TMI Tax Updates - e-Newsletter
January 16, 2012
Case Laws in this Newsletter:
Income Tax
Articles
By: Dr. Sanjiv Agarwal
Summary: The article discusses the interpretation of Section 49 of the Companies Act, 1956, which mandates that companies hold their investments in their own name. This provision primarily applies to securities, including stocks and debentures, but not to immovable properties like land or buildings. Section 49 does not apply to companies whose main business is trading in shares or securities. The article also references Accounting Standard 13, which defines investments as assets held for income generation or capital appreciation. It concludes that the term "investment" in Section 49 is primarily concerned with securities, excluding immovable property.
By: Alok Rudra
Summary: International Commercial Terms (INCOTERMS) are standardized terms published by the International Chamber of Commerce to define the responsibilities, costs, and risks in the delivery of goods in international trade. They are widely recognized and used globally, including in the USA for domestic sales. INCOTERMS are part of sales contracts but do not replace the governing law or define transfer of title, price, or credit terms. The 2010 version reduced terms from 13 to 11, introducing DAT and DAP while eliminating DAF, DES, DEQ, and DDU. INCOTERMS are categorized for any transport mode and specifically for sea and inland-waterway transport.
By: Jayaprakash Gopinathan
Summary: The article discusses the impact of changing the Central Excise Tariff from a six-digit to an eight-digit code on coconut oil classification. Coconut oil in containers up to 200 ml is now classified as hair oil under Chapter 33, subjecting it to higher excise duties. This affects consumers in Kerala who use coconut oil for both cooking and as hair oil, especially those buying in small quantities due to financial constraints. The change results in higher costs for small buyers, as they must pay additional excise duty and cess, unlike those purchasing in bulk. The classification change aims for uniformity but raises concerns about its fairness.
News
Summary: Gold and silver rates in Mumbai as of April 1, 2011, were Rs. 20,775 for standard gold, Rs. 20,875 for pure gold, and Rs. 56,900 for silver. The State Bank of India (SBI) lending rates for various loans as of April 1, 2011, included housing loans with interest rates ranging from 8% to 11% depending on the tenure and amount. Car loans varied from 7.5% to 12% based on the loan amount and tenure, while two-wheeler loans were at 16.5%. Education loans had different rates for amounts above and below Rs. 4 lakh, with concessions for female students. Personal loans were at 16.75%.
Summary: The Central Board of Excise and Customs (CBEC) of India's Ministry of Finance has issued a notification updating the tariff values for certain commodities as of January 13, 2012. The tariff values for edible oils, including various types of palm oil and soybean oil, remain unchanged. However, the tariff value for brass scrap (all grades) is set at $4007 per metric tonne, and for poppy seeds, it is set at $1970 per metric tonne. This notification outlines the specific tariff values for these commodities, impacting their import and export pricing.
Summary: The Reserve Bank of India (RBI) has issued guidelines under the Foreign Exchange Management Act, 1999, enabling Qualified Foreign Investors (QFIs) to invest in Indian companies. This move aims to broaden the base of non-resident investors in Indian stock markets by allowing non-resident investors, excluding SEBI-registered foreign institutional investors and foreign venture capital investors, to invest in equity shares. Additionally, the RBI has permitted up to 100% foreign direct investment (FDI) in single-brand retail trading through the Government route, following a policy review by the Indian Government.
Summary: The Union Finance Minister addressed the 46th convocation of the Indian Statistical Institute (ISI) in Kolkata, emphasizing the institution's pivotal role in advancing statistical research and education in India. Highlighting ISI's historical contributions, including the formation of the National Sample Survey Organisation and the development of India's second five-year plan, he praised the institute's impact on academia, governance, and industry. The Minister underscored the importance of statistics in modern policy-making and data analysis, urging graduates to contribute to society and uphold ISI's legacy. He congratulated the graduates and encouraged them to embody the values of Indian education in their future endeavors.
Notifications
Customs
1.
07/2012 - dated
13-1-2012
-
ADD
Seeks to impose anti-dumping duty on imports of Saccharin originating in, or exported from, People’s Republic of China
Summary: The Government of India, through the Ministry of Finance, has imposed an anti-dumping duty on imports of Saccharin originating from or exported by the People's Republic of China. This duty, set at $2.69 per kilogram, applies to all grades of Saccharin under specified tariff items and will be in effect for five years from the date of publication unless revoked or amended earlier. The duty aims to counteract dumping practices that harm domestic industries. The applicable exchange rate for duty calculation will be determined by notifications issued under the Customs Act, 1962.
2.
06/2012 - dated
13-1-2012
-
ADD
Rescinds Notification No. 136/2009-Customs, dated the 9th December, 2009
Summary: The Government of India, through the Ministry of Finance's Department of Revenue, has issued Notification No. 6/2012-Customs (ADD) dated January 13, 2012, which rescinds Notification No. 136/2009-Customs dated December 9, 2009. This action pertains to the anti-dumping duty previously imposed on saccharin originating from or exported by the People's Republic of China. The rescission is enacted under the authority of the Customs Tariff Act, 1975, and the related rules, with the exception of actions taken or omitted prior to this rescission.
3.
05/2012 - dated
13-1-2012
-
ADD
Regarding anti-dumping duty on imports of Cellophane Transparent Film (CTF) originating in, or exported from, People’s Republic of China
Summary: The Government of India has imposed an anti-dumping duty on imports of Cellophane Transparent Film (CTF) originating from or exported by the People's Republic of China. This duty, set at a rate of 1.95 USD per kilogram, applies to imports falling under sub-heading 392071 of the Customs Tariff Act, 1975. The anti-dumping duty will be in effect for five years from the date of publication in the Official Gazette, unless revoked or amended earlier. The duty is payable in Indian currency, with the applicable exchange rate determined by relevant government notifications.
4.
04/2012 - dated
13-1-2012
-
ADD
Regarding import of Phosphoric Acid of all grades and all concentrations (excluding Agriculture / Fertilizer Grade) originating in, or exported from, Israel and Taiwan
Summary: The Government of India imposed an anti-dumping duty on imports of Phosphoric Acid, excluding Agriculture/Fertilizer Grade, from Israel and Taiwan. The duty, effective for six months, aims to address material injury to the domestic industry caused by imports priced below normal value. The duty rates vary based on the producer and exporter, with specific amounts per metric ton in US dollars. The applicable exchange rate for calculating the duty will be determined by notifications from the Ministry of Finance. This measure is enacted under the Customs Tariff Act and related rules to protect domestic interests.
5.
03/2012 - dated
13-1-2012
-
ADD
Seeks to impose anti-dumping duty on imports of Nylon Filament Yarn originating in, or exported from, People’s Republic of China, Chinese Taipei, Malaysia, Thailand and Korea RP
Summary: The Government of India has imposed an anti-dumping duty on imports of Nylon Filament Yarn from China, Chinese Taipei, Malaysia, Thailand, and Korea RP. This measure, effective from January 13, 2012, aims to protect domestic industries from unfair pricing practices. The duty applies to specific types of nylon yarn, excluding high tenacity and fishnet yarns, with rates detailed in a provided table. Certain yarns are exempt if their landed price exceeds specified thresholds. The duty will be in force for five years, subject to review or earlier revocation, and is payable in Indian currency.
6.
02/2012 - dated
13-1-2012
-
ADD
Seeks to impose anti-dumping duty on imports of Silk fabrics originating in, or exported from, People’s Republic of China
Summary: The Government of India has imposed an anti-dumping duty on imports of silk fabrics from the People's Republic of China to protect domestic industry from unfair pricing. This duty applies to silk fabrics, including crepe, georgette/chiffon, habutai, and others, with specific weight ranges. The duty varies based on the weight of the fabric and is calculated as the difference between the specified amount in US dollars and the landed value of the goods. This measure, effective for five years, aims to counteract dumping practices and is payable in Indian currency. The notification specifies the calculation of landed value and applicable exchange rates.
7.
02/2012 - dated
13-1-2012
-
Cus (NT)
Amends Notification No. 36/2001-Customs(N.T) dated the 3rd August 2001
Summary: The Government of India, through the Ministry of Finance's Department of Revenue, has issued Notification No. 2/2012 - Customs (N.T.), amending Notification No. 36/2001-Customs (N.T.) dated August 3, 2001. This amendment involves the substitution of the existing table with a new one specifying tariff values for various goods, including crude palm oil, RBD palm oil, palmolein, crude soybean oil, brass scrap, and poppy seeds. Notably, the tariff values for palm oil and palmolein remain unchanged, while new values are set for brass scrap and poppy seeds. This amendment is enacted under the powers conferred by the Customs Act, 1962.
8.
F.No. 437/09/2011-Cus. IV - dated
10-1-2012
-
Cus (NT)
Appointment of Common Adjudicating Authority
Summary: The Central Board of Excise & Customs, under the Ministry of Finance, has designated the Commissioner of Customs at Inland Container Depot, Tughlakabad, New Delhi, as the Common Adjudicating Authority for the adjudication of a Show Cause Notice issued by the Directorate of Revenue Intelligence. This notice, dated May 18, 2007, pertains to M/s Kripal Exports and others. The assignment is made under the authority of Notification No. 15/2002-Customs (N.T.) as amended, in accordance with the Customs Act, 1962. Copies of the order have been distributed to relevant customs and excise officials.
Circulars / Instructions / Orders
FEMA
1.
67 - dated
13-1-2012
Foreign investment in Single – Brand Retail Trading Amendment to the Foreign Direct Investment (FDI) Scheme
Summary: The circular addresses an amendment to the Foreign Direct Investment (FDI) Scheme regarding Single Brand Retail Trading in India. It informs Category-I Authorized Dealer Banks of the revised policy allowing 100% FDI in Single Brand product trading under the Government route, subject to conditions outlined in Press Note No. 1 (2012 Series). The amendment updates the previous cap of 51% FDI. Banks are instructed to inform their clients about this change, and necessary regulatory amendments will be notified separately. The circular is issued under the Foreign Exchange Management Act, 1999.
2.
66 - dated
13-1-2012
(I) Scheme for Investment by Qualified Foreign Investors in equity shares (II) Scheme for Investment by Qualified Foreign Investors in Rupee Denominated Units of Domestic Mutual Funds – Revision
Summary: The circular outlines revised schemes for investment by Qualified Foreign Investors (QFIs) in Indian equity shares and rupee-denominated units of domestic mutual funds. QFIs can invest through SEBI-registered Depository Participants in equity shares of listed Indian companies, subject to specified conditions, including investment limits of 5% for individuals and 10% in aggregate. A dedicated demat account is required, but bank accounts in India are not permitted. The circular also revises the time frame for maintaining funds in a single rupee pool bank account to five working days for both equity and mutual fund investments. Amendments to relevant Foreign Exchange Management Regulations will be notified separately.
DGFT
3.
52 (RE-2010)/2009-14 - dated
12-1-2012
Filing of applications for DEPB in cases of exports made under “EPCG Shipping Bills” for items “Cotton yarn including Melange yarn” from 01.04.2011 to 04.08.2011 and ‘Cotton’ from 01.10.2010 to 04.08.2011.
Summary: The circular from the Directorate General of Foreign Trade addresses the procedure for filing Duty Entitlement Passbook (DEPB) applications concerning exports made under "EPCG Shipping Bills" for "Cotton yarn including Melange yarn" between April 1, 2011, and August 4, 2011, and "Cotton" between October 1, 2010, and August 4, 2011. Exporters must submit a hard copy of the application with the EPCG Shipping Bill and a declaration of not availing any duty exemptions. Regional Authorities will provide shipping bill details on the DEPB Scrip, issued in manual mode. Any implementation issues should be reported to the Directorate.
4.
91 (RE-2010)/2009-2014 - dated
12-1-2012
Amendment in Public Notice No. 90 (RE-2010)/2009-2014 dated 6.1.2012 regarding export of 8,300 MTs of sugar to USA under Tariff Rate Quota.
Summary: The Government of India issued an amendment to Public Notice No. 90 (RE-2010)/2009-2014 concerning the export of 8,300 metric tons of sugar to the USA under the Tariff Rate Quota. The amendment, effective from January 12, 2012, changes the classification of the sugar from "white sugar" to "raw cane sugar." This adjustment allows M/s. Indian Sugar Exim Corporation Ltd. to export raw cane sugar instead of white sugar, as previously indicated in the original notice dated January 6, 2012.
Central Excise
5.
958/1/2012-CX - dated
13-1-2012
Revised Treaty of Trade between India and Nepal.
Summary: The Revised Treaty of Trade between India and Nepal aligns exports to Nepal with those to other countries, excluding Bhutan. Six notifications issued on December 5, 2011, amend previous notifications to eliminate the existing Duty Refund Procedure (DRP) for exports to Nepal. These changes are effective from March 1, 2012. The circular requests that any difficulties encountered in implementing the revised procedure be reported to the Board and advises that field formations and trade be informed accordingly. A Hindi version of the circular will be provided.
Highlights / Catch Notes
Customs
-
Proposed Anti-Dumping Duty on Saccharin Imports from China to Protect Domestic Industries from Unfair Pricing Practices.
Notifications : Seeks to impose anti-dumping duty on imports of Saccharin originating in, or exported from, People’s Republic of China - Ntf. No. 7 /2012-Customs (ADD) Dated: January 13, 2012
-
Customs Notification 6/2012 Rescinds 136/2009, Altering Tax Regulations Effective January 13, 2012.
Notifications : Rescinds Notification No. 136/2009-Customs, dated the 9th December, 2009 - Ntf. No. 6/2012-Customs (ADD) Dated: January 13, 2012
-
India Imposes Anti-Dumping Duty on Cellophane Transparent Film from China as per Notification No. 5/2012-Customs (ADD.
Notifications : Regarding anti-dumping duty on imports of Cellophane Transparent Film (CTF) originating in, or exported from, People’s Republic of China - Ntf. No. 5/2012-Customs (ADD) Dated: January 13, 2012
-
Customs Duties on Phosphoric Acid Imports from Israel and Taiwan, Excluding Fertilizer Grade, Outlined in Notification 4/2012-Customs.
Notifications : Regarding import of Phosphoric Acid of all grades and all concentrations (excluding Agriculture / Fertilizer Grade) originating in, or exported from, Israel and Taiwan - Ntf. No. 4 /2012-Customs (ADD) Dated: January 13, 2012
-
Anti-dumping duty proposed on Nylon Filament Yarn imports from China, Taiwan, Malaysia, Thailand, and Korea to protect domestic industries.
Notifications : Seeks to impose anti-dumping duty on imports of Nylon Filament Yarn originating in, or exported from, People’s Republic of China, Chinese Taipei, Malaysia, Thailand and Korea RP - Ntf. No. 3 /2012-Customs (ADD) Dated: January 13, 2012
-
Proposed Anti-Dumping Duty on Chinese Silk Fabrics to Protect Domestic Industry from Unfair Pricing Practices. Ntf. No. 2/2012-Customs (ADD).
Notifications : Seeks to impose anti-dumping duty on imports of Silk fabrics originating in, or exported from, People’s Republic of China - Ntf. No. 2 /2012-Customs (ADD) Dated: January 13, 2012
-
Common Adjudicating Authority Appointed to Streamline Customs Matters Under Notification No. F.No. 437/09/2011-Cus. IV.
Notifications : Appointment of Common Adjudicating Authority - Ntf. No. F.No. 437/09/2011-Cus. IV Dated: January 10, 2012
DGFT
-
DEPB Benefits Applicable for Cotton Yarn and Cotton Exports Per DGFT Circular No. 52, Covering Specific 2010-2011 Dates.
Circulars : Filing of applications for DEPB in cases of exports made under “EPCG Shipping Bills” for items “Cotton yarn including Melange yarn” from 01.04.2011 to 04.08.2011 and ‘Cotton’ from 01.10.2010 to 04.08.2011. - Cir. No. 52 (RE-2010)/2009-14 Dated: January 12, 2012
-
Amendment to Export 8,300 Metric Tons of Sugar to USA Under Tariff Rate Quota, Circular No. 91, 2009-2014.
Circulars : Amendment in Public Notice No. 90 (RE-2010)/2009-2014 dated 6.1.2012 regarding export of 8,300 MTs of sugar to USA under Tariff Rate Quota. - Cir. No. 91 (RE-2010)/2009-2014 Dated: January 12, 2012
FEMA
-
Foreign Direct Investment Scheme Amended: Increased Foreign Investment in Single-Brand Retail Trading per Circular No. 67, FEMA.
Circulars : Foreign investment in Single – Brand Retail Trading Amendment to the Foreign Direct Investment (FDI) Scheme - Cir. No. 67 Dated: January 13, 2012
-
Revised Guidelines for QFIs: Streamlined Investment in Equity Shares and Rupee Denominated Mutual Funds Under FEMA.
Circulars : (I) Scheme for Investment by Qualified Foreign Investors in equity shares (II) Scheme for Investment by Qualified Foreign Investors in Rupee Denominated Units of Domestic Mutual Funds – Revision - Cir. No. 66 Dated: January 13, 2012
Central Excise
-
India-Nepal Trade Treaty Revised: Enhances Bilateral Trade, Updates Excise and Tax Rules per Circular No. 958/1/2012-CX.
Circulars : Revised Treaty of Trade between India and Nepal. - Cir. No. 958/1/2012-CX Dated: January 13, 2012
Case Laws:
-
Income Tax
-
2012 (1) TMI 12
Deduction u/s 80IC – Quantum of deduction u/s 80IC – new industrial undertaking set up by the assessee in the A.Y. 2005-06 at Dehradun – various documents placed by assessee to prove the existence of Dehradun unit/undertaking - Held that:- In view of the factual findings recorded by the CIT (A), affirmed by the Tribunal, and non-placement of any contrary material or documents by Revenue, there is no reason to interfere with the order of allowing deduction u/s 80IC to assessee. - Decided against the Revenue. The assessee may be eligible u/s 80 IC but the quantum of deduction is an incidental but an important aspect which must be considered and examined even though no question has been raised by the appellant on this aspect. The Tribunal did not examine the question of quantum of deduction inspite of the factual matrix referred to and stated in the assessment order. Therefore, the matter is remitted to the Tribunal to decide afresh the quantum of deduction u/s 80IC. - Decided in favor of revenue.
-
2011 (12) TMI 158
Whether the first appellate authority, namely, CIT(Appeals) or DCIT (Appeals) have inherent power to grant stay and decide the stay application filed along-with appeal/s filed before them u/s 246/246A of Act respectively – appeal preferred u/s 246A - application for stay of entire disputed demand made u/s 220 (3) and 220 (6) – claim rejected and coercive measures taken - Held that:- First appellate authority, namely; DCIT (Appeals) or CIT (Appeals) have inherent, implied and ancillary powers to grant stay against the recovery of disputed demand of tax while seized of the appeal filed before them in accordance with Section 246 or 246A of the Act. Such inherent powers have to be inferred even in the absence of any specific statutory provision conferring the power to grant stay upon such authorities under the Act. Section 220(6) only give discretion to the Assessing Authority, not to treat the assessee in default and doesnot confer power to grant stay of demand. Therefore, such powers have to be exercised in accordance with Instruction No. 95 dated 21.08.1969. which states that where the income determined on assessment was substantially higher than the returned income viz. twice the later amount or more, the collection of the taxes in dispute to be held in abeyance till the decision of the appeals provided there was no fault on the part of the assessee. In present case , the main additions are trading additions on the basis of GP rates, the validity of which is subject matter of appeal before the C.I.T. (Appeals). Thus, this Court in view of Instruction No.95 dated 21.08.1969, would stay the recovery of entire balance amount from the assessee, while directing the C.I.T. (Appeals) to dispose of the pending appeal of the assessee within a period of six months from date of order. The attachment of bank accounts of the assessee already attached by the Assessing Authority are also be lifted. The assessee may also file stay application before the C.I.T. (Appeals), who may also consider such stay application on its own merits upon the relevant factors. Further, it is directed that first appellate authorities and assessing authorities would act in accordance with the said decision in the cases of other appellant assessees within the State of Rajasthan also. - Decided in favor of assessee.
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2011 (12) TMI 157
Validity of computation of Arm Length Price(ALP) by TPO of transcation not referred to him by A.O. - Determination of ALP of advertising expenses – Interest leviable u/s 234B, 234D – A.Y. 2002-03 – Held that:- TPO could not take cognizance suo moto of any international transaction for computation in arms length price u/s 92-C. The provisions of section 92-CA(2A) effective from 01.06.11 are prospective in nature and will not apply for the A.Y. under consideration i.e. 2002-03. Therefore, assessing officer is directed to delete the addition made on the basis of the report of the TPO - Decided in favor of assessee. Charging of interest u/s 234-B and 234-D are mandatory. However, provisions of section 234-D have been inserted in the statute with effect from 1/06/2003. Therefore, 234-B interest will be chargeable on tax payable by the assessee after giving effect to this order and interest u/s 234-D will not be leviable in A.Y. 2002-03 under consideration.- Decided partly in favor of assessee.
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2011 (12) TMI 154
Interest u/s 234B – advance tax not paid - entire income subject to TDS - Held that:- Assessee had no liability to pay advance tax in view of the fact that his entire income was subject to tax at source. Thus, no interest is chargeable u/s 234B. This issue also stands concluded in Director of Income-Tax Vs. Jacab Civil Incorporated (2010 - TMI - 78020 - Delhi High Court). Hence, no substantial question of law arises in these appeals which are accordingly dismissed.
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