Customs Notification No. 36/ 2013 dated 22-07-2013

Government of India

Ministry of Finance

(Department of Revenue)

Notification No. 36/ 2013-Customs

New Delhi, dated the 22^nd July, 2013

G.S.R. 499 (E).- In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 12/2012-Customs, dated the 17^th March, 2012 , published in the Gazette of India, Extraordinary, vide number G.S.R. 185(E), dated the 17^th March, 2012, namely:-

In the said notification, in the Table, against the serial number 139A, in column (3), for the words and letters “Gail NTPC JV or Petronet LNG Ltd.”, the words “an importer” shall be substituted.

[F.No.332/8/2013-TRU]

(Akshay Joshi)

Under Secretary to the Government of India

Note: The principal notification No. 12/2012-Customs, dated the 17^th March, 2012 , was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 185(E), dated the 17^th March, 2012 and was last amended by notification No. 34/2013-Customs, dated the 8^th July, 2013 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 468 (E), dated the 8^th July, 2013.

Restricted sec. 14A disallowance as no substantial exp. were incurred by assessee to earn exempt inc

IT : Where major expenses were not towards earning of exempted income disallowance of expenditure under section 14A was to be restricted

CBDT's guidelines for allocation of work of departmental representative for representing before ITAT

IT : Work Allocation of Departmental Representatives before ITAT

No addition under sec. 68 if share applicants were identified and they had given their bank statemen

IT : Where Assessing Officer made addition in income of assessee-company under section 68 on plea that it could not prove that share applicants had enough money on date of purchase of its shares, since share applicants were identified and they had submitted their bank statements, cash extracts and returns filing receipts, impugned addition was not justified

IF PWD rates are available to work out construction cost, no rationale in adopting rates of metropol

IT: Where PWD rates were applicable, rates prevailing at metropolitan cities could not be adopted for working out cost of construction so as to estimate deemed income under section 69B for purpose of assessment

Rent-a-cab service availed for transportation of employees is eligible for input service credit

ST : Rent-a-cab services availed in relation to transport of employees is eligible for input service credit; however, no credit is available upto extent of amount recovered from employees in that regard

Act of curbing distribution and exhibition of films in certain regions is anti-competitive

Competition Act : Rules and regulations of appellant-associations, representative bodies of distributors and exhibitors of cinema films, by which they were compelling producers and distributors of cinema films to compulsorily register their films with them and prohibiting members to deal with non-members were violative of provisions of section 3(3)(b) of Competition Act, 2002

Sec. 88E rebate for STT can be claimed in both situations - tax payable as per normal provisions or

IT: Purpose of section 88E is to grant an assessee to a limited extent rebate in tax on account of securities transaction tax already borne by it and this rebate would be equally applicable to tax as computed under section 115JB or tax as calculated under normal provisions of Act

Government Planning To Overhaul Sez Policy To Push Declining Exports

NEW DELHI: Beset by falling exports, the government is revisiting its policy on special economic zones in the hope of rekindling interest among investors. With industry and state governments citing problems with land acquisition, the commerce department is considering relaxing the minimum area requirement for more sectors in the final amendments in the SEZ rules.



These changes are being looked at even as the government is yet to put into effect the announcement made by commerce and industry minister Anand Sharma three months ago.



The department has identified agro-processing SEZs as the main thrust area and plans to cut minimum land requirement from 100 hectares to 10 hectares for agro-processing SEZs.



"We are looking at some changes following demands from industry and also state governments," an official told ET. "States have demanded relaxation as they do not have enough land."



Among the changes being mulled is halving of the area requirement for setting up of multi-services SEZs to 50 hectares from 100 hectares. Multi-services SEZs would be considered on a par with single-product SEZs.



As per the new changes, SEZ developers will also be able to add another sector on additional contiguous 50 hectares on multi-product SEZs.



To give a fillip to exports, the government in April had halved the minimum area requirement for single-product SEZs to 50 hectares and that for multi-product SEZs to 500 hectares. While the minimum land requirement norm for IT SEZs was scrapped, it was left unchanged for multi-services SEZs. These changes, however, are yet to be implemented.



According to sources, Sharma has put these proposals on the fast track and asked ministry officials to ensure that the new norms are put in place before the end of the month. The law ministry, however, is yet to vet the proposed notification. If accepted, these changes will supplement the policy alterations made by the government three months ago.



Falling exports has put pressure on the current account deficit, which widened to an all time high of 4.8% of GDP in 2012-13. Continued contraction in exports in the current financial year has set alarm bells ringing among policymakers who are now casting about for ways to boost exports.



India's exports declined 1.41% to $72.4 billion in the first quarter of 2013-14.



SEZs, which witnessed 31% growth in exports despite an overall contraction of 1.86% in the country's outbound trade, are seen as the new saviour.

Source:-economictimes.indiatimes.com

Indian Wool Importers Get Relief On Quarantine Issue

July 23, 2013

The wool importers have been complaining of difficulty and harassment on quarantine issue for the last three years. Some Quarantine Officers and Custom Officers had stopped clearance of wool imports seeking animal quarantine clearance/ NOC.



The wool importers raised this issue before the Union Minister of Textiles Dr. K S Rao recently during his recent meeting with the Wool Industry Stakeholders.



Various associations of industry have been representing continuously that this step has created disruption and jam in smooth flow of wool import. The imported wool is being used for producing exportable products and hence, this step had, in fact, adversely affected domestic value addition and exports also.



Dr. Rao took up the matter and met with Union Agriculture Minister Shri Sharad Pawar on 17th July, 2013. The issue has been resolved by the issuance of clarification on 18th July, 2013 by Department of Animal Husbandry, Dairying and Fisheries, Ministry of Agriculture.



The Office Memorandum clarifies that the issue of requirement of Sanitary Import Permit/ NOC for import of wool is to be decided as per the notification No.S.O.794(E) dated 28.03.2008 issued by the Department of Animal Husbandry, Dairying and Fisheries.



Accordingly as per clause 3(II)(V) of the Notification No.794(E) dated 28.3.2008, import of following varieties of wool do not require Sanitary Import Permit(SIP) from Department of Animal Husbandry, Dairying and Fisheries, or ‘No Objection Certificate’ from the Animal Quarantine and Certification Services(AQCS) of the designated port. Hence, the consignment of the following varieties of wool need not be referred to AQCS of the concerned port for issuance of NOC for clearance of the product:-



“Garneted stock of wool or of fine or coarse animal hair, wool and fine or coarse animal hair, carded or combed (including combed wool in fragments), yarn of carded wool not put up for retail sale, yarn of combed wool not put up for retail sale, yarn of fine animal hair (carded or combed) not put up for retail sale, yarn of wool or of fine animal hair put up for retail sale, yarn of coarse animal hair or of horse hair (including gimped horse hair yarn whether or not put up for retail sale), woven fabrics of carded wool or carded fine animal hair, woven fabrics of combed wool or carded fine animal hair, woven fabrics of coarse animal hair or of horse hair”.



Dr. Rao has thanked the Shri Pawar for his quick response in resolving this long-standing issue. This clarification will remove the condition of NOC/ clearance certificates on above mentioned varieties of wool to the wool Importers, will aid smooth inflow of wool imports, help the domestic industry engaged in value addition, making carpets, woolen clothing, garments and other woolen products and also help in increasing the country’s exports.

Source:-www.fibre2fashion.com

India To Raise Import Taxes On Luxury Items

Jul. 23 – India is set to increase import duties on a number of luxury items, including automobiles, televisions, high-end mobile phones, tablets, laptops and exotic foods. As part of a series of strategic tax and FDI initiatives currently being implemented by Finance Minister Chidambaram, the increases are specifically targeting at imported consumer goods that add no manufacturing or FDI value to the country.



“The increases in these strategic items comes at a time when India is, for the first time, coordinating its FDI policy with tax policy,” says Chris Devonshire-Ellis, Managing Partner of Dezan Shira & Associates. “For example, while luxury tax is being imposed on smartphones and tablets, at the same time FDI restrictions in the telecommunications industry are being relaxed. The message is clear: manufacture these products in India for the domestic market or face being priced out through luxury tax. The same is true of autos and other sectors.”



India thus far has a patchy record of matching FDI policy with import duties. However this has now changed, and corporate policy as to accessing the Indian consumer market will have to change along with it.



Automotive



India’s auto market has been suffering the past eight months with sales falling. However, it is the world’s sixth largest auto market and is expected to be the third largest by 2020. Luxury tax increases will mean a 100 percent surcharge on imported autos. The status of the main foreign brand autos in India is summarized below:



Audi

Audi assembles the A4, A6, Q5 and Q7 models at ŠkodaAuto’s plant located at Aurangabad, Maharashtra while the other models are imported from Ingolstadt, Germany.



BMW

BMW has an assembly plant in Chenglepet, Chennai. The plant assembles BMW 3 and 5 series sedans and X1 SUVs while the other available models are imported.



Ford

The American auto giant has just announced plans to make India its global manufacturing hub for small cars. Its “Project B562” will see three different models roll off production lines at its Sanand plant in Gujarat from 2014.



Mercedes-Benz

Mercedes-Benz India manufactures S-series 320 L, E-series E200, E230 and E250 and C-series cars while other variants are imported.



ŠkodaAuto

ŠkodaAuto India’s product range includes the Fabia, Octavia, Laura and Superb models. The Fabia, Octavia and Laura models are assembled at Škoda’s Aurangabad plant, ŠkodaAuto’s first auto assembly plant setup outside of Europe.



Volvo

Volvo imports completely built units from Volvo’s Gothenburg factory in Sweden.



Mobile phones and tablets



India has the world’s fastest growing mobile phone subscriber base and is the second largest mobile subscriber market with some 867 million subscribers after China. Luxury tax on imported items will rise from 1 percent to 6 percent in what is a highly price competitive market. The status of primary international brand sales to India are as follows:



HTC

No manufacturing plant in India – all items are fully imported from Taiwan.



Apple

No manufacturing or assembly plant in India. Fully imported from China.



Samsung

Samsung has a production facility in India located at Noida. However, it has not started production of S4 models in India yet. S4 devices sold in India are imported from South Korea, but the company have announced the S4 will soon be manufactured in India.



Laptops



Lenovo – Market Share: 17%

Running assembly/manufacturing factory in southern Puducherry, India with 3 million units per annum capacity. Had another manufacturing facility at Baddi Himachal Pradesh, but closed down in 2010. Imports laptops and components in India from its manufacturing facilities in China, Japan, Singapore and the United States.



ACER – Market Share: 15.7%

Imports completely built laptops. Acer India has no plans of setting up a full-fledged manufacturing plant in India. It prefers instead to make small modifications on its completely built products in a factory in Pondicherry.



HP - Market Share: 15.5%

HP has an assembly/manufacturing plant in Pantnagar, Uttaranchal with 5.7 million units per annum capacity. Might be importing components (adequate information not available).



Dell – Market Share: 12.4%

Dell opened plants in Penang, Malaysia in 1995, and in Xiamen, China in 1999. These facilities serve the Asian market and assemble 95 percent of Dell notebooks.



They do, however, have a manufacturing unit in Chennai, India. Dell globally sources around 1,300 components worth US$26 billion from China, including components that arrive at the facility in India.



Asus – Market Share: ~5%

Imports from China, Taiwan. Asus does not have its own manufacturing plants. It sources its products from original equipment manufacturers such as Compal and Wintron.



It imports the products from China to its warehouse in Goa, from where it is distributed to retail outlets across India.

Source:-www.india-briefing.com

Rupee Gains 37 Paise In Opening Trade

The Indian rupee opened higher by 37 paise at 59.39 per dollar versus 59.76 yesterday. "RBI is more likely to prefer sucking out liquidity via bond issuance to ensure that interbank rates remain well above the repo rate, says Rajeev Malik of CLSA.



The Indian rupee opened higher by 37 paise at 59.39 per dollar versus 59.76 yesterday.



Rajeev Malik, CLSA said, "India will likely suffer more downgrades to GDP growth forecast if the RBI goes ahead with a sustained and aggressive liquidity squeeze, but it will still eventually have to live with a weaker rupee. A CRR hike on July 30 cannot be ruled out. Tactically, the RBI is more likely to prefer sucking out liquidity via bond issuance to ensure that interbank rates remain well above the repo rate."



The euro dollar holds above the 1.32 mark. The dollar index was trading around 82.

Source:-www.moneycontrol.com

Gold Imports By India May Slump As Purchases Tied To Exports

Jul 23 2013

Mumbai: Gold imports by India, the world’s biggest user last year, may plunge after the central bank linked inbound shipments to exports to cut a record current-account deficit and stem a decline in the currency.

Overseas purchases may tumble 63% to 175 metric tons in the six months through December from a year earlier, said Bachhraj Bamalwa, a director at the All India Gems & Jewellery Trade Federation. The Reserve Bank of India announced new rules late Monday, making it mandatory for importers to set aside 20% for re-exports as jewelry.

The curbs may cause a shortage of bullion in the domestic market as the country’s average annual exports of gold jewelry are about 70 tons, Bamalwa said. Consumption in India, which imports almost all the bullion it uses, was 864.2 tons last year, according to data from the World Gold Council.

It would tighten up supply even further than the existing measures already have, said Victor Thianpiriya, an analyst at Australia & New Zealand Banking Group Ltd. in Singapore. It is exactly what the government is targeting. It is likely to further increase smuggling and the cost associated with imports, so I expect that local prices will climb further.

India doubled a tax on inbound shipments to 8% this year and curbed financing to tackle a surge in demand after bullion entered a bear market in April. Finance minister P Chidambaram last week appealed to Indians to moderate demand, while ruling out a complete ban on imports.

Rupee decline

The current-account deficit, the broadest measure of trade tracking goods, services and investment income, widened to $87.8 billion in the year ended 31 March from $78.2 billion in 2011-2012, according to official data. The deficit is the biggest risk to the $1.9 trillion economy, according to the central bank. The rupee, which touched a record low of 61.2125 per dollar on 8 July, rose as much as 0.4% to 59.48 per dollar on Tuesday

The central bank said agencies importing bullion will need to ensure that at least 20% of the shipment be made available for exports. Importers may supply gold only to the jewelry business and bullion dealers who sell to the jewelers, it said in a statement. Importers have to retain 20% of the gold in customs bonded warehouses and will be allowed to make fresh purchases only after at least 75% of the quantity has been exported, the bank said

Quantitative restriction

You can see a substantial reduction in imports post these measures because these measures are becoming almost like quantitative restrictions, said Samiran Chakraborty, Mumbai- based analyst at Standard Chartered Plc. It ensures that the deficit on account of gold doesn’t blow out of proportion. There is a now a ratio that is prefixed.

Imports of gold and silver fell to $2.45 billion in June from $8.39 billion a month earlier, government data showed 12 July. Consumption in India accounted for 20% of global demand in 2012, according to data from the council.

Gold for delivery in August was little changed at Rs27,558 ($462) on the Multi Commodity Exchange of India Ltd. at 11:29 am in Mumbai. Futures fell to Rs24,830 per 10 grams on 28 June, the lowest since August 2011. Spot gold in London dropped 0.4% to $1,330.07 an ounce.

The new rules will make it tougher for importers and jewelers as they will necessarily need to allocate supplies for exports, said Gnanasekar Thiagarajan, a director at Commtrendz Risk Management Services Pvt. Exporters will have to search for markets as gold exports are not doing so well at this point of time.

Jewelry exports

Jewelry exports plunged 73% to $556.8 million in June from $2.06 billion a year earlier, according to the Gem & Jewellery Export Promotion Council. Shipments rose 13% to $13.05 billion in the year ended March, council data showed.

While the central bank scrapped curbs on imports on a consignment basis and restored purchases on credit, the new measures may prompt banks to discontinue sales of coins and bars to retail investors.

Most banks had stopped minting new gold coins after the government clamped down on imports earlier and they are only selling old stocks now, said Suresh Hundia, proprietor of Hundia Exports Ltd. and a former president of the Bombay Bullion Association. Coins sales by banks is as good as stopped.

Source:-www.livemint.com

Ban On Onion Exports Won't Impact Domestic Prices

July 23, 2013

A section of the Department of Agriculture feels export curbs on onions would have little impact on the prices of the commodity, as the price of Indian onions is more than prices abroad and exports have shown a slowing trend.



Officials said Indian onions were priced at about $480 a tonne in the international markets, while prices of onions from Pakistan and China stood at $410 a tonne and $300-350 a tonne, respectively.



“Therefore, to expect an export ban on onions to have a major impact on domestic prices is unreasonable, as exports have already slowed because of the price differential,” said a senior official.



In June, India exported about 1,50,512 tonnes of onions, a 23 per cent fall compared to May and a 9.01 per cent fall compared to April. In the April-June period, onion exports stood at 5,11,616 tonnes, worth Rs 776.47 crore, around 1.09 per cent less than in the corresponding period last year. In 2012-13, exports stood at 1.82 million tonnes.



The official said domestic prices of onions were lucrative for traders and farmers. Therefore, the tendency to export was low. A recent report by the Nasik-based National Horticulture Research and Development Foundation (NHRDF) said the current rise in onion prices was primarily due to the slow release of stored onions by farmers, especially in Maharashtra, in anticipation of better prices in the coming days.



It added the situation would ease in the next few weeks, as farmers would be compelled to sell stored onions in the market, as losses would rise because of high humidity conditions in Maharashtra. "The arrival of the new crop from Andhra Pradesh, which will start from August, will also ease the situation," NHRDF said.



"The Ramzan season is underway in most parts of West Asia, a big market for Indian onions. Therefore, overall international demand is slack," said a trader from a leading export house.



According to the Department of Consumer Affairs, in the last month, the average retail price across the country had risen Rs 10-20 a kg. In areas such as Siliguri, Indore, Gwalior, Dehradun and Delhi, prices rose by about Rs 20 a kg in the last month.



Alarmed by the sudden and sharp rise in retail price of onions, the government is believed to have been contemplating a ban on exports as the option of increasing the Minimum Export Price (MEP) is no longer available as the method was scrapped last year.



Few days back a PTI news report quoting an unnamed government official said that the government was keeping a close watch on onion prices and was considering various options including a ban on export to control prices. Total onion production in 2012-13is expected to be 15-16 million tonnes, almost the same as last year.

Source:-www.business-standard.com

India’S Iranian Oil Imports More Than Halve In June

NEW DELHI (Reuters) – India’s imports of crude oil from Iran more than halved in June from a year ago, as refiner Essar Oil (ESRO.NS) became the only remaining Indian client of the sanctions-hit country, tanker data obtained by Reuters showed.



India’s imports for June fell about 60 percent on an annual basis, pointing to imports from Iran’s top four customers – China, Japan, India and South Korea – of around 860,000 barrels per day (bpd) for the month, down more than a third on the year.



That would be the lowest for Iran’s top four buyers since April, when big drop-offs in barrels shipped into India and Japan cut the total to 635,750 bpd, the smallest in decades.



U.S. and European Union sanctions aimed at Iran’s disputed nuclear programme are costing Tehran billions of dollars per month. And U.S. lawmakers want to toughen them further, with the goal of reducing Iran’s oil shipments to 500,000 bpd or less.



“The downturn year-on-year of Iranian crude imports will continue,” said Praveen Kumar, who heads the South Asia oil and gas team at consultancy FGE.



“Everyone was waiting for the elections (in Iran) to happen and hoping that the new president will be more open to coming back to the negotiating table … but we don’t think there is going to be a breakthrough,” Kumar said.



Western countries believe Iran’s nuclear programme is aimed at making a bomb, while Iran says it is for peaceful purposes.



Iran’s president-elect, Hassan Rouhani, who takes office next month, pledged in June to be more transparent on the nuclear programme but no immediate curtailment of its uranium enrichment is expected.



Indian imports from Iran dropped to 140,800 bpd in June, down 45 percent from May, data from trade sources on tanker arrivals shows.



India’s imports from Iran dropped in the first half of the year to 211,400 bpd, down more than 42 percent from the same period in 2012, according to the data.



A Reuters estimate of June crude imports from Iran by Asian buyers is based on the Indian tanker data, earlier data on Chinese and South Korean oil imports, and an assumption that Japan imported about 200,000 bpd last month.



The figure for Japan, which reports its full oil import data for June next week, is close to its average daily shipments of Iranian crude for the year ended March 31.



Similar calculations and assumptions put Asia’s imports of Iranian oil at about 975,280 bpd for the first half of 2013, down just over a fifth from a year ago.



GRAPHIC: Asia’s Iranian crude imports link.reuters.com/vyw45t



Iran’s share of total Indian oil imports dropped to 5.4 percent in the first half, down from more than 10 percent from last year, the tanker arrival data also showed.



Hindustan Petroleum Corp (HPCL.NS) and Mangalore Refinery and Petrochemicals (MRPL.NS) halted their Iranian oil purchases in April amid difficulties securing insurance for refineries processing oil from the sanctions-hit country.



Last month, Washington granted its third 180-day waiver on sanctions applied to Asian countries, including India, China and South Korea, for significantly reducing Iranian oil imports in the six months through May.



Japan won its third six-month waiver in March as part of a different review process. Japan’s renewal will come up in September, while the waivers for the other Asian buyers will come up in November-December.



India imported nearly 66 percent more oil from Latin America in the January to June period as it cut its dependence on Iran. The region accounted for about 19 percent of India’s overall imports, up from 12.6 percent in the same period a year ago.



Overall, Asia’s third-largest economy shipped in 14 percent more oil in June than a year ago, while Indian imports for the January-June period rose 9.7 percent, the data showed.



(Additional reporting by Florence Tan in SINGAPORE; Editing by Clarence Fernandez and Tom Hogue)

Source:-www.firstpost.com

U.S. Probes Steel Pipe Imports From India, Eight Other Countries

The U.S. Commerce Department on Tuesday launched one of its biggest trade investigations in years into charges that manufacturers in India, South Korea and seven other countries are selling steel pipe used by oil and natural gas producers at unfairly low prices in the United States.



Imports of oil country tubular goods (OCTG) from the nine countries totaled nearly $1.8 billion in 2012, more than double their total in 2010, as rising U.S. oil and natural gas production have increased demand for the pipe.



In 2010, the United States slapped duties on imports of OCTG from China after they hit about $2.8 billion in 2008. That created an opening for the other foreign suppliers.



The latest case targets South Korea, which exported about $831 million worth of the pipe to the United States last year, as well as India, Vietnam, the Philippines, Saudi Arabia, Taiwan, Thailand, Turkey and Ukraine.



U.S. producers are asking for anti-dumping duties as high as 240 percent on India, 158 percent on South Korea, 118 percent on Thailand and 111 percent on Vietnam to offset what they say is below market pricing, and lesser but still hefty duties on the other five countries.



For two countries, Turkey and India, U.S. producers are seeking additional countervailing duties to offset alledged government subsidies.



The Commerce Department will make a preliminary decision on countervailing duties in September and on anti-dumping duties in December. Final decisions will come in 2014.



U.S. companies seeking the relief include U.S. Steel(X.N), which told the U.S. International Trade Commission (ITC) at a hearing on Tuesday that it spent $2.1 billion in 2007 to boost its OCTG production by buying a smaller manufacturer.



But "for three years now, I have heard the same tale from our salesmen: 'Imports are underselling us. We must lower our prices or our customers will go elsewhere,'" Doug Matthews, a senior vice president at U.S. Steel, told the panel.



Under the U.S. system, the Commerce Department investigates charges of unfair trade and determines whether duties are appropriate and if so at what level. But the ITC must approve the probe and has the final word on whether duties are imposed.



The commission will vote in mid-August on whether there is enough evidence that the imports are injuring U.S. producers for the Commerce Department to continue with the probe.



Other producers involved in the case include Maverick Tube Corporation, Energex Tube and TMK IPSCO.



They told the Commission that U.S. demand for OCTG between 2010 and 2012 was the strongest they had seen in 25 years, but imports prevented them from getting a fair price for their products.



"While the last few years should have been extremely strong for Maverick, the import surge deprived us of the benefits of recovering demand," Brad Lowe, a senior executive at Maverick, told the ITC. "Imports have taken away sales and have significantly suppressed and depressed market prices."



Linda Andros, legislative counsel at the United Steelworkers Union, told the panel that U.S. jobs were at risk.



"If unfair trade is left unchecked, ... there is no doubt that many of our members that produce these products will begin being laid off," Andros said.



Scott Barnes, senior vice president at TMK IPSCO, conceded that OCTG imports have fallen so far in 2013, after rising in previous years.



But that's only because "we aggressively fought imports back by price cutting in the latter part of 2012," Barnes said.

Source:-in.reuters.com

Pulses Import Bill To Decline 25% On Higher Domestic Output

July 23, 2013

India’s pulses import bill is set to decline 25 per cent this financial year due to a record domestic output and an unabated fall in prices globally. The fall in import will save around $730 million (Rs 4,350 crore) outflow.



Pulses import hit a record 4.02 million tonnes (mt) in 2012-13, an increase of 15 per cent from 3.5 mt the previous year. But the import bill shot up 41.34 per cent to Rs 13,354 crore in 2012-13 from Rs 9,448 crore in the previous year. The sharp increase in the bill was attributed to a staggering 13.6 per cent depreciation in the rupee against the dollar.



“This year, however, import is set to decline by a minimum 0.50 mt or 13 per cent of the entire import quantity on bumper output estimates from local sources. Coupled with that, pulses prices have fallen by at least 15 per cent since April. Accumulatively, this will lower pulses import bill by 25 per cent,” said Bimal Kothari, vice-president of India Pulses and Grains Association (IPGA) and owner of Pancham International Ltd, a Mumbai-based pulses importer.



The ministry of agriculture has set a target of 19 mt of pulses output for this year against 18.45 mt reported in the second advanced estimates on Monday. India’s 40 per cent pulses output comes from the kharif crop, while the remaining from the rabi season.



“The monsoon has been favourable so far with over 50 per cent of 36 meteorological sub-divisions has reported normal to excess rainfalls. Given that the trend continues in the rest of the period this monsoon season and estimates for supportive soil moisture for rabi sowing, pulses output in India may comfortably hit the record target of 19 mt,” said Pravin Dongre, president of IPGA and chief executive of the Indian subsidiary of Glencore, one of the world’s largest commodity trading companies.



Domestic as well international prices of pulses have slumped 15-20 per cent in the last three months. All varieties of pulses have fallen. Chana, for example, has plunged to Rs 2,700 a quintal from Rs 3,000 a quintal in April. Tur and urad have also declined proportionately to trade at around Rs 3,200 a quintal.



Also, tur in Myanmar is quoted at $625 a tonne today, a decline of $125 from the level of $750 a tonne in April. Similarly, urad, chana and yellow peas are currently quoted at $525 a tonne, $470 a tonne and $400 a tonne, respectively, from $650 a tonne, $570 a tonne and $460 a tonne in April.



Kothari emphasises to increase yield which has been stagnated at 650 kg/hectare in India against the world average of 1,800 kg / ha. For this, however, hybridisation is going on all across the country with research is in progress to scale up pulses yield.

Source:-www.business-standard.com

Mere tax deduction by payer doesn't decide taxability in hands of recipient; penalty order set aside

IT/ILT : Mere fact that payer deducted tax at source cannot be a sole reason to conclude that amount is taxable in hands of recipient and, therefore, if recipient does not offer said amount to tax in return of income, it does not necessarily follow that penalty has to be imposed under section 271(1)(c)

Time-limit to repatriate export proceeds for the period 01-04-13 to 30-09-13 to be reckoned as 9 mon

FEMA/ILT : Export of Goods and Software - Realisation and Repatriation of Export Proceeds - Liberalisation

Gold: 20% of import to be exported back; gold for domestic use to be made available to jewellers onl

FEMA/ILT : Import of Gold by Nominated Banks/Agencies/Entities

IRDA’s clarifications on guidelines on insurance repositories and electronic issuance of insurance p

INSURANCE : Clarifications on The Guidelines on Insurance Repositories and Electronic Issuance of Insurance Policies

Foreign currency loans given by assessee to its AE to be benchmarked at LIBOR instead of at domestic

IT/ILT : For benchmarking lending in foreign currency, interbank rate should be taken for international transaction instead of domestic prime lending rate

Addition just because a peer co. declared higher profit isn't permissible if assessee had clean hist

IT: Addition in gross profit rate of assessee with reference to case of another assessee was not justified, when assessee's past history was available and there was no material difference in facts pertaining to relevant assessment year and past history year

Services of ‘Rent-a-cab’ for commutation of employees between office and residence are input service

ST : Rent-a-cab service used for bringing employees from residence to factory and back, and, service of air travel agents for booking tickets for visit of officers to different offices of buyers (railways) are input services, eligible for credit

AO can’t outright reject sec. 154 application on reasoning that the underlying matter is a debatable

IT : Where certain issue was neither taken nor decided by Assessing Officer, application under section 154 could not be held to be not maintainable on ground that issue was debatable

Unless terms of sale of land requires pre-sale development, expenditure thereon could not be allowed

IT : Assessees did not produce any written agreement for pre-sale development of land nor was there any prior payment by purchaser therefor and assessees financial capacity was also not proved, pre-sale land development expenditure could not be allowed

Reasons for initiating re-assessment and materials on record should have a live nexus - Delhi HC

IT: Reasons recorded for validity of notice for reopening assessment should have live nexus with material on record

In case of payment through credit cards, value of services would include commission retained by Cred

ST/ECJ : In case of payment of services through credit card, commission retained by card-issuing organization represents consideration for a separate service rendered by it and, therefore, taxable amount in hands of service provider is price charged without deducting such commission

COMMISSIONER OF INCOME TAX: DELHI -I Vs. BHARTI AIRTEL LIMITED

$~2. * IN THE HIGH COURT OF DELHI AT NEW DELHI + INCOME TAX APPEAL NO. 294/2013 Date of decision: 19th July, 2013 COMMISSIONER OF INCOME TAX: DELHI -I ..... Appellant Through Mr. Abhishek Maratha, Sr. Standing Counsel & Ms. Anshul Sharma, Advocate. versus BHARTI AIRTEL LIMITED ..... Respondent Through Nemo. CORAM: HON'BLE MR. JUSTICE SANJIV KHANNA HON'BLE MR. JUSTICE SANJEEV SACHDEVA SANJIV KHANNA, J. (ORAL): This appeal by the Revenue, which pertains to Assessment Year 2005-06, has to be dismissed in view of the authoritative pronouncement of the Supreme Court in Commissioner of Income Tax versus Alagendran Finance Limited, (2007) 293 ITR 1 (SC). 2. Relevant facts in brief may be noticed. Return filed by the assessee for Assessment Year 2005-06 was taken up for scrutiny and income was assessed at Rs.860,18,30,950/- vide assessment order dated 31st December, 2007 after the setting off of brought forward loses and unabsorbed depreciation amounting to Rs.1941,17,35,146/-. ITA No. 294/2013 Page 1 of 4 3. There appears to be another order under Section 154 read with Section 143(3) dated 7th March, 2008, where the income under the normal provisions was assessed as "nil" after setting off brought forward losses and unabsorbed depreciation and the book profits were assessed at Rs.1724,82,75 449/- under Section 115JB of the Act. 4. Subsequently, the Assessing Officer issued notice under Section 147 and an order under Section 147 read with Section 143(3) dated 10th December, 2009 was passed. In the re-assessment order, two additions were made in respect of non-deduction of tax at source on payment of interest to ABN Amro Bank, Stockholm Branch. The second addition was made on account of ESOP expenses. The said order also discusses set off or brought forward loss or unabsorbed depreciation. 5. Subsequently, the Commissioner of Income Tax Delhi - I made an order under Section 263 of the Act dated 24th March, 2011 for failure to deduct TDS under Section 194H on free air time provided to distributors and under Section 194J on roaming charges paid to other network operators. The Commissioner invoked Section 40(a) (ia) to make the said disallowance. 6. Section 263(2) of the Act postulates and prescribes time limit of two years as it stipulates that no order in revision will be passed by the Commissioner after expiry of two years from the end of the financial year in which the order sought to be revised was passed. ITA No. 294/2013 Page 2 of 4 7. The question raised is whether the first order under Section 143(3) dated 31st December, 2007 or the second order under Section 147 read with Section 143(3) dated 10th December, 2009 will be the starting point of limitation under Section 263(2) of the Act. If the first order dated 31st December, 2007 is taken as the starting point, the order passed under Section 263, dated 24th March, 2011 is barred by limitation, but if we treat the second order dated 10th December, 2009 under Section 147/143(3) as the starting point, the order passed on 24th March, 2011 will be within time. 8. It is factually correct and cannot be disputed that the two aspects/questions, which have been dealt with and additions which have been made in the order under Section 263 dated 24th March, 2011, have not been dealt with or examined in the second assessment or the re-assessment order dated 10th December, 2009. The second order or the re-assessment order is on different aspects. In these circumstances, the decision of the Supreme Court in Alagendran Finance Limited (supra) is clearly applicable and the following ratio is binding on us:- "We, therefore, are clearly of the opinion that keeping in view the facts and circumstances of this case and, in particular, having regard to the fact that the Commissioner of Income-Tax exercising its revisional jurisdiction reopened the order of assessment only in relation to lease equalisation fund which being not the subject of the reassessment proceedings, the period of limitation provided for under sub-section (2) of section 263 of the Act would begin to run from the date of the order of assessment and not from the order of ITA No. 294/2013 Page 3 of 4 reassessment. The revisional jurisdiction having, thus, been invoked by the Commissioner of Income Tax beyond the period of limitation, it was wholly without jurisdiction rendering the entire proceeding a nullity." 9. In the said case, second or re-assessment order was passed under Section 147 of the Act. Order under Section 263 passed by the Commissioner was held to be barred by limitation as the subject matter of additions made in the said order were not dealt with in the reassessment order. Thus doctrine of merger it was held would not apply and limitation would begin from the date of the first or original assessment order. It has been held that once reassessment order was passed, original underassessment was set aside, to the extent of underassessment but not in respect of matters covered by the original assessment and not subject matter of reassessment proceedings or order. Earlier judgments in Hind Wire Industries Limited versus Commissioner of Income Tax, (1995) 212 ITR 639 (SC), Commissioner of Income Tax vs. Sun Engineering Works Private Limited (1992) 198 ITR 297 (SC) and other cases, were examined before the said opinion and ratio was expounded. The appeal is accordingly dismissed. SANJIV KHANNA, J. SANJEEV SACHDEVA, J. JULY 19, 2013 VKR/NA ITA No. 294/2013 Page 4 of 4

No more exemption from return filing for salaried taxpayers; special counters to file paper return u

IT : Special IT Return Receipt Counters for Salaried Tax Payers with Income upto Rs. 5 Lakh

No concealment penalty for additions during scrutiny assessment if assessee didn’t conceal any mater

IT : Assessee having disclosed all material facts, no penalty could be imposed under section 271(1)(c) on basis of additions made by Assessing Officer in scrutiny assessment

Materials used for making a premises dust-free and fire resistant is an eligible input

ST : Paints and other materials used on floor of factory/premises to make it dust free and fire retardant, which was essential for manufacture/provision of service, are inputs eligible for Cenvat Credit

Mere submitting an incorrect claim without malafide intention doesn’t attract concealment penalty

IT : Where expenditure was disallowed due to non-availability of supporting evidence, it could not be held as giving inaccurate particulars of income, and, therefore, penalty for concealment could not be levied

A bona fide belief on allowability of an exp. and disclosure of same in return saves assessee from p

IT : Where assessee-company bona fidely believed that expenses in question could be claimed towards business expenses and all material facts relating to these expenses were disclosed in return of income, penalty under section 271(1)(c) was not leviable

INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI STATEMENT SHOWING THE LIST OF SPECIAL BENCH CASES PENDING AS ON 06.07.2013.

INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI STATEMENT SHOWING THE LIST OF SPECIAL BENCH CASES PENDING AS ON 06.07.2013. Sr. Appeal No. Name of the To whom assigned the Points involved Remark No Assessee Special Bench MUMBAI BENCHES 1. ITA No. 5568 & DHL Operations 1. Hon'ble Vice- "Whether, or not, on the facts and in Fixed on 5569/M/1995 & B.V. Netherlands President the circumstances of the case and on a 10.09.13 6448/M/1994 2. ( MZ) proper interpretation of Art. 5.5 and A.Y. 1991-92 to 1993- 3. Shri. P.M.Jagtap, Art. 5.6 of the DTA (with Netherlands) 94 A.M. and having regard to its activities, it Shri.B.Ramakotaiah, can be said that Airfreight Ltd. was the A.M. agent of the assessee so that it can be held that the assessee had a PE in India? And if the answer is in the affirmative, whether or not the income from inbound shipments can be treated as attributable to the PE?" 2. ITA 5996/M/93 GTC Industries Ltd. 1. Vice President(MZ) Fixed on ITA 1055/M/94 2. Shri R.S.Syal,AM. 05.09.13 ITA 1056/M/94 3. Shri B. Ramakotaiah, A.M. 1 DELHI BENCHES 1. ITA No. M/s C.L.C. & Sons 1. Hon'ble President, "Whether, on the facts and Fixed after 1976/Del/2006 Pvt. Ltd. I.T.A.T. circumstances of the case, assessee is the disposal 2. Hon'ble Vice-entitled to claim depreciation on the of Hon'ble President (Zonal) value of all intangible assets falling in High Court 3. Shri. Rajpal Yadav, the category of "any other business or in the case of JM. commercial rights", without coherence CLC Global of such rights with the distinct genusis/ Ltd. which is category if intangible assets like know pending how, patents, copyrights, trade marks, before licences and franchises as defined U/s Hon'ble High 32(1) (II) of the I.T. Act." Court. 2. ITA No. 1999 & M/s National 1. Shri.G.D.Agarwal,VP "Whether on the facts and Blocked for 6th 2000/Del/2008 Agricultural Co-op. (DZ). circumstances of the case, where claim Months Mkt. Federation of 2. Shri.Rajpal Yadav, of damages and interest thereon is India, New Delhi 3. J.M. deputed by the assessee in the court of Shri.I.C.Sudhir,JM law, deduction can be allowed for the interest claimed on such damages while computing business income." 3. ITA M/s Giesecke & 1. Shri P.M.Jagtap,A.M. 1."Whether for the purposes of Fixed on No.5924/Del/2012 Devirent India 2. Shri A.D. Jain, J.M. determining the Arm's Length Price in 05/08/2013 Pvt.Ltd.,Gurgaon. 3. Shri B. Ramakotaiah, relation to the international A.M. transaction, quantitative filter of high/low turnover is to be applied and, accordingly, high/low turnover companies vis-à-vis the assessee company are to be excluded from the comparables selected for bench marking the transaction. 2.If the answer to question no. one is in affirmative then what should be the parameter, if any, for exclusion of high/low turnover companies vis-à-vis the assessee company. 2 4. ITA M/s Suraj 1. Shri U.B.S Bedi, J.M. "Whether on the facts and in the Fixed on No.3827/Del/2009 Oversease(Pvt.)Ltd. 2. Shri S.V.Meharotra, circumstances of the case, the 22/07/2013 A.Y.2006-07 A.M. Commissioner of Income Tax(Appeals) 3. Shri I.C. Sudhir, J.M.erred in Law in holding that profit aggregating to Rs. 2,51,50,313/-earned by the appellant from sale of shares and securities held under discretionary portfolio management scheme was assessable under the head `business income', as opposed to capital gains returned by the appellant?" 5. ITA No. Shri Tejinder singh 1. Vice President, (DZ) "Whether on the facts and Blocked for 06 163/ASR/2003 (HUF) 2. Shri S.V.Mehrotra, circumstances of the case, months A.Y.1998-99 A.M. consideration claimed to have been 3. Shri R.P. Tolani,J.M. received on account of sale of jewellery 4. Shri B.C.Meena, A.M. etc. relating to the disclosures made 5. Shri R.P.Yadav, J.M. under VDI Scheme, 1997, can be considered to be the income of the assessee from undisclosed sources under any of the provisions of Income- tax Act, 1961?" KOLKATTA BENCHES 1. ITA Nos.1548 & M/s. 1. Hon'ble President, 1. "Whether, on the facts and in the Adjourned 1549/Kol/2009 Instrumentarium I.T.A.T. circumstances of the case, no arm's length Sine-die. A.Y.2003-04 & 2004- Corporation Ltd. 2. Hon'ble V.P. (KZ) rate of interest was required to be charged 05 3. Shri Mahavir Singh, on the loan granted by the non-resident J.M. assessee-company to its wholly owned subsidiary Indian company M/s Datex Ohmeda(Indian) Pvt. Ltd.(Datex)?" 2. "Whether, in the given facts and circumstances of the case, CBDT Circular No. 14 of 2001 [252 ITR (St.) 104] and Taxation Ruling TR 2007/1 issued by Australian Taxation Office are relevant in the context of Transfer 3 Pricing Regulations of India, in particular to the case of the assessee? 3. "Whether, setting off of loss with future profits and not assessing the interest income in the hands of the assessee on arm's length price will cause real loss to the Govt. exchequer?" CHENNAI BENCHES 1. Int. T.A. 101 & M/s Bharat 1. Hon'ble Vice- "Whether, the amount collected from Adjourned 161/Mds/2003 Overseas Bank Ltd., President (CZ) the borrowers to meet the interest tax Sine die A.Y. 1999-2000 Chennai 2. Shri. N.S.Saini,A.M. liability could be taxed as interest A.Y.2000-2001 3. Smt.P.Madhavidevi, under the Interest-Tax Act, 1974?" J.M. AHMEDABAD BENCHES 1. ITA 2170/Ahd/2005 M/s Nanubhai D. 1. Hon'ble President,"Whether, Shri Deepak R. Shah, Adjourned Desai, Surat I.T.A.T. advocate and ex-Accountant Member of Sine die 2. Hon'ble Vice-the Income Tax Appellate Tribunal, is President (AZ) debarred from practicing before the 3. Shri.R.S.Syal,A.M. Income Tax Appellate Tribunal in view of the insertion of Rule 13 E in the Income Tax Appellate Tribunal Members (Recruitment and Conditions of Service) Rules,1963?" 2. ITA 1952/AHD/2012 Shri Himanshu V. 1. Hon'ble Vice- "Whether deduction u/s 80-IA(4)(ii), Date awaited Shah, Ahmedabad. President,(AZ). which is available to BASIC Telecom 2. Shri.S.V.Mehrotra, Services Providers is also available to A.M. Franchisee of such Basic Service 3. Shri.M.K.Shrawat, Providers also, which is only putting J.M. EPEX system with out creating infrastructure in the field of Telecom?" 4 3. ITA Nos.2668,2669 & The People"s Co-op. 1. Hon'ble Vice- 1."Whether the assessee being a Co- Fixed on 2670/Ahd/2012 & Credit Society Ltd., President(AZ). operative Credit Society, in view of its 12/08/2013 C.O.Nos.10, 11, Deesa. 2. Shri.M.K.Shrawat, function in providing credit facilities to 12/Ahd/2012 J.M. its members, is into the business of 3. Shri A.M. banking and is it not being impeded or Alankamony, A.M. hit by the provisions of section 80P(4) of I.T. Act, 1961? Further, in view of section 5 of Banking Regulation Act, 1949 and section 2 of NABARD Act, 1981, whether this Co-operative Credit Society is carrying on the Banking Business, and for all practical purposed acting like a Co-operative Bank?" 2. "Whether a Co-operative Credit Society being providing credit facility to its members can be held as banking function, so as to deny the benefit of Section 80P(2)(a)(i) by invoking the provisions of section 80P(4)?" HYDERABAD BENCHES 1. ITA No. 18/H/2012 M/s Jagathi 1. Shri R.S. Syal, AM. Fixed on Publication Pvt. 2. Shri P.M. Jagtap, AM. 16/09/2013 Ltd., Hyderabad. 3. Shri N.V. Vasudevan, Vide M.Z.U.O. JM. Dt.03.07.2013 5 INCOME TAX APPELLATE TRIBUNAL,MUMBAI BENCHES,MUMBAI. LIST OF SPECIAL BENCH CASES HEARD AND PENDING FOR ORDERS AS ON 06.07.2013 Sr. Appeal No. Name of the To whom assigned the Points involved Remark No Assessee Special Bench RAJKOT BENCH 1. ITA No. 391 & M/s Bharti Auto 1. Shri G.C. Gupta, Heard on 392/Rjt/2011. Products, Jamnager. Vice-President, (AZ). 18/06/2013 2. Shri D. K. Srivastava, AM 3. Shri A. M. Alankamony, AM. 6

RBI/2013-14/147 A.P. (DIR Series) Circular No. 14 dated 22-07-2013

Reserve Bank Of India

A.P. (DIR Series) Circular No.14

July 22, 2013

To

All Category - I Authorised Dealer Banks

Madam / Sir,

Export of Goods and Software – Realisation and Repatriation of export proceeds – Liberalisation

Attention of Authorised Dealer Category-I (AD Category-I) banks is invited to A.P. (DIR Series) Circular No. 52 dated November 20, 2012 extending the enhanced period for realization and repatriation to India, of the amount representing the full value of goods or software exported, from six months to twelve months from the date of export up to March 31, 2013. Further, in terms of A.P. (DIR Series) Circular No. 105 dated May 20, 2013 it was decided, in consultation with the Government of India to bring down the above stated realization period from twelve months to nine months from the date of export valid till September 30, 2013.

2. In this connection, it is clarified that as the realization and repatriation period stipulation in terms of A.P. (DIR Series) Circular No. 52 dated November 20, 2012 was valid till March 31, 2013 only, the time period for realization and repatriation of export proceeds from April 01, 2013 onwards till September 30, 2013, shall be reckoned as nine months from the date of export.


3. The provisions in regard to period of realization and repatriation to India of the full export value of goods or software exported by a unit situated in a Special Economic Zone (SEZ) as well as exports made to warehouses established outside India remain unchanged.s


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


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

Yours faithfully,

(C. D. Srinivasan)

Chief General Manager

RBI/2013-14/147

RBI/2013-14/148 A.P. (DIR Series) Circular No. 15 dated 22-07-2013

Reserve Bank Of India

A.P. (DIR Series) Circular No. 15

July 22, 2013

To

All Scheduled Commercial Banks which are Authorised Dealers (ADs) in

Foreign Exchange/ All Agencies nominated for import of gold

Madam / Sir,

Import of Gold by Nominated Banks /Agencies/Entities

Attention of Authorised Persons is drawn to the Reserve Bank’s A.P. (DIR Series) Circulars No. 103 , 107 and 122 dated May 13, June 04 and June 27, 2013 respectively on the captioned subject. ;As per these instructions, certain restrictions were imposed on the import of various forms of gold by nominated banks/nominated agencies/ premier or star trading houses/SEZ units/EoUs which have been permitted to import gold for use in the domestic sector. None of these restrictions was applicable to import of gold for the purpose of exports or to import of gold by units in SEZ exclusively for the purposes of exports.

2. Based on a review of the above instructions and in consultation with Government of India, it has been decided to rationalize the import of gold in any form/purity including import of gold coins/dore into the country. Accordingly, the following instructions are issued:
   
   
   
   1. It shall be incumbent on all nominated banks/nominated agencies to ensure that at least one fifth of every lot of import of gold (in any form/purity including import of gold coins/dore) is exclusively made available for the purpose of export. Such imports shall be linked to financing of exporters by the nominated agencies (i.e. average of last three years or any one year whichever is higher). Further, they shall make available gold in any form for domestic use only to entities engaged in jewellery business/bullion dealers supplying gold to jewellers.
   
   
   2. They will be required to retain 20 per cent of the imported quantity in the customs bonded warehouses.
   
   
   3. They are permitted to undertake fresh imports of gold only after the exports have taken place to the extent of at least 75 per cent of gold remaining in the customs bonded warehouse.
   
   
   4. Any import of gold under any type of scheme, shall follow the 20/80 principle set out at (a) and (b) above. The extant instructions, as regards import of gold on consignment basis, LC restrictions etc. stand withdrawn.
   
   
   5. A working example of the operation the scheme envisaged in terms the present instructions is given in the Annex.
   
   
   
   
   


3. Entities/units in the SEZ and EoUs, Premier and Star trading houses are permitted to import gold exclusively for the purpose of exports only.


4. AD Category I Banks are advised to strictly ensure that foreign exchange transactions effected by / for their constituents are compliant with the above instructions. Head Offices of nominated agencies / International Banking Divisions of banks would be responsible for monitoring operations of the revised scheme taking into account transactions put through different centres.


5. Government of India will be issuing separate instructions, if any, to the customs authorities/DGFT to operationalize and monitor these import restrictions.


6. The above instructions will come into force with immediate effect. Authorised dealers may please bring the contents of this circular to the notice of their constituents and customers concerned.


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

Yours faithfully

Rudra Narayan Kar

Chief General Manager-in-Charge

RBI/2013-14/148

---

Annex

An example of the working of the scheme:

1. Nominated agency ABC imports say 100 kg of gold in any form/purity.


2. Out of the above import of 100 kg, 20 kg gold held in the bonded warehouse can be got released in part or full to be sold to exporters of gold against undertaking to customs authorities as is the practice now.


3. Any further import of gold by ABC shall be permitted by the customs authorities only to the extent of actual export out of 20 kg of gold held in bonded warehouse. This can happen only after at least 15 kg of gold out of 20 kg is actually exported from the previous lot.


4. If ABC wants to place order for the second lot of import, only 75 kg of import (including 15 kg for exports) will be permitted which will again follow the procedure outlined above. At this stage, total gold with the bonded warehouse meant for the exporter will be (5 + 15) i.e. 20 kg. Out of this at least 15 kg (i.e. 75% of the above 20 kgs) will have to be actually exported to enable ABC to import again. This procedure will be followed for every lot of import.


5. If for any reason, ABC is not able to channelize the gold held in bonded warehouse for exports, no further imports can be undertaken by ABC who will also arrange for re export of the gold in the bonded warehouse.
   

Materials used for making a premises dust-free and fire resistant is an eligible inputs

ST : Paints and other materials used on floor of factory/premises to make it dust free and fire retardant, which was essential for manufacture/provision of service, are inputs eligible for Cenvat Credit

Payments for launching and tracking of satellite aren't FTS as no technology is made available to as

IT/ILT : Where foreign companies did not make available or transfer any technology to assessee satellite manufacturer, with respect to launching and tracking of its satellite, payments could not be held as fees for technical services in view of article 13 of India - France DTAA and article 12 of India - USA DTAA

CISF wants ‘service tax, security deposit’ for guarding Haryana, Punjab Secretariat

The Central Industrial Security Force (CISF), which has been guarding the Punjab and Haryana Civil Secretariat in Chandigarh for over a decade now, has threatened to withdraw its services, if both the governments failed to clear outstanding dues worth Rs 45 crore by August 31.

The amount included service tax and advance security deposit of three months on the security being provided by it to the states.

The CISF, earlier this month, had sent a strong-worded notice to the governments of Haryana and Punjab in this regard. According to CISF, while Haryana is required to clear an outstanding of Rs 23 crore, Punjab owes it Rs 22 crore. However, in a letter to the director general (CISF) under Union Ministry of Home Affairs, Haryana's Additional Chief Secretary (Home) Samir Mathur has rebutted its claims and clarified the government's position.

It stated that CISF is a central armed police force and clearly differentiated from private security agencies.

"In this case, it is providing safety and protection to the functioning of democratically elected governments under the Constitution. The Punjab and Haryana Secretariat is the seat of governance of the states of Punjab and Haryana from where the constitutional functions are discharged. It is difficult to conceive that service tax has been sought to be levied for security... when the states are paying deployment charges," the letter added.

On CISF's claim that Haryana owes it arrears worth Rs 6.47 crore and a penal interest of Rs 9.82 crore, the government said: "During reorganisation of the erstwhile Punjab state, the assets were divided in the ratio of 60:40, including the space and manpower deployed in the Secretariat building between Punjab and Haryana. ...during the period of deployment of ITBP, the cost was shared in the ratio of 60:40 and this pattern is continuing again from October 2009 till date."

Interest allowable on advance deposit of MAT under sec. 115JA, as it bears character of advance tax

IT : MAT deposit made in advance under section 115JA on basis of book profit bears character of tax paid in advance and, therefore, interest under section 244A has to be granted in case of excess deposit of said amount

Why you should file tax returns before July 31 deadline

Q: July 31 is the last date for filing it returns. But a lot of people use the two year extended window to file their returns. Is this advisable? And what are the implications of missing the July 31 deadline?

A: One should file income tax return before the deadline rather than waiting for the deadline; file it as soon as possible.

If one files the income tax return late, that is after the deadline of July 31 then a penal interest is required to be paid. The penal interest is equal to 1 percent of the tax due whether one day or one month, 1 percent per month or part of the month, the penal interest would be payable. Therefore, I strongly recommend all taxpayers of India to file income tax return in time.

Those who have got loss etc, they cannot take the benefit of carry forward of the loss, especially if the tax return is filed beyond July 31.

If no tax is due and return is delayed then one can file the return after July 31. No penalty, no penal interest but only in a situation when no tax is due.

Q: Suppose there is any kind of unpaid tax pending because of variety of reasons like if one is changing employer or have any kind of other source of income etc then is there any penalty if one does not file returns within July 31?

A: Yes, if one does not file return before July 31 then some taxes are due. Reasons are not concerned, whether change of employer or some other income, tax on other income, interest income and property income. The fact remains that as on July 31 some tax is outstanding. On that tax the net tax payable amount penal interest will be the required to be calculated and to be paid. That means even if return is delayed for two days, for example if one files in the month of August even then penal interest will be charged for the whole month. Therefore, file the return in time, pay the taxes now and file the return before July 31.

Caller Q: I am holding unlisted company shares for last 20 years for which there is a buyback offer by an American multinational company. Can I pay long-term capital gain tax without indexation at the rate of 10 percent?

A: You will not be able to take advantage of 10 percent tax rate as that is applicable only for listed company. You have to calculate the cost based on cost, inflation index and then make payment of 20 percent tax and you can save tax also by making investment in real estate.

Caller Q: What is the right time to declare interest on the bank fixed deposits (FDs)?

A: On accrued basis declare your income from bank FDs etc. This means you would have a cumulative fixed deposit receipt and bank will give the details, certificate and details of accrued interest. Therefore, best is to declare accrued interest in the income tax return but still the choice lies with the taxpayer to take whichever path he would like to chose. One can go for cash system of accounting or mercantile system of accounting but follow one system consistently, for example you may declare accrued interest on year-to-year basis or you may declare the entire interest income at one go in the year in which you receive the actual amount of the interest. However, it's better to go in for declaring on accrued bases so it is easy for you to take advantage of the tax deducted at source also.

Staff crunch may burn Rs 15,000-cr hole in direct tax mop-up

Direct tax collection may fall short by Rs 15,000 crore due to manpower shortage, the Income-Tax Gazetted Officers Association apprehends.

Suggesting filling up nearly 1,350 additional posts of Group A officers by promoting Group B Income Tax Officers, A. Sitarama Rao, President of the Association, said, “With just 50 per cent of the sanctioned strength of these commissioners, how on earth will the Government narrow its gap between revenue and expenditure to 4.8 per cent in 2013-14 and three per cent by 2016-17?”

At a press conference here on Thursday, the Association said the problems were two-fold. First, the effective strength of the additional posts at certain levels will be much less than projected. Second, the direct recruitment process will take time.

Income Tax Gazetted Officers are basically promotees and account for nearly 15 per cent of total workforce in the department. After spending years as officers, they are promoted to the post of Assistant Commissioner of Income Tax and Deputy Commissioner of Income Tax.

The Association claims that these two ranks alone collect 80-85 per cent of total direct taxes.

According to its back-of-the-envelop calculation, the targeted working strength at the level of Deputy Commissioner of Income Tax and Assistant Commissioner of Income Tax will be reduced to 1,528 against the sanctioned strength of 2,914.

The Association’s statement comes after the Government has approved creating over 20,000 additional posts (Group A – 1,349, Group B – 2,064 and Group C – 17,338) in the Income Tax Department as part of cadre restructuring.

It was said that the move would generate additional revenue of over Rs 25,750 crore a year against additional expenditure of nearly Rs 450 crore annually.

However, the Association feels that even this additional revenue will not be possible, apart from shortfall in the Budget target of Rs 6.68 lakh crore.

The Income Tax Department plans to appoint 270 Group A officers a year for five years. Half of these will be through direct recruitment and half through promotion.

According to the Association, considering that the Union Public Service Commission (agency responsible for recruitment of Group A officers at Central Government level) cannot commence its recruitment process before February 2014, only 270 vacancies are likely to be filled by way of promotions. The corresponding 270 direct recruitment vacancies in 2013-14 and 2014-15 will actually be available only after two years.

Direct tax includes income, corporate, securities transaction and wealth tax. During April-June, gross direct tax collection rose to Rs 1.24 lakh crore against Rs 1.11 lakh crore during same period last fiscal.

Simplifying procedure for filing income-tax returns

The deadline for filing income tax returns, July 31, is just week away. Needless to say, many individuals dread the date with I-T department, as they find the entire process very confusing. However, according to experts, if an individual is clear about the basics, the entire procedure can be completed in an hour's time. "Tax payers earning over Rs5 lakh are now required to file their tax return electronically. This will reduce paperwork to a great extent," says Vineet Agarwal, director at KPMG. Choose the right form Tax consultants are divided over the applicability of forms ITR-1 (Sahaj) and ITR-2 for salaried individuals, drawing income from salary and interest. Going strictly by the new I-T rules, an individual cannot file returns using the simpler form ITR-1 (Sahaj) if the person has any taxexempt income above Rs5,000. Since the I-T department has not issued any clarification so far, there are numerous interpretations on the matter. "Due to the change in rules, most salaried individuals will now have to use ITR-2. After all, typically, their remuneration includes tax-exempt components like house rent allowance (HRA), transport /conveyance allowance and leave travel allowance (LTA), which can easily exceedRs5,000 in a year," explains Vaibhav Sankla, director with tax consultancy firm H&R Block. However, many experts argue that ITR-1 (Sahaj) is the relevant form for this year. "Our view is that if the exempt income has been accounted for in Form 16, salaried individuals can continue to use ITR-1 (Sahaj). However, if they have earned an income of over Rs5,000 from, say, dividends, they will have to use ITR-2. Similarly, resident Indians, who may have been deputed abroad by their employers and are claiming a double tax avoidance treaty benefit, will have to use ITR-2," says Sonu Iyer, partner and national leader — human capital services, EY (formerly E&Y).Until last year, such additional, explicit disclosures were not sought by the I-T department. Check your tax credit Take a look at Form 26AS, which shows the amount of tax deducted from your salary that your employer has actually deposited with the I-T department, on the e-filing portal. "It is critical to ascertain whether the tax deducted from your income (as per your Form 16) matches the figures in Form 26AS. The two versions must tally. If you go ahead with filing the return without seeking clarity on the nature of the discrepancy, you are bound to get a notice from the I-T department later," says Iyer. Simplifying procedure for filing income-tax returns Claim 80G, other deductions You also need to figure out whether you want to claim any extra deductions you forgot to claim earlier. For example, if you have not submitted the relevant bills while making your investment declaration in January, your Form 16 might not have accounted for the deduction of up to Rs5,000 on preventive health checkups under section 80D. You have the option of claiming this deduction while filing returns. "ITR forms do not require you to enter any details of such bills. However, it is advisable to retain copies of these bills. If there is an enquiry from the tax department in future, these bills will serve as proof," says Sankla of H&R Block. Similarly, you can also claim deductions under section 80G on donations made to charitable institutions. "Typically, employers do not consider 80G deductions in Form 16. So, the individual can claim the benefit at the time of filing return. In the ITR form, you will be required to provide details like the amount donated as well as the charity's name, PAN and address," he adds.

Business Group Wants Separate Ports For Exports, Imports

A business lobby group is demanding that the government designate separate seaports for exports and imports to overcome gridlock in the country’s biggest trade gateway, Tanjung Priok Port in North Jakarta.



Indonesian Employers Association (Apindo) chairman Sofjan Wanandi said on Monday that the lengthy dwelling time at the port resulted in high business costs that burdened business players and moreover, markedly disrupted international trade activities.



“We certainly cannot do business as usual, and certainly require a drastic change. Otherwise, both exports and imports will be impacted,” he told reporters after a meeting with Industry Minister MS Hidayat.



Exports and imports in Southeast Asia’s top economy have grown to record highs in recent years, with last year seeing exports reaching US$190.03 billion and imports settling at $191.69 billion.



In line with significant surges in overseas trade activities, the dwelling time at Tanjung Priok Port which shoulders more than 70 percent of incoming and outgoing goods, has further expanded in the past few years, peaking to eight days this year from 6.5 days last year.



Indonesia’s dwelling time ranked highest compared to its Southeast Asian neighbors, including Singapore (1.2 days) and Thailand (five days).



In the past few weeks, poor performance in Tanjung Priok Port has raised deep concerns among business players as it could process only 170 containers on a daily basis, far fewer than the 600 containers that it should tackle, according to an estimate by the Indonesian Chamber of Commerce and Industry (Kadin).



The slow handling activities at the port caused Rp 4.8 billion ($472,209) per day in losses for exporters and importers, Kadin’s recent statistics reveal.



A quick solution to accelerate exports would be to build a new seaport to mainly serve exports in Kawasan Berikat Nusantara (KBN) industrial bonded zone in North Jakarta, Sofjan said.



KBN, which covers Marunda, Cakung and Tanjung Priok, currently serves as an export-processing zone (EPZ) that hosts more than 100 factories.



On the other hand, to cope with big inflows of overseas goods, particularly raw materials and intermediary goods, the government should allow a special verification process, with importers and importer producers getting their purchased items checked at their own warehouses instead at the densely occupied Tanjung Priok Port, Sofjan added.



In response to the demand from local business players, the Industry Minister said breakthroughs were needed at the heavily congested port as the problems could further hurt both exporters and importers if they remained unsolved.



“We must [first] realize the plan to build a new container port in KBN. At least that can be a temporary alternative due to inefficiency at Tanjung Priok. If such inefficiency continues, our industry will suffer bigger losses and undermine the competitive edge of local businesses,” Hidayat said.



“The verification at warehouses of each importing firm would be feasible as an emergency solution to temporarily ease overloads at the port, but should be followed by stricter customs procedures,” he added.

Source:-www.thejakartapost.com

No unfair trade practice if complainant couldn’t prove that it was lured by false advertisement to a

MRTP : Where complainant could not prove that it acted on false and misleading advertisement issued by respondent-carrier before handing over its consignment to said carrier, no case of unfair trade practice was made against respondent

Curb Import Of Mobiles And Electronics To Support Rupee

Jul 22, 2013

MUMBAI: Experts have recommended curbs on imports of imports and pro-growth policies to encourage inflows from foreign institutional investors. Reserve Bank of India's moves to raise rates has been criticized as it hurts growth and encourages foreign debt which is seen as hot money.



"There is a need for RBI to cut rates aggressively to bring back the 'feel better' factor as a 'feel good' factor is something that will take longer. There is a need for this to encourage inflows from foreign institutional investors which is the only source through which capital can come in fast and in large quantities" said Pradip P Shah, Chairman, IndAsia Fund Advisors. He was speaking at a seminar on the falling rupee and its impact on the Indian economy.



He also said that foreign currency non-resident deposits ( FCNR) which has helped India raise foreign currency in the past can be encouraged through sops such as lower cash reserve ratio and statutory liquidity ratio requirement for these deposits. He said that central government must do its bit by discouraging imports of consumer electronics, micro electronics and consumer products if required through non-tariff barriers. "Right now these imports are not doing anything for the Indian economy they are only creating jobs in Thailand or some other country" he said.



Echohing his view Saugata Bhattacharya economist Axis Bank said that the government's top priority should be in reviving growth. "Growth coming down from 9% to 7% is not as bad as growth coming down from 6% to 5%" he said. According to Bhattacharya besides placing curbs on imports the government could provide a simultaneous sop to domestic production through tax cuts.



According to Prabodh Thakker, Vice President, IMC and chairman of Aon Global Insurance Brokers to support the rupee there was a need to provide a boost to domestic manufacturing, improve the policy environment and spur growth.

Source:-timesofindia.indiatimes.com

Fresh Curbs On Gold Imports

Mumbai, July 22: The Reserve Bank of India (RBI) today tightened gold imports further by ordering nominated banks and agencies to ensure the export of one-fifth of every lot of gold imported.



The central bank said banks must retain 20 per cent of the imported gold in customs bonded warehouses and will only be able to further import gold after exporting at least 75 per cent of the gold from those warehouses.



The RBI added that the banks and agencies could make available gold in any form for domestic use only to entities engaged in the jewellery business.



The latest measure came as part of what it called a move to “rationalise” the import of gold into the country.



Both the Union government and the central bank have been concentrating on bringing down gold imports over the past few months to tackle the ballooning current account deficit (CAD).



India’s CAD, which simply put is the difference between inflows and outflows of foreign currency, rose to 4.8 per cent of the gross domestic product in 2012-13 from 4.2 per cent in 2011-12. A high CAD has also been blamed for the recent depreciation in the value of the rupee.



As part of these efforts, while import duty of gold was raised to 8 per cent from 6 per cent, the RBI had in the recent past placed various restrictions on banks’ import of gold.



These steps seem to have met with success as imports in June are estimated to have fallen to around 31 tonnes from 162 tonnes in May and 141 tonnes in April.



India imported around 830 tonnes of the yellow metal in the previous fiscal.



In its notification today, the central bank said all nominated banks/nominated agencies must ensure that at least one fifth of every lot of imported gold is exclusively made available for the purpose of export.



Analysts said the quantitative restriction was a clever move by the RBI as it had to be seen in the context of the tight export market now prevailing.



This had resulted in gems and jewellery exports from India declining in 2012-13.



With imports of gold now linked to exports, the amount of the yellow metal coming into India could be hit if exports do not pick up.



The instructions will, however, not apply to import of gold by units in the special economic zones, export-oriented units or star trading houses, which import gold only for the purpose of exports, it added.



The RBI said on a review of earlier norms, it “has been decided to rationalise the import of gold in any form/purity, including import of gold coins” and the new guidelines will come into force with immediate effect.



The government will issue separate instructions, if any, to the customs authorities and the DGFT to operationalise and monitor these import restrictions, the RBI said.



The banks and other authorised agencies have been asked to strictly ensure that foreign exchange transactions are compliant with new instructions, the RBI said, adding that they will be responsible for monitoring operations.



It further said earlier instructions on the import of gold on a consignment basis and against letters of credit had been withdrawn.



Gems and Jewellery Export Promotion Council chairman Vipul Shah said, “This step will boost exports and foreign revenue. There will not be any shortage of gold for domestic use. There will be some impact on prices.”

Source:-www.telegraphindia.com

Adjustments made by TPO to be deleted as it provided no reasoning or data to justify exclusion of co

IT/ILT : Where TPO only provided unsupported reasoning and no data for excluding comparables adopted by assessee, adjustment was not sustainable

Income from short-term investment of sum acquired through convertible zero coupon debenture is taxab

IT: Where a company had introduced in assessee-company a sum of Rs. 900 crores in form of zero coupon convertible debenture to be converted into equity shares within a span of 36 months and out of which a sum of Rs. 500 crores was invested by assessee in short-term deposits with banks, interest earned on these deposits was an income chargeable under head 'income from other sources'

Sum paid under VRS on closure of a few of units as a part of restructuring process is an allowable r

IT: Where only two units of assessee-company were closed as part of restructuring process, expenditure on voluntary retirement scheme was allowable as revenue expenditure

Income from letting out of a commercial complex is ‘Income from house property’ and not a business i

IT : Income earned by assessee-firm from letting out a commercial complex was to be assessed as income from house property and not as business income

Adjudicating authority can’t go beyond the scope of show cause notice

ST : Demand cannot be confirmed on a ground not specified in show-cause notice

Interest earned by supplier of goods on deferred payment is exempt from ST

ST/ECJ : Supplier of goods/services who authorizes his customer to defer payment of price, in return for payment of interest, is, in principle, making a grant of loan and accordingly, interest earned thereon falls under negative list

HC denied to admit writ against a revision order as assessee had an alternate remedy to appeal befor

IT: Against revision order, assessee should approach Appellate Tribunal instead of filing writ petition before High Court