TIOL-DDT 888 · the untouched capture
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<p><font size="3"><strong><font color="#663399" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT 888 </font></strong><font face="Verdana, Arial, Helvetica, sans-serif"><strong></strong></font></font><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif"><strong><br>
17.06.2008 <br>
Tuesday </strong></font></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Tariff Value of poppy seeds increased </font></strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tariff value of brass scrap has been decreased from 4479 US Dollars to 4332 dollars and Poppy seeds increased from 4861 US Dollars to 5048 dollars. There is no change in the Tariff Values of other items. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2008/cnt08_073.htm" target="_blank">Notification No. 73/2008-Customs(NT) , Dated the June 16, 2008 </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RBI's
Draft Master Circular on Foreign Investment in India </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">RBI
has issued a <a href="http://www.taxindiaonline.com/RC2/pdfdocs/wnew/rbi_draft_fi.pdf">Draft
Master Circular</a> on Foreign Investments. This master circular
is for public comments. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Foreign
investment in India is governed by sub-section (3) of section 6 of the Foreign
Exchange Management Act, 1999 read with Notification No. FEMA 20/2000- RB
dated May 3, 2000, as amended from time to time. The regulatory framework
and instructions issued by the Reserve Bank of India have been compiled in
this Master Circular . This Master Circular also covers the following areas. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Acquisition of immovable property which is regulated in terms
of Foreign Exchange Management Act, 1999. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Establishment of Branch/Liaison Office in India , which is regulated in terms of Section 6(6) of Foreign Exchange Management Act, 1999 read with Notification No. FEMA 22/ 2000- RB dated May 3, 2000 ; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Investment in capital of partnership firms or proprietary concern which is regulated in terms of Section 2(h) of Section 47 of Foreign Exchange Management Act, 1999, read with Notification No. FEMA 24/2000- RB dated May 3, 2000 . </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Foreign Investment in India </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Foreign Investment in India is governed by the FDI policy announced by the Government of India and the provisions of the Foreign Exchange Management Act (FEMA) 1999. Reserve Bank has issued Notification No. FEMA 20/2000- RB dated May 3, 2000 which contains the Regulations in this regard. </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Entry routes for investments in India </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Foreign investment is freely permitted in almost all sectors. Foreign Direct Investments ( FDI ) can be made under two routes-- Automatic Route and Government Route . Under the Automatic Route , the foreign investor or the Indian company does not require any approval from the Reserve Bank or Government of India for the investment. Under the Government Route , prior approval of the Government of India, Ministry of Finance, Foreign Investment Promotion Board ( FIPB ) is required. </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Prohibition on investment in India : </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Foreign investment in any form is prohibited in a company or a partnership firm or a proprietary concern or any entity, whether incorporated or not (such as Trusts) which is engaged or proposes to engage in the following activities </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">( i ) Business of chit fund, or </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) Nidhi Company , or </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) Agricultural or plantation activities, or </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iv) Real estate business, or construction of farm houses </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(v) Trading in Transferable Development Rights ( TDRs ). </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is clarified that Real Estate Business does not include development of townships, construction of residential/commercial premises, roads or bridges. It is further clarified that partnership firms/proprietorship concerns having investments as per FEMA regulations are not allowed to engage in Print Media sector . </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In addition to the above, investment in the form of FDI is also prohibited in certain sectors such as </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">( i ) Retail Trading </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) Atomic Energy </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) Lottery Business </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iv) Gambling and Betting </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(v) Agriculture (excluding Floriculture, Horticulture, Development of seeds, Animal Husbandry, Pisiculture and Cultivation of vegetables, mushrooms etc. under controlled conditions and services related to agro and allied sectors) and Plantations (Other than Tea plantations). </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Eligibility for Investing in India </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A
person resident outside India (other than a citizen of Pakistan ) or an entity
incorporated outside India, (other than an entity incorporated in Pakistan
) can invest in India , subject to the FDI Policy of the Government of India.
A person who is a citizen of Bangladesh or an entity incorporated in Bangladesh
can invest in India under the FDI Scheme, with prior approval of FIPB . </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Overseas
Corporate Bodies ( OCBs ) are entities established outside India, and predominantly
owned by NRIs (at least 60% of the paid up capital). Erstwhile OCBs, who
have converted themselves into companies incorporated outside India can make
fresh investments in India under the FDI Scheme provided they are not under
the adverse notice of Reserve Bank / SEBI . The onus to confirm that the
erstwhile OCB is not in the adverse list will lie with the investee Indian
company. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Jurispruden<font color="#FF6633" size="5"> tiol</font> – Tomorrow's cases</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><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"></b></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font><strong><font color="#663399">Customs </font></strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Entire case is based on documentary evidence and petitioner can be subjected to interrogation without being arrested - anticipatory bail granted by High Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Investigation is yet on but it is not a case where custodial interrogation shall be essential as the entire case is based on documentary evidence and the petitioner can be subjected to interrogation without being given custody to the respondent, therefore, it is a fit case where petitioner is entitled to anticipatory bail. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Liaison Office of non-resident company places purchase orders of goods on behalf of affiliates of parent company - Since LO acts only as buyer's agent, goods meant for export eligible for exemption u/s 9(1)( i ) and no income is earned in India : ITAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">IN an interesting decision the Bangalore Bench of the ITAT has held that the liaison office of a non-resident company cannot be treated as a Permanent Establishment in the light of the fact that it acted only as a window for quality control of goods manufactured for exports to various affiliates of the non-resident company located in various countries. Since all the services provided by the LO were geared towards only the purchase of goods for exports, no income can be attributed to it. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Section 11D of CEA – Service tax recovered from customers but not deposited – Once fact remains that appellant is registered with SEBI as ‘stock broker' and this registration is not cancelled, even if they act as ‘sub broker' in some cases it will not make any difference: Tribunal </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">THE appellant is a stock broker registered with the SEBI . They recovered Service Tax of Rs.2.69 lakhs from their customers but did not deposit the same with the Central government. When proceedings were initiated against them in terms of section 11D [which was then applicable in terms of Section 83 of Finance Act, 1994], they argued that they were not a “stock broker” but only a “sub broker” and<font color="#FF6633"> <strong>hence were not liable to service tax</strong></font> and consequently proceedings cannot be launched u/s 11D . </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our columns tomorrow for the judgements </strong></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow 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>
<p align="justify"><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">vijaywrite@taxindiaonline.com </a></font></p>
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