TIOL-DDT 690 · the untouched capture
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<p align="justify" ><font size="2"><b><font color="#663399" size="3" face="Verdana, Arial, Helvetica, sans-serif">TIOL</font></b><font color="#663399" size="3" face="Verdana, Arial, Helvetica, sans-serif"><b>-DDT 690</b></font><font face="Verdana, Arial, Helvetica, sans-serif"><b><br>
31.08.2007<br>
Friday</b></font></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Definitive Anti dumping Duty on Peroxosulphates</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Government had imposed provisional anti dumping duty on Peroxosulphates also known as Persulphates, originating in, or exported from, the People's Republic of <st2:country-region u2:st="on">China</st2:country-region> and <st2:country-region u2:st="on"><st2:place u2:st="on">Japan</st2:place></st2:country-region> vide Notification No. 40/2007-CUSTOMS, dated the 19<sup>th</sup> March, 2007. Now based on the recommendations of the Designated Authority, the Government has imposed definitive anti dumping duty on the goods with effect from the date of provisional anti dumping duty, that is 19.3.2007. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And consequently, the Notification No. 40/2007 dated 19.3.2007, is rescinded.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2007/ctariff07_096.htm" target="_blank">NOTIFICATIONS NO. 96</a></u><b><u> and </u></b><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2007/ctariff07_097.htm" target="_blank">97/2007-Customs ,Dated: <st2:date u2:st="on" Year="2007" Day="29" Month="8" ls="trans"><st2:date
ls="trans" Month="8" Day="29" Year="2007" w:st="on">August 29, 2007</st2:date></st2:date> </a></u></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Exchange rates announced for imported goods and export goods</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2007/cnt07_088.htm" target="_blank">Notification Nos. 88/2007</a> <b><u>and </u></b><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2007/cnt07_089.htm" target="_blank">89/2007-Cus., (N.T.), Dated August 29, 2007</a></u> fix the exchange rates for imports and exports respectively with effect from 1<sup>st</sup> September, 2007. <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2007/cnt07_075.htm" target="_blank">Notifications 75</a> <strong>and</strong> <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2007/cnt07_076.htm" target="_blank">76/2007-NT-Customs, dated the 26<sup>th</sup> July, 2007</a> are superseded.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2007/cnt07_088.htm" target="_blank">Notification Nos. 88/2007</a><b> and </b><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2007/cnt07_089.htm" target="_blank">89/2007-Cus., (N.T.), Dated August 29, 2007</a></u></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Foreign trade policy - Delayed applications - DGFT clarifications. </b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per DGFT <st2:PersonName u2:st="on"><st1:GivenName u2:st="on">PN <st1:middlename u2:st="on">No.</st2:PersonName> 16/2007 dated 10<sup>th</sup> July 2007, delayed applications may be considered after a late cut of </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. 2% for Application received after the expiry of last date but within six months from the last date.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. 5% for Application received after six months from the prescribed date of submission but not later than one year from the prescribed date</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT had received references from Regional Authorities on the procedure to be followed.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT now clarifies that</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(1) Applications which have not been submitted earlier and are now eligible with late cut may be considered with 2% or 5% cut, as the case may be in terms of amended para 9.3 of <st2:stockticker u2:st="on"><st2:stockticker
w:st="on">HBP</st2:stockticker>.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(2) All time barred, pending or rejected applications which were filed after six months from the expiry of prescribed last date of submission of application, but are now within 12 months of the expiry of last date of submission of application should be processed with 5% late cut.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(3) In all pending cases filed within six months from the last date of submission with 10% cut, the entitlement should be issued with 2% cut.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(4) Similarly in all cases where entitlement was issued after 10.7.2007, requests for enhancement be considered depending on the 2% or as the case may be, 5% cut to be applied.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(5) However, all the cases should be processed only after obtaining/submission of prescribed fees for the revised entitlement.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(6) Those cases, where benefit has already been granted with applicable late cut etc. on or before 10.07.2007, shall not be re-opened and no request for enhancement etc. will be considered.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=46&filename=notification/dgft/2007/dgft07cir008.htm" target="_blank">CIRCULAR NO. 8 (RE-07)/2004-2009, Dated: <st2:date u2:st="on" Year="2007" Day="30" Month="8" ls="trans"><st2:date
ls="trans" Month="8" Day="30" Year="2007" w:st="on">August 30, 2007</st2:date></st2:date></a></u><b><u><st2:date u2:st="on" Year="2007" Day="30" Month="8" ls="trans"><st2:date
ls="trans" Month="8" Day="30" Year="2007" w:st="on"></st2:date></st2:date></u></b></font></p>
<p align=center ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600">Import Policy - Betel Nuts - only through <st2:place u2:st="on"><st2:PlaceName u2:st="on"><st2:place
w:st="on"><st2:PlaceName w:st="on">Mangalore</st2:PlaceName> <st2:PlaceType u2:st="on"><st2:PlaceType
w:st="on">Port</st2:PlaceType></st2:place></st2:place></font><st2:place u2:st="on"><st2:place
w:st="on"><st2:PlaceType
w:st="on"></st2:PlaceType></st2:place></st2:place></b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As
per the FTP, import of Betel Nuts is free, but this had been changed by DGFT
by Notification No. 12/2007 dated 10.07.2007 to restrict import of betel
nuts only from <st2:country-region u2:st="on"><st2:country-region w:st="on">Nepal</st2:country-region></st2:country-region> through <st2:place u2:st="on"><st2:PlaceName u2:st="on"><st2:place w:st="on"><st2:PlaceName
w:st="on">Mangalore</st2:PlaceName></st2:PlaceName> <st2:PlaceType u2:st="on"><st2:PlaceType
w:st="on">Port.</st2:PlaceType></st2:PlaceType> Now the Nepalese origin is
deleted, but the betel nuts can still be imported only <st2:place u2:st="on"><st2:PlaceName u2:st="on">through <st2:place w:st="on"><st2:PlaceName
w:st="on">Mangalore</st2:PlaceName></st2:PlaceName> <st2:PlaceType u2:st="on"><st2:PlaceType
w:st="on">Port</st2:PlaceType></st2:PlaceType>.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2007/dgft07not025.htm" target="_blank">NOTIFICATION NO. 25 (RE-2007) / 2004-2009, Dated: <st2:date u2:st="on" Year="2007" Day="29" Month="8" ls="trans"><st2:date
ls="trans" Month="8" Day="29" Year="2007" w:st="on">August 29, 2007</st2:date></st2:date> </a></u></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>RBI's annual report for 2006-07</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">During 2006-07, the Indian economy exhibited acceleration in growth, led by manufacturing and services sector activities. The sustained high growth since 2003-04 has been supported by increase in domestic savings and investment. Robust growth during 2006-07, however, was accompanied by inflationary pressures on account of rising capacity utilisation, strong growth in monetary and credit aggregates, demand-supply gaps in domestic production of foodgrains and oilseeds, and firm global commodity prices. A series of timely and appropriate measures undertaken by the Reserve Bank and other supply side responses to rising prices made by the Government helped to contain headline inflation. More importantly, the measures facilitated the anchoring of inflationary expectations to a certain extent. Strong growth in general and of the industrial sector in particular enabled the corporate sector to maintain high profitability. This, in turn, resulted in buoyant tax collections and played a major role in improving public finances. The growth process was facilitated by financial market conditions, which remained orderly, barring a few episodes of volatility. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Real <st2:stockticker u2:st="on"><st2:stockticker w:st="on">GDP</st2:stockticker></st2:stockticker> growth accelerated from 9.0 per cent during 2005-06 to 9.4 per cent during 2006-07. The growth, thus, averaged 8.6 per cent per annum during the four-year period ended 2006-07. Real <st2:stockticker u2:st="on"><st2:stockticker
w:st="on">GDP</st2:stockticker></st2:stockticker> growth during the Tenth Five Year Plan period averaged 7.6 per cent per annum, the highest in any Plan period. Acceleration in the growth rate during 2006-07 was attributable to buoyancy in the industrial and services sectors, which exhibited double-digit growth (11.0 per cent each). Higher growth in the industry and services sectors more than offset the deceleration in the agricultural sector. Growth in the agricultural sector decelerated from 6.0 per cent in 2005-06 to 2.7 per cent in 2006-07, partly on account of uneven rainfall during the South-West monsoon and partly due to the base effect. Although the overall foodgrains production rose by 3.6 per cent in 2006-07, the production of major crops still did not reach the previous peak touched in 2001-02. Amongst the non-foodgrains, the production of sugarcane and cotton scaled new peaks during 2006-07, while that of oilseeds declined. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">Monetary</font></b> <font color="#663399"><b>Developments:</b></font><b> </b>Money supply increased by 21.3 per cent (Rs. 5,80,733 crore) during 2006-07 as compared with 17.0 per cent (Rs. 3,96,878 crore) during 2005-06. Amongst the major components, time deposits exhibited a growth of 23.2 per cent (Rs. 4,41,913 crore) during 2006-07 as compared with 15.3 per cent (Rs. 2,53,056 crore) during 2005-06. Higher growth in time deposits could be attributed to factors such as higher interest rates on bank deposits and availability of tax benefits under Section <st2:metricconverter u2:st="on" ProductID="80C"><st2:metricconverter
ProductID="80C" w:st="on">80C</st2:metricconverter> for bank deposits. On the sources side, growth of bank credit remained high, although there was some moderation. Demand for bank credit was largely broad-based with agriculture, industry and personal loans absorbing 14 per cent, 36 per cent and 24 per cent, respectively, of incremental expansion in overall non-food credit during 2006-07. Growth of credit to sectors such as real estate remained high, <i>albeit</i> with some moderation. In order to maintain asset quality, the Reserve Bank further tightened the provisioning requirements in respect of sectors witnessing high growth in credit. Banks' <st2:stockticker u2:st="on"><st2:stockticker
w:st="on">SLR</st2:stockticker> investments, as a proportion of their net demand and time liabilities (NDTL), declined further to 28.0 per cent by end-March 2007 (close to the prescribed ratio of 25 per cent) as the expansion in investments did not keep pace with the expansion in the NDTL. Net foreign assets remained the key driver of reserve money and the Reserve Bank continued to modulate market liquidity through operations under the liquidity adjustment facility (<st2:stockticker u2:st="on"><st2:stockticker w:st="on">LAF</st2:stockticker>), issuance of securities under the market stabilisation scheme (<st2:stockticker u2:st="on"><st2:stockticker
w:st="on">MSS</st2:stockticker></st2:stockticker>) and use of the cash reserve ratio (<st2:stockticker u2:st="on"><st2:stockticker w:st="on">CRR</st2:stockticker>). </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
<b><font color="#663399">Balance of Payments; <st2:country-region u2:st="on"><st2:place u2:st="on"><st2:country-region
w:st="on"><st2:place w:st="on">India</st2:place></st2:country-region>'s</font></b> balance of payments in 2006-07 reflected a number of positive features. Merchandise trade continued to exhibit robust growth during 2006-07, although there was some loss of pace from the strong growth of 2005-06. The higher growth of imports <i>vis-à-vis</i> exports led to a persistent rise in the trade deficit, on a balance of payments basis. Nonetheless, the current account deficit, as per cent of <st2:stockticker u2:st="on"><st2:stockticker w:st="on">GDP</st2:stockticker></st2:stockticker>, remained unchanged (1.1 per cent of <st2:stockticker u2:st="on"><st2:stockticker
w:st="on">GDP</st2:stockticker></st2:stockticker>) from the previous year since the widening of the merchandise trade deficit was offset to a large extent by the continuing buoyancy in net invisibles surplus. Net capital inflows to <st2:place u2:st="on"><st2:country-region u2:st="on"><st2:country-region
w:st="on"><st2:place w:st="on">India</st2:country-region> remained buoyant (4.9 per cent of <st2:stockticker u2:st="on"><st2:stockticker
w:st="on">GDP</st2:stockticker></st2:stockticker>), far exceeding the current account deficit. Higher capital flows could be attributed to the strengthening of macroeconomic fundamentals, greater investor confidence and ample global liquidity. Net FDI inflows from abroad of US $ 19.4 billion exceeded <st2:stockticker u2:st="on"><st2:stockticker w:st="on">FII</st2:stockticker> inflows (net) during 2006-07 aggregating US $ 3.2 billion. The debt flows (net) at US $ 25.0 billion were led by external commercial borrowings reflecting strong investment demand. Net capital flows, after financing the current account deficit, led to accretion of US $ 36.6 billion, excluding valuation changes, to foreign exchange reserves during 2006-07</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">Outlook for 2007-08</font>: </b>Available information so far indicates continuation of the growth momentum during 2007-08 at a strong pace with the impulses of growth getting more broad-based. Steady increases in the rate of gross domestic saving and investment, consumption demand, addition of new capacity as well as more intensive and efficient utilisation/capitalisation of existing capacity are expected to provide support to growth during 2007-08. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <b><font color="#663399">Monetary Management; Expansion</font></b> of money supply (y-o-y) as on <st2:date u2:st="on" Year="2007" Day="3" Month="8" ls="trans"><st2:date
Year="2007" Day="3" Month="8" ls="trans" w:st="on">August 3, 2007</st2:date></st2:date> was higher (21.7 per cent) than a year ago (19.3 per cent) and also higher than the indicative projection of 17.0-17.5 per cent set out in the Annual Policy Statement. Growth in aggregate deposits accelerated, led by time deposits. Bank credit witnessed some moderation from the strong pace of the preceding three years. Growth of non-food credit of scheduled commercial banks was 23.6 per cent, y-o-y, as on <st2:date u2:st="on" Year="2007" Day="3" Month="8" ls="trans"><st2:date
Year="2007" Day="3" Month="8" ls="trans" w:st="on">August 3, 2007</st2:date></st2:date> as compared with 32.5 per cent a year ago. Commercial banks' investments in <st2:stockticker u2:st="on"><st2:stockticker
w:st="on">SLR</st2:stockticker> securities, as per cent of their net demand and time liabilities, at 28.6 per cent were marginally higher than those at end-March 2007, but below those of 31.1 per cent a year ago. Growth of reserve money as on <st2:date u2:st="on" Year="2007" Day="10" Month="8" ls="trans"><st2:date
Year="2007" Day="10" Month="8" ls="trans" w:st="on">August 10, 2007</st2:date></st2:date> at 26.9 per cent (19.6 per cent adjusted for the first round impact of the increase in the <st2:stockticker u2:st="on"><st2:stockticker w:st="on">CRR</st2:stockticker>) was higher than a year ago (17.2 per cent), mainly on account of accretion to the Reserve Bank's net foreign assets.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <b><font color="#663399">Agriculture: </font></b>The recent upward trends in global prices of major food items have significant implications for the domestic agricultural sector and overall macroeconomic and financial stability. Increases in global food prices reflected a shortfall in global production and the rising demand for non-food uses such as bio-fuels. Reflecting the sustained uptrend in major food prices, the food price index (compiled by the IMF) reached a 26-year high in June 2007 - the highest since early 1981. Against the backdrop of these hardening trends in global food prices, there is an urgent need to take measures to accelerate the growth in Indian agriculture, especially food crops. </font></p>
<p align="justify" ><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"> <b>Industry and Infrastructure; The</b></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> rebound in industrial production that started during 2002-03 continued during 2006-07 resulting from increased domestic and external demand. The sustained growth has led to high capacity utilisation and is contributing to increased investment activity. Modernisation of the capital stock, reduction/rationalisation of import tariffs and other taxes, increased openness of the economy, higher foreign direct investment inflows, greater competitive pressures, increased investment in information and communication technology and greater financial deepening are contributing to productivity gains in industry. The sustained growth in industry is vital to generate employment opportunities and to absorb the disguised labour force dependent upon the agricultural sector. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <b><font color="#663399">Services</font>: </b>The sustained strength of manufacturing activity, strong growth in tourism, improvements in the telecommunications, buoyancy in IT and <st2:stockticker u2:st="on"><st2:stockticker w:st="on">BPO</st2:stockticker> sectors, robust growth of the construction sector, acceleration in deposit and credit growth and opening up of the insurance sector have buoyed the services sector in recent years. The impressive performance of the services sector was attributable largely to the availability of skilled and cheap labour. However, the sustained acceleration in the services and the manufacturing activities is leading to incipient pressures on the supply of good quality skilled labour. While its demographic profile places the country favourably in terms of manpower availability, there are reports of emerging talent supply shortages. In order to reap the benefits of the demographic dividend, substantial expansion and reforms in the education sector would be needed on an urgent basis. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">Fiscal Policy</font>: </b>The process of fiscal consolidation in Central Government finances under the rule-based framework of the FRBM has been characterised by front-loaded reduction in deficit indicators in 2004-05, pause in 2005-06 and resumption of the process in 2006-07. The fiscal correction process is budgeted to continue during 2007-08. With the gross fiscal deficit budgeted at 3.3 per cent of <st2:stockticker u2:st="on"><st2:stockticker
w:st="on">GDP</st2:stockticker></st2:stockticker> in 2007-08, the FRBM target of 3.0 per cent by 2008-09 appears feasible. The revenue deficit is budgeted at 1.5 per cent of <st2:stockticker u2:st="on"><st2:stockticker
w:st="on">GDP</st2:stockticker></st2:stockticker> for 2007-08; the FRBM path envisages elimination of revenue deficit in 2008-09. Adherence to the FRBM target would require a reduction of 1.5 per cent in the revenue deficit/<st2:stockticker u2:st="on"><st2:stockticker
w:st="on">GDP</st2:stockticker></st2:stockticker> ratio during 2008-09. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <b><font color="#663399">External Sector</font>: </b><st2:place u2:st="on"><st2:country-region u2:st="on"><st2:country-region
w:st="on"><st2:place w:st="on">India</st2:country-region>'s linkages with the global economy are getting stronger, underpinned by the growing openness of the economy and the two way movement in financial flows. The ratio of merchandise exports to <st2:stockticker u2:st="on"><st2:stockticker
w:st="on">GDP</st2:stockticker></st2:stockticker> has been rising since the early 1990s reflecting growing international competitiveness. At the same time, import intensity has been rising steadily as domestic entities have expanded access to internationally available raw material and intermediate goods as well as quality inputs for providing the cutting edge to domestic production and export capabilities. Structural shifts in services exports, led by software and other business services, and remittances have imparted stability and strength to <st2:place u2:st="on"><st2:country-region u2:st="on"><st2:country-region
w:st="on"><st2:place w:st="on">India</st2:country-region>'s balance of payments. The net invisible surplus has offset a significant part of the expanding trade deficit and helped to contain the current account deficit to an average of one per cent of <st2:stockticker u2:st="on"><st2:stockticker
w:st="on">GDP</st2:stockticker></st2:stockticker> since the early 1990s. Capital flows (net) have remained substantially above the current account deficit and have implications for the conduct of monetary policy and macroeconomic and financial stability. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <b><font color="#663399">Financial Sector</font>: </b>During 2006-07, the Reserve Bank continued to fine tune the regulatory and supervisory initiatives. In order to ensure asset quality, prudential measures were further tightened through increases in the provisioning requirements and risk weights in respect of specific sectors. The focus of the various prudential and supervisory measures was on anchoring financial stability while providing flexibility to the financial system. In order to further strengthen the domestic banking sector and to conform the banking sector with international best practices, commercial banks will migrate to Basel II norms in a phased manner from the year ending March 2008. Although implementation of Basel II poses a significant challenge to both banks and the regulators, it also offers two major opportunities to banks, <i>viz</i>., refinement of risk management systems and improvement in capital efficiency.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b> <font color="#663399">Monetary Policy</font>: </b>In view of the incipient inflationary pressures, the stance of monetary policy progressively shifted from an equal emphasis on price stability along with growth (October 2004/April 2005) to one of reinforcing price stability with immediate monetary measures and to take recourse to all possible measures promptly in response to evolving circumstances (January 2007). Concomitantly, the Reserve Bank has taken pre-emptive monetary measures beginning mid-2004 to contain inflation and inflationary expectations. The major policy challenge for monetary policy during the recent period has been to manage the transition to a higher growth path while containing inflationary pressures so that potential output and productivity are firmly entrenched to sustain growth. Monetary measures, supported by supply side and fiscal measures, have helped in containing inflation and anchoring inflation expectations while supporting the growth momentum.</font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>From our Legal Corner - Monday's cases</b></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><b><b><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_31.gif" alt="Legal Corner Icon" width="191" height="160" hspace="5" border="0" align="left"></b></b></b></font></p>
<p align="justify" ><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Income Tax</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">Purchase of machinery - damages received for breach of contract, on capital account - price of machinery stands reduced and so does depreciation - A 50 year old dispute settled : High Court</font></b> </font></p>
<p align="justify" ><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>YOU buy a machine and claim depreciation. The machine develops trouble and you fight with the supplier, who after three years pays you some amount of money as compensation/damages or whatever you call. Now should depreciation claim be altered from the year in which you bought the machine? </strong></font></p>
<p align="justify" ><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>This important question of law was before the High Court for the Assessment year 1958-59, for the previous year of 1957. The litigation pertains to the year 1957 - yes, the High Court could actually peruse a letter written in 1958! Maybe this case is worth preserving in the tax museum for posterity to understand that a tax case could actually run for fifty years! </strong></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">Capital gains made but cost of acquisition not apparent : AO needs to determine cost as per settled principles of law : <st2:PersonName u2:st="on"><st1:GivenName u2:st="on"><st2:PersonName
w:st="on"><st1:GivenName w:st="on">Karnataka <st1:Sn u2:st="on"><st1:Sn
w:st="on">HC</st2:PersonName></st2:PersonName></font><st2:PersonName u2:st="on"><st2:PersonName
w:st="on"></st2:PersonName></st2:PersonName></b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">IN</font></b> a case of transfer of capital asset where capital gain is made but where cost of acquisition is not apparent, what is the right course to be adopted by the Income Tax? This was the query before the Karnataka High Court which held that where a capital asset is acquired and subsequently transferred, then the capital gain is to be charged to tax u/s 45 and even if cost of acquisition can't be made out from the relevant deed or agreement, <b><font color="#663399">it is to be determined as per settled principles of law</font></b> having regard to facts and circumstances leading to acquiring and subsequent transfer of the said asset.</font></p>
<p align="justify" ><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Central Excise </b></font></p>
<p align="justify" ><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment of duty; Suppression means failure to disclose full information with the intent to evade payment of duty; When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression - Supreme Court </b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issue before the Supreme Court was excisability of Ready Mix concrete, but without going into that question, the Supreme Court decided the issue on the question of limitation.</font></p>
<p align="justify" ><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><u>See our columns Monday for the judgements</u></b></font></p>
<p align="justify" ><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more DDT</font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice day.</font></p>
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