine and penalty is in dispute, taken together, exceed the prescribed monetary limit then the matter should be litigated further.

Instruction ibid stands suitably modified.

This issues with the approval of Chairperson (CBEC).

(Sunil K. Sinha)

Director (JC)

F.No.390/Misc./163/2010-JC

GST bound to be implemented in country soon: Sushil Kumar Modi

[unable to retrieve full-text content]GST bound to be implemented in country soon: Sushil Kumar Modi...

HAMDARD LABORATORIES INDIA AND ANR Vs. DIRECTOR GENERAL OF INCOME TAX (EXEMPTION)

$~ * IN THE HIGH COURT OF DELHI AT NEW DELHI Date of decision: 11th April, 2013 + WRIT PETITION (C) 3598/2012 HAMDARD LABORATORIES INDIA AND ANR ..... Petitioners Through: Mr.Parag P. Tripathi, Sr. Adv. with Mr.Simran Mehta, Mr.R.M.Mehta & Ms.Yogita, Advs. versus DIRECTOR GENERAL OF INCOME TAX (EXEMPTION) ..... Respondent Through: Mr.Sanjeev Rajpal, Sr. Standing Counsel. CORAM: HON'BLE MR. JUSTICE SANJIV KHANNA HON'BLE MR. JUSTICE SIDDHARTH MRIDUL SANJIV KHANNA, J. The petitioner No.1 Hamdard Laboratories (India), stated to be a trust, has filed the present writ petition for issue of writ, order or direction in the nature of certiorari for quashing order dated 22.02.2012 passed by respondent No.1/Director General of Income Tax (Exemptions) under Section 10(23C)(iv) of the Income Tax Act, 1961 (,,Act for short). 2. The petitioner Nos.1 claims that it is governed by a Constitution dated 28.8.1948 and were/are dedicated to business of manufacture of sale of unani medicines for the purpose of charity. They rely upon clauses 44 to 47 of the W.P.(C) 3598/2012 Page 1 of 14 deed dated 28.8.1948, which read as under:- "44. The "Qaumi Income of the Wakf, shall be spent only within the territories of the Union of India and only on objects of public charity, which satisfy the following two cumulative tests: (a) They must be objects of public charity for the benefit of all persons irrespective of caste, colour or creed, such as relief of the poor, education, medical relief and the advancement of any other object of general public utility not involving the carrying on of any activity of profit, and (b) They must be consistent with the principles of the true teachings of Islam. Provided, however, that in spending the income on objects of public charity, priority shall be given to the collective needs of the country or to such needs as may benefit the largest number of persons or their generations. 45. Priority may be given to the following: (1) To establish and run an Institute for the promotion of medical education and research with emphasis on indigenous systems of medicine. (2) To establish and successfully conduct a Tibbia College in conformity with the recognized standards. (3) To establish and run charitable hospitals and clinics where poor patients are given free treatment. 46. Qaumi Income may also be spent on the following: (1) To establish and run educational institutions, and/or to aid those which are already in existence. (2) To build schools, laboratories, wells, or such other buildings of a public nature as may benefit the largest number of people in the country. (3) To publish books, pictures, maps or literature or to aid in publication of the same by the publication of which the object of Wakf are fulfilled or achieved. 47. Help may also be given to needy orphans, needy widows or helpless persons, needy authors and research scholars and victims of unforeseen calamities without restriction of caste, colour or creed." W.P.(C) 3598/2012 Page 2 of 14 3. The petitioner No.1 has stated that vide declaration of the founder Wakif Mutawalli dated 10.10.1985, the original deed in respect of "khandani" or family "income" was irrevocably abolished and no "khandani" income has ever been distributed or paid. 4. It is an undisputed position that the petitioner No.1 was granted registration under Section 10(23C)(iv) of the Act w.e.f. assessment year 1984- 1985. Even prior thereto, they have been treated and regarded as a charitable institution under Section 2(15) of the Act and the applicable provisions. The earlier dispute between the Income Tax Department and the petitioner No.1 on the said aspect is referred to and examined below. 5. The petitioner No.1 filed an application for renewal of approval under Section 10(23C)(iv) for the assessment year 2004-05 onwards vide application in Form No.56 dated 31.03.2003. Queries were raised and several letters were exchanged and written between the respondent and petitioner No.1. By order dated 28.12.2007, the petitioner No.1 was granted renewal w.e.f. 2004-05. The respondents, however, rely upon certain conditions stipulated in the said order and submit that there was/is violation of the same. 6. By the impugned order dated 22.02.2012, the earlier order granting renewal i.e. order dated 28.12.2007 has been rescinded. Accordingly, the petitioner No.1 is not to be treated as an approved assessee under Section W.P.(C) 3598/2012 Page 3 of 14 10(23C)(iv) of the Act w.e.f. assessment year 2004-05. 7. The impugned order dated 22.02.2012 has set out and given the following reasons for recall/rescinding the earlier order dated 28.12.2007:- (1) Petitioner No.1 was/is engaged in business and its primary and main activities were/are manufacture and sale of unani and ayurvedic medicines on commercial lines and not charity or charitable purposes. (2) The petitioner No.1 is not engaged in any charitable activities set out in Section 2(15) but donates a part of its surplus to Hamdard National Foundation (,,HNA for short). This does not meet the requirements of Section 2(15). (3) The petitioner No.1 does not maintain proper books of accounts for charitable activities and business activities and therefore, there is violation of Clause (c) of the notification under Section 10(23C)(iv) dated 28.12.2007 and Section 11(4A) of the Act. 8. The petitioner No.1 has impugned the said order/the aforesaid reasons on the following grounds:- (i) Section 2(15) does not prohibit a charitable institution from undertaking business or commercial activities but the income generated or the surplus earned should be used for charitable purpose. Business held under trust can fund and provide finance for conducting and doing charity. [see Additional CIT Vs. Surat Art Silk Cloth Manufacturers Association (1980) 121 ITR 1 (SC)] (ii) Amendment made to Section 2(15) of the Act w.e.f. assessment year 2009-10 is applicable only to the last limb i.e. when an assessee carries on activities under the clause ,,advancement of any other object of public utility. W.P.(C) 3598/2012 Page 4 of 14 The last limb is not applicable to petitioner No.1. The objects and purpose of charity undertaken by the petitioner No.1 are relief to poor, education and medical relief. It is accordingly submitted that the said amendment is not applicable to petitioner No.1. (iii) The impugned order dated 22.2.2012 does not specifically state or quote that the petitioner No.1 was/is carrying on charitable activities under the residuary head. The impugned order does not disturb the findings recorded in the earlier appellate proceedings/orders that the charitable activities in the case of petitioner No.1 relate to the first three heads i.e. relief to poor, education and medical relief. (iv) The impugned erroneously records that the Income Tax Department does not accept the decisions of the Delhi High Court in Additional Commissioner of Income Tax vs. Hamdard Dawakhana, (1986) 157 ITR 639 and Commissioner of Income Tax vs. Hamdard Dawakhana, (2001) 249 ITR 601 to cancel/recall the earlier order. (v) The assertion that the petitioner No.1 did not maintain separate books of accounts of business and charitable activities should not be accepted as the entire income or surplus or business was/is being used for charitable purpose and in such cases Section 11(4) is applicable and Section 11(4A) is not applicable. Reliance is placed on CIT vs. Mehta Charitable Prajnalay Trust, (2013) 214 Taxman 88 (Delhi) wherein it has been held that Section 11(4A) is W.P.(C) 3598/2012 Page 5 of 14 applicable where the business is not held under trust. 9. Section 2(15) of the Act defines ,,charitable purpose and at present reads as under:- "[15] "charitable purpose" includes relief of the poor, education, medical relief, [preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest,]and the advancement of any other object of general public utility; Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity:] [Provided further that the first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is ten lakh rupees or less in the previous year;]" 10. We may note here that the first proviso to sub Section was amended by Finance (No.2) Act, 2009 with retrospective effect from 01.04.2009. The said proviso is applicable in cases where an assessee claims that it is carrying on charitable purpose covered by the residuary clause i.e. "advancement of any other object of public utility". The proviso is not applicable in case an assessee or institution claims that it is carrying on charitable purpose like relief to poor, education, medical relief etc., i.e. purposes which have been specifically enumerated and stated in the earlier part of Section 2(15). 11. We have gone through the impugned order dated 22.02.2012, but do not W.P.(C) 3598/2012 Page 6 of 14 find any specific finding or statement in the said order that the charitable activities or purposes in the case of the petitioner No.1 fall under the residuary head and not under the enumerated heads mentioned in Section 2(15) of the Act. The impugned order in this regard is completely silent On the said aspect, we may record that the petitioner No.1 has filed before us number of orders passed by CIT(Appeals) relating to assessment years 1965-66 onwards upto assessment year 1994-95 and orders of the Income Tax Appellate Tribunal from 1966-67 upto 1976-77 in which findings have been recorded that the petitioner No.1 was undertaking charitable activities covered under the clauses; relief to poor, education and medical relief. It is, therefore, clear that the impugned order has applied the first proviso to Section 2(15) of the Act without elucidating the scope and ambit of the said proviso and whether it would be applicable. The respondents have proceeded on assumption that charitable purpose undertaken by the petitioner is covered by the residuary clause, without recording any such specific finding. 12. Our attention has also been drawn to the observations made in the impugned order with regard to earlier decisions of the High Court in the case the assessee. The two decisions went in favour of the petitioner No.1. It is not understandable on what basis the author of the impugned order can ignore or disregard the said decisions by observing that; "with due respect I differ W.P.(C) 3598/2012 Page 7 of 14 with the decision". The two decisions are binding precedents but can certainly be distinguished on facts and in case there is any change in law in view of the amendments or altered statutory provision. The decisions can also be distinguished or observed as not applicable or good law, in case there is a decision of the Supreme Court which takes a contrary view. 13. On a question whether or not the assessee must himself undertake charitable activities, petitioner No.1 has pointed out observations in the impugned order that the petitioner No.1 was running two state of the art dispensaries in Delhi where free medical prescription was provided to the patients; it has also been stated in the impugned order that petitioner No.1 was maintaining two state of the art laboratories for R & D in Ghaziabad and Manesar factories and was providing financial help to Hakims and Vaids by paying monthly allowance to them.(Quantum of expenditure incurred or application made is not stated in the writ petition). It is stated in the impugned order that this financial help was being given to selected Hakims and Vaids of repute. However, no details of Hakims and Vaids and their incomes have stated or mentioned in the impugned order. On what basis did the author of the order reach the conclusion that financial aid was being given to already well of Hakims and Vaids is not indicated or averred to. 14. The petitioner No.1 has referred to decisions of this Court and other High Courts in CIT vs. Sarladevi Sarabhai Trust, (1988) 172 ITR 698 (Guj.), CIT W.P.(C) 3598/2012 Page 8 of 14 vs. Nirmala Bakubhai Foundation, (1997) 226 ITR 394 (Guj.), CIT vs. Hindustan Charity Trust, (1983) 139 ITR 913 (Cal.), CIT vs. M. Ct. Muthian Chettiar Family Trust & Ors., (2000) 245 ITR 400 (Mad.), CIT vs. Trustees of the Jadi Trust, (1982) 133 ITR 393 (Bom.), CIT vs. Shri Ram Memorial Foundation, (2004) 269 ITR 35 (Del.). It is submitted that these decisions have accepted the view that application of income for charitable purposes includes transfer of funds to a third person for the said purposes. Decision in Inland Revenue Commissioner vs. Helen Slater Charitable Trust Ltd., (1980) 83 WLR 157 has been referred to. It is accordingly submitted that application of money for charitable purposes takes place when the petitioner No.1 transfers his surplus or the entire income or substantial portion thereof, i.e. 85% or more, to a third person who is also using the funds for charitable purpose. This is also application of the money for charitable purpose. It is good and valid application of money unless the transferor i.e. the assessee know or ought to have know that the money will be mis-applied by the transferor. At this stage, we record that this contention of the petitioner No.1 has not been dealt with or examined in the impugned order. We record that the petitioner No.1 has relied upon a decision of the Delhi High Court in Shri Ram Memorial Foundation, which is the jurisdictional of High Court. The petitioner has in addition also referred to instruction No. 1132 dated 05.01.1978 issued by the CBDT which states that charitable trust will not lose W.P.(C) 3598/2012 Page 9 of 14 exemption under the Act, if it passes a sum of money to another charitable trust for utilization for charitable purpose . It is submitted that as per the Board this constitutes shall be proper utilization of money by the donor for the charitable purposes. It is pointed out to us that the petitioner No.1 has set up no less than 25 medical, educational, literary, scientific and cultural organizations, the All India Unani Tibbi Conference, Institute of History of Medicine and Medical Research, Indian Institute of Islamic Studies, Ghalib Academy, Rabea Girls Public School, Hamdard Education Society, Majeedia Hospital, Jamia Hamdard (University), Rufaida Nursing School, Hamdard Study Circle, Hamdard Coaching Centre, Hamdard Primary School, Hamdard College of Pharmacy etc. 15. HNF, it is claimed, was set up by late founder Wakif Mutawalli on 12.5.1964 as a special purpose vehicle to implement charitable purposes which are identical to the charitable purposes of the petitioner No.1. Our attention was specifically drawn to the objects of HNF, a philanthropic society registered under the Societies Registration Act, 1860 and the objects and functions referered to in the Constitution of HNF. It is stated that HNF is registered under Section 12A read with Section 12AA of the Act and throughout they have been granted exemption. For assessment year 2007-08, the Assessing Officer had denied exemption to HNF under Section 11 of the Act but the said decision was reversed by the appellate authority vide decision dated 31.1.2012 i.e. before the date of the present order dated 22.2.2012. The impugned order however, does W.P.(C) 3598/2012 Page 10 of 14 refer to the order of the Assessment Officer but does not notice the appellate order passed on 31.01.2012 reversing the findings of the Assessing Officer. 16. On the question of surplus, application of income and accumulation, our attention was drawn to the chart mentioned in Paragraph 8.3 of the impugned order. It is pointed out that the gross surplus is mentioned in the first column. The second column refers to 15% of the general reserve and the last column mentions the accumulative reserve. Petitioner No.1 submits that the amount mentioned in last column accumulation is less than 15% of the general reserve and therefore, the petitioner meets the prescribed parameters. This aspect has been ignored in the impugned order by recording that the surplus has been given to HNF or surplus/income has been passed on and given to HNF. The effect thereof and whether objects/use of funds by HNF can be determinative and relevant for deciding the applicable head u/s 2(15) in the case of the petitioner No.1 is an aspect which requires examination/consideration. 17. On the question of books of accounts, we have already noticed the contention of petitioner No.1 relying upon the decision of Delhi High Court in Mehta Charitable Prajnalay Trust (supra). 18. Looking at the aforesaid situation, we allow the present writ petition and issue the writ of certiorari quashing the impugned order dated 22.2.2012 passed by the Director General of Income Tax (Exemptions). The Director General of Income Tax (Exemptions) will pass a fresh order dealing with all the W.P.(C) 3598/2012 Page 11 of 14 contentions and issues raised by the petitioner No.1 keeping in mind the case law on the subject. The reason why we are remitting the matter is that we find that there are several issues and questions, which have been partially adverted to in the impugned order and we cannot in this writ petition form a firm view. We have discussed the legal contentions raised and also referred to the legal position on certain aspects but application of legal ratio is dependent upon the facts. Difference in facts can materially affect the final outcome and the legal position applicable; whether it be books of accounts, question of application of income, quantum of surplus available or the activity undertaken by HNF. For example whether activities of HNF can be treated as charitable activity of the petitioner for the purpose head under Section 2(15) as claimed by the petitioner No.1. We find ourselves handicapped and unable to give any firm/final opinion on issues/contentions, which may have been touched but not elaborated in the impugned order and/or examined without appreciating the correct legal position. The petitioner No.1 has also disputed some factual assertions stated in the impugned order. Fairness and justice demands that the matter should be examined threadbare, first factually and then by applying the applicable legal ratio. We refrain from elucidating and going into the greater details on these aspects, least it causes prejudice to any side, in view of the remand order. 19. In order to curtail delay, it is directed that the petitioner No.1 through his authorized representative will appear before the Director General (Exemptions) W.P.(C) 3598/2012 Page 12 of 14 on 2nd May, 2013, when a date of hearing will be fixed. 20. By order dated 01.06.2012, it was directed that the assessment proceedings can continue and even assessment orders can be passed but demands will not be enforced by the Revenue without leave of the Court. The said interim order was applicable to all assessment years except assessment year 2005-06. 21. In another writ petition W.P.(C) No.3599/2012 relating to AY 2005-06, an interim order was passed on the same day that the assessment proceedings can continue but no final assessment order can be passed. 22. The interim order in W.P.(C) 3598/2012 will continue for a period of three months. We hope and expect that the respondent-Director General of Income Tax (Exemptions) will be able to decide and dispose of the remand expeditiously and within the said period. Similarly, it will be open to the Commissioner of Income Tax (Appeals) to dispose of the appeals within the said time. The assessee is expected to cooperate and in case there is any laxity and failure, it will be open to the authority to take action and decide the matter in accordance with law. 23. We clarify that this decision does not deals with the interim order for the assessment year 2005-06 passed/operating in W.P.(C) No.3599/2012. W.P.(C) 3598/2012 Page 13 of 14 The writ petition No.3598/2012 is accordingly disposed of with no order as to costs. SANJIV KHANNA, J. SIDDHARTH MRIDUL, J. APRIL 11, 2013 Gm/NA W.P.(C) 3598/2012 Page 14 of 14

CBDT revised Selection Criteria for Income Tax Officials

The Ministry of Finance in month of June 2013 has introduced new rules for sending Income Tax officers to newly created overseas units similar to in the US and the UK.

As per the new selection criteria it is now mandatory for aspirants to get testimonials from bosses and write a note on how they can help maximise revenue from this front.

Earlier in Year 2011 ministry had announced creation of eight new Income Tax Overseas Units (ITOUs) as part of its multi-pronged strategy to tackle the nuisance of blackmoney. While two ITOUs are already there in Mauritius and Singapore, the eight new are all set to be fully operational at Indian missions in Cyprus, France, Germany, Netherlands, Japan, UAE, UK and USA. The new rules designed will be applicable for postings of officials to all the ten ITOUs.

An Overview of the New Rules designed by CBDT

• It had designated I-T officers to go as First Secretaries in these countries to maintain effective coordination and liaison between Indian tax authorities and the tax authorities of countries concerned.

• As per the revised selection criteria, the aspiring candidate, with a mandatory 15 years of service in the Indian Revenue Service (IRS), will be evaluated for ten marks each in getting recommendations from two serving officers who were immediate supervisory authority anytime during their service.

• The aspiring candidate should also have to write a 1000 word statement of purpose describing how his knowledge, experience and commitment will help in bolstering tax administration in the international context.

• The applicant, who will have to go through a final interview by a panel headed by Central Board of Direct Taxes (CBDT) chairperson, will be judged for a maximum of 40 marks for providing a brief bio-data of five of their outstanding work in the field of revenue administration.

• The aspiring I-T officials will also be rated on their investigation skills and expertise to handle international financial transactions, overall awareness in respect of financial scenario and methods used for tax avoidance.

• The other areas on which these senior officers will be rated include awareness of international financial protocols, issues pertaining to transfer pricing, working knowledge of tax treaties like the Double Taxation Avoidance Agreement (DTAA) and Tax Information Exchange Agreements (TIEAs) and other tax dispute resolution mechanisms like Advance Pricing Agreement (APAs) and Mutual Agreement Procedure (MAP).

• The posting of an officer in these ITOUs is for a period of three years.

About Central Board of Direct Taxes (CBDT)

The CBDT is a part of Department of Revenue in the Ministry of Finance which basically provides essential inputs for policy and planning of direct taxes in India,at the same time it is also responsible for administration of direct tax laws through the Income Tax Department.

INCOME TAX APPELLATE TRIBUNAL :AHMEDABAD BENCHES : AHMEDABAD CONSTITUTION BENCHES FROM 10.06.2013 TO 14.06.2013

[unable to retrieve full-text content]INCOME TAX APPELLATE TRIBUNAL :AHMEDABAD BENCHES : AHMEDABAD CONSTITUTION BENCHES FROM 10.06.2013 TO 14.06.2013 {ad} For more information...

Notification No 17 (RE-2013)/2009-2014 dated 10-06-2013

GOVERNMENT OF INDIA

MINISTRY OF COMMERCE AND INDUSTRY

DEPARTMENT OF COMMERCE

Notification No. 17 (Re 2013)/2009-2014

New Delhi, Dated The 10^th June, 2013

Subject: Notification of Iran under Para 2.35 (b) of Foreign Trade Policy, 2009-2014.

S.O. (E): In exercise of powers conferred under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 read with paragraph 2.1 of the Foreign Trade Policy, 2009-2014, as amended from time to time, the Central Government hereby notifies Iran under paragraph 2.35 (b) of Foreign Trade Policy, 2009-2014

2. Accordingly, exports of such goods to Iran which have been imported against payment in freely convertible currency would be permitted against payment in Indian Rupees also, subject to at least 15% value addition.

3. Effect of this Public Notice:

Countries eligible to avail benefits of Para 2.35 (b) of Foreign Trade Policy, 2009-2014 have to be notified. Iran is being notified now as eligible.

Sd-
(Anup K. Pujari)

Director General of Foreign Trade
Email:dgft@nic.in

[Issued from F. No. 01/93/180/25/AM-12/PC-2(B)]

Rupee Hits New Low Of 58.35

Moving from bad to worse, the rupee onTuesday fell by 19 paise to hit a new all-time low of 58.35 against the US dollar in early trade on the Interbank Foreign Exchange on heavy capital outflows amid high current account deficit.



Forex dealers said besides strong dollar’s demand from banks and importers, firming dollar against other currencies on the back of strong economic data, mainly put pressure on the domestic unit.



The rupee sank by a staggering 110 paise to close at its lifetime low of 58.16 against the dollar on Monday. The local unit has fell over nine per cent in the past six weeks.

Source:-www.thehindu.com

Rupee Slide To Help Boost Steel Cos’ Export Revenues

10-Jun-2013

KOLKATA: The plunge in rupee value will provide much needed respite to domestic steel companies which are struggling in the face of shrinking margins and low demand.



The latest drop, the worst performing Asian currency since April 1, 2013 will make India steel more competitive abroad prompting steelmakers to boost export revenues. At the same time, it will make imports relatively costlier and will help curb the recent surge in steel imports.



"The rupee fall is likely to be beneficial for steel companies. It will give us the opportunity to explore exports markets aggressively. I will also discourage imports of steel products coming into the country," Sushil Maroo deputy managing director, JSPL said.

Source:-economictimes.indiatimes.com

India's Coffee Exports Down 2.85% So Far In 2013

10-Jun-2013

India's coffee exports have declined by 2.85 per cent to 172,480 tonnes so far in the 2013 calender year due to weak global prices, according to the Coffee Board. The country had exported 177,555 tonnes in the same period of January-June last year.



"Coffee exports have come down slightly as global prices were less attractive," a senior Coffee Board official said. While international prices have been falling for much of the year, global supplies have exceeded demand. Since last month, prices have further come under pressure as farmers in Brazil are harvesting new coffee crop even as they have not finished selling last year's supplies, the official explained.



The export realisation was down at Rs 1,47,555 per tonne between January and June first week of this calendar year, as against Rs 1,46,991 per tonne in the same period last year.



In terms of value, total coffee exports were down at Rs 2,545 crore as against Rs 2,609 crore in the review period.



As per the Coffee Board data, the shipment of robusta coffee bean fell marginally to 93,213 tonnes till first week of June 2013, as against 98,863 tonnes in the year-ago period.



Similarly, the export of arabica coffee declined to 35,560 tonnes from 36,843 tonnes in the review period. However, the country re-exported 32,701 tonnes of coffee in the said period, higher than 26,558 tonnes a year ago.



India largely exports its coffee produce to Italy, Germany and Russia. Besides coffee bean, the country also exports instant coffee.



The board has pegged coffee production at 315,500 tonne in the 2012-13 crop year (October-September), a marginal increase of 1,500 tonne over the final estimate of 314,000 tonne in 2011-12.

Source:-www.business-standard.com

'Deemed Export Benefits Available For Supply Of Goods, Not Service Deals'

10-Jun-2013

We have exported a consignment on FOB basis. After the dispatch of the consignment, the shipping line is not delivering the bill of lading (B/L) to us on the ground that one of the forwarders has booked some container for us and has not taken delivery. What can we do now?

As per the law relating to bill of lading, the shipping company is bound to deliver the bill of lading to you upon receipt of the goods. It is a breach of faith if the shipping line takes your goods but does not give you the B/L. You can bring legal action to enforce the obligation of the shipping company. If the shipping company has any claims on you, that can be a subject matter of a separate dispute, but that matter cannot have a bearing on the obligation of the carrier or master or agent of the master or carrier to deliver you the B/L against receipt of goods for carriage to the named destination.



We are a manufacturer of wooden pallets and packing material, supplying to Special Economic Zone (SEZ) units and Export Oriented Units (EOU). We are importing sawn wood from New Zealand by paying customs duty and supplying 100 per cent to SEZ and EOU units for their exports. Is there any provision to avail/claim the duty amount?

I believe the sawn wood you import is an input for manufacture of pallets and packing material that you supply to units in SEZ or to EOU. Supplies to SEZ are treated as physical exports and so you can claim drawback of duties you pay on imported sawn wood, under Section 75 of the Customs Act, 1962 read with the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995. Supplies to EOU are deemed exports and here again, you can claim deemed exports duty drawback as per the provisions in Chapter 8 of the Foreign Trade Policy (FTP). You also have the option to obtain advance authorisation or duty free import authorisation (DFIA) and import the sawn wood duty free, as per Chapter 4 of the FTP read with related Customs notifications no.96/2009-Cus and 98/2009-Cus, both dated 11.09.2009.



Do we need to take permission for import on 'lease' basis?

As per Para 2.35 of the FTP, no specific permission of the authorities is required for lease-financed capital goods.



We have supplied goods manufactured by us to a hydro power project that has been commissioned but the implementation was through award of works under international competitive tender invited by the company. Will the excise duty charged by us on plant and machinery be eligible for refund under deemed export benefits?

Deemed export benefits are not available for service contracts but are available for supply of goods required for setting up mega power projects (including specified hydel projects), subject to fulfilment of specified conditions. Where supply is already made without following specified procedures and the project is already commissioned, refund would not be admissible.

Source:-www.business-standard.com

Entities with disparate functions and losses can’t be taken as comparables for determination of ALP

IT/ILT : Companies engaged in functionally different business cannot be taken as comparables

Order of SetCom allowing settlement of case on merits doesn’t require any interference, says HC

IT : Order passed by Settlement Commission directing assessee's application to be proceeded with for disposal on merits did not require any interference

Computers not supposed to be error prone; penalty upheld even after claiming clerical errors in digi

ST : During period from 10-9-2004 to 30-9-2005, only commercial concerns were liable to pay service tax under Business Auxiliary Services; and, there was no intention to levy service tax on sole proprietorship concerns

Tribunal could recall its own order if assessee was prevented from arguing the matter on merits

IT: Where at time of hearing before Tribunal, assessee was prevented from arguing matter on merits, Tribunal committed no error in recalling its own order and placing matter for rehearing

Interest on service tax is payable even if it isn’t demanded in show cause notice

ST : Statutory interest is payable in respect of confirmed demand even if same is not demanded in show cause notice

Evasion of over Rs 4,500 cr in service tax, excise duties: Fin Mi

Increased efforts to check revenue leakage by the Finance Ministry have resulted in detection of over Rs 4,500 crore in service tax, excise and customs duty evasion during last year.

Out of the total Rs 4,744.92 crore of indirect tax evasion detected during April and December last year, officials made a recovery of Rs 531 crore, according to official data.

As many as 592 cases involving service tax evasion of Rs 3,055 crore were detected during 2012-13 up to December. Sustained investigation via issuance of show cause notices among others had resulted in recovery of Rs 435 crore, it said.

The Finance Ministry officials had registered 321 cases of central excise duty evasion involving an amount of Rs 571 crore during the same period of last fiscal, it said.

The officials also made recovery of Rs 96 crore being evaded as excise duty after due investigation into the matter, the data said. A total of 710 cases of customs duty evasion involving Rs 1,118.92 crore were detected between April-September last year, it said.

Representational Image. Reuters

The Finance Ministry is following a zero tolerance policy against tax evaders and has cautioned customs, central excise and service tax defaulters of stringent action.

Ministry officials say sustained efforts had resulted in detection and recovery of such a huge amount in evasion of indirect tax comprising service tax, excise and customs duty.

Investigations have found that companies and individuals were fudging data to avoid service tax. “In some cases, we found that a service provider has not acquired service tax registration number,” said a Revenue department official involved in these cases.

Similarly, in case of excise duty evasion, companies were maintaining wrong data of finished goods so as to evade tariff, the official said. In cases of customs duty evasion, the officials could lay their hands on many ‘fly-by-night’ exporters and importers.

A number of evaders were found to be misusing export promotion schemes such as duty drawback among others, he said. The Ministry has introduced and implemented a first-of-its-kind amnesty scheme for service tax defaulters.

According to the ‘Voluntary Compliance Encouragement Scheme’ (VCES), a defaulter may declare his due tax liabilities, including the cess charges, for a period between October 1, 2007 and December 31, 2012 and pay it to the government after making a truthful declaration and avoid penalty, interest or any other penal proceedings.

The officials have also booked 1,646 cases of narcotics and seized contraband goods worths Rs 164.25 crore between April-September last year.

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Title:- Govt seeks to hide tax levied in GST regime

Dircption:- The Union finance ministry — in consultation with the empowered committee of state finance ministers — is working on a mechanism where the new Goods and Services Tax (GST) regime prices are declared in a manner that would ensure the total tax levied would not be disclosed to consumers.

The government wants to hide the tax levied as it fears that if a bill is handed out to consumers containing break-up of prices of the commodity and the levies, it may invite wider criticism since the state and central tax component may add up to as high as 20%.

The proposed GST regime will have a dual tax structure where one will be the central component levied by the Centre, or the central GST, and the other to be levied by the states, or the state GST. In the dual tax structure, the Centre and states would have concurrent jurisdiction and the rate of taxes is likely to be in the range of 10% each. While the basic features of the law would be uniform, the dual model would be implemented through multiple statutes.

"A committee has been set up having members from both finance ministry and the empowered committee to deliberate how the tax could be structured within the cost of product and services," said Sushil Modi, Bihar deputy CM and chairman of the empowered committee of state finance ministers. Modi had on Friday met industry representatives and tax experts to invite their opinion on issues related to the rolling out of the GST.

The finance ministry has asked the National Institute of Public Finance and Policy (NIPFP) to work out revenue neutral rates for both the central GST and the state GST on the basis of data up to 2012-13. Earlier, the NIPFP had given their estimation for revenue neutral rates for state GST, state-wise, based on the 2009-10 data.

It had suggested rates to be 8.45% if the central sales tax (CST) is completely eliminated. At current CST rate of 2%, NIPFP had recommended to keep the state GST at 10.46%. However, the rates vary state-wise — between 5.88% and 17.21%.

While the Centre wants complete elimination of CST when GST is rolled out, the states are demanding to retain the CST at 1%-2% for initial years of the implementation of the GST to make up for their losses for migrating to the new indirect tax regime.

No penalty for delay in filing of PANs of deductees if there was reasonable cause for such failure

IT : Where Tribunal confirmed penalty order passed under section 272A without examining evidence on record showing assessee's inability to file details of tax deducted at source along with PAN of deductees, impugned penalty order was to be set aside and, matter was to be remanded back for disposal afresh

AO had to apply his mind to the objections raised by assessee opposing the reasons behind re-assessm

IT : Assessing Officer has to apply his mind to objections raised by assessee to reopening and has to deal with same in order

If case is restored for denovo assessment, assessee can't insist on preferential disposal of its obj

IT : Where order passed while reopening assessment, was itself wrong and, thus, in revision, case was restored to file of Assessing Officer to reframe assessment de novo, assessee could not contend that objections raised earlier by it should first be disposed of prior to reframing assessment

Govt seeks to hide tax levied in GST regime

The Union finance ministry — in consultation with the empowered committee of state finance ministers — is working on a mechanism where the new Goods and Services Tax (GST) regime prices are declared in a manner that would ensure the total tax levied would not be disclosed to consumers.

The government wants to hide the tax levied as it fears that if a bill is handed out to consumers containing break-up of prices of the commodity and the levies, it may invite wider criticism since the state and central tax component may add up to as high as 20%.

The proposed GST regime will have a dual tax structure where one will be the central component levied by the Centre, or the central GST, and the other to be levied by the states, or the state GST. In the dual tax structure, the Centre and states would have concurrent jurisdiction and the rate of taxes is likely to be in the range of 10% each. While the basic features of the law would be uniform, the dual model would be implemented through multiple statutes.

"A committee has been set up having members from both finance ministry and the empowered committee to deliberate how the tax could be structured within the cost of product and services," said Sushil Modi, Bihar deputy CM and chairman of the empowered committee of state finance ministers. Modi had on Friday met industry representatives and tax experts to invite their opinion on issues related to the rolling out of the GST.

The finance ministry has asked the National Institute of Public Finance and Policy (NIPFP) to work out revenue neutral rates for both the central GST and the state GST on the basis of data up to 2012-13. Earlier, the NIPFP had given their estimation for revenue neutral rates for state GST, state-wise, based on the 2009-10 data.

It had suggested rates to be 8.45% if the central sales tax (CST) is completely eliminated. At current CST rate of 2%, NIPFP had recommended to keep the state GST at 10.46%. However, the rates vary state-wise — between 5.88% and 17.21%.

While the Centre wants complete elimination of CST when GST is rolled out, the states are demanding to retain the CST at 1%-2% for initial years of the implementation of the GST to make up for their losses for migrating to the new indirect tax regime.