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EIRC NEWSLETTERVOL: 40 ISSUE: 9 1st NOVEMBER 2014 RS. 10/-

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA

EASTERN INDIA REGIONAL COUNCIL

��EIRC 1st November 2014

EIRC 1st November 2014 ��

CA Subhash Chandra SarafChairman, EIRC

,, ,,My Dear Professional Colleagues,

Wishing you most and more…

This Diwali seems to have been a cracker for India with capital market indexes touching new peak daily. With the various steps taken by the government, not only are investors attracted back but the industry as a whole is also very optimistic and bullish. In the biggest slew of reform measures seen in years, the Government put aside the inactive tag and is rapidly passing long-pending reforms. I am sure that with these fast paced changing reforms and governance by the present government, we would surely be the generation who can put India on Top of the World.

Also the hectic season of tax audits and MCA filings are just at the last bend, but it is just a matter of mindset since we would then be deeply absorbed in SDT & TP cases and also VAT audits. The Companies Act 2013 as on date is anyway keeping us constantly occupied with everyday new queries and interpretations coming up, topped up with circulars / notifications by MCA from time to time.

However, that is what we chartered accountants are… Team working Constantly 24X7 without any compromise on our quality and superiority of our work, which is why we are so looked upon by the society. Nevertheless I would also like to stress on the team that works with us untiringly and it is in their effort that we garner and taste the sweet nectar of success.

The importance of teamwork was really very greatly and in a fantastic manner was showcased to the entire world by us Indians, when a Surat Diamond firm gifted Cars, Jewelleries and Flats to over 1000 of its employees (costing over Rs. 45 Crore). This not only set out an example in itself but also laid stress on our most important assets (which are not recognized in Balance Sheet) – Human Resources - Our Partners - Our colleagues- Our Employees - Our team.

It is our team which makes us what we are…

With various international initiatives taken by the current government, our nation today is in global attention and is en-route for massive job creations. This would be a fantastic opportunity for our members, not in terms of gaining employment, but showcasing our intellect and to assist

One generation worked together to give us independence. We can be the next generation to put India on Top of the World

the sectors and the nation in terms of their legal, financial, regulatory and other requirements.

In line with the commitment of developing the practice of the future, we had planned a series of “Open house Sessions” targeting specific set of audiences including articled clerks for their professional growth and development and we are having unique experience with kind of input being received which will surely help in clearing many doubts and assist in positive professional development of all. We have made decent progress in this line with further programs lined up in the days to come.

Aside these, we are also organizing seminars on Specified Domestic Transaction, Service tax work shop, Capital Gains & more, details of which are provided later which are critically important for present and future service to the clients.

I would also once again remind all the members of the upcoming “39th Regional Conference” to be held at Science City Auditorium with the theme – “CA Profession Ahead - Dynamic, Vibrant & Challenging”, on the 28th& 29th of November, 2014 wherein senior experienced speakers from all over India would be sharing their insights and experiences on topics of wider futuristic interests. Conference would be followed by a “National Debate” in association with The Economic times. Speakers from different walks of life of national fame would debate if “Acche din aa Gaye?”.

Deepawali get together was concluded last evening with more than 600 people attending which included members and their families who enjoyed the evening of fun, frolic, games and fellowship.

My best wishes to the students for their success in the examination of the November term staring next week.

I am with you and for you always...

With Warm Regards


Forthcoming Programme

DAY AND DATE KNOWLEDGE SESSION RESOURCE COORDINATOR VENUE DURATION CPE DELEGATE PERSON HOURS FEES `

DAY AND DATE KNOWLEDGE SESSION COORDINATOR VENUE DURATION CPE DELEGATE HOURS FEES `

EIRC

SPECIAL SESSIONS

DAY & DATE PROGRAMME DETAILS VENUE TIME

Friday, 28th November & 39th Regional Conference (12 CPE Hrs) Science City Auditorioum, 9.30 am onwards Saturday, 29th November 2014 (Details inside in Page 8 ) Kolkata

REGIONAL CONFERENCE

Friday, 7th Service Tax Workshop Details inside in Page 5 EIRC R Singhi Hall, 2.30pm to 6 400November 2014 EIRC Premises 8.30pm Spot 500

Wednesday, 12th How to Improve Professional Mr. Ashray Gaurango Das CA Pramod Dayal R Singhi Hall, 5.30pm to 3 150November 2014 Efficiency (Art of Stress Management) (ISCKON) Rungta EIRC Premises 8.30pm Spot 200

Tuesday, 18th Seminar on Capital Gains including Details inside in Page 5 EIRC R Singhi Hall, 4.30pm to 4 250November 2014 International Taxation Aspect EIRC Premises 8.30pm Spot 300

Wednesday, 3rd Awareness Programme on Financial Details inside in Page 5 EIRC R Singhi Hall, 4.30pm to 3 150December 2014 Reporting Practices EIRC Premises 7.30pm Spot 200

Friday, 5th NSE Emerge & Emerge-ITP Mr. Dipan Mitra CA Manish Goyal R Singhi Hall, 5.30pm to 3 150December 2014 (Opportunities for SME’s) EIRC Premises 8.30pm Spot 200 Membership Opportunities in NSE Mr. Abhishek Kumar

Tuesday, 9th Critical Aspects of Audit of CA Vinod Goyal CA Sunil Kumar R Singhi Hall, 5.30pm to 3 150December 2014 Share Brokers Sahoo EIRC Premises 8.30pm Spot 200

Thursday, 11th Developing Enterpreneur Skills CA Abdul Rahim CA Anirban Datta R Singhi Hall, 5.30pm to 3 150December 2014 by CA’s EIRC Premises 8.30pm Spot 200

Wednesday, 5th Let`s Connect –An Open House CA Anirban Datta R Singhi Hall, 5.30pm to 3 75November 2014 with Members in Industry EIRC Premises 8.30pm Spot 100

Monday,17th Let`s Build- An Open House CA Ranjeet Kumar Agarwal R Singhi Hall, 5.30pm to 3 75November 2014 with Young Members EIRC Premises 8.30pm Spot 100

Monday, 15th S Vaidyanath Aiyar Memorial Lecture EIRC R Singhi Hall, 4.00pm to 2 FREEDecember 2014 by CA Mohan Das Pai EIRC Premises 6.000pm

Note : 1.*Please note Online registration closes 1 days before the day of the Seminar 2. Spot Registration will be taken subject to availability of seats at the venue.

Study Circle Day & Date Programme Speakers Co- ordinator Venue Duration CPE Hour

STUDY CIRCLES

VIP Road Chartered Sunday, 30th Revision under Section 263 CA Kamal Bajoria CA S N Jojodia VIPCA Library, 10.00am to 3Accountants Study November of IT Act,1961 and CA Raj Singhania 9830071300 220,Bangur 1.00 pm Circle 2014 Assessment, Re-Assessment, Avenue,BL-A, Appeal Proceedings under Kolkata-700055 I T Act 1961


SERVICE TAX WORKSHOPOrganised By Eastern India Regional Council

The Institute of Chartered Accountants of India

Day & Date: Friday, 7th November 2014

Time: 2.30pm to 8.30pm

Venue: R Singhi Hall, EIRC Premises

Topics Speakers

and Joint Charge

CA Brijesh Verma, Agra Transactions

CENVAT CA Sushil Kumar Goyal, Kolkata Credit

AWARENESS PROGRAMME ON FINANCIAL REPORTING PRACTICES

Organised by Financial Reporting Review Board, ICAI

Hosted by Eastern India Regional Council


Day & Date: Wednesday, 3rd December 2014



Topics

Statements observed by Financial Reporting Review Board

(erstwhile Revised Schedule VI, Companies Act, 1956) and Issues in CARO

6 CPE

3 CPE

4 CPE

` 400` 500 Spot

` 150` 200 Spot

Fees

Fees

SEMINAR ON CAPITAL GAINS INCLUDING INTERNATIONAL TAXATION ASPECTOrganised By Eastern India Regional Council


Day & Date: Tuesday, 18th November 2014



Topics Speakers

CA S S Gupta the Indian Income Tax Act, 1961 Kolkata

CA Ramesh Kumar Patodia Relation to Capital Gains Kolkata

` 250` 300 SpotFees

CA Pulak Saha, Kolkata

ANNOUNCEMENT FOR MEMBERS AND STUDENTS - PRINT OF LETTERS FROM

WEBLINKMembers & Students are advised to view and generate

their different letters from ICAI through the link http://220.225.242.179/REprintletter/reprint.aspx.

They may further call HELPLINE NUMBER – 30211156 to know their Member/Student/Article status.

Facility of Payment by Swiping Credit / Debit Card Introduced

You can make payment for the following Services :1) EIRC Sales Counter – Purchase of Books/ Publications2) Seminar Registration – Delegate Fees at EIRC

REQUIRED FOR READING ROOMEIRC of ICAI requires space for reading halls in North and South Kolkata for CA Students – Preferably at ground/1st floor. Reading Space is also reqired in our branches at Asansol, Bhubaneswar, Cuttack, Dibrugarh, Durgapur, Guwahati, Ranigunj, Rourkela, Sambalpur, Siliguri, Tinsukia. Space owners including NGO’s may apply, giving details of the Location, Area, Site plan and expected monthly rent to

Ms. Swati Banerjee, Librarian, Eirc of [email protected]/[email protected], Phone – 033 30211103/05


CA Pramod Dayal RungtaChairman, EICASA

Vice Chairman, EIRC

EICASA

Dear Students,

Conceive, Believe, Achieve!

October has been a joyous month full of festivals and celebrations. So let me wish you a very happy and prosperous Dusshera, kali Puja and Diwali on behalf of the whole EICASA team. And on the auspicious occasion of Diwali, I hope this Diwali burns all your bad times and enters

you in good times.

Dusshera – the festival of Victory of Good over Evil and Diwali – the festival of Lights, Customs and Traditions. I simply love the approach of the Dusshera-Diwali season. The slight winter chill, the happy faces, the excitement of shopping, exchange of greetings and sweets, planning ahead of gifts, decorations, all this and all that. I hope this Dusshera, and Diwali was as joyous for you as it was for me.

But October is not just restricted to Dusshera and Diwali. It’s also the month when the birth anniversary of the Father of our Nation, Mahatma Gandhi, is celebrated with equal joy.

“Glory lies in the attempt to reach one’s goal and not in reaching it,” said one of the greatest leaders of Indian History, Mahatma Gandhi. And while the world celebrates the 2nd of October as Gandhi Jayanthi, let us, as students and aspiring Chartered Accountants, draw inspiration from the golden words spoken by this great man.

Taking note of the recent developments in our country, courtesy our esteemed Prime Minister, Mr. Narendra Modi, let us take a step towards a “Swachh Bharat”. Keeping in tune with the Prime Minister’s call for ‘Clean India’, the EICASA team too is organizing an event, “Swachh Bharat Abhiyan” to show it’s support.

As always, it’s a humble request to all students to make best possible use of the resources available to them. The student body of the eastern region of the CA Fraternity, EICASA, also makes efforts to conduct seminars, industrial visits, etc.

On 14th October, 2014, EICASA organized an industrial visit to Jayashree Textiles, Rishra. Students who missed out on this visit need not worry as ample opportunities shall be presented to them in the form of other events and visits.

The upcoming events that EICASA has chalked out for you to participate are as follows:

� 2nd November, 2014 – In association with the Art of Living, the EICASA team is organizing an event, “Swachh Bharat Abhiyan” wherein all students are heartily invited to take part.

� Last week of November, 2014 – an Industrial Visit will be held, date will be announced shortly. Examinees, who are interested in this visit, can also participate, given the flexibility of the date.

� 1st December, 2014 – On World AIDS Day, a walkathon shall be held. Detailed program will be intimated soon.

��14th December, 2014 – A CA Fest by the name – CA rizma: Unveil the Flare is being organized by the EICASA team of EIRC of ICAI, Kolkata. A youth festival of this kind is happening for the first time, so interested students are required to contact the EICASA Board Members.

Students, to accomplish great things, you must not only act, but also dream; not only plan, but also believe. If one advances confidently in the direction of his dreams, and endeavors to live the life which he has imagined, he will meet with a success unexpected in common hours.

Before I sign off, I’d just like to say – Too many people have given up just when they were about to cross the finish line. The problem was they didn’t know they were so close. If you’re going to do something, be prepared to go all the way. Fear and doubt will always find their way into our consciousness when we attempt to go beyond what we’ve done before and if we let them, they will stop us.

The key is to follow through all the way to the finish. We usually come up short because we stop ourselves when it gets too tough and seems hopeless. On the contrary, that’s when you’re about to break through.

Looking forward to your views and / or suggestions for improvement, correction or modifications in student activities and specially EICASA activities. Suggestions for the betterment and upliftment of the EICASA are also heartily welcome, all of which you may send directly to me at [email protected] marking a copy to [email protected].

Looking forward to an eventful journey.

Students attending the Industrial VIsit to Jayashree Textiles, Rishra

Mr. Binay Dubey, CA Pramod Dayal Rungta, Vice Chairman, EIRC, Brahmachari Mural Bhai, Smt.Shashi Panja, Hon’ble MIC of Child Welfare, Govt. of WB, Mr. Anik Dhar during the Launch of Braille Durga Puja Guide for the Blinds by NIP NGO & Differently Abled & Senior Citizen.

Jayashree Officials describing the procedure of production during Industrial Visit

EIRC 1st November 2014 �


39th Regional Conference-EIRC



Branch Study Circle Programme

12 CPE

NATIONAL CONFERENCE - 2014 THEME: “ROLE OF CA’S IN MAKE IN INDIA”

Jointly Organized by: Committee for Capacity Building of CA Firms and Small & Medium Practitioners (CCBCAF & SMP), ICAI & Committee on

Management Accounting, ICAI

Hosted by: Cuttack Branch of EIRC of ICAI Date: 26th & 27th DECEMBER, 2014Venue: SAHEED BHAWAN, CUTTACK

Programme Details

For Registration & Information

Cuttack Branch of EIRC of ICAI, ICAI Bhawan, Plot No. 8-4-1/521, Sector-8, CDA, Bidanasi, Cuttack, Odisha, P.C.-753014, E-mail: [email protected], Telephone: 0671-2505348, 2506348, Fax: 0671-2506348, Mobile: 7205131215, 9040967244

Time Particulars

Day One : Friday, 26th December 201410.00 AM to 11.30 AM Inaugural Session

11.30 AM to 2.00 PM 1st Technical Session – Service Tax – Emerging Opportunities & Challenges

2.30 PM to 4.00 PM 2nd Technical Session – Fraud Detection under IT Environment

4.00 PM to 6.00 PM 3rd Technical Session – Capacity Building Measures - Panel Discussion on Role of CA’s in Make in India.

7.00 PM onwards Cultural Evening

Time Particulars

Day Two : Saturday, 27th December 201410.00 AM to 12.00 Noon 4th Technical Session – Companies Act, 2013 – Accounts & Audit

12.00 Noon to 2.00 PM 5th Technical Session Companies Act, 2013 – Compliances

2.30 PM to 4.30 PM 6th Technical Session – Issues on Direct Taxes

4.30 p.m. to 5.00 p.m. Capacity Building Measures-Networking, Merger & Other forms of Consolidation

5.00 PM to 5.30 PM Valedictory Session

The details for registration are as follows:-

Registration fees Members Non Members Includes Corporate Delegates Students

Rs. 2,000/- Rs. 3.000/- (Including S.Tax) Rs. 500/-

CA Pawan Kumar Udaypuria CA Santanu Mishra CA Mahesh Prasad Mohapatra Chairman, Cuttack Branch of EIRC of ICAI Secretary, Cuttack Branch of EIRC of ICAI Organizing Committee Chairman 9937166049 9437072885 9437314520


A. Direct TaxCompiled by CA Raj Singhania

[email protected]. G. Shankar vs. ACIT (ITAT Bangalore) Second proviso to s. 40(a)(ia) inserted w.e.f. 1.4.2013 should

be treated as retrospectively applicable from 1.4.2005 and no disallowance for want of TDS can be made if payee has paid tax thereon. Assessee must be given opportunity to file Form 26A

The undisputed fact is that the assessee has not deducted tax at source on the payments made to Uday Kumar Shetty. The fact that the payee has accounted for these payments in his books of account, financial statements and the same have been offered for tax in his return of income for the period relevant to AY 2005-06, has not been controverted by the authorities below. In our considered opinion, since the payee/ recipient has accounted for these payments in his books of account, audited u/s 44AB of the Act and has offered the same for tax in his return of income for the relevant period, by virtue of the amendment, by way of insertion of the second proviso to section 40(a)(ia) of the Act w.e.f. 1/4/2013, the provisions of section 40(a)(ia) of the Act would not be attracted to the payments made by the assessee to Uday Kumar Shetty. In coming to this view, we draw support from the two above cited decisions of the co-ordinate benches of this Tribunal in the case of DCIT vs. Anand Marakala and S.M.Anand vs. ACIT wherein it was held that insertion of the second proviso to section 40(a)(ia) of the Act should be read retrospectively from 1/4/2005 and not prospectively from 1/4/2013. In this view of the matter, the provisions of section 40(a)(ia) of the Act is not attracted to the payments made by the assessee since the object of introduction of section 40(a)(ia) is achieved for the reason that the payee/recipient has accounted for, declared and offered for taxation the payments received from the assessee in his hands. Earlier, we have held that the second proviso to section 40(a)(ia) of the Act is retrospective in operation w.e.f. 1/4/2005. As per this newly inserted proviso, the assessee is required to file Form No.26A as per rule 31ACB of the IT Rules, 1962 so as not to be held as an assessee in default as per the proviso to section 201 of the Act. As held in the decision of the co-ordinate bench in the case of S.M.Anand vs. ACIT (supra), since the assessee in the period under consideration i.e. assessment year 2005-06, could not have contemplated that such a compliance was to be made, we also in the case on hand, remit the matter to the file of the Assessing Officer for affording the assessee adequate opportunity to file Form No.26A and verification of whether the said payee has reflected the payment/receipt in his books of account and offered the same to tax in the period under consideration.

2. The Stock Exchange, Bombay vs. V.S. Kandalgaonkar (Supreme Court) Income Tax Act does not provide for any paramountcy of dues by way

of income tax. Government dues only have priority over unsecured debts

The first thing to be noticed is that the Income Tax Act does not provide for any paramountcy of dues by way of income tax. This is why the Court in Dena Bank’s case (supra) held that Government dues only have priority over unsecured debts and in so holding the Court referred to a judgment in Giles vs. Grover (1832) (131) English Reports 563 in which it has been held that the Crown has no precedence over a pledgee of goods. In the present case, the common law of England qua Crown debts became applicable by virtue of Article 372 of the Constitution which states that all laws in force in the territory of India immediately before the commencement of the Constitution shall continue in force until altered or repealed by a competent legislature or other competent authority. In fact, in Collector of Aurangabad and Anr. vs. Central Bank of India and Anr. 1967 (3) SCR 855 after referring to various authorities held that the claim of the Government to priority for arrears of income tax dues stems from the English common law doctrine of priority of Crown debts and has been given judicial recognition in British India prior to 1950 and was therefore “law in force” in the territory of India before the Constitution and was continued by Article 372 of the Constitution (at page 861, 862).

In the present case, as has been noted above, the lien possessed by the Stock Exchange makes it a secured creditor. That being the case, it is clear that whether the lien under Rule 43 is a statutory lien or is a lien arising out of agreement does not make much of a difference as the Stock Exchange, being a

secured creditor, would have priority over Government dues.3. ITO vs. Sajjankumar Didwani (ITAT Mumbai) S. 41(1): Unclaimed & unproven liabilities are deemed to have ceased

and are assessable as income(i) When the liability continues to subsist year after year, for several years,

serious and valid doubts as to its existence or as representing an existing liability, may arise. This is as in the very nature of the events, nobody would ordinarily, i.e., without justifiable reason, not claim his dues, representing his hard earned money or capital built up over years. Then, again, why would one not agitate the matter or take legal recourse to effect recovery. That is, the said presumption fails on the test of human probabilities in the facts and circumstances of the case.

(ii) The hon’ble Delhi high court per its recent decision in the case of CIT vs. Chipsoft Technology (P.) Ltd. [2012] 210 Taxman 173 (Del), examining the legal aspect of the matter, has clarified that the view that merely because a liability outstands in books, and that lapse of time bars the remedy but does not efface the liability, is an abstract and theoretical one which does not ground itself in reality. The interpretation of law, particularly fiscal and commercial legislation, is to be based on pragmatic realities. It would be indeed paradoxical, if not illogical, to allow the assessee-debtor to, while avoiding a liability on the basis that it is no longer enforceable in law, yet claim his status as a debtor, so that he was indeed liable for the amount reflected as a liability in accounts. …. The said decision by the hon’ble court stands followed and adopted by the tribunal, as in ITO vs. Shailesh D. Shah and Yusuf R. Tanwar vs. ITO.

(iii) It could be argued that even where the assessee is unable to prove the existence of a trade liability as at the relevant year-end, which though continues to outstand in books, would yet not exhibit that the remission or cessation of the liability during the relevant year, and which is a prerequisite for the application of section 41(1). The argument, attractive at first sight, in-as-much as the same represents a primary ingredient of the relevant provision, fails on scrutiny. This is for the reason that the assessee reflecting the amount as a liability in his books for the immediately preceding year, has confirmed it as so as at the end of that year, i.e., 31.03.2008 in the present case. It does not therefore lie in his mouth or is not open for him to say or contend that it was not so, and that the amount was in fact not outstanding even on that date. The Revenue has merely proceeded by accepting the assessee’s claims and books for that year. The principle of approbate and reprobate would therefore apply to estopp the assessee from taking such a stand, i.e., legally. The anomaly stands explained famously by the hon’ble apex court in Phool Chand Bajrang Lal vs. ITO [1993] 203 ITR 456 (SC) in the context of reopening of reassessment u/s.147, which requires the assessee to disclose all material facts fully and truly: ‘You accepted my lie, now your hands are tied and you can do nothing.’ It clarified that it would be a travesty of justice to allow the assessee that latitude.

4. ITO vs. Onkarmal Kajaria Family Trust (ITAT Kolkata) S. 50C: AO cannot straightaway adopt stamp duty value as

consideration for capital gains but must offer assessee benefit of reference to DVO for valuation

It is difficult to accept the proposition that the assessee had accepted that the price fixed by the District Sub Registrar was the fair market value of the property. No such inference can be made as against the assessee because he had nothing to do in the matter. Stamp duty was payable by the purchaser. It was for the purchaser to either accept it or dispute it. The assessee could not, on the basis of the price fixed by the Sub-Registrar, have claimed anything more than the agreed consideration which, according to the assessee, was the highest prevailing market price. It would follow automatically that his case was that the fair market value of the property could not be the value as assessed by the District Sub Registrar. In a case of this nature the assessing officer should, in fairness, have given an option to the assessee to have the valuation made by the departmental valuation officer contemplated under Section 50C. As a matter of course, in all such cases the assessing officer should give an option to the assessee to have the valuation made by the departmental valuation officer to avoid miscarriage of justice. The legislature did not intend that the capital

Recent JudicialPronouncements - Direct Tax


Property, Law relating to Intellectual Property, Interpretation of Statutes, and other Miscellaneous Provisions of Law, from time to time. The NTT besides the aforesaid statutes, will not only have to interpret the provisions of the three statutes, out of which appeals will be heard by it, but will also have to examine a challenge to the vires of statutory amendments made in the said provisions, from time to time. They will also have to determine in some cases, whether the provisions relied upon had a prospective or retrospective applicability. Keeping in mind the fact, that in terms of s. 15 of the NTT Act, the NTT would hear appeals from the Income Tax Appellate Tribunal and the CESTAT only on “substantial questions of law”, it is difficult for us to appreciate the propriety of representation, on behalf of a party to an appeal, through either Chartered Accountants or Company Secretaries, before the NTT. The determination at the hands of the NTT is shorn of factual disputes. It has to decide only “substantial questions of law”. In our understanding, Chartered Accountants and Company Secretaries would at best be specialists in understanding and explaining issues pertaining to accounts. These issues would, fall purely within the realm of facts. We find it difficult to accept the prayer made by the Company Secretaries to allow them, to represent a party to an appeal before the NTT. Even insofar as the Chartered Accountants are concerned, we are constrained to hold that allowing them to appear on behalf of a party before the NTT, would be unacceptable in law. We accordingly reject the claim of Company Secretaries, to represent a party before the NTT. We simultaneously hold s. 13(1), insofar as it allows Chartered Accountants to represent a party to an appeal before the NTT, as unconstitutional and unsustainable in law.

7. CIT vs. Holcim India P. Ltd (Delhi High Court) S. 14A & Rule 8D disallowance cannot be made if there is no exempt

income or if there is a possibility of the gains on transfer of the shares being taxable.(i) On the issue whether the assessee could have earned dividend income

and even if no dividend income was earned, yet Section 14A can be invoked and disallowance of expenditure can be made, there are three decisions of the different High Courts directly on the issue and against the Revenue. No contrary decision of a High Court has been shown to us. The Punjab and Haryana High Court in CIT vs. M/s. Lakhani Marketing Inc made reference to two earlier decisions of the same Court in CIT Vs. Hero Cycles Limited, 323 ITR 518 and CIT Vs. Winsome Textile Industries Ltd 319 ITR 204 to hold that Section 14A cannot be invoked when no exempt income was earned. The second decision is of the Gujarat High Court in CIT vs. Corrtech Energy (P.) Ltd. [2014] 223 Taxmann 130 (Guj). The third decision is of the Allahabad High Court in CIT vs. Shivam Motors (P) Ltd;

(ii) Income exempt under Section 10 in a particular assessment year, may not have been exempt earlier and can become taxable in future years. Further, whether income earned in a subsequent year would or would not be taxable, may depend upon the nature of transaction entered into in the subsequent assessment year. For example, long term capital gain on sale of shares is presently not taxable where security transaction tax has been paid, but a private sale of shares in an off market transaction attracts capital gains tax. It is an undisputed position that assessee is an investment company and had invested by purchasing a substantial number of shares and thereby securing right to management. Possibility of sale of shares by private placement etc. cannot be ruled out and is not an improbability. Dividend may or may not be declared. Dividend is declared by the company and strictly in legal sense, a shareholder has no control and cannot insist on payment of dividend. When declared, it is subjected to dividend distribution tax;

(iii) What is also noticeable is that the entire or whole expenditure has been disallowed as if there was no expenditure incurred by the assessee for conducting business. The CIT(A) has positively held that the business was set up and had commenced. The said finding is accepted. The assessee, therefore, had to incur expenditure for the business in the form of investment in shares of cement companies and to further expand and consolidate their business. Expenditure had to be also incurred to protect the investment made. The genuineness of the said expenditure and the fact that it was incurred for business activities was not doubted by the Assessing Officer and has also not been doubted by the CIT(A).

gain should be fixed merely on the basis of the valuation to be made by the District Sub Registrar for the purpose of stamp duty. The legislature has taken care to provide adequate machinery to give a fair treatment to the citizen/taxpayer. There is no reason why the machinery provided by the legislature should not be used and the benefit thereof should be refused. Even in a case where no such prayer is made by the assessee, who may not have been properly instructed in law, the assessing officer, discharging a quasi judicial function, has the bounden duty to act fairly and to give a fair treatment by giving him an option to follow the course provided by law (Sunil Kumar Agarwal vs. CIT (Cal HC) followed)

5. CIT vs. Ghatge Patil Transports Ltd (Bombay High Court) S. 2(24)(x) r.w.s 36(1)(va) & 43B: Even employees’ contribution to PF

etc is allowable if deposited before due date of filing ROI Section 43B made it mandatory for the department to grant deduction in

computing the income under section 28 in the year in which tax, duty, cess, etc. is actually paid. However, Parliament took cognizance of the fact that the accounting year of a company did not always tally with the due dates under certain statutes and, therefore, by way of the first proviso, an incentive / relaxation was sought to be given in respect of tax, duty, cess or fee by explicitly stating that if such tax, duty, cess or fee is paid before the date of filing of the return under the Income Tax Act, the assessee would be entitled to deduction. It did not apply to contributions to labour welfare funds. The second proviso resulted in implementation problems and which led to deletion of the second proviso in the Finance Act, 2003 and bringing about uniformity in the first proviso by equating tax, duty, cess and fee with contributions to welfare funds like employees’ provident fund, superannuation. Fund and other welfare funds. The first proviso by Finance Act, 2003 was made applicable with effect from April 1, 2004 and the assessee would argue that it was curative in nature, clarificatory and, therefore, applied retrospectively from 1st April, 1988. The department argued that it was clarifactory and, therefore, applied prospectively. The Supreme Court held that Finance Act, 2003 would be applicable retrospectively and defaulter who fails to pay the contribution to the welfare fund right upto April 1, 2004 and who pays the contribution after April 1, 2004, would get the benefit of deduction under section 43B of the I.T. Act. It is held that the Finance Act, 2003 to the extent indicated above would be curative in nature and hence is retrospective. The reason being to be that the employers should not sit on the collected contributions and deprive the workmen of the rightful benefits under social welfare legislations by delaying payment of contributions to the welfare funds. We are of the view that the decision of the Supreme Court in Alom Extrusions Ltd 319 ITR 306 applies to employees’ contribution as well as employers’ contribution (CIT vs. Hindustan Organics Chemicals Ltd (Bom HC) followed).

6. Madras Bar Association vs. UOI (Supreme Court – Constitution Bench) The NTT Act “crosses the boundary” & is unconstitutional. CAs/CSs

are specialists on accounts & facts and are not capable of arguing/ deciding ‘Substantial Questions Of Law’

The Full Bench of the Supreme Court had to consider whether the National Tax Tribunals Act, 2005, which sought to take away the jurisdiction of the High Courts in tax matters was constitutional. The Full Bench has struck down the entire Act as being unconstitutional on the ground that though “tribunalization” has been allowed subject to safeguards, the NTT Act “crosses the boundary” and “encroaches the exclusive domain” of the High Courts. In the course of the judgement, the Supreme Court had to consider whether Chartered Accountants could be appointed Members of the NTT and whether s. 13(1) of the Act which permitted Chartered Accountants to represent a party to an appeal before the NTT was valid in law. It also had to consider the application by the Company Secretaries that they are equal in all respects to the CAs and should also be permitted to appear and plead before the NTT. HELD by the Full Bench:

A perusal of the reported judgements shows that while deciding tax related disputes, provisions of different laws on diverse subjects had to be taken into consideration. The Members of the NTT would most definitely be confronted with the legal issues emerging out of Family Law, Hindu Law, Mohammedan Law, Company Law, Law of Partnership, Law related to Territoriality, Law related to Trusts and Societies, Contract Law, Law relating to Transfer of


penalty proceedings and no rebuttal to the findings of the AO that the transactions were bogus and sham are sufficient facts to hole that the assessee had put a false claim of depreciation during the assessment proceedings. The plea of the assessee that he did not contest the addition to avoid litigation or to buy peace etc. even does not seem plausible. The Hon’ble Supreme Court, in the case of “MAK Data P. Ltd. vs. Commissioner of Income Tax-II” civil appeal No.9772 of 2013 date of decision 30.10.13, has categorically held that it is the statutory duty of the assessee to record all its transactions correctly and to clear its true income in the return of income. The AO should not be carried away by the plea of the assessee like “voluntary disclosure”, “buy peace”, “avoid litigation”, “amicable settlement”, etc. to explain away its conduct. The question is whether the assessee has offered any explanation for concealment of particulars of income or furnishing inaccurate particulars of income. Explanation to Section 271(1) raises a presumption of concealment, when a difference is noticed by the AO, between reported and assessed income. The burden is then on the assessee to show otherwise, by cogent and reliable evidence. When the initial onus placed by the explanation, has been discharged by him, the onus shifts on the Revenue to show that the amount in question constituted the income and not otherwise;

(ii) The other plea taken by the assessee is that in fact there was no tax effect when the income shown by the assessee in subsequent years is taken into consideration. The assessee in the assessment year in question has claimed a huge claim of depreciation. Merely because in the subsequent years, the net tax effect would be ‘zero’ or otherwise, does not lessen the burden of the assessee to state true and correct particulars of the income for the year under consideration;

(iii) The contention that whether a transaction is a lease transaction or a finance transaction is a debatable legal issue, we are not inclined to accept this argument also. Whether a transaction is a lease transaction or a loan transaction, in our view, is a factual issue which is to be decided after appreciation of the relevant facts. If the facts show that the assessee has put a wrong claim of depreciation by showing a finance or loan transaction as a lease transaction, certainly the claim is to be disallowed. However, in cases, where from the facts and evidences on the file it can be shown that the transaction was real or genuine, the relief of claim of depreciation is to be allowed. In the case in hand, from the facts, it was clearly established that the assessee had put a wrongful claim of depreciation and thereby had furnished inaccurate particulars of income for the purpose of concealment of real income, hence, the penalty proceedings were correctly initiated by the AO.

(iv) It was not a case of tax planning by the assessee so as to avoid or reduce its taxes by remaining within the framework of the law. The transactions entered into by the assessee were sham and bogus transactions which were intended to defeat the provisions of law. It may be observed that tax avoidance by way of tax planning or structuring the transactions so as to reap the largest tax benefit may be permissible under law but fraudulent transfer of assets or income or engaging in sham transactions with the object of reducing the tax liability cannot be said to be a case of tax avoidance but of tax evasion. Any act or attempt to reduce the tax liability by deceit, subterfuge or concealment is not permissible under law.

11. Raajratna Metal Industries Ltd vs. ACIT (Gujarat High Court) S. 147: If AO contests the audit objection but still reopens to comply

with the audit objection, it means he has not applied his mind independently and the reopening is void

To satisfy ourselves, whether the reassessment proceedings have been initiated at the instance of the audit party and solely on the ground of audit objections ….. On a perusal of the files, the noting made therein and the relevant documents, it appears that the assessment is sought to be reopened at the instance of the audit party, solely on the ground of audit objections. It is also found that, as such, the AO tried to sustain his original assessment order and submitted to the audit party to drop the audit objections …. … if the reassessment proceedings are initiated merely and solely at the instance of the audit party and when the Assessing Officer tried to justify the Assessment Orders and requested the audit party to drop the objections and there was

8. Alliance Infrastructure Projects Pvt. Ltd vs. DCIT (ITAT Bangalore) S. 14A & Rule 8D disallowance cannot be made if there is no exempt

income. Cheminvest Ltd. vs. ITO 121 ITD 318 (Ahd) (SB) is not good law.

There is no dispute that the assessee had no exempt income during both the years involved. No doubt as mentioned by the DR, the Special Bench of this Tribunal in the case of Cheminvest Ltd. vs. ITO 121 ITD 318, had held that disallowance under section 14A could be made even in an year in which no exempt income was earned or received by the assessee. This decision of Special Bench of the Tribunal has been, in our opinion, impliedly overruled by various decisions of different High Courts, namely, CIT vs Shivam Motors P. Ltd. (All HC), CIT vs. Corrtech Energy Pvt. Ltd (Guj HC), CIT vs. Winsome Textile Industries Ltd 319 1TR 204 (P&H), CIT Vs.Delite Enterprises (Bom HC) & CIT vs. Lakhani Marketing (P&H HC). Therefore, unless and until there is receipt of exempted income for the concerned assessment years, s. 14A of the Act cannot be invoked.

9. Parmanand Tiwari vs. ITO (ITAT Kolkata) Rule 37BA (credit for TDS) inserted w.e.f. 01.04.2009 to mitigate

hardship to taxpayers has to be treated as being retrospective in nature

Rule 37BA of the Rules clearly mentions that credit for tax deducted at source and paid to the Central Government shall be given to the person provided that the deductee files a declaration with the deductor and the deductor reports the tax deduction in the name of other person in the information relating to deduction of tax referred to in sub-rule (1) of Rule 37BA of the Rules. Further, sub-rule (3) of Rule 37BA of the Rules provides that for the purpose of giving credit in respect of tax deducted in term of provisions of Chapter XVII for the purpose of giving credit to a person other than those referred to in sub-section (1) and also the assessment year in which such credit may be given. In view of the above provision of section 37BA of the Rules and the provisions of section 199(1) of the Act, the credit for tax deduction could be given to the person from whose income tax has been deducted. The Rule as amended by the Amendment Rules, 2009 w.e.f. 01.04.2009 makes it abundantly clear that the credit will be given based on the information by deductor. The proviso to sub-rule (2) of Rule 37BA of the Rules mitigates the hardship faced by assessee for claiming credit of TDS whereby deductee files a declaration with the deductor and the deductor reports the tax deduction in the name of other person in the information relating to deduction of tax as referred to in sub-rule (1) of Rule 37BA of the Rules. In such provisions of law, the assessee should have been allowed credit for TDS in the given set of facts and circumstances of the case. The only issue is that the amended provision is applicable w.e.f. 01.04.2009 and the relevant assessment year involved is 2008-09. Whether the amended Rule as amended by Amendment Rules, 2009 is a beneficial provision mitigating the hardship of the assessee and in turn the same can be declared as retrospective and will apply to all pending matters. Similar issue was dealt by Hon’ble Supreme Court in the case of Allied Motors Pvt. Ltd. Vs. CIT (1997) 224 ITR 677 (SC), wherein it has been held that “the provisions of the first proviso, which has newly been inserted by the Finance Act, 1987, with effect from 1st April, 1998, to section 43B is remedial in nature, designed to eliminate unintended consequences which may cause undue hardship to the assessee and which made the provision unworkable or unjust in a specific situation, and is of clarificatory nature and, therefore, has to be treated as retrospective with effect from 1st April, 1984, the date on which section 43B has newly been inserted by the Finance Act, 1983.” Similarly, here also the Rule was inserted by the Amendment Rules, 2009 to remove the hardship faced by assessees and to give true meaning to the provision of section 199 of the Act. In such circumstances, I direct the AO to allow the credit of TDS after verifying declaration to be filed by deductee in term of proviso to sub-rule (2) of Rule 37BA of the Rules.

10. Times Guaranty Ltd vs. ACIT (ITAT Mumbai) S. 271(1)(c): Wrong claim for depreciation by showing a finance or

loan transaction as a lease transaction attracts penalty(i) The detailed findings of the AO, the assessee not agitating the findings of

the AO in quantum proceedings, no plea of factual discrepancies during quantum proceedings and appeals, even no such plea before AO during


the higher will be commission earned by the assessee. Accordingly, we have no doubt that there is a direct nexus between advertising expenditure and revenue albeit the fact that there may be a lean period before revenue picks up notwithstanding high amount spent on such publicity. This justifies the higher expenditure vis-a-vis revenue noticed by the department.

It is also not necessary that the foreign enterprises must compensate the Indian agent for the benefit it receives or it may receive from the advertisement and promotion of its channels by agent in India. The agent in India earns commission from adsales and distribution revenue, both of which have sufficiently compensated the assessee. We would not expect the revenue to determine the sufficiency of the compensation received by the agent and as such we do not find any justification in this ground either.

13. DCIT vs. Owens Corning Industries (India) Pvt. Ltd (ITAT Hyderabad) TPO cannot question commercial expediency of payment to AE. RBI

approval to a transaction implies it is at arms’ length price We are of the opinion that the TPO was incorrect in going into the business

expediency of payment of royalty and arriving at the conclusion of the quantum of the royalty. We find support for this proposition in the decision of Hon’ble Delhi High Court in CIT vs. EKL Appliances (345 ITR 241) (Del) wherein the Hon’ble Delhi High Court had occasion to consider the disallowance of royalty by TPO and held that if the expenditure has been incurred or laid out for the purposes of business it is no concern of the TPO to disallow the same on any extraneous reasons. In the case ofEricsson India Pvt. Ltd. vs. DCIT (ITA No. 5141/Del/2011) the Delhi High Court decision in CIT vs. EKL Appliances (supra) was followed wherein it was held that “it would be wrong to hold that the expenditure should be disallowed only on the ground that these expenses were not required to be incurred by the assessee”.

We also draw support from the decision of Ahmedabad Bench in KHS Machinery (P) Ltd. vs ITO (146 TTJ 692) ….. and … Air Liquide Engg. India (P) Ltd., vs DCIT (ITA No. 1040/Hyd/2011, 1159/Hyd/2011 and 1408/Hyd/2010) dated 13th February 2014 ….

We find merit in this claim that once the RBI approval of royalty rate was obtained the payment was considered to be held at arm’s-length. It is also noted that various Tribunals such as Air Liquide Engg. India (P) Ltd, Hyderabad (ITA No.1159, l040/Hyd/2011 & ITA No.1408/Hyd/ 2010), DCIT vs. Sona Okegawa Precision Forgins Limited (ITA No. 5386/DeI/2010), Hero Motocorp Limited vs. Addl. CIT (ITA No. 5130/Del/2010), ThyssenKrup Industries India Ltd vs Addl. CIT (ITA No. 6460/Mum/2012), Abhishek Auto Industries Ltd. vs. CIT (ITA No. 1433/Del/2009) have taken a view that RBI approval of the Royalty rates itself implies that the payments are at Arm’s Length and hence no further adjustment needs to be made viewed from this angle too.

14. Shanti Enterprise vs. ACIT (Gujrat High Court) S. 275(1A): Assessee’s claim for refund of penalty with interest cannot

be defeated by inaction of revenue(i) What is provided by Section 275(1A) is that the order imposing or

enhancing or reducing or cancelling the penalty may be passed on the basis of the assessment as revised by giving effect to the order in appeal. The concerned authority was thus required to make specific order for cancelling the penalty by giving effect to the order in appeal made in favour of the petitioner. However, failure of assessing officer or concerned authority to pass such order would not mean that the assessee has no right of refund on his becoming successful in appeal against the order of assessment. Further, if there is failure to exercise power under Section 275(1A) within outer limit of six months, the assessee would be justified in approaching before this Court under Article 226 of the Constitution. In our view, word ‘MAY’ should be construed to create an obligation upon the authority to pass consequential order upon conclusion of the litigation.

(ii) Though time limit of six month is provided for the order contemplated to be passed of imposing, enhancing, reducing, cancelling penalty or dropping the proceedings for imposition of penalty for giving effect to any order passed in appeal, but when such order is to be passed in favour of the assessee, time limit for passing such order by the concerned officer should not come in the way of the assessee for cancelling the penalty on

no independent application of mind by the Assessing Officer with respect to subjective satisfaction for initiation of the reassessment proceedings, the impugned reassessment proceedings cannot be sustained and the same deserves to be quashed and set aside (MAYUR WOVENS PVT. LTD and Shilp Gravures Ltd and Vodafone West Ltd followed).

12. CIT vs. N.G.C. Network (India) P. Ltd (Bombay High Court) Advertisement expenditure incurred by agent to popularize the

business of the channel run by the foreign principal is allowable as there is a direct business between the expenditure and the assessee’s business as agent. The fact that the foreign principals also benefited does not entail right to deny deduction under section 37(1)

The main grounds on which the revenue has questioned the order of the tribunal are (a) non disclosure in form 3CEB of the fact that the principal is also a beneficiary of the advertising expenses; (b) that the advertising and promotional expenses are not wholly for the benefit of the assessee but it also benefited the principal who was an associated enterprise; (c) that advertising and publicity expenses were far higher than the amount of revenue earned and lastly, that although foreign principals i.e. Associated Enterprise benefited from advertising and publicity no compensation was paid by the foreign principals to the assessee to avail of such benefits.

It is not possible to accept the Revenue’s contentions for the following reasons: Firstly, the contention that there was no proper disclosure of the benefit before the Transfer Pricing Officer cannot now be a reason to entertain the questions and the order of Transfer Pricing Officer is final. It was admitted position that the assessee is a agent of foreign principal and would naturally benefit from advertising carried on by agent in India. However, these benefits were not ascertainable. The contention of the assessee that the benefits were not ascertainable or taxable in view of extra territory appears to be correct and justified. In the instant case we find that the assessee has not suppressed any information. It has offered to tax its income from both business, namely, distribution business as well as advertisement and promotion business. In the assessment year in question, the Assessing Officer has proceeded to grant 33.33% of the total advertising expenses as allowable deduction. We do not find any justification for such restriction of the same. Furthermore, the Appellant’s case during argument that the fact of the foreign principal benefiting had been disclosed in the Form 3CEB and the Transfer Pricing Officer `could’ have taken a different view. Admittedly therefore the Transfer Pricing Officer had followed a possible view which cannot now be faulted.

The contention that the expenditure should have been wholly and exclusive for the purpose of business of the assessee under section 37(1) read with provisions of section 40A(2) as being excessive and unreasonable does not appeal to us. There can be no doubt in the instant case, that in view of decision of the Supreme Court in Sassoon David (supra) it cannot be said that the expenditure was not wholly or exclusively for benefit of the assessee. The mere fact that foreign principals also benefited does not entail right to deny deduction under section 37(1). Furthermore, it is seen that all the amounts earned by the assessee were brought to tax, especially in view of the fact that the payment of expenses were made to Indian residents and there payments were not required to be included in form 3CEB since Section 92 which governs the effect of form 3CEB covers only international transactions. Furthermore, it is seen that the respondents income from subscription fee is variable and through commission received on the advertising sales is 15% of the value of Ad-sales. The Assessing Officer’s contention that the assessee received fixed income is not justified and there is certainly, in our view, a direct nexus between the amount spent on advertising and publicity, and the appellant’s revenue.

Advertisers who advertise on these channels act through media houses and advertising agencies and they work to media plans designed in the manner so as to maximise value for the advertiser. They will evaluate expenditure with channel penetration in the market place inasmuch as only channels with high viewership would justify the higher advertising rates which is normally sold in seconds. Merely having high quality content will not ensure high viewership. This content has to be publicized. The great reach of the publicity, the higher chances of larger viewership. The larger the viewership, the better chances of obtaining higher advertisement revenue. The higher advertisement revenue,


available with the AO was the DVO’s estimated report, which is based entirely on comparative transactions in the close vicinity. This, cannot become the basis of adoption of financial valuation.

17. CIT vs. Fortune Hotels and Estates Pvt. Ltd (Bombay High Court) S. 271(1)(c): Non-offering of stamp duty/DVO value as consideration

for capital gains does not attract penalty if facts are on record The assessee was the owner of office premises which were sold in AY 2004-05

for Rs. 2 crore. The AO noted that the stamp duty valuation of the property was Rs.3,72,42,000 and that the DVO had valued the property at Rs. 2,70,03,920. The value adopted by the DVO was taken as the consideration for sale of the property u/s 50C and capital gains was assessed on that basis. The assessee accepted the same. The AO levied penalty u/s 271(1)(c) for furnishing inaccurate particulars of income. This was upheld by the CIT(A) though deleted by the Tribunal. Before the High Court, the department relied on Chuharmal vs. CIT 172 ITR 250 (SC) and argued that even though s. 50C created a liability for deemed income, still penalty u/s 271(1)(c) could be levied. HELD by the High Court dismissing the appeal:

The Tribunal finding that the case was not one of furnishing inaccurate particulars of income or of concealment inasmuch as there was a registered sale deed and the consideration was mentioned therein cannot be faulted. Also, the DVO determined the value at a figure from that of the stamp value. The larger question posed for consideration as to whether s. 271(1)(c) penalty can apply to deemed income is left open for consideration in an appropriate case.

18. CIT vs. Indian Oil Corporation Ltd (Bombay High Court) S. 244A(1)(b): Refund of Self-Assessment tax is also entitled to

interest The Tribunal held that a refund on account of self-assessment tax was entitled

to interest u/s 244A(1)(b). On appeal by the department to the High Court HELD by the High Court dismissing the appeal:

In view of the judgement of the Madras High Court in Cholamandalam Investment and Finance Ltd 294 ITR 438 (Special Leave Petition dismissed by the Supreme Court) and Sutlaj Industries Ltd 325 ITR 331 (Del) and the fact that there is nothing contrary, the appeal of the department is dismissed.

B. Indirect Tax Compiled by CA Ankit Kanodia

[email protected]. Cenvat credit not reversible under rule 6 of the CCR on by products-

[SHREE KAMREJ VIBHAG SAHAKARI KHAND UDYOG MANDLI LTD. Versus COMMISSIONER OF C.EX., SURAT(2014 (302) E.L.T. 258 (Tri. - Ahmd.)]

The appellant is engaged in the manufacture of sugar and during the course of manufacture of sugar, a product ‘press-mud’ emerges which is actually a waste and by itself cannot be of much use, which is further processed and mixed with spent Wash and Bio-compost emerges. On the ground that the bio-compost is not liable to duty and is exempted product and therefore the appellant was required to maintain separate accounts in respect of inputs utilized for the manufacture of dutiable product and bio-compost Revenue required the appellant to pay 10% of the value of the bio-compost sold in terms of Rule 6(3) of Cenvat Credit Rules with interest. Further, penalty under Section 11AC of Central Excise Act, 1944 has also been imposed. The Tribunal after hearing both the sides held that just because the press-mud is processed further resulting in exempted product, it cannot be said that the appellant is required to maintain separate accounts. Further, in the case of CCE, Visakhapatnam v. Sri Sarvarya Sugars Ltd. - 2010 (250) E.L.T. 542 (Tri.-Bang.), the Tribunal took a view that the appellant was not required to reverse the 10% of the value of press-mud under Rule 6 of CENVAT Credit Rules, 2004.Following the decision of Hon’ble High Court and Tribunal cited by above, the appeal was allowed with consequential relief to the appellant.2. CENVAT – reversal of credit not required unless invoices found to

be wrong or inputs received under any invoice diverted - Rule 3 of Cenvat Credit Rules, 2004- Gujarat HC (COMMISSIONER OF C. EX. AND CUSTOMS, DAMANVersusNARENDRA IMPEXI2011 (265) E.L.T. 332 (Guj.))

his getting success before the higher forum in appeal merely because the concerned officials failed to discharge his duty of giving effect to the order made in the appeal in favour of the assessee.

(iii) A “tax refund” is a refund of taxes when the tax liability is less than the tax paid. As held by the Courts while awarding interest, it is a kind of compensation of use and retention of the money collected unauthorizedly by the Department. When the collection is illegal, there is corresponding obligation on the revenue to refund such amount with interest in as much as they have retained and enjoyed the money deposited.

15. ACIT vs. NHPC Ltd (ITAT Delhi) S. 115JB: Cost of use of land amortized in books cannot be added back

for computing book profits This is a land taken for use from the State government without transferring the

title for relief and rehabilitation for land evacuees because of submerges and where construction of such alternative facility is a condition for setting up a project. The cost so incurred by the assessee company is amortized over useful life of the project. The above policies have been approved by the auditors of the company as well as the C&AG. The accounts of the assessee company are subject to audit not only by the statutory auditors but also by the C&AG also. Further the accounts so prepared has been approved and adopted by the company in the Annual General Meeting and filed with the Registrar of Companies

The Supreme Court in the case of Apollo Tyres Ltd. (Supra) has held that the AO under the Income-tax Act has to accept the authenticity of the accounts with reference to the provisions of the Companies Act which obligates the company to maintain its account in a manner provided by the Companies Act and the same to be scrutinised and certified by the statutory auditors and will have to be approved by the company in its general meeting and thereafter to be filed before the Registrar of Companies who has a statutory obligation also to examine and satisfy that the accounts of the company are maintained in accordance with the requirements of the Companies Act. The Supreme Court has further held that the AO while computing the income under section 115J has only the power of examining whether the books of account are certified by the authorities under the Companies Act as having been properly maintained in accordance with the Companies Act. The Assessing Officer thereafter has the limited power of making increases and reductions as provided for in the Explanation to the said section (115J). The Supreme Court has further went on to hold “To put it differently, the Assessing Officer does not have the jurisdiction to go behind the net profit shown in the profit and loss account except to the extent provided in the Explanation to section 115J”.

16. ACIT vs. Dilip Nabera (HUF) (ITAT Mumbai) Even if s. 50C addition can be made on the basis of stamp duty

valuation, addition u/s 69B cannot be made barely on the basis of DVO’s report

At the outset, we have to demarcate the territory of the case, i.e. application of section 50C and addition to be made u/s 69C. We find that both the sections operate independently i.e. to say that section 50C shall bet attracted where there is a transfer of property by the assessee and receives sales consideration. This automatically puts into oblivion the purchase part of the agreement. Hence, the argument of the assessee before the CIT(A0 was correct that provisions of section 50C do not apply on purchase part of the agreement.

Coming to application of section 69B, it is attracted if the AO finds that the amount expended on making investment exceeds the amount recorded in the books or the explanation, as made by the assessee is not acceptable. From the orders of the revenue authorities, we have find that the material available with the AO was report of the

DVO, and the report of the registered valuer. As seen from the impugned order, the remand report does not talk about any thing factual but it only says that since the DVO valuation is closer to stamp duty valuation, hence DVO’s report is being adopted. As such there is nothing in the report of the DVO. The only acceptable document is the report of the registered valuer, which has same basis.

We find that the observation of the CIT(A) that the AO must have some reasonable material to put the leash on the assessee. But the only material

Recent JudicialPronouncements - Indirect Tax


Recent Judicial Pronouncements - Indirect Tax

The respondent-assessee is engaged in manufacturing Plastic Lay Flat Tubing, plastic films, plastic bags etc. falling under Chapter 39 of the Central Excise Tariff Act, 1985. During the course of audit, it was observed that the assessee had furnished Form No. 3-CD under Section 44AB of the Income Tax Act, 1961 to the Income Tax Department, which revealed that the assessee has received short quantity of raw material, that is, plastic powder and granules which had not been in stock accounts of inputs. Under the provisions of Rules 57A and 57AB of the erstwhile Central Excise Rules, 1944 (the Rules) and Rule 3 of the CENVAT Credit Rules, 2001-2002, the manufacturer or producer of final product is entitled to take credit of duty paid on any inputs or capital goods received in the factory. Since it appeared that the assessee had wrongly availed of CENVAT credit of such short quantity of raw material and proportionately wrongly availed CENVAT credit, show cause notice came to be issued to the assessee proposing to recover CENVAT credit of Rs. 2,19,333/- along with interest and penalty.The Commissioner (Appeals) has allowed the appeal filed by the revenue mainly on the ground that the Form 3-CD under Section 44AB of the Income Tax Act, 1961 is a valid and statutory document and has laid the onus on the assessee to prove that the disputed short quantity of raw material was due to process loss. The CESTATupon appreciation of the evidence on record, found that the entire case of the revenue was based upon shortage in respect of quantity of inputs mentioned in the 3-CD Income Tax Return. That the Adjudicating Authority had found that except for the above, there was no other corroborative evidence to establish that the shortage was on account of short receipt of raw material. The assessee had availed of credit of the duty as reflected in the invoices for the inputs. There was no allegation that the credit availed by it was in excess of the duty paid by the supplier of the inputs. The Tribunal further found that there was some process loss during blow moulding process and that the loss claimed by the assessee was not on the higher side. The Tribunal observed that the Commissioner (Appeals) had proceeded on assumptions and presumptions and not on the basis of any evidence showing less receipt of raw material in the assessee’s factory and was of the view that the benefit of yield loss was required to be extended to the assessee. The High Court after noting the above facts held that it is not in dispute that there is no diversion of goods covered under the invoices in question and that the entire inputs received have been used as inputs in the end product manufactured by the assessee and have not been put to any other use. The mode of proof of quantity and payment of duty on inputs received and used as input is by producing invoices. Unless the invoices are found to be wrong or diversion of inputs received under any invoice to any other use is found, the assessee is entitled to avail of the cenvat credit in terms of the invoices issued by the supplier.In the absence of any evidence to indicate short receipt of material, merely because there is some discrepancy between the quantity stated in the invoice and that shown in the 3-CD report, it cannot be presumed that there was in fact short receipt of raw material. In the light of the aforesaid discussion, it is not possible to state that the conclusion arrived at by the Tribunal is in any manner unreasonable, so as to warrant interference and thus the revenue appeal was dismissed.3. CE – S.4A of CEA, 1944 - Goods cleared in bulk does not mean that

they are meant for Industrial/Institutional consumers - It should be meant for Industrial/Institutional consumers under the SWAM Rules to pay duty u/s 4 of the CEA, 1944 (M/s NITCO TILESVsCOMMISSIONER OF CENTRAL EXCISE, RAIGAD)

In this case, the appellants The appellant M/s. Nitco Tilesis a manufacturer of ceramic tiles and clearing the same to their depots. The appellant sold this tile to dealer who in turn sells to ultimate consumer. The appellant also sell tiles to buyers such as Real Estate Developers, Construction Co., Cooperative Housing Societies, Commercial Complexes, Educational Institutions & Hostels, Hotels, Hospitals, Interior Designers etc. The product manufactured by the appellant is ceramic tiles is required to pay duty as per Section 4A of the Central Excise Act, 1944 i.e. MRP less abatement. The appellant is discharging the duty liability as per Section 4A but the revenue is of the view that as these tiles have been cleared to industrial or institutional consumers, they are not required to discharge Central Excise duty as per Section 4A as clearance to these institutional or Industrial Consumer is exempt to affix MRP as per Rule 2A of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977. Therefore, the appellants are required to pay duty on transaction value i.e. as per Section 4 of Central Excise Act, 1944. Accordingly, impugned proceedings were initiated against the appellant and duty demand along with interest and penalty have been confirmed against them by way of the

impugned order. The Appellant submitted that he goods are manufactured by them in regular process and are intended for retail sale and packed accordingly. Although the appellants are receiving orders for bulk supply but the goods supplied in bulk have also been manufactured as those which were intended for retail sale. As per the Standard of Weights and Measures (Packaged Commodities) Rules, 1977, they are required to affix MRP and other details on the said packages, therefore, they are paying duty as per Section 4A of the Central Excise Act, 1944. As per Rule 2A of the Package Commodity Rules, the Rules have given exemption for the commodity Rules, the Rules have given exemption for the commodity meant for Industrial/Institutional consumers. These goods were already manufactured and intended for retail sale, and all packages are treated alike. Therefore, they have correctly discharged their duty and the goods cleared in bulk does not mean that they are meant for Industrial/Institutional consumers and not required to affix MRP. After hearing both the side, the CESTAT held that in almost all the cases, supplies have been made within a period of one week of the obtaining of the purchase order. As the manufacturing of tiles by the appellant is a continuous process, therefore, these goods are meant for retail sale. Accordingly, the appellant has affixed MRP on each package of the tiles, even if the quantity supplied is in bulk but it is clearly indicated in the purchase order that the goods have to be supplied in boxes of 15 tiles which means that supplies are retail packs on which MRP is printed. As there is no time gap between the receipt of the purchase order and effected supply, which would also prove that supplies are made out of the quantity already manufactured by the appellant, packed and kept ready for sale. therefore, they have correctly discharged the duty and the goods cleared in bulk does not mean that they are meant for industrial/Institutional consumers. It should be meant for Industrial/Institutional consumers under the Standard Weights & Measures Rules to pay duty under Section 4 of the Central Excise Act, 1944 and the appeal was allowed.4. Service Tax – Refunds – Interest payable on delayed refunds

(RELIANCE INDUSTRIES LTDVsTHE COMMISSIONER OF CENTRAL EXCISE AND SERVICE-TAX, RAJKOT 2014-TIOL-2096-CESTAT-AHM)

In this case the Appellants had paid Service Tax on services in SEZ on which no service tax was payable. Any services rendered in an SEZ units are exempted by SEZ Act 2005 and the service tax in excess of what was in other ways leviable is to be refunded as per the provisions. The Board hadcategorically directed the formulation that the refund claim of the service tax paid on services rendered to SEZ units should be sanctioned within the maximum time of 30 days from the date of filing of refund claim and in any case beyond 45 days from the date of filing of the refund claim.Clear instructions of the Board are not followed in the case in hand which is very evident from the delay which has occurred in sanctioning refund claim. The time limit which has been given out in place by the Board needs to have been followed failing which, the liability to pay interest arises. The circular dtd 20th May, 2009 has practically put the refund claims filed in terms of Notification of 9/2009 on a higher platform as compared to other types of refund claims filed under Section 11B for which 3 months period was prescribed for processing the claim from the date of filing of the refund claims.Aggrieved by the rejection of refund claims of interest, appellants preferred appeal before the First Appellate Authority. The First Appellate Authority after following the due process of law did not agree with the above contentions raised by the appellant and rejected the appellants claims for interest on the belated refunds. The CESTAT held that Firstly, it is to be noted that any services rendered in an SEZ units are exempted by SEZ Act 2005 and the service tax in excess of what was in other ways leviable is to be refunded as per the provisions. In the case in hand, undisputedly services were rendered to the appellant in an SEZ unit and service tax paid by the service provider.Secondly, the First Appellate Authority has held that the appellants claim is contrary to the spirit of the Board circulars is findings contrary to the spirit of both the circulars dtd 20th May, 2009 and thirdly, the judgment of the Hon’ble High Court of Gujarat in the case of Reliance Industries Ltd has clearly rejected the arguments of the Revenue that Cenvat Credit Rules did not specifically provide for interest on sanction of the refund claims. Thus the Tribunal held that he impugned orders rejecting the claim of interest of the appellant were incorrect and not in consonance with the law as settled by various judicial fora. Accordingly, the impugned orders were set aside and the appeals allowed with consequential relief if any.

EIRC 1st November 2014 �

Notification & CircularsDirect Taxes & Indirect Taxes

A. Direct TaxCompiled by CA Raj Singhania

[email protected]. S.O. 2487(E). – In exercise of the powers conferred by section 295 read

with section 197 of the Income‐tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income‐tax Rules, 1962, namely:‐ (1) These rules may be called the Income-tax (9th Amendment) Rules, 2014. (2) They shall come into force on the date of their publication in the Official

Gazette. 2. In the Income-tax Rules, 1962,—

(a) in rule 28AA, for sub-rule (4) and sub-rule (5), the following sub-rules shall be substituted, namely:-

(4) The certificate for no deduction of tax shall be valid only with regard to the person responsible for deducting the tax and named therein.

(5) The certificate referred to in sub-rule (4) shall be issued direct to the person responsible for deducting the tax under advice to the person who made an application for issue of such certificate.

(6) The certificate for deduction of tax at lower rate shall be issued to the person who made an application for issue of such certificate, authorising him to receive income or sum after deduction of tax at lower rate.”;

(b) in Appendix-II, for Form No.13, the following Form shall be substituted.[Notification No. 46/2014/F.No.133/10/2014-TPL dated 24.09.2014] 2. Whereas, a Protocol (hereinafter referred to as the said Protocol) as

set out in the Annexure, was entered into between the Government of the Republic of India and the Government of the Polish People’s Republic amending the Agreement between the Government of the Republic of India and the Government of the Polish People’s Republic for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income that was signed at Warsaw on the 21st day of June, 1989;

And whereas, the date of entry into force of the said Protocol is the 1st day of June, 2014, being the thirtieth day after the date of receipt of latter of the notifications of completion of the procedures as required by the respective laws for entry into force of the said Protocol, in accordance with paragraph 1 of article 17 of the said Protocol;

[Notification No. 47/2014/F.No.501/08/1979-FTD - 1 dated 24.09.2014] 3. S.O. 2669(E). – In exercise of the powers conferred by section 133C

read with section 295 of the Income‐tax Act, 1961(43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income‐tax Rules, 1962, namely:‐ 1. (1) These rules may be called the Income-tax (10th Amendment) Rules,

2014 (2) They shall come into force on the date of their publication in the

Official Gazette.2. In the Income-tax Rules, 1962, after Rule 12C, the following Rule Shall be

inserted, namely : Rule 12D : The prescribed authority u/s 133C shall be the Principal Director

General or Director General or Principal Director or Director, as the case may be.[Notification No. 48/2014/F.No.142/8/2014-TPL dated 30.09.2014] 4. S.O. 2669(E). - In exercise of the powers conferred by section 120

(1) of the Income‐tax Act, 1961, the CBDT hereby directs that Sri Bhaskar Goswami, Additional Commissioner of Income Tax in the office of Principal Chief Commissioner of Income Tax, New Delhi shall exercise the powers and functions of the Deputy Commissioner of Income Tax (TP Officer) – I – 5, New Delhi, and Sri Vijay Choudhary, Joint Commissioner of Income Tax in the office of Principal Chief

Commissioner of Income Tax, New Delhi shall exercise the powers and functions of the Deputy Commissioner of Income Tax (TP Officer) –I I – 5, New Delhi.

[Notification No. 49/2014/F.No.187/14/2013-ITA.I dated 17.10.2014]CIRCULARS

CIRCULAR NO. 14/2014: Clarification regarding allowability of deduction U/S 10A / 10AA on transfer of technical manpower in the case of software industry.CBDT had issued Circular No. 12 / 2014 dated 18th July, 2014 to clarify that mere transfer or re-deployment of existing technical manpower from an existing unit to a new SEZ unit in the first year of the commencement of business will not be construed as splitting up or reconstruction of an existing business, provided the number of technical manpower so transferred does not exceed 20% of the total technical manpower actually engaged in developing software at any point of time in the given year in the new unit.Representations have been received stating that the aforesaid limit of 20% is inadequate and restrictive since it impacts the competitiveness of the Indian Software Industry in the global market in terms of the quality of the product and delivery time-lines.The matter has been re-examined by the Board. In supersession of the Circular No. 12 / 2014 dated 18th July, 2014, it has now been decided that the transfer or re-deployment of existing technical manpower from an existing unit to a new SEZ unit in the first year of the commencement of business will not be construed as splitting up or reconstruction of an existing business, provided the number of technical manpower so transferred does not exceed 50% of the total technical manpower actually engaged in developing software or IT enabled products at any point of time in the given year in the new unit.Alternatively, if the assessee is able to demonstrate that the net addition of the new technical manpower in all units of the assessee is at least equal to the number that represents 50% of the total technical manpower of the new SEZ during such previous year, deduction U/S 10A /10AA would not be denied, provided the other prescribed conditions are also satisfied.The assessee will have a choice of complying with any one of the two above mentiond alternatives.[Circular No. 14/2014 dated 08.10.2014] CIRCULAR NO. 15/2014: Approval of long term bonds and rate of interest for the purpose of Section 194LC of the Income-tax Act, 1961Section 194LC of the Income-tax Act, 1961, introduced by the Finance Act 2012, provided for lower withholding tax at the rate of 5% on the interest payments by Indian companies on borrowings made in foreign currency by such companies from a source outside India. The benefit was available in respect of borrowings made either under an agreement or by way of issue of long term infrastructure bonds. The section further provided that such borrowing and the rate of interest should be approved by the Central Government. Subsequently with a view to lower the compliance burden and reduce the time lag which would have arisen on account of case-by-case approval, the Central Government had decided to grant approval to all borrowings by way of loan agreement and long term infrastructure bonds provided they satisfy certain conditions . The approval and the conditions were detailed in the CBDT Circular No.7 of 2012 dated 21st September, 2012.2. The Finance (No. 2) Act, 2014 has amended section 194LC with effect from the 1stDay of October, 2014. Consequent to the amendment, the concessional rate of withholding tax has been extended to borrowing by way of any long term bonds, not limited to a long term infrastructure bond, if the borrowing is made on or after 1st day of October, 2014. Further, the concluding date of the period of borrowings eligible for concession under Section194LC which was earlier 01/07/2015 has been extended to borrowings made before the 1st day of July, 2017. 3. Therefore, the approval of the Central Government is further required in respect of long term bond issue and the rate of interest to be paid on such borrowings.

4. Considering the fact that there would be a large number of bond issues to be


Notification & CircularsDirect Taxes & Indirect Taxes

undertaken by Indian companies, providing a mechanism involving approval in each and every specific case would entail avoidable compliance burden on the borrower/issuer of bond. In order to mitigate the compliance burden and hardship, the Central Board of Direct Taxes [with the approval of t h e Central Government] conveys the approval of the Central Government for the purposes of section194LC in respect of the issue of long term bond including long term infrastructure bond by Indian companies which satisfy the following conditions:- a. The bond issue is at any time on or after 1st day of October, 2014 but before the 1st day of July, 2017. b. The bond issue by the Indian company should comply with clause (d) of sub section (3) of section 6 of the Foreign Exchange Management Act, 1999 read with Notification No. FEMA3/2000-RB viz. Foreign Exchange Management (Borrowing or Lending in Foreign exchange) Regulations 2000, dated May 3, 2000, as amended from time to time, (hereafter referred to as “ECB regulations”), either under the automatic route or under the approval route. c. The bond issue should have a loan Registration Number issued by the Reserve Bank of India (RBI). d. The term “longterm” means that the bond to be issued should have original maturity term of three years or more.5. Further, the Central Government has also approved the interest rate for the purpose of section194LC in respect of borrowing by way of issue of long term bond including long term infrastructure bond as any rate of interest which is within the All-in-cost ceilings specified by the RBI under ECB regulations as is applicable to the borrowing through a long term bond issue having regard to the tenure thereof.6. In view of the above, any bond issue, which satisfies the above conditions, would be treated as approved by the Central Government for the purposes of section194LC. 7. It is also clarified that consequent to the amendment to Section 194 LC the approval of the Central Government contained in Circular No.07/2012, in so far as they apply to borrowings by way of a loan agreement, shall be valid for the borrowings made on or before 30/06/2017 instead of 30/06/2015 as mentioned in the said Circular.

F.No.133/24/2014-TPLOrder under section 119 of the Income-tax Act, 1961

In compliance to the judgement of High Court of Gujarat and after considering the representations made for extension of due date for furnishing of return of income in compliance with the directions of the other High Courts, the Board, in exercise of power conferred by section 119 of the Act, hereby extends, subject to para 7 below, the `due-date’ for furnishing return of income from 30th September, 2014 to 30th November, 2014 for the assessment year 2014-15 for all purposes of the Act, in case of an assessee, who, (i) is required to file his return of income by 30th September, 2014 as per clause (a) of Explanation 2 to sub-section (1) of section 139 of the Income-tax Act, 1961; and (ii) is also required to get his accounts audited under section 44AB of the Act or is a working partner of a firm whose accounts are required to be audited under section 44AB of the Act. There shall be no extension of the “due date” for the purposes of Explanation 1 to section 234A (Interest for defaults in furnishing return) of the Act and the assessees shall remain liable for payment of interest as per the provisions of section 234A of the Act. For removal of doubt, it is clarified that for an assessee (other than working partner of a firm which is required to obtain and furnish tax audit report), who is required to file its return of income by 30th September, 2014 but not required to obtain and furnish tax audit report under section 44AB, the due date for furnishing of return of income for assessment year 2014-15 remains as 30th September, 2014.

(Rajesh Kumar Bhoot)Director (TPL)

B. Service TaxCompiled by CA Ankit Kanodia

[email protected]

1. Extension of filing of service tax return due date for the period Apr 14 to Sep 14 (Order No. 02/2014-ST dated 24.10.2014)

2. Constitution of Review Committee of Chief Commissioners of Central Excise & Chief Commissioners of Service Tax (OFFICE ORDER NO 4/2014-STDated 15.10.2014)

3. Levy of service tax on activities involved in relation to inward remittances from abroad to beneficiaries in India through MTSOs (Circular no.180/06/2014-ST, Dated 14.10.2014)

4. Constitution of Review Committee of Commissioners of Central Excise and Service Tax (OFFICE ORDER NO 6/2014-ST Dated 22.10.2014)

C. Central ExciseCompiled by CA Ankit Kanodia

[email protected]

1. Constitution of Review Committee of Chief Commissioners of Central Excise (OFFICE ORDER NO 2/2014-CE, Dated: October 15, 2014)

2. Amendment of Notification No. 27/2014 - Central Excise (NT) dated 16.09.2014 (Notification no. 31/2014-CX (N.T.), Dated: October 15, 2014)

3. Guidelines regarding Structure, Administrative set up and Functions of Audit Commissionerates – reg. (Circular no. 985/09/2014-CX, Dated: September 22, 2014)

4. Action-Plan to evolve non-adversarial indirect tax administration-reg. (INSTRUCTION no. F.No.296/185/2014-CX.9Dated: September 30, 2014)

5. Building of a comprehensive MIS in CBEC-reg. (Letter no. D.O.F. NO.296/127/ 2013-CX.9, Dated: October 10, 2014)

6. CBEC clarifies Central Excise Audit has adequate statutory backing. (CIRCULAR NO. 986/10/2014-CX., Dated: October 9, 2014)

7. Discontinuation of Certain Reports (INSTRUCTIONS no. F.No. 354/156/2014-TRU, Dated: October 10, 2014)

8. Export warehousing: CBEC extends facility to Bhuj Taluka in Kutch District.(CIRCULAR NO. 987/11/2014-CX., Dated: October 15, 2014)

9. Determination of place of removal (CIRCULAR NO.988/12/2014-CX., Dated: October 20, 2014)

D. Customs Compiled by CA Ankit Kanodia

[email protected]

1. Pulses & Chickpeas exempted from Customs duty till 01.04.2015 & 01.01.2015 respectively (NOTIFICATION NO. 29/2014-Cus., Dated: September 25, 2014)

2. Constitution of Review Committee of Chief Commissioners of Customs - Reg.(OFFICE ORDER NO 3/2014-CUS, Dated : October 15, 2014)

3. Notification 12/2012 - Period of six months substituted by 12 months. (NOTIFICATION NO. 30/2014-Cus., Dated: October 20, 2014)

4. Hosur appointed as Inland Container depot.(NOTIFICATION NO. 88/2014-CUS.(N.T.), Dated: September 26, 2014)

5. CBEC reduces tariff value of gold & silver. (NOTIFICATION NO. 95/2014-Cus. (N. T.), Dated: September 30, 2014)


6. CBEC notifies Customs exchange rates effective from Oct 02. (NOTIFICATION NO. 96/2014-Cus. (N. T.), Dated: October 01, 2014)

7. CBEC hikes tariff value of gold but reduces for RBD Palmolein. (NOTIFICATION NO. 97/2014-Cus. (N.T.), Dated: October 15, 2014)

8. CBEC notifies Customs exchange rates effective from Oct 17. (NOTIFICATION NO. 98/2014-CUSTOMS (N.T.), DATED: October 16, 2014)

9. Import of Pesticides. (CIRCULAR NO. 10/2014-Cus., Dated: October 17, 2014)

10. Anti-dumping duty on Flexible Slabstock Polyol imported from China PR. extendedtill 30.08.2015. (NOTIFICATION NO. 42/2014-Cus., (ADD), Dated: September 25, 2014)

11. Govt imposes definitive anti-dumping duty on phenol. (NOTIFICATION NO. 43/2014-Cus., (ADD), Dated: September 30, 2014)

E. FEMA & FDI Compiled by CA Gautam Sharma

[email protected]

1. Exim Bank’s Line of Credit of USD 30 million to the Government of the Republic of Togo

Reserve Bank of India vide Notification No. RBI/2014-15/240 A.P. (DIR Series) Circular No.32, dated 24th September, 2014, have announced that Export-Import Bank of India (Exim Bank) has entered into an Agreement dated June 20, 2014 with the Government of the Republic of Togo for making available to the latter, a Line of Credit (LOC) of USD 30 million (USD Thirty million) for financing eligible goods, machinery, equipment and services including consultancy services (including Preparation of Detailed Project Report) from India for the purpose of financing rural electrification project to cover 150 localities in Togo.The goods, machinery, equipment and services including consultancy services from India for exports under this Agreement are those which are eligible for export under the Foreign Trade Policy of the Government of India and whose purchase may be agreed to be financed by the Exim Bank under this Agreement. Out of the total credit by Exim Bank under this Agreement, the goods and services including consultancy services of the value of at least 75 per cent of the contract price shall be supplied by the seller from India and the remaining 25 percent goods and services may be procured by the seller for the purpose of Eligible Contract from outside India.

2. Exim Bank’s Line of Credit of USD 52 million to the Government of the Republic of Togo

Reserve Bank of India vide Notification No. RBI/2014-15/242 A.P. (DIR Series) Circular No.33, dated 25th September, 2014, have announced that Export-Import Bank of India (Exim Bank) has entered into an Agreement dated June 20, 2014 with the Government of the Republic of Togo for making available to the latter, a Line of Credit (LOC) of USD 52 million (USD Fifty Two million) for financing eligible goods, machinery, equipment and services including consultancy services (including Preparation of Detailed Project Report) from India for the purpose of financing up of 161 kV power transmission line in Togo.The goods, machinery, equipment and services including consultancy services from India for exports under this Agreement are those which are eligible for export under the Foreign Trade Policy of the Government of India and whose purchase may be agreed to be financed by the Exim Bank under this Agreement. Out of the total credit by Exim Bank under this Agreement, the goods and services including consultancy services of the value of at least 75 per cent of the contract price shall be supplied by the seller from India and the remaining 25 percent goods and services may be procured

by the seller for the purpose of Eligible Contract from outside India.

3. Risk Management and Inter Bank Dealings: Hedging under Past Performance Route

Reserve Bank of India vide Notification No. RBI/2014-15/250 A.P. (DIR Series) Circular No.34, dated 30th September, 2014, have reviewed the evolving market conditions and with a view to bringing at par both exporters and importers for hedging of currency risk of probable exposures based on past performance, ithas decided to allow importers to book forward contracts, under the past performance route, up to 100 per cent (previously 50 per cent) of the eligible limit. Importers, who have already booked contracts up to previous limit of 50 per cent in the current financial year, shall be eligible for difference arising out of the enhanced limits. All other operational guidelines, terms and conditions shall apply mutatis mutandis.

4. Memorandum of Instructions for Opening and Maintenance of Rupee / Foreign Currency Vostro Accounts of Non-resident Exchange Houses

Reserve Bank of India vide Notification No. RBI/2014-15/257 A.P. (DIR Series) Circular No.35, dated 9th October, 2014, have decided to permit remittances to the Prime Minister’s National Relief Fund through the Exchange Houses subject to the condition that the remittances are directly credited to the Fund by the banks and the banks maintain full details of the remitters. Accordingly, the Annexure to the A.P. (DIR Series) Circular No 88 dated January 9, 2014, listing the permissible transactions has been modified and appended hereto. All other instructions issued vide A.P. (DIR Series) Circular No. 28 [A. P. (FL/RL Series) Circular No. 02] dated February 6, 2008, as amended from time to time, will remain unchanged.

5. Foreign Exchange Management Act, 1999 (FEMA) Foreign Exchange (Compounding Proceedings) Rules, 2000 (the Rules) - Compounding of Contraventions under FEMA, 1999

Reserve Bank of India vide Notification No. RBI/2014-15/266 A.P. (DIR Series) Circular No.36, dated 16th October, 2014, have announced that in partial modification of A.P. (DIR Series) Circular no. 117 dated April 4, 2014 and the Foreign Exchange (Compounding Proceedings) Rules, 2000 notified by the Government of India vide G.S.R.No.383 (E) dated 3rd May 2000, as amended fromtime to time regarding delegation of powers to the Regional Offices of the ReserveBank of India to compound the contraventions of FEMA, decided to delegate further powers to Regional Offices as

Sr. No. FEMA Regulation Brief description of contravention

1 Regulation 10 A (b) (i) read with paragraph 10 of Schedule I to FEMA 20/2000-RB dated May 3,2000

Delay in submission of form FC-TRS on transfer of shares from Resident to Non-Resident.

2 Regulation 10 B(2) read with paragraph 10 of Schedule I to FEMA 20/2000-RB dated May 3, 2000

Delay in submission of form FC-TRS on transfer of shares from Non-Resident to Resident.

3 Regulation 4 of FEMA 20/2000-RB dated May 3, 2000

Taking on record transfer of shares by investee company, in the absence of certified form FC-TRS.

The work of three divisions of Foreign Investment Division (FID) viz. Liaison/Branch/ Project office (LO/ BO/ PO) division, Non Resident Foreign Account Division(NRFAD) and Immovable Property (IP) Division has been transferred to FED, COCell, Reserve Bank of India, 6, Sansad Marg, New Delhi-110001 with effect from July 15, 2014. The monetary limits for contraventions have been prescribed in the said circular.


We pray to the almighty that may his soul rest in peace

CA NIRMALENDU BANERJEEMembership No. 002839

Passed away on 17th July 2014

EIRC DEEPLY MOURNS THE SAD DEMISE OF

WORK DISPOSAL STATUS The position of action taken on various matters relating to members and students of EIRC

ARTICLES SECTION as on 29/10/2014 PARTICULARS DATE New Registration 07/10/2014

Industrial training Registration 28/10/2014

Re-registration 23/10/2014

Termination 23/10/2014

Completion 29/09/2014

Permission to Study 28/10/2014

Supplementary Registration 24/10/2014

Change of Address 28/10/2014

Work disposal status of Various Activities Releated to Members Section as on 27/10/2014

1) New Enrolment 30/09/2014

2) Grant of Certificate of Practice 10/10/2014

3) Grant of Fellow Admission 10/10/2014

4) Firm Registration / Constitution 16/10/2014

5) Reconstitution of Firms 16/10/2014

6) Restoration (Prospective ) 30/09/2014

7) Change of address 30/09/2014

8) Permission of other engagement 16/10/2014

Board of Studies Section as on 28/10/2014

CPT Registration 24/10/2014

IPCC Registration 24/10/2014

Final Registration 17/10/2014

BY HAND BY POSTIssuance of Study Materials - CPT Upto Date 07/10/2014

Issuance of Study Materials - IPCC Upto Date 07/10/2014

Issuance of Study Materials - Final Upto Date 20/10/2014

GMCS Certificate Issuance Upto Date

Orientation Certificate Issuance Upto Date

ITT Certificate Issuance 28/09/2014

Change of Name/Address Upto Date

Work Disposal& Library News

LIBRARY NEWSSome of the latest and useful addition to the EIRC LibrarySl Title & Author Publisher Place &No Edition Year

1 The Very Very Rich and Gunther M Vision Books New Delhi how they got that way 2014

2 I’m Ok-You’ok Harris T A Arrw Books USA

3 Innovation in India Ramani S V Cambridge Delhi 2014

4 Capital in The Twenty- Thomas The Belknap Cambridge First Century Piketty Press of Harvard Uni- versity Press

5 International Trade & Acharyya R & Oxford UK 2014 Economic Development Kar S

6 The Sociology Of Finance Cetina K K & Oxford UK 2014 Preda A

7 The Indian Economy In Goyal A Oxford Delhi 2014 The Twenty-First Century

8 Heaven’s Bankers Harris I Constable London 2014

9 The Death of Money James R Penguin London 2014

10 Rogue Elephant Simon D Blooms Bury London 2014

11 Accounting A Very Nobes C Oxford UK 2014 Short Introduction

12 The Emerging The Big Kapia U Academic New Delhi Picture Making Sense Foundation 2014 of India’s Economy

13 Coalition Politics India Sridharan E Academic New Delhi Foundation

14 India: Leading Issues In Mishra R.K Academic New Delhi Economic Development Foundation 2014

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Bijoya Get together on 10th October 2014


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BOOK POSTCA. Subhash Chandra Saraf – EditorCA. Pramod Dayal Rungta – Jt. EditorCA. Anirban Datta – MemberCA. Manish Goyal – MemberCA. Subodh Kumar Agrawal – MemberCA. Sumantra Guha – MemberCA. Abhijit Bandyopadhyay – MemberCA. Rajneesh Agarwal – Co-opted MemberCA. Sanjay Poddar – Co-opted MemberCA. Swatandra Kr. Rustagi – Co-opted MemberCA. Divya Mohta – Co-opted Member

(L- R) CA Ranjeet Kr, Agarwal, Past Chairman, EIRC, CA Manish Goyal, Treasurer, EIRC, CA Pramod Dayal Rungta, Vice Chairman, EIRC, CA Subhash Ch. Saraf, Chairman, EIRC, CA Sunil Kr. Sahoo, Member, EIRC Inaugurating the Deepawali Get Together

Lighting of the Inaugural Lamp at the Deepawali Get together.

Children and families at the Get-Together

Regional Council Members alongwith representatives of Study Circles of EIRC at the Get Together

A view of the audience / participants playing Tambola

Families and children enjoying the Talking Doll performance.

Deepawali Get Together on 31st October 2014

Documents

EIRC NEWSLETTER - ICAI · Facility of Payment by Swiping Credit / Debit Card Introduced You can make payment for the following Services : 1) EIRC Sales Counter – Purchase of Books