Sensible Export Policy Would Have Saved The Day

17-Jul-2013

There is something moronic about the utterances of economists who they see in the current rupee-dollar exchange rate crisis a silver lining. They aver it would spur the nation to export more.



If only it was so simple! China, the world’s largest exporter, has about 50 per cent of its GDP coming from exports with the comparable figure for us being less than 15 per cent, which does not place us in the category of leading exporters.



Indeed, we are not. In the rough and tumble of the export market, there are no quick fixes or shortcuts. There are both endogenous and exogenous factors that operate in determining the strength of a country’s currency, with exogenous factors often exerting greater influence.



All floating currencies of the world have perforce to yield to the US dollar, which was foisted as the global currency by the US in 1944 through a combination of trickery, audacity and technological and military supremacy.



Indeed, the US dollar defies all theories and truisms.



A country suffering from perennial Current Account Deficit (CAD) would willy-nilly have to live with a weak domestic currency.



This, however, does not apply to the US. Despite leading the pack in having the highest CAD, it has a fairly strong currency.

Policy Paralysis



It is not as if we have been done in by the external environment alone. The rot could have been stemmed through several policy initiatives, such as:



The only area we reined supreme for a while was IT and IT-related exports but somewhere down the line we allowed that advantage to slip through, though the world-wide recession admittedly was also responsible.



Countries like Vietnam and Philippines were snapping at our heels through furious cost-cutting and catching up on English language skills but we buried our heads in the sand, ostrich-like.



Our IT companies, instead of preserving our advantages, set up shop in these countries in the sobering realisation that if you cannot beat them, better join them.



We were once upon a time a leading cotton garments exporter. But the Johnny-come-lately, Bangladesh, has not only stolen a march over us but has been giving the more dogged Chinese a taste of their own bitter medicine — furious under-cutting of price. What the government must do immediately, now that India grows cotton in enormous quantities, is to throw open the garment industry to the large-scale sector.



Huge economies of scale and the much-needed resilience to cope up with the ever-changing fashions are attributes uniquely present only with the large companies, which have the resources to import the most modern machines.



Reviving the cotton textile industry should be the government’s priority that would give fillip to the downstream garments sector.



Employment opportunities would get a leg-up.



This, however, does not mean the rupee would turn the tide, immediately because there would always be a lag between investments and exports.



Export markets are notoriously difficult to prise open especially when faced with under-cutting of quotations and devaluation of currency, adopted by China.



Our captains of industry were itching to invest abroad. It is one thing for students to itch to study abroad but quite another for industries to invest abroad. Of course, they were not entirely to blame.



The government drove them to take this extreme step when back home investment was becoming a tough proposition — the ‘economy versus ecology’ dichotomy, among others, was making investments difficult. And the government played ball with them in facilitating the exodus, whereas it should have restrained them through tough norms.



The rather easy norms for outbound foreign investments have depleted our precious forex reserves; besides, Indian ended up buying a pig in a poke. Yes, many of the outbound investments have gone sour for two reasons — the recession there and winners’ curse of paying an excessive price for acquisitions abroad in the anxiety to prevent competitors from stealing a march. Domestic investments, by contrast, have a multiplier effect like creation of employment opportunities, greater revenue for governments and better infrastructure.



Making External Commercial Borrowings (ECB) laughably simple through the automatic route through which a company can borrow as much as the equivalent of $700 million in a financial year was suicidal even without the benefit of hindsight. The economy is paying through its nose now that the rupee has dropped steeply from what the dollar fetched at the time of borrowings.



Huge redemption losses stare the borrowing companies in particular, and the economy, in general. Mercifully, the RBI put its foot down on borrowings from abroad for less than three years.



Revolving door mechanism extended to FIIs. FIIs bring hot money and are fair weather friends. They must be reined in. We need to take steps that would make us a manufacturing nation, so that we have an export surplus.



Right now, our exports have a huge import content, be they petroleum products or gems and diamonds. The government is now giving a pep talk to the industry, exhorting it to increase steel production. But it has to walk the talk.

Source:-www.thehindubusinessline.com

Indian Coffee, Tea, Meat, Spice Exports For June 2013 Fall To $276.67M

July 18, 2013

one of the country's premier import-export market research company, announced that in June 2013, India's coffee, tea, meat and spice exports fell to $276.67 million, a decrease of 9.86 per cent compared to May 2013.



These findings are based on the data about India's exports of coffee, tea, meat and spices available on InfodriveIndia.com and on export shipping bills filed at Indian Customs by exporters from India at over 110 ports in India.



These include the Jawaharlal Nehru Port Trust (JNPT), Mumbai's air and seaports, Chennai's air and seaports, Delhi's Indira Gandhi International (IGI) Airport, Delhi's Tughlakhabad inland container depot (ICD), Delhi's Patparganj, Kolkata's air and seaports, Bangalore airport, etc.



Pradeep, chief research associate, InfodriveIndia.com, provided an analysis and break-up of the major product categories (coffee, tea, meat and spices), the major countries to which they are exported and the major Indian ports.

Source:-www.fnbnews.com

Rupee Depreciation Not Helping Exporters: Eepc India

A sharp dip in rupee value against dollar and other major currencies has yielded no gains to exporters who are reeling under a severe slowdown in global demand and have seen their shipments drop, calling for very urgent measures from the government and the industry, EEPC India Chairman Aman Chadha said Wednesday.



"We are facing considerable demand problem in external markets and there is, so far, no visible impact of the currency depreciation on our exports," Chadha said in his presentation before senior officials of the Commerce Ministry in New Delhi on Wednesday.



While rupee has depreciated about 10 per cent in the last two months against the US dollar and other major currencies, exports of engineering products, among the largest segments of the Indian merchandise export basket, too sent went down almost in the same ratio, instead of benefitting from currency erosion, EEPC India, formerly known as Engineering Export Promotion Council said.



India's overall engineering exports fell by 9.26 percent to USD 4223.29 million in June this year from a revised figure of USD 4654.47 million achieved during June 2012. The decline has exacerbated from -3.15 percent in May 2013.Average growth rate for the first quarter of 2013-14 was -7.53 percent.



Important engineering export segments like iron and steel, products of iron and steel, copper and copper products, motor vehicles and aircrafts, spacecrafts and parts have witnessed sharp decline in exports.



Out of the 33 engineering panels, 19 engineering panels recorded negative growths in the month of June 2013 as opposed to 16 such panels in the month of May 2013.



Faced with a difficult situation in the developed markets of the US and the European Union, the two main destinations for Indian markets, the EEPC is seeking new markets in Africa.



While the overall trade with Africa is much below the potential, India and Africa can help each other tide over the impact of global slowdown, Chadha said.



The continent is recovering from the global crisis of 2009 and it is sustained even though a new global slowdown is constraining Africa's growth, like that of many other regions. With the gradual recovery of North African economies, Africa´s average growth is expected to rebound to 4.8 percent in 2013.



"While keeping an eye on new economic storm clouds in Europe, both India and Africa must keep its focus on reforms that encourage growth and foster bilateral trade and investment between our two regions," EEPC Chairman said.

Source:-www.smetimes.in

CBDT's clarification - Exemption under Sec. 10A, 10AA, 10B and 10BA are available after set off of l

IT : Section 10A, Read with Sections 10AA & 10B of The Income-Tax Act, 1961 - Free Trade Zone - Direct Tax Benefits - Clarification on Issues Relating to Applicability of Chapter IV of The Act and Set off and Carry Forward of Business Losses

CBDT issues instruction to effectively handle the SLPs or appeals to be filed by assessees

IT : Section 261 of The Income-Tax Act, 1961 - Supreme Court - Appeals to - Instruction Regarding Standard Operating Procedure for Appeals/SLPs Filed by The Assessees in The Supreme Court and Related Matters

DRP to pass a speaking order considering all objections raised by assessee

IT/ILT : Where order of Dispute Resolution Panel did not state objections raised by assessee, same should be set aside to its file to pass a speaking order stating all objections and disposing them by giving cogent reasons

Sec. 154 doesn't authorize AO to allow an exemption not claimed in return unless it's an apparent mi

IT: Sec. 154 doesn't authorize AO to allow an exemption not claimed in return, unless it's an apparent mistake

Discount on shares issued under ESOP held as ‘expenditure’ and part of employees’ cost

IT : Object of issuing ESOPs at a price at a discount to market price is not to raise share capital but to earn profit by securing the consistent and concentrated efforts of its dedicated employees during the vesting period. Such discount is construed, both by the employees and company, as nothing but a part of package of remuneration. Discount on ESOPs is neither short capital receipt nor contingent liability. It is an expenditure. Discount on ESOPs deductible on straight line amortization basi

Commissioner (A) can’t take different stands on a same issue but arising in distinct periods

ST : Where Commissioner (Appeals) had upheld orders passed by Adjudicating Authority rejecting refund claim of assessee, while, for subsequent period, refund claim involving same input services was allowed by him, matter was required to be remanded back to Commissioner (Appeals)

Reassessment based on additional reasons recorded after service of reassessment notice not valid

IT: Where Assessing Officer reopened assessment of assessee after recording reasons and served on it a notice under section 148 on 19-1-2010, additional reasons recorded by Assessing Officer subsequent to issuance of notice under section 148 could not be looked into for purposes of determining validity of proceedings initiated under notice dated 19-1-2010

Government to discuss tax concerns of industry groups

Finance minister P. Chidambaram announced on Wednesday the setting up of a mechanism to discuss tax-related, sector-specific concerns raised by industry groups and other associations to improve the dialogue between government and companies.

From the government’s side, Parthasarathi Shome, adviser to the finance minister, will meet industry groups and associations once a week and take note of their concerns. This will only be a forum for the concerns of a particular industry and not individual cases.

“There is a merit for having an institutional, structured mechanism to hear concerns of industry groups. At present, we get to hear about their concerns only once a year during the pre-budget discussions,” Chidambaram said at a press briefing after meeting the chief commissioners and directors general of customs, central excise and service tax.

Expressing confidence that the government will meet the revenue collection targets for the current fiscal, Chidambaram warned that “non-filers”, those who do not pay taxes, and “stop filers”, those who used to pay taxes but have stopped, will be targeted.

“In service tax, the number of non-filers and stop filers is exceeding Rs.12 lakh. We are going to target them,” he said.

Of the indirect tax target of Rs.5.63 trillion for 2013-14, more than Rs.1.80 trillion has to come from service tax collections.

Given the lukewarm response to the service tax voluntary compliance encouragement scheme in this year’s budget, the finance minister said the tax department would run an awareness campaign to encourage assessees to take advantage of it.

Under the scheme, any service provider who has not paid service tax dues can do so without having to pay interest and penalty. The government will shortly issue a list of frequently asked questions to provide clarity about the scheme, he said.

The finance minister also said that the government is taking steps to address manpower issues with a proposal for cadre restructuring of the Central Board of Excise and Customs (CBEC) to be taken up in the Cabinet soon. The government has to fill almost 700 vacancies above the assistant commissioner level in CBEC.

On a new chairman for the empowered committee of state finance ministers, Chidambaram said that the Union government and state finance ministers will choose a new head at a meeting on 22 July in New Delhi. The post fell vacant after Sushil Kumar Modi stepped down after resigning as the deputy chief minister of Bihar.

SECURI TECH INDIA P. LTD. COMPANY Vs. THE CHAIRMAN CENTRAL BOARD OF DIRECT TAXES

$~ * IN THE HIGH COURT OF DELHI AT NEW DELHI + WRIT PETITION (CIVIL) NO. 987/2012 Date of decision: 8th July, 2013 SECURI TECH INDIA P. LTD. COMPANY ..... Petitioner Through Dr. M.P. Raju, Advocate. Versus THE CHAIRMAN CENTRAL BOARD OF DIRECT TAXES & ORS. ..... Respondents Through Mr. N.P. Sahni, sr. standing counsel for R-1. Mr. Abhishek Maratha, sr. standing counsel for respondent Nos. 2 to 4. CORAM: HON'BLE MR. JUSTICE SANJIV KHANNA HON'BLE MR. JUSTICE SANJEEV SACHDEVA SANJIV KHANNA, J. (ORAL): Securi Tech India Pvt. Ltd., petitioner No.1 has filed the present writ petition for refund of Rs.5,42,000/- with interest. It is stated that the respondent Nos.1 to 4 i.e. the income tax authorities are not obeying and complying with the order dated 13th January, 2006 passed by the tribunal and have acted contrary to the mandate and obligation imposed by Section 240 of the Income Tax Act, 1961 (Act, for short). 2. Rajender Prasad Tyagi, respondent No.5 was subjected to search and seizure operations under Section 132 of the Act on 21st January, 1997. An amount of Rs.5,42,000/- was found at the residence, which was allotted to Tuleshwari Tyagi wife of Rajender Prasad Tyagi, at Satya Sadan, Chanakyapuri, New Delhi. Seizure memo W.P. (C) No. 987/2012 Page 1 of 7 (annexure P-1) records the name of the persons searched as R.P. Tyagi and Tuleshwari Tyagi and mentions that Rs.5,32,310/- and Rs.17,000/- in different denominations notes were found at the time of search in one bedroom and store room of the house. Rs.5,25,000/- out of Rs.5,34,310/- was seized. 3. By block assessment order dated 21st January, 1999, substantive addition of Rs.5,42,000/- was made to the income of Rajender Prasad Tyagi as declared. Another order under Section 158 BC was passed in the case of the petitioner No.1 and addition of Rs.5,42,000/- on account of the cash seized was made on protective basis in the hands of the petitioner No.1. As tax demands remained unpaid by Rajender Prasad Tyagi, this amount of Rs.5,25,000/-, which was lying in the PD of the Commissioner, were adjusted towards the demands payable by Rajender Prasad Tyagi. Rajender Prasad Tyagi, however, succeeded in first appeal and addition in his hands was deleted vide order dated 25th January, 2001 by Commissioner of Income-tax (Appeals) and it was held that this amount of Rs.5,25,000/- belonged to the petitioner No.1. Consequent upon the said order, the Assessing Officer passed a fresh assessment order dated 28th March, 2002 and added Rs.5,25,000/- on account of the cash seized on substantive basis to the income of the petitioner No.1. This addition was challenged before the first appellate authority and then before the tribunal. Tribunal by their order dated W.P. (C) No. 987/2012 Page 2 of 7 13th January, 2006 quashed the original assessment order dated 25th January, 1999 made under Section 158 BC of the Act. We only record that the said order has become final. As a result, no addition has been made in the case of the petitioner No.1. 4. Since then, i.e., after 13th January, 2006, petitioner No.1 has been repeatedly asking for refund of the said amount and has written request letters dated 15th March, 2007, 20th September, 2007, 24th March, 2008, 20th August, 2008, 13th January, 2009, 5th February, 2009 and 26th March, 2009, etc. After a lapse of nearly three years, the Assessing Officer for the first time responded and asked the petitioner No.1 vide letter dated 8th April, 2009 to justify the claim of refund by filing documentary evidence. Reply was filed by the petitioner No.1 vide letter dated 2nd May, 2009. The Assessing Officer thereupon wrote letter dated 25th May, 2009/1st June, 2009 asking why the refund was being claimed by the petitioner No.1, as the seized cash could be adjusted against the demand created in the case of Rajender Prasad Tyagi. Thereafter, nothing happened. Petitioner No.1 thereupon approached Ombudsman but proceedings remained pending and no refund was made. 5. The petitioner No.1 has in these circumstances approached this Court by way of the present writ petition. 6. Rajender Prasad Tyagi, respondent No.5 has filed counter W.P. (C) No. 987/2012 Page 3 of 7 affidavit to the present writ petition and has stated that he has no objection in case payment is made to the petitioner No.1. In the counter affidavit he has reproduced the findings recorded by the CIT (Appeals), which read:- "4.3 The cash of Rs.5,25,000/- was not found from the bedroom or from the personal possession of the appellant but from the room wherein records and consumer containing entries of M/s Securi Tech India Pvt. Ltd. were kept by virtue of going a camp office of the said company operating from theses premises. 4.4 Thus, the fact of ownership of cash confirmed by the persons connected to M/s Securi Tech India Pvt. Ltd. So, it cannot be presumed to be belonging to any other person. 4.5 The Department did not have any evidence to reject the statement of the assessee and the owners of the cash so found. Merely, on surmises and conjectures the same could not be assessed or presumed to be the undisclosed income of the appellant. 4.6 In respect of other amount of Rs.17,000/- Sh. Yashvir Tyagi, brother-in-law of the assessee, categorically confirmed in his statement that this amount was left by him with his sister and was a part of professional fee and expenses received by him for representing a murder case at Gurgaon. The fees was received at the residence of his sister and thereafter he proceeded to Gurgaon from where he returned to his home at Meerut without picking it up from the residence of his sister. He could not come to Delhi, thereafter, and the said cash was seized at the time of search. 4.7 Smt. T.D. Tyagi and Sh. R.P. Tyagi at the time of search in their statements recorded on 21.01.1997 categorically stated that this amount of Rs.17,000/- was left by Sh. Yashbir Tyagi, Advocate and brother of Smt. T.D. Tyagi. This was also confirmed by Sh. Yashbir Tyagi in his affidavit and statement filed before the A.O. In fact, the affidavit and other confirming evidence from his client, who paid the W.P. (C) No. 987/2012 Page 4 of 7 fees to him, were also submitted before the A.O. Shri. Yashvir Tyagi has been assessed under Section 158 BC at the same time and the said receipt has already been considered as income in his hands. 4.8 Factually, the AO has not given any reason to reject the contention of the appellant and that of Shri Yashvir Tyagi. But he merely brushed aside the facts and submissions by stating the same to be an afterthought. 4.9 In respect of cash of Rs.5,25,000/- found from the flat, I am of the opinion that the appellant cannot be deemed to be the owner of the said cash as he has been able to discharge his onus." 7. It is clear from the above quote that the CIT (Appeals) has held that the money belonged to petitioner No.1 and the amount seized Rs.5,25,000/- did not belong to any other person. The balance amount of Rs.17,000/- it was held belonged to one Yashvir Tyagi and has been assessed as his income under Section 158 BC. This order of the CIT (Appeals), as noted above, has been accepted by the Revenue and it has not been challenged or questioned. 8. We fail to understand that once the department has accepted the said order and treated Rs.5,25,000/- as income and money of petitioner No.1 and this was/is also the stand of respondent No.5, why the said respondents have not refunded or repaid the said amount. We also fail to understand why the Assessing Officer took three years to respond to the letter written by the petitioner No.1 and their ambivalence and distrait thereafter. Addition of Rs.5,25,000/- on substantive basis in W.P. (C) No. 987/2012 Page 5 of 7 the case of the petitioner No. 1 was deleted by the tribunal by their order dated 13th January, 2006. Rs.5,25,000/- should have been refunded immediately thereafter. The department could not have adjusted the amount against the demand payable by Rajender Prasad Tyagi in view of the findings recorded by the CIT (Appeals) in the order dated 25.1.2001 that the amount belonged to petitioner No.1. It was not the money of respondent No. 5. We have recorded that there is no dispute between the petitioner No.1 and respondent No.5 that the amount belongs to petitioner No.1 and respondent No.5 does not claim any right or interest on the said amount. 9. In view of the findings recorded above and the statement made by respondent No.5, we are not inclined to entertain and examine the submission made by respondent Nos.1 to 4 that payment or refund under Section 132(3) can only be made to Rajender Prasad Tyagi and not to petitioner No.1. We would not like to examine the contour of Section 132 as the facts of the present case do not require the said examination. The said respondents accept that the refund of Rs.5,25,000/- is due. The amount belongs to the petitioner No. 1. Respondent No. 5 states and accepts that the amount/refund should be paid to the petitioner No. 1. As already noted above, the case of the respondent No.5 throughout has been that the money does not belong to him and the said finding has been accepted by the first appellate W.P. (C) No. 987/2012 Page 6 of 7 authority under the Act, i.e., the Income Tax Act, 1961 and the order has become final. Prima facie it appears that Section 132(3) is meant to deal with the cases where there is difference or dispute between two or more persons as to whom the money belongs. In the present case, no such issue or question arises. In these circumstances, Section 132(3) need not be interpreted as the question is of merely academic interest. 10. Amount of Rs.5,25,000/- along with interest is lying deposited in this Court. It will be appropriate and proper if the said amount along with interest is released to the petitioner No.1 by the Registry of this Court. The petition is accordingly allowed to the extent indicated and the respondent Income-tax authorities, i.e., respondent Nos. 1 to 4 will pay costs of Rs.20,000/- to the petitioner No.1. The said costs will be paid within two months by sending a cheque. Mr. Abhishekh Maratha, who appears for respondent No.6, the Assessing Officer of Rajender Prasad Tyagi states that as per their records no amount is due and payable by Rajender Prasad Tyagi. In case any recovery has to be made from Rajender Prasad Tyagi, the same will be affected in accordance with law. SANJIV KHANNA, J. SANJEEV SACHDEVA, J. JULY 08, 2013/NA/VKR W.P. (C) No. 987/2012 Page 7 of 7

COMMISSIONER OF INCOME TAX Vs. SAMSUNG INDIA ELECTRONICS LTD.

$~ * IN THE HIGH COURT OF DELHI AT NEW DELHI Date of decision: 9th July, 2013 + ITA 132/2010 COMMISSIONER OF INCOME TAX ..... Appellant Through Ms. Suruchi Aggarwal, sr. standing counsel. versus SAMSUNG INDIA ELECTRONICS LTD. ..... Respondent Through Mr.Satyen Sethi and Mr. Arta Tarana Panda, Advocates. CORAM: HON'BLE MR. JUSTICE SANJIV KHANNA HON'BLE MR. JUSTICE SANJEEV SACHDEVA SANJIV KHANNA, J. (ORAL) This appeal under Section 260A of the Income Tax Act, 1961 (Act, for short) by the Revenue, which relates to the assessment year 1998-99 raises two issues. The first issue pertains to deletion of disallowance on account of brand-building and dealers loyalty expenditure. The said issue is covered against the Revenue by decision dated 3rd September, 2012 in ITA 98/2010, Commissioner of Income Tax Vs. Samsung India Electronics Ltd. We note that ITA 98/2010 also relates to the assessment year 1998-99. ITA 132/2010 Page 1 of 4 2. The second issue relates to training expenses of Rs.29,30,950/-. The said expenses were incurred by the respondent-assessee on training given to technical and some non-technical persons. The Assessing Officer has held that that the expenditure had resulted in enduring benefit to the assessee and amortized the expenditure over a period of six years. 1/6th of the said expenditure was allowed for the year 1998-99. Assessee filed first appeal but the CIT (Appeals), instead of agreeing with the assessee, disallowed the entire expenditure holding that it relates to ,,pre setup period and was capital expenditure. The CIT (Appeals) observed that some of the employees, mainly engineers and technicians, were sent to various plants in Indonesia, Bangkok and Seoul but the said training was given before commencement of the business of manufacturing which started from 17th June, 1997. The technicians were trained abroad during the period February-March 1997. 3. The contention of the assessee, which has been accepted by the tribunal, is though manufacturing of colour TV sets commenced with effect from 17th June, 1997, but the business was setup earlier. The date of commencement of manufacturing was not relevant. The Tribunal has held that the expenditure was essentially for the purpose of carrying on the existing business, for which the commercial operations had started in 1996- ITA 132/2010 Page 2 of 4 1997, and the new manufacturing unit was an extension of existing business. We have already noticed that the Assessing Officer did not treat the expenditure in question as capital in nature but amortized it over a period of six years. The first appellate authority took notice of the fact that actual manufacturing activity commenced from 17th June, 1997, but did not go into the question as to the date on which business activities commenced i.e. business was setup and whether the manufacturing activity was in continuation of the earlier business. The first appellate authority has, however, recorded that the respondent-assessee had commenced its business during the previous year in 1995-96 and training was given in March, 1997. 4. Pertinent observations have been made in Commissioner of Income Tax v. Cement and Chemical Industries Ltd. [1973] 91 ITR 170 by a division bench of Gujarat High Court (authored by Justice Bhagwati P.N. J as his Lordship then was) that "business" connotes a continuous course of activities and all the activities need not start simultaneously in order that the business may commence. The business would commence with the activity which is first in point of time and which much necessarily precede all other activities. Thus, in that case when the cement company quarried the leased area of land and extracted limestone from it, it was considered as much an ITA 132/2010 Page 3 of 4 activity in the course of carrying on the business as the subsequent activities of manufacture of cement and sale of manufactured cement. This activity came first in point and laid foundation for others and, hence, was held to be deductible in computing the trading profits of the assessee for the relevant assessment years. 5. In view of the findings recorded by the tribunal, we do not think that any substantial question of law arises for consideration and the appeal is dismissed. SANJIV KHANNA, J SANJEEV SACHDEVA, J JULY 09, 2013 NA ITA 132/2010 Page 4 of 4

COMMISSIONER OF INCOME TAX Vs. SAMSUNG INDIA ELECTRONICS LTD.

$~ * IN THE HIGH COURT OF DELHI AT NEW DELHI Date of decision: 9th July, 2013 + ITA 132/2010 COMMISSIONER OF INCOME TAX ..... Appellant Through Ms. Suruchi Aggarwal, sr. standing counsel. versus SAMSUNG INDIA ELECTRONICS LTD. ..... Respondent Through Mr.Satyen Sethi and Mr. Arta Tarana Panda, Advocates. CORAM: HON'BLE MR. JUSTICE SANJIV KHANNA HON'BLE MR. JUSTICE SANJEEV SACHDEVA SANJIV KHANNA, J. (ORAL) This appeal under Section 260A of the Income Tax Act, 1961 (Act, for short) by the Revenue, which relates to the assessment year 1998-99 raises two issues. The first issue pertains to deletion of disallowance on account of brand-building and dealers loyalty expenditure. The said issue is covered against the Revenue by decision dated 3rd September, 2012 in ITA 98/2010, Commissioner of Income Tax Vs. Samsung India Electronics Ltd. We note that ITA 98/2010 also relates to the assessment year 1998-99. ITA 132/2010 Page 1 of 4 2. The second issue relates to training expenses of Rs.29,30,950/-. The said expenses were incurred by the respondent-assessee on training given to technical and some non-technical persons. The Assessing Officer has held that that the expenditure had resulted in enduring benefit to the assessee and amortized the expenditure over a period of six years. 1/6th of the said expenditure was allowed for the year 1998-99. Assessee filed first appeal but the CIT (Appeals), instead of agreeing with the assessee, disallowed the entire expenditure holding that it relates to ,,pre setup period and was capital expenditure. The CIT (Appeals) observed that some of the employees, mainly engineers and technicians, were sent to various plants in Indonesia, Bangkok and Seoul but the said training was given before commencement of the business of manufacturing which started from 17th June, 1997. The technicians were trained abroad during the period February-March 1997. 3. The contention of the assessee, which has been accepted by the tribunal, is though manufacturing of colour TV sets commenced with effect from 17th June, 1997, but the business was setup earlier. The date of commencement of manufacturing was not relevant. The Tribunal has held that the expenditure was essentially for the purpose of carrying on the existing business, for which the commercial operations had started in 1996- ITA 132/2010 Page 2 of 4 1997, and the new manufacturing unit was an extension of existing business. We have already noticed that the Assessing Officer did not treat the expenditure in question as capital in nature but amortized it over a period of six years. The first appellate authority took notice of the fact that actual manufacturing activity commenced from 17th June, 1997, but did not go into the question as to the date on which business activities commenced i.e. business was setup and whether the manufacturing activity was in continuation of the earlier business. The first appellate authority has, however, recorded that the respondent-assessee had commenced its business during the previous year in 1995-96 and training was given in March, 1997. 4. Pertinent observations have been made in Commissioner of Income Tax v. Cement and Chemical Industries Ltd. [1973] 91 ITR 170 by a division bench of Gujarat High Court (authored by Justice Bhagwati P.N. J as his Lordship then was) that "business" connotes a continuous course of activities and all the activities need not start simultaneously in order that the business may commence. The business would commence with the activity which is first in point of time and which much necessarily precede all other activities. Thus, in that case when the cement company quarried the leased area of land and extracted limestone from it, it was considered as much an ITA 132/2010 Page 3 of 4 activity in the course of carrying on the business as the subsequent activities of manufacture of cement and sale of manufactured cement. This activity came first in point and laid foundation for others and, hence, was held to be deductible in computing the trading profits of the assessee for the relevant assessment years. 5. In view of the findings recorded by the tribunal, we do not think that any substantial question of law arises for consideration and the appeal is dismissed. SANJIV KHANNA, J SANJEEV SACHDEVA, J JULY 09, 2013 NA ITA 132/2010 Page 4 of 4

Trust registration couldn’t be denied because of non-commencement of charitable activities

IT : Only because trust has not commenced activities, Commissioner would have no authority to ipso facto reject application for registration under section 12AA

Transportation and installation of goods after transfer of title thereof is liable to ST

ST : If transfer of title of goods takes place at place of seller, then, subsequent charges for transporting goods, installation and other expenditure do not form part of sale price and can be charged to service tax

Direct taxes code bill to be introduced in monsoon session: Chidambaram

The government will introduce the official amendments to the Direct Taxes Code (DTC) bill, seeking to overhaul the over 50-year old income tax law, towards the end of the Monsoon session of Parliament.

The session will be held from August 5 to 30.

The DTC bill was introduced in the Lok Sabha in 2010 and Standing Committee on Finance has given a report after its scrutiny.

Finance Minister P Chidambaram on Tuesday said: "The report (of the panel) has come. I completed the exercise in the Ministry of Finance. The official amendments are now being drafted. They will be ready and I will introduce the official amendments in the Parliament towards the end of the Monsoon session and then it is for Parliament to pass it."

The minister said the DTC has gone through entire legislative process except passage in Parliament. "I think we have done our homework and Parliament will pass it".

The DTC aims to rationalise tax rates to bring more people and companies under the tax net.

Among other things, the Standing Committee had suggested raising the income tax exemption limit to Rs 3 lakh as against Rs 2 lakh proposed in the DTC Bill, 2010.

On the proposed Goods and Services Tax (GST), Chidambaram said "one or two state governments" are opposing it.

The Empowered Committee of State Finance Ministers, he said, is working hard on the GST and by-and-large all of them are very supportive.

"The Constitution amendment bill is being drafted. It is being placed before the Council of Ministers (on July 22). Then the GST bill is to be drafted. It will be placed before them," Chidambaram said, adding the two would be placed in Parliament after they are ready.

The GST bill, introduced in Parliament in 2010, is being vetted by the Standing Committee on Finance. After the committee submits its report, the states and the Centre would together to finalise the draft and bring it back to Parliament.

The proposed GST will bring in a common tax regime for goods and services by subsuming most indirect taxes, and is expected to help increase revenue mop ups.

The GST roll out has missed several deadlines on account of differences over contentious issue of Central Sales Tax, compensation and design of the GST structure between the states and the Centre.

Saket Agarwal vs. ITO (ITAT Delhi)

No s. 271(1)(c) penalty even if explanation unproved if it is not disproved by AO The assessee had a cash credit of Rs. 7.33 lakhs in his books. He also claimed agricultural income of Rs. 1 lakh. He offered an explanation on both issues which was not accepted by the AO. He accordingly surrendered both amounts to tax to buy peace. The AO imposed penalty u/s 271(1)(c) which was confirmed by the CIT(A). Before the Tribunal, the assessee claimed that the additions were made on “voluntary surrender” and to avoid further litigation and to buy mental peace and that the same could not be considered as furnishing of inaccurate particulars of income or concealment of income. HELD by the Tribunal allowing the appeal: If the assessee gives an explanation which is unproved but not disproved i.e. it is not accepted but circumstances do not lead to the reasonable and positive inference that the assessee’s case is false, then the penalty is not imposable. In the present case, the assessee’s explanation remained unproved but it cannot be said as disproved. Further, s. 68 is an enabling provision for making an addition where the assessee fails to give an explanation regarding the cash credit but such addition does not automatically justify imposition of penalty u/s 271(1)(c) r/w Explanation 1 thereto. In order to justify levy of penalty, there must be some material or circumstances leading to a reasonable conclusion that the amount does represent the assessee’s income and the circumstances must show that there was a conscious concealment or act of furnishing of inaccurate particulars. From a bare reading of s. 271, it is clear that the provisions of Explanation 1 to s. 271 do not make the assessment order conclusive evidence that the amount assessed was, in fact, the income of the assessee and that the assessee did not satisfactorily explain the cash credits by producing evidence and documents. Accordingly, penalty u/s 271(1)(c) is not leviable (Upendra V. Mithani (Bom) (included in file) and National Textile 249 ITR 125 (Guj) followed)

INCOME TAX APPELLATE TRIBUNAL : CHENNAI BENCHES : CHENNAI CONSTITUTION FOR THE WEEK FROM 15-07-2013 TO 18-07-2013

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Forfeiture of deposit by hotel due to cancellation of reservation isn’t chargeable to service tax

ST/ECJ : In case of hotel industry, where hotelier retains deposit in event of cancellation of reservation by client, neither payment of deposit, nor retention of that deposit is liable to service tax

Changes you must know while filing tax returns this year

The tax filing process for financial year 2012-13 differs from previous years in more ways than one, more so for businesses.

Central Board of Direct Taxes (CBDT) has brought in many changes that need to be kept in mind while e-filing tax returns. Some of these are listed below:

Tax Audit Report and Transfer Pricing Report to be e-filed

Businesses having revenue of 1 Crore (Rs. 25 Lacs for professionals) need to get their account books of audited by a practising chartered accountant (CA) under the laws of the Income Tax Act. Also, the details of such Tax Audit Report (Form 3CD) were required to be disclosed in the returns of such businesses along with the details of CA signing such report.

From financial year 2012-13, Income Tax Department has made it mandatory to e-file tax audit reports prior to filing of income tax returns. E-filing of Transfer Pricing Reports under section 92E (Form CEB) has also become mandatory for businesses with respect to entering into international transactions.

Immediate impact of this change would be escalated compliance cost for businesses since this would be an additional requirement. We feel that this change would be good for accounting practice eco-system at large in our country and would create more value to the practice for obvious reasons.

Disclosure of Assets and Liabilities in ITR Form

This is another major change one needs to know while filing tax returns for financial year 2012-2013, the objective of which seems to gather as much information as possible. Law says that every individual and Hindu Undivided Family (HUF) having total income Rs 25 lakhs is required to disclose complete details of assets and liabilities in Schedule AL in the ITR form to be e-filed.

MAT Report (Form 29B) to be E-Filed

A report under section 115JB ( Form 29B) of the Income-tax Act, 1961 is required to be obtained from a practicing chartered accountant for computing book profits of the company in accordance of the law. The Income Tax Department has made it mandatory from financial year 2012-13 (AY 2013-14) to e-file such Form 29B within the stipulated time.

New Method of issuance of Form 16 (Salary Certificate)

The Income Tax Department has introduced new a method to issue Form 16/ Salary Certificate to the employees. This system mandates that Part A of Form 16, which contains total income and tax deduction details for a particular financial year needs to be generated using the TRACES portal and Part B ( personal details of the employee) needs to be prepared by the employers. This method is a step in the right direction, since now there would be lesser chances of discrepancies in the Form 16 vis-Ã -vis Form 16AS (Tax Deduction) details on the portal of IT Department. However, since this is the first year of its implementation, there ought to be some operational issues.

Mind you there is a penalty of Rs. 100 per day prescribed on the company for delayed issuance of Form 16 to the employees. Many companies would have delayed the issuance of Form 16, mainly due to this new system, thus the government may look to be lesser stringent on the penalty front.

Other changes in Online Income Tax Returns for FY 2012-13 (AY 2013-14)

• The IT Department has brought in stringent rules for ITR applicability for various assessees, specifying forms for set of income and also assessees. Now, ITR (Sahaj) can not be filed in case of losses from Other Sources exceeding Rs 5000 (winning from horse race, lottery etc), or if there is a double taxation avoidance agreement exemption, also applicability of ITR 4 and ITR4S.

• E-filing has become mandatory for assessees having income more than Rs 500,000 in FY 2012-13. It is a step in the right direction, which will bring transparency in the system.

• A new section 80TTA has been introduced, wherein interest upto Rs 10,000 is exempt from taxes, if earned from a savings bank account, or co-operative bank/post office.

• There is no need for senior citizens to pay advance taxes if they don't have business income.

HC dismissed writ challenging reassessment as assessee had an alternate remedy of appeal

IT: Where assessee filed a writ petition challenging initiation of reassessment proceedings based on change in method of accounting adopted by Assessing Officer, in view of fact that assessee had sufficient alternative remedy of filing appeal before appellate authorities, writ petition was to be dismissed being non-maintainable

Additions for cash credit deleted as assessee managed to prove genuineness of transaction

IT : Addition on account of cash credits can be deleted on basis of evidence that cash was received from genuine parties

AO can’t apply Sec. 50C to a purchaser; unexplained money deleted on furnishing family settlement ag

IT : Where assessee in support of certain amount received from his family members on account of sale of property, produced family settlement agreement and sale agreement, there being no defect in said agreements, amount so received by assessee could not be added to his taxable income as unexplained money

Extended period couldn’t be invoked if assessee had furnished all facts to the department

ST: Where assessee had voluntarily stated fact of non-payment of duty/tax even prior to visit of Department's officials in its factory, there was no intention to evade duty and therefore, invocation of longer period of limitation was not justified.

Rule 19(7) isn’t applicable for amalgamation of Cos. not seeking exemption under Securities Contract

CL: Where no exemption under Securities Contracts (Regulation) Rules, 1957 was sought, provisions of rule 19(7) would not be applicable for purpose of amalgamation of companies

Penalty for delay in filing TDS return waived off as unavailability of PAN of payees caused such del

IT: Where delay in filing return of tax deducted at source by assessee-bank was due to lack of information of PAN of deductees, i.e., reasonable cause, penalty under section 272A(2)(k) could not be levied

[Indian Custom Non-Tariff Notification] : Amendment Notification No. 36/2001-Customs (N.T.), dated the 3rd August, 2001

Agri Exports Rise 42%, Imports Fall 7% In Q1

July 16, 2013

According to the BAS quarterly report, agricultural exports in the first quarter climbed to $1.641 billion from $1.155 billion in the same period last year.



The agricultural sector brought in 13.58% of the country’s total export earnings, which amounted to $12.081 billion.



Meanwhile, total expenditures for agricultural imports, which comprised 11.50% of the country’s total import expenditures of $15.163 billion, dropped by 6.62% to $1.743 billion in the first quarter this year.



The highest level of monthly agricultural exportation was pegged in March at $612.25 million while highest monthly importation was recorded in February at $596.94 million.



Total earnings from the country’s top 10 agricultural exports registered 45.82% growth to $1.161 billion in the first quarter from $796.40 million in the same period of 2012.



Except for desiccated coconut, whose first-quarter revenues decreased by 33.32%, top export commodities posted revenue increments.



Of the top five performing exports, copra oil cake brought in $62.50 million, a 404.04% surge from last year’s $12.50 million.



Centrifugal sugar exports grew 143.16% to $98.12 million from $40.35 million; fresh bananas, 82.93% to $206.87 million from $113.09 million; tobacco (manufactured), 63.61% to $87.74 million from $53.63 million; tobacco (unmanufactured), 42.23% to $30.25 million from $42.23 million; and seaweeds and carrageenan, 41.31% to $69.34 million from $49.07 million.



Expenditures for the top ten agricultural imports this year fell to $847.20 million, 0.37% lower than year’s $850.37 million.



Tuna, which is not usually among the country’s top agricultural imports, ranked ninth in the list with expenditures of $20.39 million, though this is lower by 4.26% from the $25.25 million recorded in the first quarter of 2012.



On the other hand, regular top imports rice and corn did not make it to the list in the first quarter.



Wheat and meslin remained the country’s top agricultural import, with first-quarter expenditures of $238.93 million, up 14% from the $209.58 million of 2012.



Soy bean oil or cake meal was the next top import in the first quarter, seeing a 51.11% increase in expenditures to $201.9 million from $133.61 million.



Expenditures for the rest of the top imports decreased year-on-year, with urea seeing the biggest drop at %59.54, from $51.34 million in 2012 to $20.77 million this year.



As for the balance of trade, the agricultural trade deficit softened by 85.53% from $707.22 million the first quarter last year to $102.34 million in 2013.



The month of January saw the biggest deficit at $81.25 million while a trade surplus of $39.21 million was recorded in March.



A wider trade deficit with the United States was recorded at $135.62 million this year from $44.79 million in 2012.



However, the country’s first-quarter trade deficits with Australia declined by 51.71%; with the Association of Southeast Asian Nations, 59.09%; and with the rest of the world, 61.40%, compared with the same period last year.



Agricultural trade with Japan and the European Union posted further trade surpluses of $211.52 million and $183.45 million, respectively.

Source:-www.bworldonline.com

Northwest Ports Pledge 75% Dpm Cut

16-Jul-2013

The Northwest ports of Seattle, Tacoma and Metro Vancouver say they will reduce diesel particulate matter (DPM) by 75 percent and greenhouse gas emissions by 10 percent, per ton of cargo, by 2015, according to the ports’ updated Clean Air Strategy. Both air pollution reduction targets use 2005 levels as a baseline.



The ports say they will further reduce DPM per ton of cargo 80 percent by 2020 and cut GHGs 15 percent by 2020, both compared to 2005 levels.



According to the Clean Air Strategy, the ports will meet these goals by exploring different methods to reduce emissions, from switching to liquefied natural gas to idle-time reduction.



The three ports have also committed to conducting pilot studies and demonstration projects to cut emissions from ocean-going vessels, harbor vessels, cargo-handling equipment, trucks, locomotives and rail transport, and port administration.



The Metro Vancouver port is exploring the viability of switching to liquefied natural gas for marine operations. It has also studied introducing clean energy at two container terminals. The Puget Sound Clean Air Agency (PSCAA) is in the process of implementing an idle-reduction technology, while the Seattle port completed a pilot study on using radio frequency identification (RFID) tags for trucks, so they have less wait times at gates.



The three ports published their original clean air strategy plans to reduce emissions from shipping and port operations in the Georgia Basin-Puget Sound airshed in 2007.



To set and implement the goals, the ports partnered with the EPA, PSCAA, the Washington State Department of Ecology, and Environment Canada and Metro Vancouver in Canada.



Other ports have also been looking for ways to reduce pollution from their operations. The Port of Long Beach announced in May that all 13 international cargo terminals at the Port of Los Angeles and Port of Long Beach will power docked ships with electricity by the end of this year, cutting air pollution from the ships at berth by 95 percent. The infrastructure to supply shore power — also known as cold ironing or alternative marine power (AMP) — is being installed in support of clean air initiatives led by the two ports and the California Air Resources Board.

Source:-www.environmentalleader.com

Rupee Up 21 Paise To Hit Fresh Two-Week High

The rupee on Wednesday strengthened by 21 paise to hit a fresh two-week high of 59.10 in early trade at the Interbank Foreign Exchange market, after the government liberalised FDI limits in a dozen sectors.



Forex dealers said the government liberalising FDI limits in a dozen sectors, including allowing 100 per cent in telecom and higher limits in ‘state-of-the-art’ defence manufacturing, in a bid to lure capital inflows, in a bid to curb the sliding rupee and to boost sagging economy, boosted the local currency.



They said, a higher opening in the domestic equity market, too, helped the rupee to strengthen.



The rupee had gained 58 paise to end at 59.31 against the dollar on Tuesday, the biggest gain in more than a fortnight after the RBI announced a slew of measures to curb rupee’s volatility.



Meanwhile, the BSE benchmark index Sensex recovered by 118.79 points, or 0.59 per cent, to 19,970.02 in early trade on Wednesday.

Source:-www.thehindu.com

Gems, Jewellery Exports Nosedive About 41% In June

16 Jul, 2013

NEW DELHI: India's gems and jewellery exports nosedived about 41 per cent year-on-year to USD 2.3 billion in June, 2013 on account of shortage of yellow metal and limited inventory in domestic market.



In June last year, these exports stood at USD 4 billion, according to the Gems and Jewellery Export Promotion Council (GJEPC).



"The exports declined drastically in June as there was a shortage of raw-material for jewellery manufacturing. This was because the government had taken steps to curb gold imports," GJEPC Chairman Vipul Shah told PTI.



But, he said, the shortage was a short-term phenomenon and hoped that the industry would get regular raw-material supply.



India is the largest importer of gold which is mainly utilised to meet demand of the jewellery industry.



The major markets for the country's jewellery exports are the US, Europe, Middle-East, Hong Kong and Japan.



In June 2013, there were no outbound shipments of gold medallions and coins, while gold jewellery exports declined 73 per cent. However, silver jewellery exports were up 52 per cent and outward shipments of cut and polished diamonds jumped about 22 per cent.



During April-June 2013, the gems and jewellery exports declined 13.2 per cent year-on-year to USD 8.5 billion.



India imported around 830 tonnes of gold in 2012-13. To curb demand, the government hiked the import duty on gold thrice in a year and raised it recently by 2 per cent, to 8 per cent. Besides, RBI too, has put restrictions on banks on importing gold.



Gold imports in June are estimated to have fallen to around 31 tonnes, down from 162 tonnes in May and 141 tonnes in April.



High imports strain the Current Account Deficit (CAD), which hit a record high of 4.8 per cent in the 2012-13 fiscal.



CAD occurs when total imports of goods, services and transfers is greater than the exports

Source:-economictimes.indiatimes.com

Garments Exports Jump 11% To $3.5 Billion

16-Jul-2013

NEW DELHI: India's garments exports have climbed over 11% to $3.5 billion as local exporters cornered a bigger share of the market in Latin America and most of Asia to offset the impact of poor demand in the US and Europe.



The rise comes after garment exports fell nearly 6% to $12.9 billion in 2012-13. Buoyed by the success, the government and the Apparel Export Promotion Council are now egging exporters to target nontraditional markets such Uruguay, Columbia, Israel, Brazil, Australia, South Africa, and Japan, A Sakthivel head of the industry body said on Monday.



Although data is currently unavailable, Indian garment exporters witnessed a reversal in fortunes in April, at least in the US with the value of shipments surging over 16% to $337 million. For January-April, they continued to remain in the red with exports falling 0.8% to $1.2 billion. The story was much the same in the European Union, where exports rose almost 16% in April to $525 million, while January-April shipments are estimated to have decreased 2.6% to $2.1 billion.





According to the latest available data, among the top eight exporters to the US, India and Mexico are the only two countries that have seen the value of shipments decline, while others such as China and Bangladesh have continued to witness an increase.



With the tide turning a little, textiles minister K Sambasiva Rao on Monday asked apparel exporters to step up their overseas sales target to $20 billion in 2013-14. "You assure me that you are going to increase the exports — not from $14 billion to $17.5 billion this year, but to $20 billion," he said.



Source:-timesofindia.indiatimes.com

Exp. in connection with sales but not leading to brand promotion can’t be compartmentalized into AMP

IT/ILT : Expenditure incurred in connection with sales which does not lead to brand promotion, cannot be brought within ambit of advertisement, marketing and promotion (AMP) expenses for determining cost/value of international transactions

CBDT directs officials not to deny interest on excess TDS unless assessee is at fault for such delay

IT : Section 244A of The Income-Tax Act, 1961 - Refunds - Interest on - Payment of Interest Under Section 244A when Assessee is not at Fault

HC presumes existence of culpable mind in not filing return within time; confirms prosecution

IT : Where assessee had not filed return of income timely, it could be prosecuted under section 276CC on presumption that there existed a culpable mental state as onus to prove that delay was not wilful was on assessee and not on department

Section 73A can’t be applied unless there is an assessment of service-tax

ST : If there is no dispute with regard to self-assessment, it should be treated as final

Entire block assessment held invalid as no evidences were found to reveal undisclosed income

IT: Where no material or evidence were found showing undisclosed income during search, block assessment was invalid

RBI announces measures to address exchange rate volatility

BANKING : RBI Announces Measures to Address Exchange Rate Volatility

Benefit of ECB up to USD 10 billion extended to specified Indian Cos with overseas JVs or wholly own

FEMA/ILT : External Commercial Borrowings (ECB) Policy Repayment of Rupee Loans And/Or Fresh Rupee Capital Expenditure - USD 10 Billion Scheme

Pursuant to hike in bank rates, RBI enhances penal interest rates on shortfall in reserve requiremen

BANKING : Revised Bank Rate Effective from 15-7-2013

No concealment penalty on mere disallowance of a claim if full details were disclosed in return

IT : Penalty for concealment of income, cannot be levied for claim being rejected by revenue, where full details were disclosed in return

HC restored an appeal when reasons for delay in making pre-deposit were explained by assessee

ST: If pre-deposit requirement is fulfilled somewhat belatedly and there is Explanation of such delay, then, appeal may be restored for consideration of issues on merits

Dividend received on shares cannot be charged to service tax

ST/ECJ : Mere acquisition and holding of shares in subsidiary company is not to be regarded as a service

Mumbai wholesalers go on strike against tax

The provocation for the strike is the government failing to fulfill its commitment to set up a high-level committee to examine the LBT issue and make its recommendations.

Wholesale traders in the city have launched a two-day strike to protest against the pending Local Body Tax (LBT) imbroglio, officials said here Monday.

The provocation for the strike is the government failing to fulfill its commitment to set up a high-level committee to examine the LBT issue and make its recommendations.

"Trading across sectors came to a standstill Monday morning with all wholesale markets remaining closed for two days," said Federation of Associations of Maharashtra (FAM) President Mohan Gurnani.

LBT, which replaced the traditional octroi in municipalities in the state, is an account-based cess collection for every raw material used or imported into the city by all businesses, traders and manufacturers.

While it was implemented in most parts of Maharashtra from April 1, it is due to be imposed in Mumbai Oct 1.

Last month, as the wholesale and retail trade strike crippled the state, Chief Minister Prithviraj Chavan and Union Agriculture Minister Sharad Pawar had intervened to resolve the looming crises.

In a meeting with all traders' bodies, the state government had promised to set up a committee to examine LBT and make necessary recommendations.

"Accepting the government proposal, traders had called off the strike in public interest May 23," Gurnani said.

"It is now over six weeks and there is no movement on the part of the state government. This token strike is intended to serve as a wake-up call before we consider other measures," Gurnani said.

He said the monsoon session of the Maharashtra legislature would start Monday and expressed hope that both the ruling and opposition parties would take up the issue on priority to prevent inconvenience to the masses.

Gurnani said retailers have not joined the strike since monsoon clearance sales are underway. However, he said they would join the strike unless the government acted on LBT immediately.

Sec. 43B disallowances represents business income and eligible for sec. 10A deductions

IT: Where employees' contribution to provident fund was paid before due date of filing of return of income, same could not be disallowed under section 43B

RBI/2013-14/137 A.P. (DIR Series) Circular No. 12 dated 15-07-2013

Reserve bank of India

A.P. (DIR Series) Circular No. 12

July 15, 2013

To

All Category - I Authorised Dealer Banks

Madam / Sir,

External Commercial Borrowings (ECB) Policy Repayment of Rupee loans and/or fresh Rupee capital expenditure – USD 10 billion Scheme

Attention of Authorized Dealer Category - I (AD Category - I) banks is invited to A.P. (DIR Series) Circular No. 134 dated June 25, 2012 , A.P. (DIR Series) Circular No. 26 dated September 11, 2012 and A.P.(DIR) Circular No.78 dated January 21, 2013 on the captioned scheme.

2. As per the extant guidelines, Indian companies in the manufacturing, infrastructure sector (as defined under the extant ECB policy) and hotel sector, which are consistent foreign exchange earners, are allowed to avail of ECB for repayment of outstanding Rupee loan(s) availed of from the domestic banking system and / or for fresh Rupee capital expenditure under the Approval Route.


3. On a review, it has been decided to extend the benefit of USD 10 billion scheme to Indian companies in the aforesaid sectors which have established Joint Venture (JV) / Wholly Owned Subsidiary (WOS) / have acquired assets overseas in compliance with extant regulations under FEMA, 1999 subject to the conditions as under:
   
   
   
   1. ECB can be availed of for repayment of all term loans having average residual maturity of 5 years and above / credit facilities availed of by Indian companies from domestic banks for overseas investment in JV/WOS, in addition to ‘Capital Expenditure’;
   
   
   2. ECB can be availed of within the scheme based on the higher of 75 per cent of the average foreign exchange earnings realized during the past three financial years and / or 75 per cent of the assessment made about the average of foreign exchange earnings potential for the next three financial years of the Indian companies from the JV / WOS / assets abroad as certified by Statutory Auditors / Chartered Accountant / Certified Public Accountant / Category I Merchant Banker registered with SEBI / an Investment Banker outside India registered with the appropriate regulatory authority in the host country;
   
   
   3. ECB availed of under the scheme will have to be repaid out of forex earnings from the overseas JV / WOS / assets.
   
   
   
   


4. The past earnings in the form of dividend/repatriated profit/ other forex inflows like royalty, technical know-how, fee, etc from overseas JV/WOS/assets will be reckoned as foreign exchange earnings for the purpose of US$ 10 billion scheme.


5. All other aspects of the scheme shall remain unchanged. The amended ECB policy will come into force with immediate effect and is subject to review based on the experience gained in this regard.


6. AD Category-I banks may bring the contents of this circular to the notice of their constituents and customers.


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

Yours faithfully

Rudra Narayan Kar

Chief General Manager-in-Charge

RBI/2013-14/137

Concealment penalty confirmed as assessee disclosed income after search and sec. 153A notice

IT: Where there was a search upon assessee and she subsequent to search, in pursuance of notice issued under section 153A, filed returns for relevant assessment years and amount shown in returns filed as 'other income' was not a part of her regular accounts, such amount would squarely come within purview of concealed income liable to penalty under section 271(1)(c)

No unexplained investment if fact finding authority didn’t spot any discrepancy in slump purchase sh

IT : Where in case of business transfer, assets shown in books had been accepted by appellate authorities, addition could not be made on account of unexplained investment

Find out if you have to pay wealth tax

Very few taxpayers have heard of it and fewer pay it. However, this is no reason for you to ignore wealth tax. This tax is payable if the market value of certain assets exceeds Rs 30 lakh. The tax is 1% of the combined value of such assets.

Wealth tax targets unproductive, non-essential and idle assets. In the crosshairs are two of the biggest obsessions of Indian investors: property and gold. If you have bought a second house and not given it on rent, the value of the property will be included while computing your wealth tax liability. Of course, the outstanding loan taken to buy the property will be deducted from this. Gold and silver, whether bought, gifted or inherited, will also be included in the calculation. Even the cash you keep in your locker at home is liable to wealth tax.

However, productive and financial assets, such as commercial property, bonds, fixed deposits, stocks, Ulips, gold funds, mutual funds, your savings account bank balance and gold exchange traded funds (ETFs) are exempt from wealth tax.

This tax is not taken very seriously by taxpayers because the Central Board of Direct Taxes is busy with other, more important, ones, such as corporate tax, income tax, service tax and excise.

Wealth tax accounts for less than 0.25% of total direct taxes and is minuscule in the total revenue collection. Last year, it contributed Rs 866 crore to the total revenue collection of Rs 1,038,036 crore.

The taxman's disinterest is surprising because, although small, this is a regular stream of tax collection. Unlike income tax, which is levied on earnings just once, wealth tax is payable every year for the same assets. One would have thought that wealth tax collections would see an exponential rise as India's rich became richer. Instead, these collections have witnessed a slow growth, rising 10% from Rs 787 crore in 2011-12 to Rs 866 crore in 2012-13.

This doesn't mean the taxman will not go after you for not paying it. Direct tax collections have been below the target set in the budget and the CBDT is under pressure to improve compliance. There is a stiff penalty for evading wealth tax. Incorrect declaration of wealth can invite a fine of up to 500% of the evaded tax. One can also be jailed for up to seven years if the tax due is over Rs 1 lakh. Remember, wealth tax evasion is easy to detect because the assets are tangible and undervaluation is not difficult to prove.

Are you liable to pay wealth tax? Fill the table provided here to know if you are rich enough to fall in its ambit. If the total figure exceeds Rs 30 lakh, you have to pay 1% wealth tax on that amount. This can be paid online or deposited at any designated bank branch. The wealth tax return is to be filed using form BA and the last date for doing so is 31 July. If the assessee is liable to audit, the last date is 30 September.

Wealth tax fact file

Wealth tax is 1% of the value of assets exceeding Rs 30 lakh.

Valuation date for a financial year is 31 March.

If you haven't paid yet, add 1% interest on the tax for every month of delay.

Penalty for evasion can be up to 500% of the tax sought to be evaded.

Assessee can be jailed for up to 7 years if the tax evaded exceeds Rs 1 lakh.

Penalty for delay in filing wealth tax return can be Rs 100-200 per day.

Invocation of extended period of limitation is a mixed question of law and fact; out of writ jurisdi

ST: Issue whether show-cause notice was beyond limitation is a point on which writ Court cannot, generally, render a finding since it involves a mixed question of law and fact, which must be determined in adjudicating proceedings

Winding up petition to be dismissed if dispute among parties on restructuring was not yet settled

CL: Where parties had entered into restructuring, winding up order could not be passed in favour of petitioner unless dispute with regard to restructuring was adjudicated and settled

POCM isn’t mandatory; real estate developers can follow either POCM or Completed Contract Method

IT : It is not mandatory for all real estate developers to workout their profits by following percentage of completion method as prescribed by Institute of Chartered Accountants of India under AS-7

India Mulls New Measures To Curb Gold Imports

15-Jul-2013

KOLKATA (miningweekly.com) - The Indian government is mulling a number of new measures to consolidate the falling trend in gold imports over the past month, including stiffer licensing conditions for importers.

According to senior government officials, the Finance Ministry has initiated a consultation process with various government departments and the Reserve Bank of India (RBI) to look into the possibility of laying down fresh, stiffer conditions for the granting of licences to importers.

One of the options currently favoured by the Finance Ministry is to restrict the granting of gold import licences to gold that is for actual use, such as for jewellery making, and not for investment or trading purposes, the official said.

Many of the RBI's senior staff were also against the granting of gold import licences to some commercial banks, as imported gold was used by commercial banks for retail sales to investors. The RBI officials have recommended that only government-owned trading companies should be eligible for imports and not actual refiners, which would choke demand for gold for retail investment purposes.

“New measures to curb the import of gold were felt necessary in order to consolidate the success achieved with earlier measures,” a senior bank official involved in the consultations said.

“Rising oil and gold imports were two main constituents of the country’s worsening current account deficit (CAD). Since oil imports cannot be checked in view of energy needs, the government feels it necessary to be most aggressive in curbing gold demand,” the official added.

Gold imports during June 2013 fell to 28 tonnes, down from 162 tonnes in May 2013, in response to the central bank restrictions last month. The RBI imposed that all gold imports intended for domestic consumption and made through either nominated agencies or directly, would have to be through 100% cash margins.

The central bank prohibited all forms of credit from any suppliers or bullion banks, for domestic use of gold which would impact gold imports on a nonconsignment basis, such as gold on lease or loans.

However, government circles were not sure whether the fall in imports in June could be entirely attributed to the measures taken, as the June to September period usually witnessed muted demand, owing to widespread monsoon rains and the agricultural sowing season in the rural regions.

A demand upsurge could not be ruled out during the September to December period, driven by the festival and marriage seasons and higher liquidity in rural areas during the harvesting season. As a result, the new measures to check imports would have to be sustained, the official said.

In March this year, India’s CAD hit a seven-month high of 4.8% at $20.1-billion, with gold imports of 830 tonnes during 2012/13 being the second-highest contributor after the oil import bill.

New measures to check gold imports assumed further urgency, with the RBI, last week, once again, raising concern over the large CAD and new pressures emerging on it from the weakening exchange rate of the rupee. Since May 2013, the Indian rupee hasdlost 15% against the greenback, resulting in the further ballooning of the gold import bill unless imports are checked.

Source:-www.miningweekly.com

Payment to NR for downloading the licensed software is payment of ‘royalty’ subject to withholding t

IT/ILT: Payment made by assessee to non-residents for downloading their licenced software amounted to payment of royalty and, thus, assessee was liable to deduct tax at source while making said payment

CBDT fixes deadline for adjustment of refunds against past arrears where Sec. 245 procedure wasn't f

IT : Section 245 of The Income-Tax Act, 1961 - Refunds - Set off of Refunds Against Tax Remaining Payable - Past Adjustment of Refunds Against Arrears where Procedure under Section 245 was not Followed

For promotional activities, RBI asks banks to engage only those telemarketers who are registered wit

BANKING : Unsolicited Commercial Communications - National Customer Preference Register (NCPR)

IRDA permits participation of insurers in Securities Lending and Borrowing Scheme

INSURANCE : Lending Securities through Securities Lending and Borrowing (SLB) Framework

Comparables with higher turnover, functional diversity and RPT’s to be excluded for TP analysis

IT/ILT : Where in course of transfer pricing proceedings, TPO made certain adjustment to ALP determined by assessee, in view of fact that some of comparables selected by TPO were inappropriate on account of high turnover, functional difference and excessive related party transactions, impugned adjustment was to be set aside and matter was to be remanded back for disposal afresh

Matter to be remanded back in case of dispute on facts

ST : In case there is a dispute as to factual background, matter must be remanded back to adjudicating authority in order to get an order on merits of issue

Additions on matters which are outside the scope of material found during search to be deleted

IT: Where addition was made de hors material found as a result of search, it should be deleted being not falling within parameters of Chapter XIVB

Sec. 40A(2) disallowances to be invoked only for an amount which exceeds its fair market value

IT: Disallowance of payment to related parties under section 40A(2) can be made only for amount proved to be in excess of fair market value

AO rejected books as complete records weren’t furnished; return can be revised even after sec. 143(1

IT: Processing of return does not amount to an assessment and revised return within statutory time is valid

Coupon discounts are deductible in computing taxable value of services

ST/ECJ : Discounts and rebates are not to be included in taxable amount, as they constitute a reduction of price at which services are offered to customer

No addition for unexplained credit if assets were created against liability which was fulfilled late

IT : No addition can be made under section 68 or 69 for creditors for expenses when assets have been created against said liability which was acknowledged of having been fulfilled at a later date

Transfer of possession of an immovable property is ‘transfer’ as contemplated under section 2(47)

IT : Transfer of possession of property amounts to transfer of asset under section 2(47)

Assessee gets immunity from penalty if conditions of Explanation 5 to sec. 271 are fulfilled

IT: Immunity from penalty be granted where all relevant requirements of Explanation 5 to section 271 are satisfied

Interest can’t be demanded twice over the same demand

ST : If interest for same delayed payment had already been confirmed by adjudicating authority and deposited by assessee, second time confirmation of same interest is liable to be set aside subject to confirmation by Department

Ex parte order by CLB is valid if conduct of appellant isn’t fair and it didn’t co-operate in procee

CL: Where appellant's conduct before CLB was not fair and they did not co-operate in conduct of proceedings, ex parte order passed by CLB in petition under sections 397 and 398 was justified

Subsidiary co. isn’t a ‘related person’ for sec. 40A(2); payment made by holding co. isn’t subject t

IT : Subsidiary of assessee-company is not a related person within meaning of sub-clause (ii) of clause (b) of section 40A(2) and, thus, payment made by assessee to its subsidiary cannot be disallowed by invoking provisions of said section

Better Volumes, Rupee Depreciation Improve Garment Makers’ Prospects

Jul 14 2013

The sharp fall of the rupee over the past few months should improve the revenue of many textile companies since most of them accrue from exports. Cotton textile exporters would get more value for every dollar-denominated sale unit made in the global markets. Readymade garment exporters will benefit, given that the export volumes are also on the rise since the beginning of 2013 after nearly two years.

A report by Crisil Research reiterates that garment exports to the US and Europe, which fell by 7% and 15%, respectively, in 2012, compared with the previous year, have shown signs of improving in the current year. Interestingly, India has also gained marketshare in these two regions, although on a low base against China.

Going by media reports, India’s Apparel Export Promotion Council says that leading global brands have increased their sourcing from India following greater stability in output and factory compliance compared with other Asian regions. Further, most garment makers have also increased prices this year to pass on higher yarn prices.

Analysts reckon that some integrated units such as Vardhman Textiles Ltd, Alok Industries Ltd and other firms such as Page Industries Ltd and Kewal Kiran Clothing Ltd are likely to register higher revenue after nearly three to four quarters. Therefore, favourable market conditions like higher volumes and better pricing power could translate into improved profitability for garment makers amid rising yarn and cotton prices.

According to Crisil, garment makers had seen an operating margin erosion of around 70-80 basis points to 9.3% from fiscal 2012 to the year ended March. One basis point is one-hundredth of a percentage point. Fortunately, garment manufacturers, barring some integrated companies, are not saddled with huge debt like the spinning mills.

That said, the Indian marketshare in the US and Europe is only in the low single digits. And, though Chinese readymade garments marketshare fell in the US and Europe in 2013 so far, it enjoys a little over one-third of the marketshare in these regions. But it remains to be seen whether the uptrend in volumes will sustain over the longer term, given the fierce competition from other countries.

Source:-www.livemint.com

Gold Imports Slip In June But Still Up 36% Yoy

Gold imports have slipped to 31 metric tonnes in June as per government data. It is 81 per cent less than the figures for May.



The numbers from the department of central excise and customs show they are, however, still 36 per cent more than the imports for the same month last year which means the upward thrust in the import demand for gold persists.



The numbers were shared with the chief economic advisor to the finance ministry Raghuram Rajan by the indirect tax department over the weekend.



Rajan also met foreign and domestic banks on Friday and would be meeting finance minister P Chidambaram on Monday to decide if the government needs to go ahead with a foreign bond issue to shore up the forex reserves. The minister returns from the US for a trip where he went to raise more forex for the economy.



An upsurge in the demand for gold along with oil has created the biggest macro economic management crisis for the centre for a long time. It has pushed the current account deficit to 4.8 per cent for the year 2012-13. Since this also creates a pressure on the foreign exchange by draining it the government has been looking for means to plug the leak and raise additional forex from international markets to finance it.



After meeting the bankers on Friday, Rajan had said all options (including raising of foreign bonds) were on the table.



Analysts are fretting that the government has run short of options to check in the falling rupee. While economists have said the fall is in sync with the economic fundamentals, treasurers of banks are fretting this is making it harder for them to meet the income targets of their banks.



The indirect tax data also shows that just in the first quarter of this financial year, gold imports at 335 tonnes is more than double the imports for last year at 137 metric tonnes. In value terms it is $15 billion against $7 billion in the same period last year.

Source:-www.indianexpress.com

Refined Palm Imports By India Seen At Record High On Lower Taxes

14-Jul-2013

India, the world’s biggest palm oil buyer, is set to import record amounts of the refined variety, taking advantage Palm of lower export taxes in Indonesia and Malaysia as the producers seek to encourage domestic refining.



The share of refined oil will climb to 60 percent to 70 percent of total palm purchases by Oct. 31, said Dorab Mistry, a director at Godrej International Ltd. That may increase to 80 percent by December if India fails to raise the import duty, he said. Such products were 20 percent of shipments a year earlier, according to the Solvent Extractors’ Association of India.



Malaysia and Indonesia, suppliers of about 87 percent of the world’s palm oil, cut taxes on shipments to clear stockpiles and boost prices. Futures for the oil used in everything from noodles to biofuel entered a bear market in June 2012 as output expanded and demand slowed. Stockpiles are poised to jump 21 percent to a record 9.5 million metric tons in 2013-2014, U.S. Department of Agriculture data show.



“The problem is created by the differential export taxes levied in Indonesia and Malaysia, and the Indian government has refused to rectify this situation,” Mistry said in an e-mailed response to questions from Bloomberg. “The economics of refining are so bad.”



Indonesia set the export tax on refined, bleached and deodorized palm olein at 4 percent for July, compared with a 10.5 percent tariff on crude oil. RBD palm olein exports from Malaysia attract no taxes, while crude oil shipments are taxed at 4.5 percent since March. India imposed a duty of 2.5 percent on crude edible oil imports in January, while keeping the levy on refined varieties unchanged at 7.5 percent.

Low Capacity



The gap between RBD olein and crude on a cost, insurance and freight basis delivered to Indian ports is at times as low as $10 and on odd days prices are the same, said Mistry.



The industry is in a serious crisis and most plants are operating at very low capacity, said B.V. Mehta, executive director of the extractors’ association. The government should increase taxes to maintain a gap of at least 10 percent between RBD palm olein and crude oil, he said.



“Our refining capacities are low because of the higher refined imports,” said Dinesh Shahra, managing director of Ruchi Soya Industries Ltd. (RSI), the biggest importer of cooking oils. “This is true for other refiners as well,” he said by text message. Imports are definitely cheaper and that’s why so much olein is coming in, said Atul Chaturvedi, chief executive officer of Adani Wilmar Ltd.

Source:-www.bloomberg.com

Professional fees excluded in applying employee cost filter; entity losses ‘uncontrolled’ status if

IT/ILT : Application of turnover filter of Rs. 1 crore to Rs. 200 crore for selecting comparables is justified

What decides suitability of a financial product?

The traditional argument in the market for financial products is to ask the investor to use the information that is disclosed and make a correct and cautious decision. This places on the producer the onus of disclosing correct and relevant information as prescribed by the regulator.

The problem with this approach is that both regulators and producers hope the investor will select the right product using the information that is disclosed. This has not been the case for three main reasons. First, producers bring too many products with poorly differentiated variants and are not too bothered as long as they comply with disclosure rules. Second, distributors and advisers push these products to investors for a commission, leading to misselling. Third, disclosures are too technical and complex for investors to make an investment decision based on them.

The focus in financial markets is slowly shifting to 'suitability' of financial products, where investors are helped by advisers and distributors to select the right product based on its appropriateness for their specific situation. This means the selection of the right investment product is done by the adviser based on his understanding of the investor's needs. Several assume that collecting financial data from the investor and running a risk profiling questionnaire would solve this problem. Many investor advisory processes tend to build around these two documents. However, more needs to be done.

Let us consider the case of a retired investor. The first question is about his needs, or what he would expect the investment to do for him. He would like to receive a regular income that adjusts for inflation and protects his capital from erosion. The second question is about the extent to which he depends on this investment for these objectives. Or how critical is the performance of this investment for the given objective, and whether there is a buffer or alternate sources to meet the given objective. The third question is about how willing the investor is to accept any variation in the investment performance, say, the minimum monthly income that he expects at all times. The fourth question is about the willingness and ability to accept any changes to the invested value and the maximum downside that can be accepted without stress.

In the above framework of suitability, the adviser should be able to compare the alternatives that are available. For example, a bank deposit or a government saving scheme may serve the objective of safety of principal and regular income, but may not protect against inflation. An investment in equity may offer long-term protection from inflation, but will offer neither capital protection nor regular income. A suitable solution is a combination of equity and debt, which generates an income within the range that the investor is comfortable with.

How should a mutual fund's monthly income plan (MIP) be positioned in the context of the suitability framework? The investor should know that the product does not offer a guaranteed dividend of a fixed amount every month. Therefore, unless he has an alternate source of income, such as rent, interest from deposits, income from an alternate profession, an MIP would be unsuitable. It is at best an add-on product that can supplement existing income from another source. Recommending that the entire retirement corpus be invested in an MIP would make it unsuitable for an investor seeking a fixed amount of monthly income.

It would, however, be suitable for an investor who is willing to take some downside risks to income and capital, in return for a growth in the value invested over a period of time. This needs investor agreement on risks to capital value and income, to some extent. However, unfortunately, MIPs are typically positioned as a 'yield plus' product, which is only half the story. Advisers tend to tell retired investors that the MIP will offer a return better than that of a bank deposit or saving scheme, since the equity return will top up the interest income earned by the debt portfolio. This is not always true. What the investor needs to know is that the presence of equity incorporates risk into the product in return for appreciation in the value of the investment over the long term.

Assume that the debt component earns a return of 9%, and 80% of the portfolio is invested in debt securities. This translates to a return of 7.2%. The equity component of 20% is risky. It can earn a return of say -15% to +15%. This means that it contributes -3% to +3% to the return. After allowing for costs of, say, 2%, the return to the investor ranges from 2.2% to 8.2%. If suitability is the criterion, the investor who chooses this product should be willing to accept both variation in income and in the value of the amount invested, given the equity component in the portfolio. Only those retired investors who accept this proposition pass the suitability test. Others will reject it.

What happens in this context? The adviser positions the MIP as 'better' without highlighting the risk brought in by equity, and positions the return for one of the many scenarios where it is higher. The fund manager is expected to meet the demands of the sales team that has made the promise, and juggles the equity and debt components to deliver a stable return, or announce a regular dividend. The funds that manage to pay a regular dividend are heavily invested in debt, not meeting the need of equity for the investor; funds that deliver a high return do so in a bullish equity market, unable to replicate it in a falling one.

We have a sad situation where MIPs are offered with various equity levels (5-30%) and their performance swings wildly. In a rare phase of good equity and debt returns, they are stars with double-digit returns. During good equity markets, they are the deposit-plus product advisers love. The rest of the time, they are products whose performance and returns are tough to explain and investors remain unconvinced.

Suitability requires comparison of alternatives. The retired investor may be better off adding equity to his post office deposits or an index fund to his bank deposit. Such solutions require advisers and investors to examine both risks and returns, and agree on what they are willing to give up in terms of security and comfort, in exchange for inflation protection and return. That is the process we need.

(The author is Managing Director, Centre for Investment Education and Learning.)

Family Finances: Rohit Joshi's skewed portfolio may hurt important goals

By Amit Kumar, ET Bureau | 15 Jul, 2013, 08.35AM IST

Prioritising goals is as important as working towards them. If you don't follow this tenet of financial planning, the achievement of one important goal is likely to come at the cost of sacrificing the others.

When Rohit Joshi, a senior manager in an education company, contacted us to help him with his finances, his portfolio was massively skewed towards real estate. The usual suspects— expensive insurance, low equity investment and no contingency fund—were there too.

We concluded that given his income, a house would result in a struggle to build corpuses for his future child's education and marriage. His daughter was born a few months after the plan, and in light of this development, the financial review will help them rectify their mistakes.

The original plan

Rohit, 29, lives with his wife Neha, 24, and 10-month-old Niral in their own house in Vadodara. When the Joshis approached ET Wealth for advice a year ago, it was easy to see why.

Rohit had a monthly income of Rs 52,725, and after accounting for all their expenses, the Joshis were left with a handsome surplus of Rs 24,306. At that time, they were supposed to pay Rs 6.45 lakh for a piece of land bought in Ujjain a few months ago.

The couple had been lazy about life insurance too. They had a total cover of Rs 76 lakh— from two traditional insurance plans, three Ulips and one online term plan—and shelled out about Rs 43,000 per year for this. They did better at health insurance with a cover of Rs 3 lakh each from ICICI Lombard.

Their goals included making a down payment for the land in three years, saving Rs 37 lakh and Rs 55 lakh for their child's education and marriage, respectively, and amassing Rs 6.57 crore in 30 years for their retirement.

Concealment penalty was justified if subsequent withdrawal of a claim proved unstable behaviour of a

IT : Where assessee claimed excess depreciation on machinery on basis that machinery was of foreign origin but facts showed that such machinery was of Indian make and excess claim was only withdrawn in view of action initiated by department, penalty under section 271(1)(c) was justified