ITAT granted further stay of demand as sum involved in MAP was fully covered by bank guarantee

IT/ILT: Where it was apparent from records that amount involved in MAP was fully covered by bank guarantee furnished by assessee and, moreover, assessee did not seek adjournments during hearing of MAP proceedings, its application seeking extension of stay of demand was to be allowed

In COD plea assessee not to justify delay of each day, details from date of limitation till filing o

Excise & Customs : If assessee had 3 months to file appeal, assessee could very well have become active only towards end; delay is to be explained from last day of limitation onwards and what transpired during period from receipt of order till last date of limitation is not required to be explained

Proceeding against ex-directors dropped as these were initiated after prolonged delay from non-compl

CL: Where prosecution against ex-directors was launched much after there was alleged non-compliance and ex-directors were not in possession of required documents due to lapse of time, proceedings against ex-directors were to be dropped

Excise duty based on capacity of production - Actual production not relevant

GST : CENTRAL EXCISE : Section 3A of The Central Excise Act, 1944 - Charge/Levy - Excise Duty Based on Production Capacity - In Case of Duty Based on Capacity of Production, Actual Speed of Machines and Actual Production is Irrelevant; Duty is Payable Based on Deemed Production

Issue revolving around status of assessee which impacts his tax liability can be raised first before

IT : Where determination of correct status of assessee impacts ultimate tax liability, such an issue can be admitted for first time before Tribunal even if it was not raised before lower authorities

15 days period for factory closure not to be reckoned for each month; HC approves of abatement based

Excise & Customs : Where assessee's factory remained closed for a continuous period of 36 days (1-3-2011 to 5-4-2011), abatement of duty was available for entire 36 days including 5 days of April; abatement cannot be denied on ground that period of 15 days is to be reckoned for each month separately

Broker held guilty for manipulative trade as it funded and carried out forged transactions to raise

SEBI : Where appellant not only carried out manipulation in scrip of a company in his own account, but also in account of others whom he provided necessary funds and this led to synchronised and structured trade, raising price of scrips, appellants should be held guilty of manipulative trade

Urban land continues to be an urban land even if jurisdiction of municipality and land falls in diff

IT : If a land is adjacent to a municipality and is urban land covered under section 2(14), though municipality and land fall in different States, land will continue to be urban land

Abatement of ACP based excise duty is available even if 15 days closure period for factory falls in

Excise & Customs : In case of excise duty based on annual capacity of production, abatement is available if factory remains closed for a 'continuous' period of 15 days; there is no further requirement that 15 days period is to be reckoned for each month separately

Prosecution of trustee won’t authorise Dept. to deny registration to trust as long as its objects ar

IT: Where assessee, a public religious trust, made applications seeking registration under sections 12A and 80G, registration could not be declined merely because once upon a time assessee's founder trustee had been accused of heinous crimes and he was awarded life imprisonment

Revenue to rely on Local PWD rates instead of central PWD rates to value construction cost of proper

IT : Local PWD rates should be relied upon rather than Central PWD rates in order to arrive at valuation of renovation and construction of residential property

Adoption of CPM necessitates adjustment of normal GP margin of comparables for functional difference

IT/ILT: Where cost-method was adopted, normal gross profit of comparable was required to be adjusted taking into account functional and other difference, if any, between international transaction and comparable uncontrolled transaction before it could be made applicable for determining arm's length price in regard to international transaction entered into by assessee

HC nods to penalty under Rajasthan VAT as existence of bill without bill no. established evasion cha

CST & VAT : Where, on interception at check post, goods were found with a bill without mentioning bill number, charge of evasion was established; and, therefore, penalty under Rajasthan VAT/Sales-tax law was leviable

Repayment of loan is an application and not diversion of income; can’t constitute as revenue exp.

IT: Where repayment of loan amount was application of income and not diversion of income by way of any overriding title, such loan amount could be claimed neither as a deduction from business income nor as revenue expenditure

Once Compromise Scheme is sanctioned, neither Court nor Company can rescind it

CL : Neither Court nor company can abrogate/rescind/cancel scheme once sanctioned and effective; if scheme is not workable, company can seek necessary directions for modifications in it

Sec. 47(iv) exemption allowable as condition of 100% shareholding is impossible to comply due to the

IT : Where under a development agreement with a developer assessee merely realised sale proceeds of capital asset held for 30 years, same would give rise to 'capital gains', and not 'business income'

No addition under sec. 69B as sums were paid by directors in their individual capacity and not by as

IT: No addition could be made in hands of company under section 69B for on money payment to purchase land by directors individually

Lower Realisations To Worsen Sugar Firms' Losses

Sugar mills’ financial health is unlikely to see a significant change soon, due to a continued price decline in the sweetener and uncertainty on allied products, despite the government’s short-term relief measures.

Fundmentally, mills’ cost of producing sugar is substantially more than the price they get. And, the latter continues to decline. The average price (M-30 variety) at the major wholesale Agricultural Produce Marketing Committee market at Vashi (Navi Mumbai) near here fell 13 per cent to Rs 3,124 a quintal in the October-December quarter, compared to Rs 3,583 a qtl a year ago. The price has fallen a further four per cent this month, to Rs 3,000 a qtl. This spot price is at least Rs 250-300 a qtl lower than the cost of production in major producing states.

“Sugar mills in Uttar Pradesh will continue to suffer losses due to high cane prices (Rs 280-290 a qtl), despite their close integration with by-products, including co-generation and distillation. But by-products will prove a saviour for integrated mills in Maharashtra, as their cane cost stands at Rs 240-250 a qtl,” said Chaitanya Raut, an analyst with CARE Ratings. Port-based sugar mills are able to export at competitive prices, enabling them to recover the production cost, a benefit not available to UP mills.

In the past two financial years, this situation has persisted, of a higher cost of production than actual realisation from core and allied activities. The losses have deepened steadily in the past two quarters, due to a rising interest burden on the working capital raised by companies during the crushing season. Poor offtake by state governments for supply through the Public Distribution System has swelled the inventory.

Leading producer Bajaj Hindusthan incurred a loss of Rs 509 crore in the September quarter, on a turnover of Rs 1,327 crore; it was one of the biggest quarterly losses in the company’s history. In the June quarter, it had a loss of Rs 157 crore on a turnover of Rs 1,256 crore.

Shree Renuka Sugars had a loss of Rs 63.6 crore on a turnover of Rs 1,937 crore in the June quarter, deepening to a Rs 120-crore loss on a turnover of Rs 1,535 crore in the September quarter.

Sugar mills' fortune will not change till a long-term formula is devised to align the cane price with sugar realisation, said Sanjay Tapriya, chief financial officer, Simbhaoli Sugar Mills.

Last month, an Empowered Group of Ministers (EGoM) recommended to the Cabinet Committee on Economic Affairs to allow four million tonnes more of sugar export. The sector has this much surplus but prices in the global markets are lower than in India, said Abinash Verma, director-general, Indian Sugar Mills Association.

The EGoM’s other recommendation was to raise the compulsory blending of ethanol with petrol up to 10 per cent from five per cent. However, oil marketing companies (OMCs) are not willing to pay the Rs 44 a litre demanded by the mills. In the first tender for five per cent mandatory ethanol blending, the OMCs had invited supply orders at Rs 34-36 a litre.

In the Indian markets, the average cost of sugar production works out to Rs 3,250 a qtl against the average realisation between Rs 2,900 and Rs 3,100 a qtl. There has been a further fall of Rs 150 a qtl in the past

Source;- business-standard.com

Dispute on clubbing of clearances for SSI exemption was related to rate of duty; issue appealable to

Excise & Customs : Dispute as to whether clearances of two or more persons are to be clubbed for SSI-exemption is related directly to rate of duty applicable and, hence, appeal involving said issue would lie before Supreme Court and not High Court

Another Year Of Bumper Crop And Bumper Prices

Current spot prices at Rs 20,500 a bale (170 kg) are 12 per cent below the levels seen at the beginning of the Indian cotton season October 1, 2013. This was expected as the cotton crop was expected to make new records in 2013-14. What has come as a surprise is prices have rebounded by 10 per cent since they bottomed in the first week of December at around Rs 18,500 a bale. Different scenarios could play out regarding the direction in the days to come.

So far, robust demand has supported the price. Export numbers suggests till mid-January, 5.5 million bales have been exported. This means 65 per cent of the total estimated exports of 8.5-9 million bales has been achieved in the first four months of the season. As against this, arrivals have been one-third of the total expected crop of 37.5 million bales during the same period. Clearly, higher demand has driven the prices since December. Consumption seems to be on the ascending path for the rest of the season that ends in September.

In the January-March quarter, 53-55 per cent of the total crop is expected to arrive, amounting to a little over 20 million bales. Because of delayed rain, a lot of cotton is still maturing. As against this, exports might dip a little at 3.5 million bales, compared with 4.4 million in the first quarter. Recently, import parity emerged and 200,000 bales of imports were contracted. Clearly, the quarter would be supply-heavy.

And yet, prices are unlikely to dip below the previous lows, as the annual cotton balance sheet of India remains tight. Assuming a crop of 37.5 million bales and exports of nine million bales and consumption of close to 30 million bales, ending stocks would look similar to what it was last year, which is close to 4.5-5 million bales. Prices will not fall in anticipation of higher prices in the second half.

Since the last couple of years, cotton yarn has emerged as a proxy to cotton imports from China. Cotton imports attract 40 per cent import duty, while cotton yarn attracts none. India remains the top supplier of yarn, and its yarn remains the cheapest in world. As a result, robust cotton exports and equally robust demand from domestic consumers will keep cotton demand in a very healthy shape.

Internationally, too, cotton prices have rallied quite sharply and the demand rationing has not really appeared at higher levels. The rally is supported by the understanding that US ending stock is the lowest in four years.

On the other hand, China with 60 per cent of total global stocks and 162 per cent stock to use ratio, has declared it would discontinue its controversial stock reserve policy in 2014-15. As a result, as we get closer to 2014-15, chances rise of global prices coming under pressure. While a lot will depend on the 2014-15 acreage and crop, the prices will remain under selling pressure in anticipation.

It can be concluded the prices are currently running ahead of their time. Reduced activity on account of the Chinese New Year holiday might provide a much-needed break to the current price rise. A five to seven per cent correction in the January-March quarter cannot be ruled out. The second half of the cotton year will see firm prices, as the Indian balance sheet is tight; a rally of 10-15 per cent after the correction is most likely. If the demand-side story remains strong, we might end up revisiting the prices seen during last year-end at Rs 23,000 a bale

Source;- business-standard.com