CA Terminal

Friday, 10 April 2015

Sahoo Committee recommends lifting of cap on ECBs and their hedging by all borrowers - Sahoo Committ

FEMA/ILT : Comments Invited on Sahoo Committee's Report on Foreign Currency Borrowings

High Court allows Sec. 54 relief on provisional booking of a house as it amounts to acquisition of '

IT: Even where assessee acquired property by provisional booking, he was eligible for section 54 deduction for cost of improvement along with cost of investment

SLP dismissed against HC's order denying sec. 154 rectification as re-computation of turnover requir

IT : SLP dismissed against order of High Court where it was held that since recomputation of turnover of assessee would not be confined to arithmetical or adding figures, rather explanation and answers would be required, said determination could not be undertaken under section 154

No reassessment on pretext of wrong allocation of exp. between units if sec. 80-IA relief was grante

IT: Assessing Officer having allowed assessee's claim for deduction under section 80-IA/80-IB in course of assessment under section 143(3), could not initiate reassessment proceedings merely on basis of change of opinion that there was inappropriate allocation of expenses between various units eligible for deduction

Section 50C won't apply to an encumbered property, says ITAT

IT : Where property held by assessee was encumbered and, thus, she was not absolute owner of property, while computing capital gain arising from transfer of such a property, market value of property as taken for purpose of payment of stamp duty could not be adopted as sale consideration by applying provisions of section 50C

SetCom’s order wasn’t to be interfered with due to error in computing penalty unless exercise of pow

IT: SLP dismissed against High Court ruling that even if there was an error of law or fact in calculating penalty by Settlement Commission, discretion exercised by it requires no interference unless exercise of power made by Settlement Commission was perverse requiring interference under article 226 of Constitution

Govt. exempts excise duty/ST on goods/services supplied against Duty Credit Scrips issued under new

E&C : Implementation of Merchandise Exports from India Scheme (MEIS) under Foreign Trade Policy 2015-2010

Order of SetCom need not be interfered even if there is error in computing penalty unless exercise o

Seller was liable to CST for inter-state supply of goods occurred due to lease agreement between buy

CST & VAT : CST - Where assessee, a manufacturer of gas cylinders, entered into an agreement of sale with one 'R' for supply of cylinders to it and further 'R' had a lease agreement with one 'L' for leasing of cylinders after procurement and assessee on basis of purchase order given by 'R' supplied cylinders to 'L', transaction of supply of cylinders was in nature of inter-State sale and not inter-State lease

Tribunal has to follow guidelines laid out by HC for earlier period while passing order for later pe

Cenvat Credit : Where, in passing orders for subsequent period, adjudicating authority did not follow guidelines set by High Court for disposal of refund claim in respect of earlier period, matter was remanded back to adjudicating authority

High Court upheld sec. 69 additions as assessee failed to explain source of investment

IT : In view of failure of assessee to explain source of investment for earning certain undisclosed income, reasonable addition suggested by revenue on account of unexplained investment on estimate basis was to be confirmed

Provisional booking of a house property is a 'capital asset'; sum incurred on its improvement is ded

IT: Even where assessee acquired property by provisional booking, he was eligible for section 54 deduction for cost of improvement along with cost of investment

Thursday, 9 April 2015

HC rejects creditor's objection to amalgamation scheme as there was unequivocal promise to pay off d

CL : Where some unsecured creditors of petitioner-company challenged proposed scheme of amalgamation on account of non-convening of meeting of creditors, in view of fact that debts belonging to them were doubtful and, moreover, there was unequivocal promise to pay debts if found to be true and binding on petitioner, objection raised deserved to be set aside

Ocean freights are not includible in value of 'logistics support services' or 'freight forwarding' s

Service Tax : Prima facie, ocean freight is not includible in value of logistics support service or 'freight forwarding' services falling under Business Support Services, provided to exporters/importers located in India

TP adjustment has to be made only for international transaction with AE and not with unrelated parti

IT/ILT: Determination of transfer pricing adjustment should be restricted to value of international transactions carried out by assessee with its associated enterprises and not to unrelated parties

No ST could be levied on surplus arising out of distribution of consideration which was already char

Service Tax : When assessee-transporter had paid service tax on entire consideration received from all customers, no service tax could not be demanded on surplus arising out of distribution of said consideration to various parties

Interest-free loan taken from tenant isn't includible in 'Annual Letting Value' of property on notio

IT : Where assessee let out its hotel premises, in view of fact that apart from rent assessee also received interest free loan from tenant which had no nexus with leasing of property, notional interest on said loan could not be included while computing ALV of property

Assessee can't claim interest on refund if there is no delay on part of department in granting refun

IT : Where there was no delay on part of department in making refund after furnishing indemnity bond by assessee, no interest on refund was allowable

Doc seized during search not to be relied upon by AO to make additions when doc was undated and unsi

IT : Where Assessing Officer made addition to assessee's income on basis of a document seized in course of search, in view of fact that document seized was both undated and unsigned and even taken at face value did not lead to further enquiry on behalf of Assessing Officer, impugned order of Tribunal deleting addition was to be confirmed

Tax Recovery Officer couldn't pass arrest order against petition for non-submission of proposal to p

SEBI : Where in recovery proceedings initiated by SEBI, petitioner failed to furnish proposal of payment of dues, detention and arrest order passed by Tax Recovery Officer against petitioner was arbitrary and illegal

Pakistan Exports Items Worth Rs 446 Million To India Via Wagha In Second Half Of March

Pakistan has exported items worth Rs 446 million to India via Wagha border trade route between March 16 and March 31.As per the documents available with Customs Today, Pakistan exported fruits, salt, cement, gypsum, glass and aluminium ores, woven fabrics, scrap rubber, seeds and other items to India.

Pakistan has exported 2,602 metric tonnes of fruits (HS Code 804-1020) to India worth Rs 123 million.

On the other hand, perfumery plants and plant seeds worth Rs 132 million have been exported, while vegetable extracts worth Rs 66 million were also exported.

According to details, Pakistan exported 39,211kg gypsum worth Rs 61 million to India.

Besides, Pakistan exported Portland cement, aluminous cement, slag cement, super-sulphate cement and similar hydraulic cements and clinker worth Rs 67 million to India from March 16 to March 31, 2015.

Pakistan also exported carbonates, hydrogen peroxide, limestone and glass to India.

As a whole, Pakistan exported items worth Rs 446 million to India via Wagha border Lahore.

Pakistani exports to India through Wagha border have increased while import of vegetables from India is decreasing these days.

The current season is not favourable for vegetables’ import so Pakistan’s largest import from India is likely to fall in the upcoming months.

Source:-customstoday.com.pk

Domestic Cashew Market Is Growing Faster Than Exports

Increasing domestic cashew consumption is affecting India's exports of the nut that is a rich source of anti-aging agents. With local demand increasing 15% annually, consumption in India has overtaken that of the US and Europe, the principal buyers of Indian cashew.

"The annual Indian consumption is hovering around 2 lakh tonne compared with about 1.3 lakh tonne in the US and 80,000 tonne in Europe," said Pankaj N Sampat, director of Mumbai-based Samsons Traders. India's exports have been around 1.2 lakh tonne a year.

With cashew's popularity increasing, its processing, which was limited to the four southern states, is spreading to other places. "Cashew has seen several new origins like Gujarat, West Bengal and Maharashtra in the past few years," said K Prakash Rao, managing partner of Kalbavi Cashews. This has increased the number of processors, putting pressure on the availability for processing systems, said Rao. The booming local market has hindered the growth of exports, he added. Cashew is a major foreign exchange earner for India.

Though official figures are yet to come out, value of cashew exports in 2014-15 was estimated to have surpassed Rs 5,000 crore, achieved in the previous year. Till the end of February 2015, cashew worth Rs 4,986 crore was exported.

Vietnam, a major producer, exports almost the entire production as its domestic consumption is marginal.The problems confronted by the export market - like the high price of imported raw cashew nuts, rising cost of production and a lower price in the world market - have also worked in favour of domestic consumption.

Source:- economictimes.indiatimes.com

India Gold Premiums Jump Despite Surging Imports

The gold premiums in Mumbai climbed higher during the week. The gold which had traded at a premium of as low as $1 during the previous week has now increased to $2-$3 per ounce over London spot prices. This is despite a huge rise in gold imports by the country during the past month.

The official gold import figure for the month of March is yet to be announced. According to rough estimates provided by the Ministry of Commerce and Industry, the monthly imports might have totaled nearly 100 tonnes during the month. However, importers claim that actual imports may have been even higher at around 120 tonnes. One has to wait until the release of official government data in mid-April.

Meantime, the Indian government announced relief packages to farmers affected by hailstorms in Northern and Western parts of the country. This should augur well for gold demand in the country during this month. Moreover, the country is about to enter into monsoon season, which according to Met department predictions must be ‘normal’ to ‘good’. Incidentally, farmers totaling nearly 120 million in number account for 60% of the annual domestic gold consumption by India.

The gold demand is likely to climb higher ahead of ‘Akshaya Tritiya’ festival. However, gold prices above Rs 27,000 per 10 gram are likely to dampen the festive gold sales in the country.

Elsewhere, spot premiums at Chinese Shanghai Gold Exchange remained at $3.50 per ounce over spot prices on 1 kilogram bars. The premiums in Hong Kong hovered around $1.50 per ounce. Premiums in Singapore remained at $1.50 per ounce during the previous week. Bangkok premiums went marginally higher to $2 per ounce from $1.50 per ounce during the prior week. Meantime, Dubai gold premiums dropped to $0.25 cents per ounce.

Source:metal.com

Rupee Trading Marginally Higher At 62.22 Vs Dollar

The rupee was trading marginally higher against the US dollar in late afternoon trade at the Interbank Foreign Exchange after rating agency Moody’s upgraded India’s outlook from stable to positive.

At 4.07 pm, the rupee was trading at 62.22 against the previous close of 62.24. During the day, the rupee moved between 62.29 and 62.15.

Besides, selling of the American currency by exporters and banks and a higher opening in domestic stock market supported the rupee but the dollar’s strength against other currencies overseas limited the gains, forex dealers said.

The rupee had ended marginally higher by two paise at 62.24 against the American currency in yesterday’s trade due to weakness of the greenback in international markets.

Source:thehindubusinessline.com

Limitation period to revise an order won't begin from date of reassessment if issue isn't subject to

IT : For issues which were not subject of reopening, period of limitation for revision would commence from date of order of assessment and not reassessment

HC directs Chief CIT to examine whether assessee engaged in teaching music/dance is educational inst

IT : HC directs Chief CIT to examine whether assessee engaged in teaching music/dance is educational institution

Govt. constitutes 'Information Security Committee' in CBDT

IT/ILT : Constitution of An Information Security Committee (ISC) – Broad Responsibilities of Said Committee

SEBI hikes limit for USD-INR currency derivative contract beyond which proof of exposure is to be es

SEBI : Revision of Limits Relating to Requirement of Underlying Exposure for Currency Derivatives Contracts

RBI directs authorised dealer banks to follow revised FDI limit in insurance sector

FEMA/ILT : Foreign Direct Investment in India – Review of FDI Policy – Sector Specific Conditions in Insurance Sector

Assessee has to collect TCS on sale of imported timber to dealers

IT : Where assessee was engaged in importing timber and thereupon selling it to registered dealers in country, assessee was required to collect tax at source from purchasers/dealers in terms of section 206C at time of sale

Voluntary disallowance by assessee under Sec. 14A couldn't be enhanced by AO without showing any rea

IT: Where Assessing Officer could not found any deficiency in assessee's books of account and could not prove that assessee's computation of section 14A disallowance for earning exempt income was incorrect, assessee's claim was to be allowed

VAT collected from buyer is includible in taxable turnover of assessee if VAT isn't shown separately

CST & VAT: Karnataka VAT - Where assessee sold goods and tax invoice issued to purchasing dealer showed price of goods inclusive of all taxes and it did not contain details such as rate and amount of tax charged, assessee was not entitled to deduction of tax amount as contemplated under rule 3(2)(h) of VAT Rules

Non-refundable membership fees received from members to be apportioned and taxed over period of memb

IT : When services were to be rendered for a period of years, both revenue and expenditure were to be shown proportionate to degree of completion of service

Plastic Pouch development exp. is in nature of scientific research exp; allowable under Sec. 35

IT : Plastic pouch development expenses being in nature of scientific research or acquisition of patent rights or copy right would come under purview of section 35 or 35A; said expenses were not allowable under section 37(1)

No disallowance of loss claimed in return filed u/s 153A after the due date prescribed under sec. 13

IT : Raw materials purchased by assessee for first time production would be allowable as revenue expenditure

'Impose hefty penalty on listed Cos for non-appointment of women director' - SEBI's direction to Sto

SEBI : Fine structure for non-compliance with the requirement of clause 49(ii)(a)(1) of listing agreement

CARO, 2003 not applicable for F.Y 2014-15, MCA likely to notify smaller version of CARO soon - ICAI

COMPANIES ACT, 1956/COMPANIES ACT, 2013/AAA/INDIAN ACTS & RULES : Section 143 of the Companies Act, 2013 - Powers and duties of auditors and auditing standards- Companies (Auditor's Report) Order, 2003 ceased to have effect from 1-4-2014.

Wednesday, 8 April 2015

No TP adjustment by ignoring transaction in entirety and by picking up those which are in revenue's

IT/ILT : Where TPO made addition to assessee's ALP in respect of purchase of raw material from AE located abroad by applying internal CUP method, matter was to be remanded back for disposal afresh with a direction that transaction of import from AEs was to be considered in entirety to calculate amount of adjustment instead of only those common products whereby import price from AEs was higher vis-a-vis purchase price from local third parties

No disallowance of loss claimed in return field u/s 153A after the due date prescribed under sec. 13

IT : Raw materials purchased by assessee for first time production would be allowable as revenue expenditure

Amount paid for using know-how to produce hydro-power equipment is taxable as royalty: High Court

IT/ILT : Where assessee, an Austria based company, entered into agreement with Indian company for furnishing know-how and technical assistance for producing hydro power equipment, amount received for right to use technical know-how would be taxable in India as 'royalty' whereas amount received for rendering technical services would be taxable to extent it is attributable to activities actually performed in India

Right to appeal under FEMA against order of Tribunal is also available even against its interim orde

FEMA : Where proceedings by way of a show cause notice were initiated against petitioners during sun-set period, provisions of FERA can be invoked

Service provider would get refund of wrongly paid ST when service receiver certifies that he has not

Service Tax : Where invoice does not show service tax and service recipient certifies that he did not bear/pay service tax, test of unjust enrichment is passed by service provider and he is entitled to refund of service tax wrongly paid

RBI eases lending norms for 'NBFC-Micro Finance Institutions'

NBFCs : Modification in Non-Banking Financial Company-Micro Finance Institutions (NBFC-MFIs) Directions

8L Cotton Bales Exported From India In February

During February, fibre (cotton, ASF, PSF, VSF and wool) exports stood at 156 million kg, worth US$194 million or INR1,190 crore. Cotton accounted more than 85 per cent of all types of fibre exported during the month at 135 million kg or 800,000 bales worth US$164 million. About 21 million kg of MMF were also exported worth US$30 million.

Bangladesh, China and Vietnam continued as the largest importers of fibre (cotton plus MMF) and together accounted for 76 per cent of all cotton export in February. USA was the largest importer of PSF during the month while China was the major importer of VSF, in similar comparison. Iran was the dominant buyer of ASF. The next major was Vietnam.

Price wise, unit value realisation on ASF export was close to US$2.50 per kg while cotton fetched over US$1.20 a kg. PSF export value averaged US$1.12 a kg while VSF was shipped at US$1.57 per kg.

Source:ccfgroup.com

Philips To Increase Export Of Medical Equipment From India

Medical equipment major Philips India Ltd is targeting the domestic and the overseas markets for its new digital X-ray machine, said a senior official here on Wednesday.

Speaking to reporters after launching the company's latest digital mobile X-ray unit, Rekha Ranganathan, vice president and general manager, mobile surgery, IXR, said: "The new product will not only be marketed in India but also shipped out.

"The product has necessary quality certification like the internationally accepted C-marking and other certifications," added Radhakrishnan Kodakkal, senior director, research and development, Philips Healthcare.

According to Ranganathan, who also heads the Healthcare Innovation Centre (HIC) here, the new machine called MobileDiagnost Opta was designed, developed and made at the company's Healthcare Innovation Centre (HIC) here.

She said the centre can make around 100 units a month but declined to reveal the equipment's price, saying that it would be competitive.

Ranganathan said the digital image generated by the X-ray unit, its compactness, ease of mobility in restricted places like intensive care units and operation theatres were some of the innovate features.

There was no need for the conventional X-ray film. She said the company was gradually increasing the local content in the machines made at HIC by developing suppliers. However critical components for X-ray machines were imported as there were no domestic suppliers, Kodakkal said.

Declining to reveal any figures - investment in the HIC and its annual capacity - Ranganathan said the centre would play a critical role in supporting Philips' local and global strategy in the image guided therapy.

She said the global leadership team for mobile surgery being based in Pune, HIC will take the lead in delivering innovations for both the Indian and global markets.

According to Ranganathan, the HIC has more than 400 employees and has shipped products to more than 90 countries. She said the centre had launched five products and filed four patents. Ranganathan said Philips India gets more than 50 percent of its revenue from the healthcare vertical. The balance comes from consumer lifestyle and lighting products.

Speaking about Philips India's market position in the medical equipment market, Sameer Garde, president South Asia, Philips Healthcare, said the company gained market share in 2014 when the overall market remained flat.

According to him, India was one of the top markets for the group in the case of healthcare equipments. Garde said the company leads the market in the MRI (magnetic resonance imaging), critical care, catheterization lab and homecare equipment. The company sees good growth in tier II and III cities.

Source:newkerala.com

Flooring/tile terracing inclusive of construction is eligible for abatement in respect of constructi

Service Tax : Where assessee was providing construction services (inclusive of completion and finishing) and scope thereof was 'plinth levelling, slab casting, plaster work (inner & outer), flooring and tiles terracing', said services were eligible for abatement in respect of construction services

Directors not liable for tax dues of Co. if AO failed to show that dues were not recoverable from Co

IT : Unless it was shown that it was not possible to recover tax due from said company, no liability could be fixed on assessee-director of said company to pay due tax

India Could Consider White Sugar Export Incentive - Minister

India could consider giving cash-strapped sugar companies an incentive to export white, or refined, sugar as long as mills agree to pay dues they owe to millions of cane growers, Food Minister Ram Vilas Paswan said on Wednesday.

"The government is willing to consider the demand of the industry so that mills' financials do not worsen, but we need an assurance that cane arrears to farmers are cleared as early as possible," Paswan told Reuters.

Five straight years of surplus output has hammered local sugar prices, hitting mills' financial health to an extent that they now owe more than $3 billion to cane growers. Mills also complain that higher government-set cane prices have destroyed their profit margins.

"We have to strike a balance to protect farmers' interests and ensure that cane crushing remains viable for mills. I'll separately talk to farmers and mills to ensure that," Paswan said.

Sugar companies owe 192 billion rupees ($3.1 billion) to cane growers, with the top two producing states of Maharashtra and Uttar Pradesh accounting for more than three-fifths of the total arrears.

Source:maktoob.news.yahoo.com

Fy15 Soybean Meal Exports At 6.46 Lakh Tonnes, Down 77.25 Per Cent

India exported 6.46 lakh tonnes of soybean meal in FY15, registering a decline of 77.25% over the previous financial year (2013-14), when soybean meal exports were 28.41 lakh tonnes. The figures were released by Soybean Processors Association of India (SOPA) on Wednesday.

Exports of soybean meal during March 2015 were 46,670 tonnes compared to 2,32,176 tonnes in March 2014, showing a decline of 80%.

"With the increase in export incentives in the new foreign trade policy under Merchandise Exports from India Scheme (MEIS), we are hopeful that we will be able to regain some of the lost markets and our exports of soybean meal in 2015-16 will increase substantially," said Davish Jain, chairman, SOPA.

During the first half of the current Oil year, that is, October 2014 to March 2015, total exports are 5,49,627 tonnes as against 19,64,581 tonnes last year, showing a decrease of 72%.

Source:economictimes.indiatimes.com

Gold and silver rates as on March 31, 2015

IT/ILT : Gold and Silver Rates as on 31st March, 2015

Application of income by trust for charitable purposes outside India doesn't lead to denial of Sec.

IT : Registration u/s 12AA cannot be refused to a trust which applies its income for charitable purposes outside India

IRDA prescribes guidelines for establishment of 'IFSC Insurance Office' in SEZs

INSURANCE/INDIAN ACTS & RULES : IRDAI (International Financial Service Centre) Guidelines, 2015

Units should be custom bonded is a pre-requisite to claim exemption for custom duty and not for sec.

IT : Customs bonding is not a requirement or a condition precedent for granting exemption under section 10A

Mere establishment of subsidiary in other country won't be deemed as PE of foreign Co.

IT/ILT : Whether establishing a subsidiary in other treaty country would not result in creating and establishing a PE of foreign holding company in said treaty country

Mere non-verifiability of creditors doesn't indicate that they are bogus if purchases are genuine

IT: Where Assessing Officer had drawn an adverse conclusion only on account of non-verifiability of sundry creditors but there being no dispute as regards purchases, and trading results having been accepted, addition made under section 68 was not sustainable

Time limit for refund of duty paid on finalization of provisional assessment starts from date of app

Excise & Customs : Where, on finalization of provisional assessment, assessee paid differential duty and said duty becomes refundable due to appellate order in favour of assessee, time-limit for filing refund claim would start from date of appellate order

Failure to consider satisfaction recorded under sec. 158BD is a mistake apparent from record

IT : There was an error apparent on record in Tribunal's order where Tribunal had not considered evidence of satisfaction recorded under section 158BD

Tuesday, 7 April 2015

Sec. 5 shall not operate to exclude income of NR which is covered under presumptive provisions of se

IT/ILT : Sec. 5(2) shall not operate to exclude amount received outside India for computing income presumptively u/s 44BB

[DGFT Notification] : Export Policy of Onions- reduction in Minimum Export Price (MEP).

(To be Published in the Gazette of India Extraordinary Part-II, Section - 3, Sub-Section ii)

Government of India

Ministry of Commerce & Industry

Department of Commerce

Udyog Bhawan

Notification No. 2 /2015-2020

New Delhi, Dated: 7 April, 2015

Subject:- Export Policy of Onions- reduction in Minimum Export Price (MEP).

S.O. (E) In exercise of powers conferred by Section 5 of the Foreign Trade (Development & Regulation) Act, 1992 (No. 22 of 1992), as amended, read with Para 1.02 of the Foreign Trade Policy, 2015-2020, the Central Government hereby makes the following amendment, with immediate effect, in Notification No. 91 (RE- 2013)/2009-14 dated 21.08.2014 read with Notification No. 73 (RE- 2013)/2009-14 dated 12.03.2014 relating to export of onion.

2. The amended para 2 of Notification No. 91 (RE- 2013)/2009-14 dated 21.08.2014 will now read as:

“Export of onion for the item description at Serial Number 51 & 52 of Chapter 7 of Schedule 2 of ITC (HS) Classification of Export & Import Items shall be permitted subject to a Minimum Export Price (MEP) of US$ 250 per Metric Ton F.O.B. or as notified by DGFT from time-to-time”.

3. Effect of this notification:

Export of all varieties of onions as described above will be subject to a Minimum Export Price (MEP) of US$ 250 per MT (reduced from MEP of US$ 300 per MT earlier).

(Pravir Kumar)

Director General of Foreign Trade

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

(Issued from File No. 01/91/180/922/AM08/PC-III/Export Cell)

Foreign currency futures are transactions of derivative market; they can't be termed as speculative

IT: Transaction of derivative market which included foreign currency and call option/put option could not be termed as speculative in nature

Imparting of education not to be deemed as business activity under Rajasthan VAT Act

CST & VAT : Rajasthan VAT - Where assessee, a deemed university/educational institution, was imparting education and it sold prospectus and it also purchased cement, etc. after payment of VAT and provided same to its own contractors for construction of hostel building, etc. and further it reduced value of material from contract amount, assessee was not carrying on business and was not required to get itself registered

Opposite party abused its dominance by imposing unfair pricing in market of freight transport servic

Competition Act: Where opposite party providing services of freight transport by trucks to various industrial units located within area of Kiratpur in Punjab through its members was dominant in relevant market, OP abused its dominant position by imposing unfair prices for transportation services

Sum received in foreign currency for rendering technical service abroad isn't taxable in India: ITAT

IT/ILT : Where assessee rendered services as senior drilling engineer at Nigeria to an Indian company, fees was received by assessee in foreign currency for rendering said services outside India could not be brought to tax in India

Excise Dept Move On Service Tax May Make Rail-Based Traffic Costlier

At a time when the Centre is trying to increase the share of rail-based traffic, an excise department move may end up shifting container traffic away from rail to roads.

The excise department wants to impose full service tax on containerised traffic without providing the 70 per cent abatement available to cargo moving on rail. This means, in effect, the service tax will be levied on 30 per cent of the tariff. Incidentally, road transporters also get about 70 per cent abatement on service tax.

The proposed move has irked the Railway Ministry and the container train operators, and could jeopardise the rail-based container segment, which includes operators such as the Container Corporation of India, Gateway Rail Freight Ltd, Hind Terminals, APL Logistics, DPW-backed Container Rail Road Services, ETA, Kribhco, Central Warehouse Corporation, and Vikram Logistics.

The Directorate-General of Central Excise Intelligence (DG-CEI) has used a technicality in the Finance Act 1994 -- Section 65 B (49) -- to say that container train operators offer a "support service" to the Railways, which attracts full service tax. It has issued a show-cause notice to the operators asking them to pay full service tax with effect from 2012.

Meanwhile, the Railways and container train operators are citing two clauses of the Finance Act 1994 – 65 (B) 25 and 66F – to prove that they move goods on the rail mode and support their view for attracting service tax with abatement.

The DG-CEI’s logic, if accepted, can jeopardise not just the container rail segment, but sectors such as cement, automobiles, petroleum products, mining and the dairy segment, which have invested in wagons to offer rail-based services, while some others have plans to invest in specially designed wagons.

Companies such as ACC, APL Vascor, Jindal Steel and Power Ltd, and Maruti Suzuki, have already made such investments.

The Railways had approved procurement of 45 rakes with an investment of over Rs 1,000 crore to 10 customers three years ago.

Also, in the passenger segment, coach investment has been made in some premium tourist trains, such as by IRCTC in Maharaja Express, the Rajasthan government in the Palace on Wheels, the Maharashtra government in its Deccan Odyssey, and the Karnataka government in the Golden Chariot.

The excise department’s move is likely to make railway services pricier and move customers away at a time when it is already losing share to the road segment.

Source:-thehindubusinessline.com

Ftp 2015-20: Pushing Exports And Imports In Sync

The much-awaited Foreign Trade Policy 2015-20 has been announced. It has targeted to double exports to $900 billion by 2019-20. The achievement of this target underscores the need to encourage both merchandise and services exports, as enshrined in the policy document.

Many would have termed the target as ambitious if the green shoots of global economic recovery were not in evidence. The US economy is growing, riding on the back of an impressive manufacturing growth, which is getting translated into more jobs. Europe, though still not out of the woods, is showing signs of recovery. Japan and China are coming out of slowdown blues, though the pace is sluggish. There are indications to believe that world trade will pick up in the next two years or so. Against this backdrop, the target set for doubling exports seems to be in sync with reality.

There are various policy changes that have been incorporated in the FTP document, such as simplification and amalgamation of incentives schemes, revamping of incentives schemes for services exports, focus on reduction of transaction cost, incentives to SEZs, eliminating bottlenecks for doing business, etc. Yet we should not lose sight of the challenges. Exports have contracted over the last three months. In February, contraction was a high 15%, mainly on account of persistent slowdown in some markets and volatility of the rupee against a basket of currencies. For a pragmatic FTP, it is important to have a stable exchange rate, which will insulate the trade from avoidable risks.

In order to give a boost to exports from SEZs, the government has extended benefits of both the reward schemes—Merchandise Exports from India Scheme (MEIS) and Services Exports from India Scheme (SEIS)—to units located in SEZs. Trade facilitation and enhancing the ease of doing business are the other major focus areas in this new FTP. Besides, a move towards paperless working 24×7 is an encouraging development.

Another feature of this policy is the importance it has assigned to services sector exports. Services have become an important component of our export basket—at $145 billion, they are half the merchandise exports of $300 billion. There are some distinguishing features of service exports. One, high retention of foreign exchange since the outgo in terms of import content is either insignificant or nil. Two, exports from this sector benefit more people and that way they have an expanding stakeholder profile. Three, they promote skills which are tradable both in India and abroad, providing gainful employment to many.

Importantly, CII in partnership with the ministry of commerce and industry has pioneered a platform for promotion of services exports from the country. On April 23-25, CII along with the commerce ministry will organise the Global Exhibition on Services (GES) in Delhi, wherein representatives from 40 countries will participate. This business-to-business (B2B) event will showcase India’s services capabilities to foreign buyers and will provide a rewarding platform for forging partnerships and businesses to Indian partners. To be inaugurated by the PM, this meet will be attended by a large number of delegates from the US, the UK, Singapore, Spain, Australia, the UAE, and SAARC countries. The focus sectors at the GES are IT & telecom, tourism, healthcare, R&D, media & entertainment, education and logistics.

The FTP policy has also laid focus on tapping huge potential for exports in emerging sectors such as e-commerce, export of defence and pharmaceutical goods, etc, and extended incentives for export-oriented units (EOUs), electronic hardware technology parks (EHTPs) and software technology parks (STPs). A case in point is the huge electronics imports into the country. It is estimated that, by 2020, India will need for domestic use electronic goods worth $400 billion. Domestic production around that time, at the current rate, will be worth $100 billion, necessitating an import of $300 billion, which will be higher than India’s oil imports. To ward off such a situation, it is important to give a boost to electronics production in the country. State-of-the-art EHTP units should come up in various parts of the country, which should be functional and capable of meeting the domestic demand. India should also fast-track its capacity for chip manufacturing, the costly part that goes into most of the electronic goods which are largely imported from China, Taiwan, Korea, etc.

A growing economy should have a strong international trade segment consisting of imports and exports. At the same time, there should be a harmony between imports and exports. A nation that focuses only on exports holds the risk of getting its currency overvalued, thereby creating distortions in its economic structure. Conversely, excessive imports unmatched by export realisations will create current account deficit and instability. Both situations should be avoided. The commerce minister seems to have treaded a cautious line in creating a sync between the two.

Source:- financialexpress.com

Bankers Call For Anti-Dumping Duty On Steel Imports

Top bankers have asked the government to slap anti-dumping duty on imports of steel to salvage the iron and steel sector hit by dumping of steel by other countries, especially China.

State Bank of India chairman Arundhati Bhattacharya told finance ministry officials about the need for introducing anti-dumping duty on imports of steel and gave the example of the US where 35 per cent anti dumping has been imposed on steel imports.

SBI chairman’s proposal came after the finance ministry complained to top bankers that banks are not meeting the credit needs of stalled projects. “Stalled projects are not getting desired attention of banks. Financial services secretary (Hasmukh Adhia) expressed his concern over the issues and advised the banks to come forward to meet the credit requirement of stalled projects,” the ministry said in a note to bank chiefs.

The SBI chief said there is very little demand for credit for new projects. “Corporate demand for credit is not coming in,” she told the ministry officials in a meeting with bankers recently. Major sectors which are affected include iron and steel, sugar, mining and construction and the power sector. Steel and iron has been affected due to high rate of iron ore, bankers told the ministry.

Latest figures compiled by the Ministry of Finance in March 2015 indicate that 299 mega projects involving an outlay of Rs 18.13 lakh crore still remain stalled with the Project Management Group (PMG) in the cabinet secretariat.

A top banker, who attended the review meeting with ministry officials, said the sugar industry is facing high production cost vis-à-vis the price realisation. In order to solve the problems of sugar industry, bankers suggested that the percentage of ethanol use permitted in petroleum products may be increased from 10 per cent to 35 per cent.

“Power sector is facing fuel supply problems. Mining sector suffers involvement of state governments. Road construction suffers because of delayed clearance form National Highway Authority of India (NHAI). The problems of each sector need to be addressed separately,” they said as per a ministry note.

Reserve Bank data shows credit growth to industry halved to 6 per cent in February 2015, down from an increase of 13.2 per cent in February 2014.

Source:- indianexpress.com/

RBI tweaks norms on refinancing of rupee loans with foreign currency borrowings

BANKING : Prudential Norms on Income Recognition, Asset Classification and Provisioning Pertaining to Advances – Refinancing of Exposures to Borrowers

Govt. scraps new guidelines for power generation in SEZs

SEZ : Guidelines for Power Generation in Special Economic Zones

SEBI invites comments on issues regarding 'Offer for sale' of shares

SEBI : Discussion Paper on Issues Pertaining to Offer for Sale of Shares (OFS) through Stock Exchange Mechanism

Banks can further extend date of starting of stalled projects by two years in case of change in owne

BANKING : Prudential Norms on Income Recognition, Asset Classification and Provisioning Pertaining to Advances – Projects under Implementation – Change in Ownership

Prospective importers are interested parties; must be granted hearing prior to levy/non-levy of anti

Excise & Customs : For purposes of anti-dumping duty, 'interested party' refers to a party who is interested in investigation and ultimate outcome of it; therefore, prospective importer of goods is also an 'interested party' and must be granted hearing prior to levy/non-levy of anti-dumping duty

Payment made to transporter for providing buses on hire basis along with driver would attract TDS u/

IT : Where assessee-company entered into contract with transporters for providing buses for giving pick-up and drop facilities to its employees, in view of fact that transporters were contractually obliged to maintain buses in proper condition and drivers and conductors were also to be provided by them, assessee was liable to deduct tax at source under section 194C while making payments to transporters

Evasion penalty has to be levied when invocation of extended period isn't challenged

Cenvat Credit : Where assessee had not challenged invocation of extended period for raising demand and same had become final, penalty under section 11AC was automatic and was leviable at quantum specified in said section

Payment made to Govt. notified agencies couldn't be deemed as direct payment to Govt.; sec. 40A(3) d

IT: Where assessee, engaged in distributing food grains and Kerosene under PDS scheme, made cash payments to agencies notified by Government, it could not be regarded as payment directly made to Government and, thus, disallowance made under section 40A (3) deserved to be confirmed

Pension Fund Authority notifies norms on 'Trustee Bank' for holding funds in name of 'National Pensi

INSURANCE/INDIAN ACTS & RULES : Pension Fund Regulatory and Development Authority (Trustee Bank) Regulations, 2015

Pension Fund Authority notifies points of presence norms for National Pension System

INSURANCE/INDIAN ACTS & RULES : Pension Fund Regulatory and Development Authority (Point of Presence) Regulations, 2015

Interest paid on refundable deposits of tenants is allowable u/s 24 if deposits are used to repay ho

IT : Interest paid on refundable security deposits received from tenants is allowable under section 24(b) if deposits are used to repay loan taken for purchase of house property

General Free Allowance of individual family members can't be pooled together for imports by baggage

Customs : In case of imports by baggage, GFA is allowed to passenger if article in baggage is for his or his family's personal use; use of word 'family' does not mean that family members of passengers can be pooled together, as Explanation to Appendix A [rule 3 of Baggage Rules, 1998] bars any such pooling

Cash payments exceeding 20,000 made to fisherman to purchase fish won't invite sec. 40A(3) disallowa

IT: Where assessee had purchased fish from fisherman/headman of fisher, no disallowance under section 40A(3) would be made even if payment in cash exceeded prescribed limit

Payment made to Govt. notified agencies couldn't deemed as direct payment to Govt.; sec. 40A(3) disa

No revision by CIT treating exp. on creation of brand as capital exp. when AO examined this issue in

IT : Where view taken by Assessing Officer that brand building expenses incurred by assessee were revenue expenditure was possible view on facts, order of Assessing Officer could not be set aside in section 263 proceedings

No TDS disallowance for exp. paid during the year; Visakhapatnam ITAT follows principles of Merilyn

IT: No disallowance under section 40(a)(ia), when payments on which tax was required to be deducted were paid during relevant previous year and nothing remained payable on last day of previous year

Monday, 6 April 2015

No reassessment if revenue didn't furnish copy of sworn statement on basis of which proceedings were

IT : Where assessee was not furnished with copy of statement made by person allegedly providing accommodation entries in respect of sale purchase of shares by assessee, reassessment on basis of said statement was not justified

Sec. 76 and Sec. 78 penalties could be levied simultaneously if show cause notice was issued prior t

Service Tax : If show-cause notice has been issued prior to amendment from 16-5-2008, penalty both under sections 76 and 78 would be leviable simultaneously and amendment providing either of two penalties would not be applicable

Successors in interest couldn't exercise those rights under SARFAESI Act which weren't available to

SARFAESI: Where original lender of loan was not entitled to take an action under SARFAESI Act, successors in interest pursuant to any merger, transfer or assignment of debt could not exercise right under SARFAESI Act qua debt in question even though, successor was entitled to take action under SARFAESI Act

No reassessment if revenue didn't furnish copy of sworn statement on basis of which proceeding were

Sec. 68 additions upheld on failure of assessee to prove source of cash receipts credited in books

IT : Where two cash receipts were found credited in books of account of assessee on account of repayment of his dues and sale of shares but he could not satisfy Assessing Officer by adducing proper evidence regarding source of said money, said amounts were rightly added to assessee's income under section 68

Amalgamating co. can pass its losses to successor co. only if it was engaged in business for more th

IT : Unless amalgamating company was engaged in business for three or more years as on date of amalgamation, amalgamated company could not claim set off of brought forward unabsorbed business loss and depreciation of amalgamating company against its income

Govt. revises selection criteria for appointment of Chairman, Vice-Chairman and members of SetCom

IT/ILT/INDIAN ACTS & RULES : Settlement Commission (Income-Tax and Wealth-Tax) (Recruitment and Conditions of Service of Chairman, Vice-Chairmen and Members) Rules, 2015

Issue involving classification of 'water filters' isn't maintainable before High Court

Excise & Customs : Issue whether water filters are classifiable under 7323.10 as 'tableware and kitchenware' (as claimed by assessee) or under 8421.10 as 'filtering or purifying machinery or apparatus' (as claimed by revenue), is not appealable before High Court, as said issue has relation to 'rate of duty'

Indian Commerce Ministry Officials Visit Iran; Revival Of Basmati Rice Exports On Agenda

India's Commerce Secretary and a high level delegation are visiting Iran this week to discuss ways to boost trade, including revival of rice trade, between the two nations, according to local sources.

The Indian officials' visit to Iran is particularly significant as the Middle East nation had banned rice imports in November 2014 citing excess stocks from last year's imports and a bumper crop in 2014, a move which has significantly affected India's basmati rice exports. Iran is a major destination for India's basmati rice exports and accounts for nearly 40% of India's total basmati rice exports. Last month, some exporters expressed confidence that India’s basmati rice exports to Iran would resume from the beginning of new financial year (2015-16) in April 2015.

The delegation will meet the Iranian Commerce Secretary and Trade Minister according to local sources. They are understood to particularly seek for the removal of ban on rice imports as well as focus on increasing project exports to Iran. India is a major importer of crude oil from Iran but its imports had declined significantly in March 2015 due to pressures from western nations. The delegation is also likely to discuss means to solve the oil import issue.

India's new Foreign Trade Policy has reportedly retained the Rupee-Riyal payment mechanism, which was initiated a couple of years ago to facilitate trade between India and Iran.

The bilateral trade between India and Iran increased by about 2% to around $15.27 billion in 2013-14 as against $14.94 billion in 2012-13.

While Iran's basmati rice imports from India increased about 33% y/y to around 1.44 million tons in 2013-14, the Middle East nation's imports have declined in 2014-15 primarily due to its stance to revise the accepted level of arsenic content in basmati rice from 150 parts per billion (ppb) to 120 ppb in March 2014. Later in September 2014, Iran also increased import duty on basmati rice from 22% to 45% before banning rice imports in November 2014.

India exported around 767,697 tons of basmati rice to Iran in the first ten months of FY 2014-15 (April - January), according the Agricultural and Processed Food Products Export Development Authority (APEDA). At this pace, rice market analysts expect India's basmati rice imports to Iran to decline by about 15-20% to around 1.15 - 1.2 million tons in 2014-15.

India exported around 9.57 million tons of rice (including 2.92 million tons of basmati and 6.65 million tons of non-basmati) in the first ten months of FY 2014-15 (April - March), up about 7% from around 8.96 million tons (including 3.09 million tons of basmati and 5.87 million tons of non-basmati) exported during the same period in FY 2013-14, according to provisional data released by the APEDA.

Source:-oryza.com

India's 2014/15 Iron Ore Imports Hit Record 15.5 Mln T As Prices Tank

India's iron ore imports jumped to a record above 15 million tonnes in the fiscal year to end-March as tumbling global prices and limited domestic supply pushed steelmakers to buy more of the raw material overseas, industry data showed on Monday.

Formerly the world's No. 3 supplier of iron ore, India has been importing it over the past three years due to court-imposed restrictions aimed at curbing illegal mining in the major producing states of Karnataka and Goa.

The shortage deepened last year when some mines in the states of Odisha and Jharkhand were ordered to close after the expiry of licences.

India's iron ore imports totalled 15.5 million tonnes in the past fiscal year, according to data compiled by industry consultancy SteelMint, which tracks shipments at 18 ports across the country. In the year to March 2014, imports were just 320,000 tonnes.

More than half of imports in fiscal 2014/15 were brought in by JSW Steel, India's third-largest steel producer, with 8.4 million tonnes. Tata Steel followed with 3.06 million.

Official Indian government data only covers April-December, with imports totalling 7.38 million tonnes, according to the trade ministry.

Despite the jump in shipments to India, global iron ore prices fell below $50 a tonne .IO62-CNI=SI last week to the lowest level since a key benchmark pricing index began in 2008.

The steelmaking commodity has lost about two-thirds of its value since the start of last year amid a global glut and slow demand from top iron ore buyer China.

The reopening of iron ore mines in states such as Odisha, Jharkhand and Goa may reduce India's imports in the current fiscal year, said Dhruv Goel, managing partner at SteelMint."We expect imports will be limited to 6-7 million tonnes, subject to global iron ore prices.

Source:- reuters.com

India’S Trade Deficit With China To Double In The Next Two Years

India's trade deficit with China could nearly double to $60 billion in the next two years if the two partners do not address market access constraints and nontariff barriers faced by Indian goods in the neighbouring country, the department of commerce cautioned in the foreign trade policy statement released last week. The statement came ahead of Prime Minister Narendra Modi's expected visit to Beijing in the second week of May.

India is pushing for tariff concessions from China in oil seeds, textile items and marine products in the fourth round of tariff concessions under Asia-Pacific Trade Agreement (APTA) in a bid to correct the imbalance in bilateral trade. The trade deficit widened to $36 billion in 2013-14, accounting for a quarter of India's overall export and import gap. While India's exports to the bigger Asian rival fell 18.6% in April 2014-January 2015, imports grew 17.16%. India's imports include manufactured items in both "non-essential" categories and power and telecom equipment, as per the statement.

"If the current situation persists, by 2016-17, merchandise imports from China will exceed $80 billion while India's exports will be around $20 billion, leaving an unsustainable trade deficit of $60 billion," the commerce department said. The matter was also taken up during the recent visit of an Indian delegation to China in March, but Beijing refused to give an assurance."We did not get any commitment from their end on any of the issues, be it agriculture, pharmaceuticals or IT. It has so far maintained that the wide trade gap can be explained by the divergent nature of the two economies, with India being a services-led one while China is a manufacturing economy," said a government official.

"There is definitely a level of frustration as there have been a lot of MoUs on bovine meat to IT and pharma, but no action on the ground," he added. India is seeking reduction in tariffs on close to 200 product lines from China under APTA including textiles, oil cakes and marine products. APTA is a preferential trade agreement between the six countries of Asia- India, China, Bangladesh, Sri Lanka, Laos and South Korea."PM is also likely to take this up during his visit,' said the official.

According to the government, a series of non-tariff barriers block India's exports of pharmaceuticals, IT/ITES and agri commodities including bovine meat, oil meals and cake, tobacco, rice, fruits and vegetables to China. India has also been pushing China to allow Indian companies to bid for tenders in its state-owned enterprises. In pharmaceuticals sector, India has been seeking removal of entry barriers as registration of existing drugs in China takes three-five years, compared to just three-six months in India. India also questioned China's decision to continue curbs on Indian buffalo meat imports at an agriculture committee meeting of the World Trade Organisation (WTO) recently. Non-essential imports is another issue Of the $12.5 billion (about Rs 78,000 crore) worth of consumer imports in each of the past two years, mobiles phones alone accounted for $5 billion (about "31,000 crore) worth of imports and this segment has seen a surge in imports in the past three-four years.

The statement pointed out that the approach for electronics exports promotion must include discouraging non-essential imports and improving product standards, among other things. The commerce department also recommended that states play a role in rationalising non-essential imports."Foriegn direct investment flow from China is one way of addressing the problem of widening trade deficit.

If China sets up manufacturing facilities in India, those items will not get imported from Beijing," said Ram Upendra Das, professor, RIS for developing countries. The department of industrial policy and promotion secretary Amitabh Kant conducted a 'Make in India' workshop in Beijing last week to drive Chinese investment into Indian manufacturing. During Chinese president Xi Jinping's visit to India in September last year, China had committed investment of $20 billion in India over the next five years. The commerce department recommended that the country must remain vigilant and"take action to safeguard against unfair trade practices to protect the legitimate trade interests of Indian industry".

Source:- economictimes.indiatimes.com

Rupee Gains 0.51% Against Dollar In Afternoon Trade

The rupee was higher against the US dollar on dollar inflows from foreign institutional investors (FIIs) as dealers sold the US currency, noting its weakness against global currencies.

Data from the US released on Friday showed that US companies added the least number of jobs in more than a year in March, raising expectations that a rate hike by the US Federal Reserve may be delayed.

The weak US data had ramifications on global currencies once the market opened on Monday. The Malaysian ringgit gained 1.049%, South Korean won gained 0.738%, Indonesian rupiah gained 0.556% and Taiwan dollar gained 0.168%.

At 2.40pm, the rupee was trading at 62.1775 per dollar, up 0.51% from its previous close of 62.4975. The partially convertible currency opened at 62.1050 a dollar and touched a high and a low of 62.1012 and 62.2075, respectively.

Since January this year, the rupee has gained 1.4%.

“There are dollar inflows in the market and the weakness of the US currency has also helped the rupee. It is only dollar buying from the state-owned banks likely on behalf of the Reserve Bank of India (RBI) which has kept the rupee from rising,” said a dealer with a foreign bank.

RBI has been buying dollars from the currency market through state-owned banks to shore up its foreign exchange reserves ahead of a impending US Fed rate hike which could lead to outflows from emerging markets like India.

A strong rupee also makes exports from the country less competitive.

Expectations are that the rupee will trade in the 62 to 62.50 per dollar this week.India’s benchmark 10 year bond yield was trading at 7.71% down from previous close of 7.73%.Sensex, the benchmark index of the Bombay Stock Exchange gained 0.73% or 205.63 points to 28,465.77 points.

Source:- livemint.com

TPO to allow working cap adjustment when ageing schedule of assessee's debtors was different from co

IT/ILT : Where assessee had placed on record a working regarding difference in time lag in sale recoveries in its case and that of three comparables selected by TPO, difference in such time lag was to be applied to Prime Lending Rate (PLR) in order to compute working capital adjustment while determining ALP

Debit entry passed by Co. for allotment of shares to shareholder would invite addition of deemed div

IT: Where there were regular trading transactions between assessee-shareholder and company AIL and payments received by assessee from AIL were receipts against sales made during course of commercial transactions, provisions of section 2(22)(e) were not applicable