TMI Tax Updates - e-Newsletter
March 22, 2012
Case Laws in this Newsletter:
Income Tax
Customs
Articles
By: CSSwati Rawat
Summary: The budget introduces several income tax changes, including raising the basic exemption limit for individuals to Rs. 200,000 and enhancing income slab limits. Corporate tax rates remain unchanged. The General Anti-Avoidance Rule (GAAR) is introduced to address aggressive tax planning. Tax exemptions are provided for certain life insurance receipts, SEBI registered venture capital funds, and specific foreign company income. New provisions affect charitable organizations, advance tax payments, and audit thresholds. Various deductions and depreciation benefits are extended or enhanced. Changes also include new penalties, withholding tax obligations, and provisions for international transactions, transfer pricing, and dividend distribution tax.
By: CSSwati Rawat
Summary: Budget 2012 introduced provisions for Minimum Alternate Tax (MAT) and Alternate Minimum Tax (AMT). For MAT, companies like insurance, banking, and electricity can prepare profit and loss accounts according to applicable regulatory provisions, not necessarily following Schedule VI of the Companies Act. Book profits for MAT will include revaluation reserves from retired or disposed assets not credited to profit and loss accounts. Part III of Schedule VI will be deleted from section 115JB. For AMT, beyond LLPs, any non-company entity claiming certain deductions will be subject to AMT unless their adjusted total income is under Rs 2 million. Amendments address tax credit, self-assessment tax, and interest payment provisions.
By: CSSwati Rawat
Summary: The 2012 budget introduces taxation measures for companies not substantially owned by the public. If such a company receives payment from a resident for shares exceeding their face value, the excess amount is taxable. The fair market value (FMV) of shares is determined by either a prescribed method or based on asset value, including intangible assets, on the issue date. This rule does not apply to shares issued by venture capital undertakings. Additionally, any property or sum over Rs. 50,000 received without consideration by an individual or Hindu Undivided Family (HUF) is taxable unless from a defined "relative," with the term now including HUF members, effective retroactively from October 1, 2009.
By: CSSwati Rawat
Summary: Budget 2012 introduces relief from long-term capital gains tax for individuals or Hindu Undivided Families (HUF) on selling residential property if the proceeds are reinvested in equity shares of a newly established SME company in the manufacturing sector, with specific conditions. The SME must use the funds for new plant and machinery within a year. Tax applies if shares or assets are transferred within five years. The relief is available for transfers made on or before March 31, 2017. Amendments address valuation and cost of acquisition, effective retrospectively from April 1, 1999, and July 1, 2012, respectively. Changes also apply to corporate reorganizations like amalgamations and demergers.
By: Dr. Sanjiv Agarwal
Summary: The 2012 budget, presented by the Finance Minister, lacked significant policy initiatives to boost the economy, which is struggling with slow growth and persistent inflation. The service sector, a key driver of economic recovery, faces setbacks due to increased service tax rates. Corporate sectors received minimal tax relief, leading to negative responses from capital markets. Personal taxation saw minor reliefs, including increased basic income tax exemptions and non-taxable savings interest. Indirect tax changes, such as higher excise and service tax rates, are expected to exacerbate inflation. The budget introduced a broad service tax net, despite the absence of a clear roadmap for GST implementation.
By: Dr. Sanjiv Agarwal
Summary: Union Budget 2012-13 introduces significant changes in personal taxation. Individual taxpayers benefit from relief in the first two income tax slabs, with no tax on income up to Rs 2 lakh, 10% on Rs 2-5 lakh, and 20% on Rs 5-10 lakh. Income above Rs 10 lakh is taxed at 30%. Senior citizens enjoy a Rs 2.5 lakh exemption, with age harmonized to 60 years. Savings bank interest up to Rs 10,000 is exempt, aiding small taxpayers. A preventive health check-up deduction is included under section 80D. The Rajiv Gandhi Equity Scheme offers a 50% deduction on Rs 50,000 investments, with a three-year lock-in.
By: Pradeep Jain
Summary: The excise duty scheme for precious metal jewelry has been revised, now applying a 2% duty to both branded and unbranded jewelry, excluding silver. Duty is calculated on a tariff value, set at 30% of the transaction value. Small-scale industry (SSI) exemptions apply based on the aggregate value of clearances, with specific calculations for eligibility. Job workers are no longer required to register, but those supplying materials must handle registration and duty payments. Full excise duty exemptions are provided for certain silver and gold coins, while duties on refined gold and silver have increased. The changes aim to broaden excise duty coverage, potentially impacting jewelry affordability.
By: CSSwati Rawat
Summary: The 2012 budget introduces new penalty provisions under section 271AAB for income tax searches initiated on or after July 1, 2012. Penalties range from 10% to 90% of undisclosed income, depending on taxpayer admission and compliance. Appeals can be made to the Commissioner of Income-tax (Appeals) for tax deduction issues, effective July 1, 2012. Prosecution measures include establishing special courts and adjusting punishment thresholds, with increased thresholds for tax evasion penalties. Offenses involving evasion over Rs 2,500,000 may result in imprisonment from six months to seven years, while lesser amounts will incur reduced penalties. These amendments take effect from July 1, 2012.
By: C.A.Sapna Avasthi
Summary: The Indian government's proposal in the 2012-2013 Union Budget to retrospectively amend the Income Tax Act has raised concerns about its impact on foreign direct investment (FDI), particularly following the Supreme Court's ruling in favor of a major telecommunications company. The Court had ruled that the company was not liable for withholding taxes on a significant acquisition, as it was an offshore transaction. In response, the government amended the definitions of 'capital asset' and 'transfer' to include rights related to Indian companies, aiming to tax such transactions retrospectively. These amendments have been criticized for potentially deterring FDI and undermining legal certainty.
By: CSSwati Rawat
Summary: The 2012 Budget introduces several tax-related amendments. Exemptions on life insurance receipts now apply to policies issued after April 1, 2012, with premiums not exceeding 10% of the actual capital sum assured. Venture Capital Funds and Companies gain broader tax exemptions without sector restrictions. Charitable organizations exceeding Rs. 25 Lakhs in trade-related receipts lose tax exemptions, effective retroactively from April 1, 2009. Foreign companies selling crude oil in India are exempt from tax under specific conditions. New deductions include up to Rs. 10,000 for savings account interest and restrictions on cash donations over Rs. 10,000. The senior citizen age for certain deductions is reduced to 60 years.
By: DEVKUMAR KOTHARI
Summary: The Finance Bill 2012 proposes amendments to Section 56 of the Income Tax Act, 1961, affecting tax treatment of gifts and share premiums. The definition of "relative" is clarified to include specific family members and Hindu Undivided Family (HUF) members, allowing gifts within these groups to be non-taxable. Additionally, a new clause targets closely held companies issuing shares at a premium, taxing the excess over fair market value as income, unless received from venture capital sources. The amendment aims to prevent tax avoidance through share premiums, though exceptions and valuation methods are specified.
By: DEVKUMAR KOTHARI
Summary: In response to a Supreme Court ruling favoring Vodafone, the Indian government proposed amendments to the Income Tax Act in 2012 to impose taxes on offshore deals retrospectively. These amendments, effective from April 1, 1962, redefine "property," "transfer," and other terms to include rights related to Indian companies, aiming to negate the court's decision. The retrospective nature of these changes raises concerns about legal stability, equality among taxpayers, and the credibility of India's legislative and judicial systems. Critics argue that such amendments create uncertainty and discourage investment in India.
By: Surender Gupta
Summary: The 2012-2013 budget introduced several amendments to the Cenvat Credit Rules, 2004, effective from March 17, 2012, or April 1, 2012. Key changes include allowing Cenvat credit on certain motor vehicles and their parts for all service providers, with specific allowances for certain vehicle categories. Service tax credits on motor vehicle rentals, insurance, and maintenance were expanded. Provisions for capital goods disposal were revised, and rules for credit on goods outside service provider premises were relaxed. Refunds for unutilized credit in exports were simplified, and restrictions on credit for life insurance services were removed. Additionally, credit distribution by input service distributors and the transfer of unutilized SAD credit were addressed.
By: Surender Gupta
Summary: The 2012-2013 budget introduced several amendments to service tax regulations, effective from March 17, 2012, or April 1, 2012. Key changes include the expansion of eligibility for service tax exemptions on common facilities for effluent and solid waste treatment to all clubs or associations. The effective service tax rate increased from 10% to 12%. Amendments also adjusted exemptions for small service providers and air passenger transport, with specific exemptions and levies applied. Additionally, the service tax rate on works contracts under the composition scheme rose from 4% to 4.8%. Exemptions for rail transport were extended until July 1, 2012.
By: Surender Gupta
Summary: The 2012-2013 budget introduced several amendments to the Service Tax Rules, 1994, effective from either March 17 or April 1, 2012. Key changes include the inclusion of LLPs in the definition of partnership firms, extending the invoice issuance period to 30 days (45 for banking), and allowing adjustments of excess paid service tax without limits. Export service payments are now due on receipt, regardless of the timeframe. The option to pay service tax on a receipt basis is available for individuals and partnerships with a value cap of Rs. 50 lakhs. Composition schemes for life insurance, money changing, and lottery agents were also revised.
By: Surender Gupta
Summary: The 2012-2013 budget introduced amendments to the Point of Taxation Rules 2011, effective from April 1, 2012. Key changes include the definition of "change in effective rate of tax," now encompassing changes in the taxable portion of value as per official notifications. The definition of "continuous supply of service" was expanded to include recurrent services under contracts exceeding three months with periodic payments. A new rule specifies the date of payment as the earlier of book entry or bank credit, with exceptions for tax rate changes. Additionally, new provisions address tax payment for new services and residual determination of the point of taxation.
By: Harish Chander Bhatia
Summary: The article critiques the actions of a Finance Minister who, like Hamlet, claims to be "cruel to be kind," suggesting that harsh measures are ultimately beneficial. It discusses the retrospective amendments in Indian tax law, implying that the government uses its power to overturn judicial victories against it by altering laws retroactively. The article highlights a specific instance where the Reserve Bank of India was exempted from wealth tax retroactively and criticizes the potential misuse of legislative power, drawing parallels with historical legal battles to preserve constitutional integrity.
By: CSSwati Rawat
Summary: The 2012 amendments to the Central Excise Act, 1944, include changes to several sections. Section 4 now incorporates the definition of "inter-connected undertakings" from the Monopolies and Restrictive Trade Practices Act. The threshold for evasion cases punishable by imprisonment in Section 9 is raised from one lakh to thirty lakh rupees. Section 9A classifies most offences as non-cognizable, while Section 11A adjusts the period for issuing show cause notices. Section 11AC requires reduced penalties to be paid within 30 days. Other amendments align search, seizure, and arrest provisions with the Customs Act and introduce new rules for bail and investigation procedures. Changes in the Central Excise Rules and Cenvat Credit Rules address audit powers, capital goods clearance, credit transfer, and interest on wrongly taken credits.
By: CSSwati Rawat
Summary: The 2012 Budget introduces changes to assessment procedures, extending the time limit for completing assessment proceedings to two years for the 2010-11 assessment year onward, and three years if involving a Transfer Pricing Officer. For reassessment and other proceedings, the time limit is extended by three months. When seeking information from foreign tax authorities, the limitation period is increased to one year. Exemption from processing income-tax returns is allowed if a scrutiny assessment is initiated. Reassessment notices for non-resident agents can now be issued within six years. For income related to assets outside India, the reopening period extends to 16 years. These amendments take effect on 1 July 2012.
By: CSSwati Rawat
Summary: The 2012 budget introduced several policy changes in financial services. Asset Management Companies (AMCs) must cease overseas operations within a year, with entry loads on mutual funds abolished since August 2009. Non-Banking Financial Companies (NBFCs) are barred from investing in partnership firms and must exit existing partnerships. A new regulatory framework for Microfinance Institutions (MFIs) and revised capital adequacy norms for NBFCs were introduced. NBFCs require RBI approval for overseas ventures and cannot open overseas branches. The definition of infrastructure loans now includes telecom towers. Banks' investments in short-term mutual funds are capped at 10% of their net worth.
By: ajay singh
Summary: The 2012-13 budget introduced significant amendments to the Central Excise Act. It expanded the definition of Inter-connected Undertakings, potentially increasing revenue. Penalties for offenses under section 9 were raised from one lakh to thirty lakh rupees. Non-cognizable offenses were redefined, excluding those punishable by three years or more. Changes to section 11A addressed duty recovery, allowing exclusion of stay periods in notice service. Section 13 empowered officers to arrest individuals suspected of offenses. Section 5A amendments allowed retrospective changes to government notifications, ensuring no retrospective punishment for actions previously not punishable.
News
Summary: India and the World Bank have signed a US$ 152 million IDA credit agreement to enhance health services in Uttar Pradesh, a state with significant health challenges. The Uttar Pradesh Health Systems Strengthening Project aims to improve the efficiency, quality, and accountability of health services by strengthening management, governance, and engagement with the private sector. The project focuses on institutional development, enhancing health department management, and improving quality assurance. It also seeks to improve information flow to citizens and establish feedback mechanisms. The initiative builds on previous efforts and aims to reduce health-related poverty impacts, particularly benefiting the poor.
Summary: India's apple exports in 2010 were only 0.02% of the global total, primarily due to high domestic demand, inadequate cold chain infrastructure, and poor connectivity in apple-producing states. To boost exports, the government is implementing various schemes and incentives through the Commodity Boards and Export Promotion Councils. The Agricultural and Processed Food Products Export Development Authority (APEDA) is providing financial assistance to registered exporters. Additionally, the Ministry of Commerce and Industry has introduced several initiatives to enhance export infrastructure and market access. These efforts have led to an 86.10% growth in apple exports during 2010-11 compared to the previous year.
Summary: The Spices Board of India is actively promoting spice exports through various schemes, including technology upgrades, quality control enhancements, and international market studies. From 2008-09 to 2010-11, spice exports increased from 470,520 tons to 525,750 tons. The Board has conducted numerous workshops and training programs to improve spice production and quality, involving over 87,716 participants, including farmers and industry personnel. These initiatives aim to reduce aflatoxin levels and pesticide residues in spices. Additionally, 64 training sessions have been held to enhance analytical skills and quality control in the spice industry.
Summary: In 2010, global rice trade reached 22.90 million metric tons, valued at $15,316.31 million. India exported rice to various countries, with significant exports to Saudi Arabia, the UAE, and Iran over three years. The Indian government is actively promoting agro-product exports, including rice, through incentives and schemes under the Export Promotion Plan. The Agricultural and Processed Food Products Export Development Authority (APEDA) supports exporters with financial assistance and organizes trade delegations and buyer-seller meets to enhance market penetration. The Basmati Development Fund also aids in promoting basmati rice exports.
Summary: The Tobacco Board, an autonomous body under the Indian government, is actively promoting Virginia tobacco through global exhibitions and trade delegations. Efforts focus on enhancing the brand image, cost competitiveness, and reliability of supply to international markets. The Board has facilitated trade missions to countries such as Saudi Arabia, UAE, Oman, Thailand, South Korea, and Tanzania to boost exports of unmanufactured tobacco and related products. Additionally, delegations from various nations have been invited to India for further promotion. This initiative was detailed by the Minister of State for Commerce and Industry in a written response to the Rajya Sabha.
Summary: India is enhancing trade with South Asian Free Trade Area (SAFTA) nations by exporting items like cotton yarns, pharmaceuticals, and leather, while importing metal ores, fruits, and petroleum products. The Directorate General of Commercial Intelligence and Statistics does not publish state-specific export data. India has significantly reduced its Sensitive List for Least Developed Countries (LDCs) from 480 to 25 items, granting zero customs duty on these items. For Non-Least Developed Countries (NLDCs), the peak tariff rate was reduced to 8%. Efforts are ongoing to encourage other SAFTA members to liberalize trade and investment policies to boost regional commerce.
Summary: The small tea grower sector in Assam produces approximately 100 million kg of tea, accounting for about 25% of the state's total production. A survey revealed over 68,000 small tea growers across 14 districts, with plans to extend and re-survey to include any initially omitted growers. The Assam Cess Utilization Policy, 2010, aims to support these growers through financial aid, self-help groups, cooperatives, and cooperative tea factories to enhance quality and pricing. The Tea Board of India supports the industry with financial aid for re-plantation, factory modernization, market promotion, worker welfare, and research. A new directorate for small growers is being established in Dibrugarh.
Summary: The export of apples from India over the past three financial years has shown fluctuations, with quantities exported varying significantly. The export process involves private exporters and government agencies, including the Himachal Pradesh Horticultural Produce Marketing Processing Corporation Ltd. and Jammu Kashmir Horticulture Produce Marketing and Processing Corporation. The Agricultural and Processed Food Products Export Development Authority (APEDA) has provided financial assistance to these agencies to develop infrastructure for apple exports. This includes funding for integrated packhouses and controlled atmosphere stores in various locations in Himachal Pradesh, enhancing the export capabilities and quality of apple storage.
Summary: India and Malawi have witnessed a significant resurgence in bilateral trade, showing an 85% growth from $61 million to $113 million between April and November 2011 compared to the previous year. The Indian Minister of Commerce and Industry and his Malawian counterpart emphasized enhancing trade volume and diversifying trade products. India aims to bolster its trade relationship with Africa, targeting $90 billion by 2015, and supports Malawi's economic development in sectors like agriculture and energy. India has committed $5.7 billion to Africa for developmental goals, including scholarships and capacity-building institutions, and launched initiatives like the Cotton Technical Assistance Programme.
Summary: The Indian Minister for Commerce, Industry, and Textiles met with Kenya's Trade Minister to discuss investment opportunities in India's textile sector, allowing up to 100% equity participation. The Indian minister raised concerns about Kenya's high import tariffs on man-made fiber textiles, which include tariffs up to 50% and a 16% VAT. The meeting aimed to enhance cooperation between trade bodies and businesses from both countries. Despite a decline in India's textile exports to Kenya in 2011, India views Kenya as a strategic gateway to East African markets. Discussions also covered ongoing projects and agreements, including a Double Taxation Avoidance Agreement and a potential Bilateral Investment Promotion Agreement.
Summary: Conventional life insurance plans in India experienced an 11% growth in policies and a 22% increase in premiums as of February 29, 2012. In contrast, Unit Linked Insurance Plans (ULIPs) showed a decline, reflecting a broader industry trend. The Minister of State for Finance noted that the number of insurance agents correlates with market potential, and agent commissions are regulated under the Insurance Act, 1938. The Life Insurance Corporation of India (LIC) reported no significant agent departures due to reduced commissions or stricter guidelines, with agent numbers slightly decreasing from 1,337,064 in 2010-2011 to 1,305,430 by January 31, 2012.
Summary: Insurance companies in India must obtain prior approval from the Insurance Regulatory and Development Authority (IRDA) before launching new products. According to the File and Use Guidelines, non-life insurance products require a 60-day clearance period, while life insurance products require 30 days. Delays often occur due to incomplete product details, with approval times ranging from 2 to 1708 days. The average approval time is 109 days for life insurance, 103 days for general insurance, and 176 days for health insurance. The popularity of insurance depends on quality service, innovative products, and prompt claim settlements, as stated by the Minister of State for Finance.
Summary: The bilateral trade between India and Zimbabwe has doubled over four years, reaching $125 million in the 2010-11 financial year. India's exports to Zimbabwe were $114 million, while imports were $11 million. The Indian Minister of Commerce, Industry, and Textiles met with Zimbabwe's Vice-President to discuss enhancing trade and investment, urging Zimbabwe to ratify the Bilateral Investment Promotion and Protection Agreement (BIPPA) signed in 1999. India expressed interest in collaborating with Zimbabwe in sectors like mining, power, railways, ICT, and agriculture. Additionally, India is involved in education and capacity-building initiatives in Zimbabwe, including a $100 million credit line for the health sector.
Summary: The National Manufacturing Competitiveness Council (NMCC) is expanding its Visionary Leaders for Manufacturing (VLFM) Programme, which aims to enhance leadership in India's manufacturing sector. Initially successful in Pune, the program will extend to Chennai. Launched in 2007, it is a collaborative effort involving CII, IIM Kolkata, IIT Kanpur, and IIT Madras under the Indo-Japan cooperation. The program offers four modules targeting CEOs, senior and middle managers, and SMEs, resulting in significant cost savings and innovations for over 100 companies. More than 500 leaders have been trained, with Prof. Shoji Shiba receiving the Padma Shri for his contributions.
Summary: The Government of India plans to establish the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) as part of the Companies Bill, 2011. These bodies aim to reduce the backlog of winding-up cases and streamline litigation processes by consolidating cases under one jurisdiction, thereby decreasing the burden on High Courts. The NCLT will handle cases previously managed by the Company Law Board, BIFR, and AAIFR, which will be dissolved. Appeals from NCLT decisions will be directed to NCLAT, with further appeals to the Supreme Court limited to legal points. These tribunals will become operational following the bill's enactment.
Summary: The Government of India has identified 1,55,394 companies as defaulting for not filing balance sheets or annual returns for the financial years 2006-07 to 2009-10, as per the Companies Act, 1956. These companies are restricted from filing certain documents with the Registrar of Companies to enforce compliance and corporate governance. By March 2012, the number of defaulting companies was reduced to 78,529. The measures aim to improve corporate governance by ensuring companies submit necessary financial documents. This was confirmed by the Minister of State in the Ministry of Corporate Affairs in response to a parliamentary inquiry.
Summary: The Government of India announced a delay in the implementation of the International Financial Reporting Standards (IFRS), opting for a phased convergence with Indian Accounting Standards due to unresolved issues, including tax concerns. The final implementation date will be determined once these issues are addressed. Meanwhile, the Ind-AS, which are aligned with IFRS, have been made available online for stakeholders to familiarize themselves. This decision was disclosed by a government official in response to a parliamentary inquiry about the missed April 2011 deadline and the implications of the delay.
Summary: Over the past three years, 21 companies have been identified as potentially violating the Indian Penal Code, implicating them in various scams. This information was disclosed by the Minister of State for Corporate Affairs in response to a query in the Rajya Sabha. Although prosecutions have been sanctioned against these companies, no specific cases have been reported to the Ministry during this period. The issue of possible connections between politicians, bureaucrats, and corporate houses was also raised, with the government considering measures to address such concerns.
Summary: The Ministry of Corporate Affairs in India reported 26 cases of corporate frauds. These cases are detailed in an annexure. Multi-national audit firms are regulated under the Chartered Accountants Act, 1949, and related rules, with no restrictions on investigating frauds upon client requests. The Minister of State for Corporate Affairs informed the Rajya Sabha about the government's awareness of increasing frauds by top management in corporate entities and the establishment of separate arms by audit firms for fraud investigations. The regulatory framework for these firms in India was also discussed.
Summary: The Competition Commission of India (CCI) organized a workshop on Public Procurement Competition Law to raise awareness among stakeholders about the importance of fair competition and compliance with competition laws. Held in New Delhi, the event was attended by 77 delegates from 36 Central Public Sector Enterprises. The CCI Chairperson emphasized the significance of addressing competition issues in public procurement, particularly bid rigging. Discussions included the draft Public Procurement Bill, with participants engaging actively in addressing concerns and preventive measures, such as the Competition Compliance Programme, to enhance fair practices in procurement.
Summary: India and ASEAN are in the process of negotiating an Agreement on Trade in Services, following the signing of a Trade in Goods Agreement in August 2009. As of November 2011, both parties have exchanged revised offers. The negotiations aim to extend cooperation in various service sectors, but the specific benefits for India will only be clear once discussions are finalized. This update was provided by a government official in response to a parliamentary inquiry.
Summary: Under the current Foreign Trade Policy, the export of iron ore with Fe content of 64% and above, excluding Goa Redi origin, is managed through MMTC Limited under the State Trading Regime. The government is considering using a nodal agency to regulate and ensure the legitimacy of iron ore exports. Measures such as end-to-end monitoring and mandatory registration aim to trace ore origins and ensure legal mining. To prioritize domestic supply, the government has increased the export duty on iron ore lumps and fines to 30% and imposed differential railway freight for exports.
Summary: The Indian government has implemented mandatory pre-shipment sampling and testing for red chillies and chilli products to prevent export rejections due to contaminants like Sudan dye and Aflatoxin. This quality check applies to exports to the EU, USA, South Africa, Japan, and other destinations. Over the past three years, 2,253 consignments were detained after testing 77,409 samples. The Spices Board also conducts training for growers and exporters on Good Agricultural and Manufacturing Practices to minimize Aflatoxin levels. Major export destinations include Malaysia, Sri Lanka, Bangladesh, and the USA, with significant export volumes and values recorded over recent years.
Summary: Exports of Indian tea have stagnated around 200 million kilograms in recent years, with a notable decline from April to December 2011 compared to the previous year. Factors contributing to this decline include political instability in Afghanistan, Egypt, and the Middle East, payment issues with Iran, non-tariff barriers in Iraq, and reduced demand from major importers like Russia. The export target for the current financial year is 220 million kilograms, with future targets set at 196 million and 199 million kilograms for 2012-13 and 2013-14, respectively. Measures like the Darjeeling Tea Trade Chain Integrity System have been implemented to ensure the authenticity of Darjeeling tea exports.
Summary: India aims to double its exports by 2014, focusing on expanding trade with West Asia, including Iran, to address the trade deficit. Iran is a key trading partner with potential in sectors like food, pharmaceuticals, and medical equipment. The Federation of Indian Exporters Organization organized a business delegation to Iran from March 10-15, 2012, to explore non-sanctioned trade opportunities. No agreements have been finalized yet, as reported by the Minister of State for Commerce and Industry in response to a parliamentary question.
Summary: The Indian Department of Commerce has developed a strategy to double the country's merchandise exports from $246 billion in 2010-11 to $500 billion by 2013-14. The plan focuses on promoting high-value products, maintaining market presence, advancing up the value chain, and exploring new markets and products. Key sectors include pharmaceuticals, electronics, and smart engineering. Initiatives like the Niryat Bandhu Scheme and various export schemes aim to enhance trade, especially with the USA and EU. Additionally, India is pursuing trade agreements to strengthen economic cooperation with global partners. This was disclosed by a government official in response to a parliamentary inquiry.
Summary: The import of melamine in India is unrestricted under the Exim Code 2933 61 00, with significant quantities imported over the past three years. However, all imports must comply with domestic regulations and safety norms. The government takes action against imports that threaten health or violate regulations, including seizing fake or toxic goods under the Customs Act, 1962. Due to melamine contamination concerns, especially from China, the import of milk and milk-based products, including chocolates and candies, has been banned. Additionally, toy imports must adhere to specified safety standards. This was disclosed by a government official in a parliamentary session.
Summary: The Indian government has become aware of instances where Indian products are being copied and sold in China or exported from China to other countries. However, no specific cases of such counterfeit products being sold in India have been identified. Complaints regarding copyright and trademark violations against Indian brands by Chinese companies have been received. These cases are being addressed with Chinese government agencies and are being monitored through the Indian Embassy in Beijing. This information was provided by the Minister of State for Commerce and Industry in response to a query in the Lok Sabha.
Summary: The Government of India has officially withdrawn the Duty Entitlement Passbook (DEPB) Scheme as of October 1, 2011. A revised Duty Drawback Scheme, effective from the same date, now covers 1,096 new items previously under the DEPB Scheme. The DEPB Scheme was temporarily extended until September 30, 2011, to ensure a smooth transition. Despite requests from various industries to extend the DEPB Scheme, the government has decided not to reconsider its phase-out. This update was provided by the Minister of State for Commerce and Industry in response to a parliamentary question.
Summary: The Government of India plans to import pulses to address the shortfall between demand and domestic supply. Decisions on imports for the current year will depend on the rabi harvest arrivals. Currently, imports are subject to zero duty until March 31, 2012. Public Sector Undertakings (PSUs) also import pulses for distribution to states under the Public Distribution System (PDS), with this arrangement valid until the same date. This information was provided by the Minister of State for Commerce and Industry in a written response to a parliamentary question.
Notifications
Central Excise
1.
20/2012 - dated
19-3-2012
-
CE
Seeks to amend notification No. 2/2011-Central Excise, dated the 01.03 2011.
Summary: The Government of India, through the Ministry of Finance, has issued Notification No. 20/2012-Central Excise, amending Notification No. 2/2011-Central Excise. This amendment, effective from March 19, 2012, modifies the entries related to serial numbers 48 and 49 in the notification table. Serial number 48 now pertains to articles of jewellery, while serial number 49 covers articles of goldsmiths' or silversmiths' wares made of precious metals or clad with precious metals, excluding gold and silver coins of specified purity. The definition of "brand name" is clarified, excluding jewellers' or job workers' marks known as 'house-marks.'
2.
20/2012 - dated
19-3-2012
-
CE (NT)
Seeks to amend the Chewing Tobacco and Un-manufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty ) Rules, 2010.
Summary: The Government of India issued Notification No. 20/2012 - Central Excise (N.T.) on March 19, 2012, to amend the Chewing Tobacco and Un-manufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010. The amendment revises the production capacity per packing machine based on retail sale prices, with specific figures provided for various price ranges. Additionally, the amendment specifies that the annual production capacity for March 17-31, 2012, should be calculated on a pro-rata basis. This notification follows previous amendments, including one on March 17, 2012.
3.
19/2012 - dated
19-3-2012
-
CE (NT)
Seeks to amend Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008.
Summary: The notification amends the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008. Effective from the publication date, the amendment revises the table in Rule 5, specifying the number of pouches per machine per month based on retail price categories, ranging from up to Re. 1.00 to above Rs. 6.00. Additionally, Rule 6 is modified to include a provision for calculating the annual production capacity on a pro-rata basis for the period from March 17 to March 31, 2012. This amendment is part of the Central Excise (Non-Tariff) regulations by the Ministry of Finance, Government of India.
Customs
4.
CORRIGENDUM - dated
20-3-2012
-
Cus
2nd Corrigendum of notification no. 12/2012 – Customs.
Summary: The corrigendum to notification No. 12/2012-Customs, dated March 17, 2012, by the Ministry of Finance, Department of Revenue, amends various serial numbers in the customs tariff table. Changes include updates to the classification codes for certain goods, adjustments to duty rates, and clarifications on aggregate import quantities. Specifically, S. No. 39 now includes additional codes, S. No. 187 removes certain codes, S. No. 252 specifies different duty rates for certain goods, and S. No. 321 distinguishes between types of gold imports with varying duty implications. These amendments aim to refine the customs tariff regulations for the specified goods.
5.
23 /2012-Customs - dated
20-3-2012
-
Cus
Seeks to amend Notification 12/2012 – Customs, dated 17-03-2012.
Summary: The Government of India, through the Ministry of Finance, has issued Notification No. 23/2012-Customs to amend Notification 12/2012-Customs dated March 17, 2012. This amendment, under the Customs Act, 1962, modifies the tariff exemptions for goods imported for manufacturing paper or paperboard, including newsprint. It introduces a new condition, 25A, requiring importers to provide an undertaking to customs authorities ensuring the specified use of imported goods. Failure to comply may result in the importer paying the difference in duty. The importer must also submit a usage certificate from the relevant Central Excise authority within a specified timeframe.
6.
Corrigendum - dated
19-3-2012
-
Cus
1st Corrigendum of notification no. 21/2012 – Customs.
Summary: The corrigendum to notification no. 21/2012 - Customs, dated March 19, 2012, introduces amendments to the original notification published on March 17, 2012. Key changes include the addition of electrical energy to the list of items exempt from customs duty, alongside compressed natural gas for the transport sector. Adjustments are made to tariff item numbers and conditions for importing certain goods, such as acetate rayon tow, which now requires adherence to specific customs procedures. The corrigendum also clarifies exemptions for goods under certain tariff headings, ensuring they are subject to specified conditions.
7.
Corrigendum - dated
19-3-2012
-
Cus
Corrigendum of Notification no. 12/2012- Custom.
Summary: The corrigendum to Notification No. 12/2012-Customs, dated March 17, 2012, issued by the Ministry of Finance, Department of Revenue, introduces amendments to various entries in the notification. Changes include revisions to the description and tariff rates for composite fertilizers and other goods, corrections in item numbers, and modifications to the conditions for importing goods by manufacturers and merchant exporters of textile, leather garments, and footwear. The amendments specify registration and export requirements with relevant export promotion councils and set limits on the value of imported goods relative to the previous year's exports.
Circulars / Instructions / Orders
VAT - Delhi
1.
19 - dated
13-2-2012
Online filling of Annexure 2A and 2B along with DVAT/CST returns by quarterly dealers.
Summary: The Department of Trade and Taxes in Delhi mandates quarterly dealers to file Annexure 2A and 2B online before submitting DVAT/CST returns. Initially required by Circular No. 17 of 2011-12, the deadlines for online filing and hard copy submission for December 2011 and the third quarter of 2011-12 were extended to February 17 and 21, 2012, respectively. Further extensions for online filing of Annexures 2A and 2B for the third quarter were granted until March 26, 2012. Hard copies of Annexures 2A and 2B are not required with DVAT/CST returns, but monthly dealers must file them online before their returns.
2.
18 - dated
8-2-2012
Filing of online returns for the tax periods December 2011 & third quarter 2011-12.
Summary: The Government of the National Capital Territory of Delhi's Department of Trade and Taxes issued a circular extending the deadline for filing online DVAT/CST returns for December 2011 and the third quarter of 2011-12. The new deadline for online submissions is set for February 17, 2012, while the deadline for submitting hard copies is extended to February 20, 2012. Despite the extension for filing returns, tax payments for the specified period must still be made in accordance with Section 3(4) of the DVAT Act, 2004, with penalties applicable for late payments.
3.
17 - dated
30-1-2012
On-line filing of Annexure 2A & 2B by Quarterly return filing dealers.
Summary: The Department of Trade and Taxes in Delhi mandates that all quarterly return filing dealers must file Annexure 2A and 2B online before submitting their DVAT/CST returns. This requirement eliminates the need to submit hard copies of these annexures, although printouts of the online receipts must be attached to the hard copy returns. Dealers who have already filed returns for the third quarter of 2011-12 are exempt from this requirement for that period. From the financial year 2011-12 onwards, all quarterly returns must be preceded by the online filing of Annexure 2A and 2B for each month of the quarter.
4.
16 - dated
23-1-2012
Filing of online returns for the tax periods December 2011 & third quarter 2011-12.
Summary: The Government of NCT of Delhi's Department of Trade and Taxes has extended the deadline for filing online DVAT/CST returns for December 2011 and the third quarter of 2011-12 to February 10, 2012. The deadline for submitting hard copies of these returns is extended to February 13, 2012. Despite the extension for filing returns, the tax due for these periods must be deposited as per Section 3(4) of the DVAT Act, 2004. Penalties will apply for late tax deposits.
FEMA
5.
95 - dated
21-3-2012
Foreign Exchange Management (Deposit) Regulations, 2000 - Credit to Non Resident (External) Rupee Accounts .
Summary: The Reserve Bank of India has decided that Authorized Dealer Category-I banks may allow the repayment of loans borrowed by Indian residents from their close relatives abroad to be credited to the Non Resident (External) Rupee (NRE) or Foreign Currency Non-Resident (Bank) [FCNR(B)] accounts of the lenders. This is conditional upon the loan being extended via inward remittance in foreign exchange through normal banking channels or debited from the lender's NRE/FCNR(B) account. The lender must be eligible to open such accounts under the Foreign Exchange Management (Deposit) Regulations, 2000. This directive is issued under the Foreign Exchange Management Act, 1999.
6.
93 - dated
19-3-2012
Investment in Indian Venture Capital Undertakings and /or domestic Venture Capital Funds by SEBI registered Foreign Venture Capital Investors .
Summary: The circular addresses the investment guidelines for SEBI-registered Foreign Venture Capital Investors (FVCIs) in Indian Venture Capital Undertakings (IVCUs) and domestic Venture Capital Funds (VCFs). It allows FVCIs to invest in eligible securities, including equity, debt, and debentures, through private arrangements or purchases from third parties, in addition to investments via public offerings or private placements. FVCIs can also invest in securities on recognized stock exchanges, adhering to SEBI regulations. Authorized Dealer Category - I banks are instructed to inform their clients about these changes. Amendments to relevant Foreign Exchange Management regulations will be notified separately.
7.
94 - dated
19-3-2012
Clarification - Prior intimation to the Reserve Bank of India for raising the aggregate Foreign Institutional Investors / Non-Resident Indian limits for investments under the Portfolio Investment Scheme.
Summary: The circular clarifies that Indian companies intending to raise the aggregate investment limits for Foreign Institutional Investors (FIIs) from 24% to the sectoral cap or for Non-Resident Indians (NRIs) from 10% to 24% must notify the Reserve Bank of India (RBI) immediately. A Company Secretary's certificate confirming compliance with the Foreign Exchange Management Act and Foreign Direct Policy is required. The RBI monitors these investment ceilings daily and has set cut-off points 2% below the limits for effective monitoring. Once these cut-off points are reached, further purchases require RBI approval. Authorized Dealer banks must inform their clients of these changes.
DGFT
8.
24 - dated
20-3-2012
Scrutiny and revalidation of Registration Certificates(RCs) for export of cotton.
Summary: The Directorate General of Foreign Trade issued a trade notice regarding the scrutiny and revalidation of Registration Certificates (RCs) for cotton exports. Applications for revalidation must be submitted by March 22, 2012. Priority will be given to cotton consignments handed over to customs by March 4, 2012, and those at Land Custom Stations on the Indo-Pakistan, Indo-Bangladesh, and Indo-Nepal borders. Exporters in these categories should notify the relevant Regional Authorities and send a copy to the DGFT via email. Exports will only be allowed after RCs are revalidated.
9.
102 (RE-2010) /2009-2014 - dated
16-3-2012
Procedure for scrutiny and revalidation of Registration Certificate for export of cotton [ITC(HS) code 5201 & 5203].
Summary: The Directorate General of Foreign Trade has issued guidelines for the scrutiny and revalidation of Registration Certificates (RCs) for the export of cotton under ITC(HS) codes 5201 and 5203. Applications are to be submitted for RCs valid as of March 5, 2012, with a submission deadline of March 22, 2012. Applicants must provide details of exported quantities, those handed over to Customs, and those pending, along with relevant documents. Scrutiny will occur at the DGFT headquarters in New Delhi, and revalidation will follow DGFT instructions. Revalidation provisions from a previous policy circular are withdrawn.
Companies Law
10.
05 - dated
19-3-2012
Constitution of a Committee to formulate a Policv Document on Corporate Governance.
Summary: The Ministry of Corporate Affairs, Government of India, issued an office memorandum on March 19, 2012, regarding amendments to the committee formed to draft a policy document on corporate governance. The amendments include corrections to the names and designations of committee members: the correct name and title for a committee member from L&T Finance Holdings Ltd., the correct name and title for a member from HDFC, and a correction to the spelling of another member's name. These changes update the previously issued memorandum dated March 7, 2012.
Highlights / Catch Notes
Customs
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Corrigendum Updates Notification No. 12/2012 for Customs: Ensures Compliance and Clarity in Regulations for Stakeholders.
Notifications : 2nd Corrigendum of notification no. 12/2012 – Customs. - Ntf. No. CORRIGENDUM Dated: March 20, 2012
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Corrigendum Issued for Notification No. 12/2012-Customs: Updates and Clarifications on Customs Regulations for Compliance and Accuracy.
Notifications : 1st Corrigendum of Notification no. 12/2012- Custom. - Ntf. No. Corrigendum Dated: March 19, 2012
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Corrigendum Issued for Customs Notification No. 21/2012 to Clarify and Correct Original Document Details.
Notifications : Corrigendum of notification no. 21/2012 – Customs. - Ntf. No. Corrigendum Dated: March 19, 2012
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Amendments to Customs Notification 12/2012: Streamlining Import and Export Procedures with Updated Regulations and Duties.
Notifications : Seeks to amend Notification 12/2012 – Customs, dated 17-03-2012. - Ntf. No. 23 /2012-Customs Dated: March 20, 2012
DGFT
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DGFT Circular on Cotton Export: Scrutiny and Revalidation Process for Registration Certificates Explained.
Circulars : Scrutiny and revalidation of Registration Certificates(RCs) for export of cotton. - Cir. No. 24 Dated: March 20, 2012
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DGFT Circular No. 102 outlines steps for revalidating cotton export registration under ITC(HS) codes 5201 and 5203.
Circulars : Procedure for scrutiny and revalidation of Registration Certificate for export of cotton [ITC(HS) code 5201 & 5203]. - Cir. No. 102 (RE-2010) /2009-2014 Dated: March 16, 2012
FEMA
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FEMA Circular No. 95 Updates: Key Changes in Non-Resident (External) Rupee Accounts Under Foreign Exchange Management Regulations 2000.
Circulars : Foreign Exchange Management (Deposit) Regulations, 2000 - Credit to Non Resident (External) Rupee Accounts . - Cir. No. 95 Dated: March 21, 2012
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Foreign Venture Capital Investors Can Invest in Indian Ventures, SEBI Regulations Govern Compliance and Frameworks.
Circulars : Investment in Indian Venture Capital Undertakings and /or domestic Venture Capital Funds by SEBI registered Foreign Venture Capital Investors . - Cir. No. 93 Dated: March 19, 2012
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RBI Clarifies Prior Intimation Rule for Increasing Investment Limits for Foreign Institutional Investors and NRIs under PIS.
Circulars : Clarification - Prior intimation to the Reserve Bank of India for raising the aggregate Foreign Institutional Investors / Non-Resident Indian limits for investments under the Portfolio Investment Scheme. - Cir. No. 94 Dated: March 19, 2012
Corporate Law
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Committee Formed to Develop Corporate Governance Policy as per Circular No. 05, March 19, 2012.
Circulars : Constitution of a Committee to formulate a Policv Document on Corporate Governance. - Cir. No. 05 Dated: March 19, 2012
Indian Laws
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Finance Bill 2012 Proposes Amendment to Section 56 of Income Tax Act for Clearer Income Taxation in India.
Articles : BUDGET PROPOSAL IN RELATION TO AMENDMENT OF SECTION 56 OF THE INCOME TAX ACT 1961 VIDE FINANCE BILL 2012. - Article
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2012 Budget Amendment Targets Supreme Court Ruling on Telecom Tax, Sparks Legislative vs. Judicial Tension in Tax Law.
Articles : Budget 2012: Amendment to overcome judgment of the Supreme Court in case of Vodaphon Explanations for the removal of doubts – very unfortunate trend on legislation in law. - Article
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Cenvat Credit Rules Amended: New Eligibility Criteria, Documentation, and Refund Procedures for 2012-2013 Budget in India.
Articles : Budget 2012-2013 - Amendments in Cenvat Credit - Article
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Finance Bill 2012 Proposes Wealth Tax Changes: Asset Valuation, Exemptions Adjusted for Fairness and Increased Revenue Collection.
Articles : BUDGET PROPOSAL IN RELATION TO WEALTH TAX VIDE FINANCE BILL 2012 - Article
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Finance Bill 2012: New Tax Slabs, Stricter Penalties for Foreign Assets, and Streamlined Administration for Better Compliance.
Articles : BUDGET PROPOSAL IN RELATION TO INCOME TAX VIDE FINANCE BILL 2012 - Article
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Finance Bill 2012 amends Income-tax Act 1961, refining tax exemptions for corporations, individuals, and specific sectors.
Articles : The Finance Bill 2012 :Amendments in relation to exemptions under Income-tax Act 1961 - Article
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India Expands Tax Base with 2012-2013 Budget: Service Tax Rate Hiked to 12%, Negative List Approach Introduced
Articles : Budget 2012-2013 - Amendments in Service Tax - Article
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2012-2013 Budget Amends Service Tax Rules: New Tax Rates, Expanded Services List, and Revised Compliance Procedures.
Articles : Budget 2012-2013 - Amendments in Service Tax Rules, 1994 - Article
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2012-2013 Budget Amends Point of Taxation Rules 2011 to Clarify Service Tax Liability Timing and Enhance Compliance.
Articles : Budget 2012-2013 - Amendments in Point of Taxation Rules 2011 - Article
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Harsh Tax Laws in India: Short-Term Pain for Long-Term Economic Gain, Promoting Fiscal Responsibility and Growth.
Articles : I must be cruel only to be kind - Article
Central Excise
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Amendment to Update Central Excise Duties in Notification No. 2/2011 as per Notification No. 20/2012.
Notifications : Seeks to amend notification No. 2/2011-Central Excise, dated the 01.03 2011. - Ntf. No. 20/2012-Central Excise Dated: March 19, 2012
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Amendments to 2010 Tobacco Packing Machines Rules: Updated Capacity Determination and Duty Collection Regulations Issued by Central Excise.
Notifications : Seeks to amend the Chewing Tobacco and Un-manufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty ) Rules, 2010. - Ntf. No. 20/2012 - Central Excise (N.T.) Dated: March 19, 2012
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Central Excise amends Pan Masala Packing Machines Duty Rules 2008, impacting capacity determination and duty collection. Notification No. 19/2012.
Notifications : Seeks to amend Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008. - Ntf. No. 19/2012 - Central Excise (N.T.) Dated: March 19, 2012
Case Laws:
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Income Tax
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2012 (3) TMI 246
Supreme Court rejects Government's petition seeking review of Vodafone order - Supreme court has declined petition filed by Union of India on 17th February, 2012 seeking review of its order in Vodafone case wherein it was held that tax authorities had no jurisdiction to tax vodafone's offshore transactions. Apex court on review petition held that no merit is found in the petition.
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2012 (3) TMI 244
Validity of notice issued u/s 148 for re-opening of assessment when jurisdiction was founded merely on the possibility of escapement – asseseee being Singapore Company had business of investment in Indian securities – electronically 'annexure less' return of NIL income filed in accordance with provisions of DTAA between India and Singapore – several notes annexed to the return of Income making relevant disclosures – A.O. sought to reopen assessment on ground that petitioner is FII and section 115AD would be attracted and short term capital gains may have arose – A.Y. 2006-07 - Held that:- It is settled principle of law that when the A.O. issues a notice u/s 148, at that stage the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief and validity of the notice u/s 148 has to be determined on the basis of the reasons which are disclosed to the assessee. Those reasons constitute the foundation of the action initiated by the A.O. of reopening the assessment. Those reasons cannot be supplemented or improved upon subsequently. In present case, attention of A.O. was drawn to the fact that assessee is not FII and it would be evident that the A.O. has not acted within his jurisdiction in purporting to reopen the assessment. Also A.O. was not entitled, when he disposed of the objections to travel beyond the ambit of the reasons which were disclosed to the assessee. See CIT v. Kelvinator of India Ltd (2010 - TMI - 35201 - Supreme Court Of India) – Decided in favor of assessee.
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2012 (3) TMI 243
India – Canada convention – applicant being wholly owned subsidiary of UK company - outsourcing of back office support functions by overseas entities – assignment of employees of overseas entity to perform the duties at the location of the applicant for the period stipulated and to report to the applicant – salary paid by overseas entity – reimbursement of salary by applicant to overseas entity – whether reimbursement of salary to overseas entity is income accrued to overseas entity – withholding of taxes – Revenue also questioned regarding it to be FTS – Held that:- In present case, secondee employees are all rendering managerial services and there is no indication that any technical functions or consultancy functions is performed, therefore, it cannot be held to be fees for technical services. Further, employees continue to be the employees of the overseas entities and are rendering services for their employer in India by working for a specified period for a subsidiary or associate enterprise of their employer. This gives rise to a service PE within the meaning of Art.5 of the India-UK Treaty, falling under Article 5.2(k) corresponding to provision in paragraph 2(l) of Article 5 of India-Canada Convention. Hence, reimbursement of salary by the applicant under the agreement would be income accruing to overseas entities in view of the existence of a service PE in India and tax is liable to be deducted at source u/s 195
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2012 (3) TMI 242
FTS - IVTC services - Whether payment received by the applicant in connection with transactions undertaken in relation to the Inspection, Verification, Testing and Certification (IVTC) services are chargeable to tax in India as “FTS” u/s 9(1)(vii)(b) - applicant being tax resident of Hong Kong belonging to X group of companies engaged in the business of IVTC services – services to Indian customers provided through X India - Held that:- It is observed that reports are highly technical in nature and are cargo activity specific. These are admittedly customized services and not routine commercial services. Thus, the technical services provided to the customers/X India is covered under the term “fee for technical services” u/s 9(1)(vii). The exception provided u/s 9(1)(vii)(b) of the Act is not available to the applicant. Whether payments received in connection with costs incurred for and on behalf of X India / recovery of administrative cost are chargeable to tax in India – Held that:- Such payments are also chargeable to tax as FTS u/s 9(1)(vii). Withholding of tax – Held that:- As the applicant has tax presence in India, X India / Indian customers are required to withhold taxes u/s 195 at the rate in force mentioned in the Finance Act for the relevant year. Requirement of filing of return u/s 139 – Held that:- As the applicant has taxable income in India, it is required to file tax return under the provision of section 139.
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2012 (3) TMI 240
Deduction u/s 80IB - manufacturing - Revenue filled an appeal against the judgment of the Tribunal on the ground that the activity carried on by the assessee does not amount to manufacturing or production of "an article" or "thing" within the meaning of Section 80IB(3) of the Act - The assessee is engaged in the business of manufacturing home-care products including perfume sprays, air fresheners, room fresheners as also polish spray; rust removers, etc and claimed deduction under Section 80IB on the income derived from its activity, the assessee for the A.Y 2004-05 - Held that :- Tribunal noted the process undertaken by the assessee in producing the air fresheners -that for bringing into existence the air fresheners as a commodity saleable in the market, the assessee had to undertake several steps like Container Forming, Pre-mix Preparation,Cleaning of Tins Cans, Filling, Crimping, Charging , sealing, packing ,etc. - Tribunal, by the impugned order, rejected the Revenue's appeal confirming the view of the CIT(A) that the activity carried out by the assessee would amount to manufacturing activity.
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2012 (3) TMI 239
TDS credit - claim of TDS credit without surrender of income - held that:- the provisions contained in sub-sections (1) and (3) of Section 199 read with Rule 37BA of the Income Tax Rules serve a purpose because if income is not assessable in the assessment year and at the same time assessees are entitled to credit of tax recovered and remitted in respect of such income, the Department will be compelled to refund the entire tax amount every year and along with it if refund is not made within three months from filing of return, mandatory interest will also payable, as provided under Section 243(1) of the Income Tax Act which will defeat the purpose of TDS provisions in the Act. Therefore, we do not find any justification for the Tribunal to allow credit of tax based on TDS certificates without corresponding assessment of income in the assessment years concerned which is against the statutory provision. whether the assessing officer was justified in refusing to give credit for tax payments based on TDS certificates issued by the Bank for the reason that income is not returned for assessment by the assessees in the assessment year following the year in which tax is recovered and paid by the Banks - Section 199 of the Income Tax Act makes it clear that the assessee is entitled to credit based on TDS certificate only in the assessment year in which income from which tax is deducted is assessed - Decided against the assessee. If Section 145(1) is amended for assessment of income on which TDS is made in the assessment year following the year in which deduction is made irrespective of the system of accounting followed by the assessee, the same will avoid problems for the assessees and the Department. - Decided in favor of the revenue
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Customs
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2012 (3) TMI 245
Petition filed to seek assessment of Bill of Entry by allowing exemption from CVD under Notification No.30/2004-CE – Held that:- Prayer for assessing the BE by allowing the exemption from CVD under Notification No.30/2004-CE, dated 09.07.2004, cannot be granted. Also, respondent is directed to release the goods concerned subject to furnishing of bank guarantee for the entire value of CVD by petitioner.
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