TIOL-DDT 1702 · the untouched capture
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 1702</font><br> 28.09.2011<br> Wednesday </strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">‘Resident Public Limited Company' Notified to be Eligible as an ‘Applicant' for Advance Rulings under Customs </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SECTION</strong> 28E(c) of the Customs Act, 1962 defines an ‘applicant' eligible to apply for Advance Rulings as follows: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>“(c) ‘applicant' means - </em></font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) (a) a non-resident setting up a joint venture in India in collaboration with a non-resident or a resident; or </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) a resident setting up a joint venture in India in collaboration with a non-resident; or </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) a wholly owned subsidiary Indian company, of which the holding company is a foreign company, </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">who or which, as the case may be, proposes to undertake any business activity in India; </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) a joint venture in India; or </font></em></p> <p align="justify"><strong><em><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) a resident falling within any such class or category of persons, as the Central Government may, by notification in the Official Gazette, specify in this behalf, </font></em></strong></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">and which or who, as the case may be, makes application for advance ruling under sub-section (1) of section 28H; </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Explanation. - For the purposes of this clause, "joint venture in India" means a contractual arrangement whereby two or more persons undertake an economic activity which is subject to joint control and one or more of the participants or partners or equity holders is a non-resident having substantial interest in such arrangement.” (emphasis supplied) </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, in terms of sub-clause (iii) ibid, the Central Government has notified ‘resident public limited company' as class of persons for the purposes of the said clause. For this purpose, the phrases ‘public limited company' and ‘resident' are explained as follows: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">‘public limited company' shall have the same meaning as is assigned to “public company” in clause (iv ) of sub-section (1) of section 3 of the Companies Act, 1956 (1 of 1956) and shall include a private company that becomes a public company by virtue of section 43A of the said Companies Act, 1956; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">‘resident' shall have the same meaning as is assigned to it in clause (42) of section 2 of the Income-tax Act, 1961 (43 of 1961) in so far it applies to a company. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2011/cnt11_067.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 67/2011-Cus (N.T.)., Dated: September 22, 2011 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Board assigns Adjudicating Authority for another DRI SCN </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC</strong> has assigned Show Cause Notice DRI F.No.856(28)LDH/2009/Pt-XI/3100-3121 dated 09.06.2010 issued by Additional Director General, Directorate of Revenue Intelligence, Delhi Zonal Unit, New Delhi in the case of M/s Agro Impex, 223/24, 1st Floor, Katra Peran, Tilak Bazar, Khari Baoli, Delhi-06 and others, to the Commissioner of Customs, Customs (Preventive) Commissionerate, CR Building, The Mall, Amritsar, for the purpose of adjudication. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2011/order_07_2011.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Order in F.No.437/20/2011-Cus. IV., Dated: September 26, 2011 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">RBI liberalizes ECB Policy to allow credit enhancement for Indian Infrastructure Development Companies </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RBI</strong> has decided to further liberalise the policy relating to structured obligations to permit direct foreign equity holder(s) as per extant ECB guidelines (minimum holding of 25 per cent of the paid up capital) and indirect foreign equity holder, holding at least 51% of the paid-up capital, to provide credit enhancement to Indian companies engaged exclusively in the development of infrastructure, where “infrastructure” is as defined under the extant guidelines on ECB and by the Infrastructure Finance Companies (IFCs), which have been classified as such by the Reserve Bank. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Credit enhancement by all eligible non-resident entities will henceforth be permitted under the automatic route and no prior approval will be required from the Reserve Bank.</font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=280&filename=notification/rbi/2011/rbi11cir028.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A P (DIR Series) Circular No. 28/RBI., Dated: September 26, 2011 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">RBI Allows Availment of ECBs in Renminbi for Indian Infrastructure Sector Companies </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CONSIDERING </strong>the specific needs of the infrastructure sector, it has been decided to allow Indian companies which are in the infrastructure sector, where “infrastructure” is as defined under the extant guidelines on External Commercial Borrowings (ECB), to avail of ECBs in Renminbi (RMB), under the approval route, subject to an annual cap of USD one billion pending further review. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Once approved, the approval of the Reserve Bank will be valid for a period of three months from the date of issue of the approval letter and the loan agreement should be executed within the validity period. The company may thereafter submit the completed Form 83 to the Department of Statistics and Information Management (DSIM), Reserve Bank of India for allotment of loan registration number (LRN) within seven days (from the date of signing the loan agreement between the borrower and the lender). In case the borrower fails to obtain LRN within the above period, the approval of the Reserve Bank will stand cancelled. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=280&filename=notification/rbi/2011/rbi11cir030.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A P (DIR Series) Circular No. 30/RBI., Dated: September 27, 2011 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">ECBs from Foreign Equity Holders - RBI rationalizes policy </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RBI </strong>rationalized the ECB policy vis-à-vis ‘foreign equity holders' as ‘eligible lenders' and issued the following clarifications: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) Now onwards the term 'debt' in the debt-equity ratio will be replaced with 'ECB liability' and the ratio will be known as 'ECB liability'-equity ratio to make the term signify true position as other borrowings/debt are not considered in working out this ratio; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) The paid-up capital contributed by the foreign equity holder is considered under the extant guidelines for the purpose of calculation of equity for ECBs of or beyond USD 5 million from direct foreign equity holders. Henceforth, besides the paid-up capital, free reserves (including the share premium received in foreign currency) as per the latest audited balance sheet shall be reckoned for the purpose of calculating the equity of the foreign equity holder. Where there are more than one foreign equity holder in the borrowing company, the portion of the share premium in foreign currency brought in by the lender(s) concerned shall only be considered for calculating the ECB liability-equity ratio for reckoning quantum of permissible ECB. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) For calculating the ECB liability, not only the proposed borrowing but also the outstanding ECB from the same foreign equity holder lender should be reckoned. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Also to benefit eligible borrowers, RBI in consultation with the Government of India, decided to consider ECB proposals from foreign equity holders (direct/indirect) and group companies under the approval route as under:- </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) Service sector units, in addition to those in hotels, hospitals and software, could also be considered as eligible borrowers if the loan is obtained from foreign equity holders. This would facilitate borrowing by training institutions, R&D, miscellaneous service companies, etc; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) ECB from indirect equity holders may be considered provided the indirect equity holding by the lender in the Indian company is at least 51 per cent ; and </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) ECB from a group company may also be permitted provided both the borrower and the foreign lender are subsidiaries of the same parent. </font></p> </blockquote> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=280&filename=notification/rbi/2011/rbi11cir029.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A P (DIR Series) Circular No. 29/RBI., Dated: September 26, 2011 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">IT benefit for IRCS and St. John's Ambulance (India) - Union Health Minister</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Mr.</strong> Ghulam Nabi Azad, Union Health Minister and Chairman of Indian Red Cross Society and St John Ambulance (India), yesterday presided over the General Body meeting of IRCS and St. John's Ambulance (India) on behalf of the President of India. <br> <br> The Minister informed the General Body members that due to persistent efforts, they were able to obtain tax exemption for the income of the society on a perpetual basis under the Income Tax Act. He referred to the provisions of section 10(46) of the Income Tax Act, 1961 (inserted by Finance Act, 2011 w.e.f 01.06.2011) which he said would cover organizations like IRCS under the said provisions and <em>inter alia <strong><font color="#663399">would enable IRCS to spend funds outside India to help vulnerable people.</font></strong></em> It was further informed that necessary notification to this effect would be issued by Finance Ministry shortly. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A quick recap of section 10(46) of Income Tax Act, 1961 as inserted by section 4(c) of Finance Act, 2011: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>“(46) any specified income arising to a body or authority or Board or Trust or Commission (by whatever name called) which - </em></font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) has been established or constituted by or under a Central, State or Provincial Act, or constituted by the Central Government or a State Government, with the object of regulating or administering any activity for the benefit of the general public; </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) is not engaged in any commercial activity; and </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) is notified by the Central Government in the Official Gazette for the purposes of this clause. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Explanation. - For the purposes of this clause, “specified income” means the income, of the nature and to the extent arising to a body or authority or Board or Trust or Commission (by whatever name called) referred to in this clause, which the Central Government may, by notification in the Official Gazette, specify in this behalf;” </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Unfortunately, in the above provision there is no enabling provision to allow the organizations referred to therein, to <font color="#663399"><strong><em>spend funds outside India to help vulnerable people! </em></strong></font></font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Jurispruden</font><font color="#FF6633" size="5">tiol</font><font color="#006600"> – Thursday's cases</font></strong></font></strong></font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_hammer.jpg" alt="Legal Corner Icon" width="100" height="84" hspace="5" border="0" align="left">Central Excise </font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mango Pickles not intended for retail sale and cleared to Nestle for free distribution are correctly assessed in terms of transaction value u/s 4 of Central Excise Act.</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> respondents are engaged in the manufacture of pickle and ketchup which is covered under section 4A of the Central Excise Act, 1944. It is alleged that the respondent has cleared the mango avakai pickles without declaring the MRP. The respondent has shown in the product declaration form dated 01.07.1999, Nil MRP as the product was distributed for sale promotion and they determined the assessable value under section 4 of the Central Excise Act, 1944. It is the allegation of the Revenue that the assessee had contravened the provisions of section 4A read with rule 9(1) and, therefore, demand was raised for demanding differential duty. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income Tax </font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Whether, in property deal, capital gains become leviable right from day assessee receives part payment and executes sale deed, and not from day when it receives balance payment - from day assessee receives part payment: ITAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ASSESSEES</strong> are owner of certain lands - filed their return of income of the impugned year, declaring long term capital gain (LTCG) - AO while finalizing the assessment levied interest of sections 234A, 234B and 234C. The issues before the Bench are - Whether, in a property deal, capital gains become leviable right from the day assessee receives part payment and executes the sale deed and not from the day when it receives the balance payment - Whether charging interest is mandatory and whether when interest is charged in the ITN-150 while computing tax, there is no substance in the assessee's contention that AO did not charge interest specifically in the body of the order. And the verdict goes against the assessee. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax </font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Rejection of refund claim on grounds not alleged in show-cause notice is not legal: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>COMMISSIONER</strong> (Appeals) has set aside the lower adjudicating authority's order on the premise, that the grounds of unjust enrichment and that the refund under Notification No. 41/2007-ST dated 6.10.2007 is not allowable were, not part of the impugned show-cause notice. Tribunal in the case of Hindustan Unilever Ltd. held that unjust enrichment has not been made applicable to the goods exported. The Tribunal in the case of Sparkler Ceramics Pvt. Ltd held that question of unjust enrichment will not be applicable to this case as it involves export of goods. The Commissioner (Appeals) has given clear and cogent finding and no reason to interfere with the same. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns Tomorrow for the judgements </font></strong></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more <strong>DDT </strong></font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a Nice Day. </font></p> <p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <a href="mailto:vijaywrite@taxindiaonline.com"><strong>vijaywrite@taxindiaonline.com</strong></a></font></p> </body> </html>