tag:blogger.com,1999:blog-75949126047608197272024-03-06T12:02:27.657-08:00The Finance InsiderLeadership is the wise use of power. Power is the capacity to translate intention into realty and sustain it.---Warren G. BennisSandeep Bhujbalhttp://www.blogger.com/profile/14051123456091166205noreply@blogger.comBlogger2310125tag:blogger.com,1999:blog-7594912604760819727.post-18248634842612862842022-01-04T01:15:00.000-08:002022-01-04T01:15:34.751-08:00RBI Notifies Transition to its Benchmark Rates from Overseas Borrowings<p> <span style="-webkit-text-stroke: 1px rgba(0, 0, 0, 0); background-color: white; color: #333333; font-family: Roboto, Arial, sans-serif; font-size: 15px;">With the imminent discontinuation of the publication of the London Interbank Offered Rate (LIBOR) by the end of 2021 for most currencies, the Reserve Bank of India (RBI) by its circular dated 8 December 2021 (Circular) amended the RBI’s Master Direction - External Commercial Borrowings, Trade Credits and Structured Obligations dated 26 March 2019 (ECB Master Directions) to provide for a risk free benchmark rate as an alternative to the LIBOR (which has been used since inception for majority foreign currency borrowings).</span></p><p style="-webkit-text-stroke: 1px rgba(0, 0, 0, 0); background-color: white; box-sizing: border-box; color: #333333; font-family: Roboto, Arial, sans-serif; font-size: 15px; margin: 0px 0px 10px;">LIBOR has been a preferred benchmark rate for the syndicated loan markets and as a pricing source by financial markets globally and in India for a wide array of financial instruments including loans and derivative products. In view of the cessation of publication of LIBOR, the RBI in August 2020 had indicated to all the banks and the financial institutions to frame a board-approved plan, outlining an assessment of exposures linked to the LIBOR and the steps to be taken to address risks arising from the cessation of LIBOR, including preparation for the adoption of the Alternative Reference Rates (ARR) and putting in place a framework to mitigate risks arising from such exposures on account of transitional issues including valuation and contractual clauses.</p><p style="-webkit-text-stroke: 1px rgba(0, 0, 0, 0); background-color: white; box-sizing: border-box; color: #333333; font-family: Roboto, Arial, sans-serif; font-size: 15px; margin: 0px 0px 10px;">The amendments to the ECB Master Directions provide much-needed clarity to the financial institutions, hedge providers and borrowers on the new applicable alternative reference rates for external commercial borrowings and encourage them to use any widely accepted ARRs as soon as practicable in lieu of the cessation of LIBOR from December 2021.</p>Sandeep Bhujbalhttp://www.blogger.com/profile/14051123456091166205noreply@blogger.com0tag:blogger.com,1999:blog-7594912604760819727.post-46580144350348363702021-06-29T04:07:00.000-07:002021-06-29T04:07:51.450-07:00Increase to overseas investment limits for mutual funds<p><span style="-webkit-text-stroke: 1px rgba(0, 0, 0, 0); background-color: white; color: #333333; font-family: Roboto, Arial, sans-serif; font-size: 15px;">The Securities and Exchange Board of India has announced amendments to the overseas investment limits for mutual funds. The amendments provide that:</span></p><ul style="-webkit-text-stroke: 1px rgba(0, 0, 0, 0); background-color: white; box-sizing: border-box; color: #333333; font-family: Roboto, Arial, sans-serif; font-size: 15px; margin-bottom: 10px; margin-top: 0px;"><li style="box-sizing: border-box; margin-bottom: 0.7em;">mutual funds can make overseas investments subject to a maximum of US$1 billion per mutual fund, within the overall industry limit of US$7 billion;</li><li style="box-sizing: border-box; margin-bottom: 0.7em;">mutual funds can make investments in overseas exchange traded funds subject to a maximum of US$300 million per mutual fund, again within the overall industry limit of US$1 billion; and</li></ul><p style="-webkit-text-stroke: 1px rgba(0, 0, 0, 0); background-color: white; box-sizing: border-box; color: #333333; font-family: Roboto, Arial, sans-serif; font-size: 15px; margin: 0px 0px 10px;">in respect of investment limits to be disclosed in the scheme documents at the time of a new fund offer as specified in the relevant Circular and the investment limits on ongoing schemes as specified in the relevant Circular, such limits will henceforth be soft limits for the purpose of reporting only by mutual funds on a monthly basis in the prescribed format.</p>Sandeep Bhujbalhttp://www.blogger.com/profile/14051123456091166205noreply@blogger.com0tag:blogger.com,1999:blog-7594912604760819727.post-20561467267769709062021-05-10T22:38:00.003-07:002021-05-11T06:56:07.337-07:00SEBI introduced a new rules for mutual funds companies. <p> <em style="font-size: 16px;"><span style="font-family: georgia;">On April 28, 2021, SEBI introduced a new rule. They mandated key employees of asset management companies i.e. mutual fund companies to invest about 20% of their salary in the schemes they run or oversee. They’ll have to tie it up for 3 years or for the duration of the scheme, whichever is shorter.</span></em></p><p style="background-color: white; font-family: Helvetica, Arial, sans-serif; font-size: 16px;"><em>Basically, it’s a diktat forcing fund managers and other key personnel to have their skin in the game. </em></p><p style="background-color: white; font-family: Helvetica, Arial, sans-serif; font-size: 16px;">Rumour has it that SEBI only acted after Franklin (an asset management company) wound down 6 different mutual funds overnight sending ripples across the entire sector. Reports allege that the fund managers, in this case, took on inordinate amounts of risks, acted recklessly, and pulled out their money when things took a turn for the worse. A few days later they wound down the funds leaving hundreds and thousands of investors in the lurch. There were no consequences for their actions. No penalties, no harm, and no damage done.</p><p style="background-color: white; font-family: Helvetica, Arial, sans-serif; font-size: 16px;">Because remember, fund houses are paid despite how their schemes perform. Most companies seek a fee (1–2% of the sum you invest), without promising much. According to one report from 2019, 82% of active large-cap funds have underperformed the S&P BSE 100 index, which includes the 100 largest Indian companies. Imagine that — You could pick a passive basket of the 100 largest Indian companies and still outperform those who are paid ludicrous amounts of money to actively manage a mutual fund scheme.</p><p style="background-color: white; font-family: Helvetica, Arial, sans-serif; font-size: 16px;"><br />Bottom line —Most fund managers aren’t really that good at managing money and it’s probably why you’re seeing some backlash from the incumbents. </p><p style="background-color: white; font-family: Helvetica, Arial, sans-serif; font-size: 16px;">SEBI wants mutual fund companies to have skin in the game. But other key stakeholders in the industry want the rule gone. The only question remaining —What do you think?.... </p><p style="background-color: white; font-family: Helvetica, Arial, sans-serif; font-size: 16px;"><br /></p>Sandeep Bhujbalhttp://www.blogger.com/profile/14051123456091166205noreply@blogger.com0tag:blogger.com,1999:blog-7594912604760819727.post-56961408131768992192021-03-14T00:01:00.000-08:002021-03-14T00:01:42.128-08:00S. 90, 91: An Indian taxpayer is not entitled to claim refunds from the Government of India of taxes paid by the said taxpayer outside India, i.e., to the foreign Governments, in respect of the income taxes paid abroad on income earned in the respective tax jurisdictions, if the said income is not taxed in India due to a loss. However, the taxes paid abroad are allowable as a deduction in the computation of the business income of the assessee . <p> <span face="sans-serif"><span style="font-size: 12.8px;"><b>Bank of India vs ACIT ( ITAT MUMBAI) </b></span></span></p><div style="font-family: sans-serif; font-size: 12.8px;">In the present case, our entire focus was on whether these foreign tax credits could be allowed even when such tax credits lead to a situation in which taxes paid abroad could be refunded in India, but that must not be construed to mean that, as a corollary to our decision, these foreign tax credits would have been allowed, even if there is no domestic tax liability in respect of the related income in India if it was not to result in such a refund situation. At the cost of repetition, we may add that, for the detailed reasons set out earlier, we have our reservations on the applicability of the Wipro decision (supra) on this bench, being situated outside of the jurisdiction of Hon’ble Karnataka High Court, and we are of the considered view that full tax credit for source taxation cannot, as such and to that extent, be extended in the residence jurisdiction when a tax treaty sanctions only proportionate credit, and does not, in any case, specifically provide for the full foreign tax credit. A full tax credit, which goes beyond eliminating double taxation of an income, actually ends up subsidizing the foreign exchequer, to the extent that the taxes paid to the foreign exchequer are allowed to discharge exclusive domestic tax liability, rather than eliminating double taxation of an income, and that is the reason that even in the solitary full credit situation visualized in the Indian tax treaties, in the Indo Namibia tax treaty (supra), it’s one-way traffic inasmuch as while India, as a relatively developed nation, offers, under article 23(2), full credit for taxes paid in Namibia, whereas, in contrast, Namibia, as a developing nation, offers, under article 23(1), proportionate credit for taxes paid in India. It reinforces our understanding that the full foreign tax credits cannot be inferred to be permissible as a matter of course and normal practice</div>Sandeep Bhujbalhttp://www.blogger.com/profile/14051123456091166205noreply@blogger.com0tag:blogger.com,1999:blog-7594912604760819727.post-17571882461593376092020-06-28T21:37:00.001-07:002020-06-28T21:37:39.682-07:00Cabinet approves participation of Private Sector into Space exploration <div dir="ltr" style="text-align: left;" trbidi="on">
<div style="font-family: "din pro", "din web", sans-serif; font-size: 16px;"><br /></div><div style="font-family: "din pro", "din web", sans-serif; font-size: 16px;"><span style="font-family: Georgia, "Times New Roman", Times, serif;">The government’s recent reforms for the </span><a class="storyTags" href="https://wap.business-standard.com/topic/space" style="border: 0px; color: #1c3c65; cursor: auto; font-family: Arial; text-decoration-line: none !important;" target="_blank">space </a><span style="font-family: Georgia, "Times New Roman", Times, serif;">sector will not only enable private companies to build rockets and satellites but also let them use the Indian </span><a class="storyTags" href="https://wap.business-standard.com/topic/space" style="border: 0px; color: #1c3c65; cursor: auto; font-family: Arial; text-decoration-line: none !important;" target="_blank">Space</a> <span style="font-family: Georgia, "Times New Roman", Times, serif;">Research Organisation’s (Isro’s) facilities, </span> It was perhaps the first admission that existing <a data-saferedirecturl="https://www.google.com/url?q=https://bn9wksbn.r.us-east-1.awstrack.me/L0/https:%252F%252Ftimesofindia.indiatimes.com%252Findia%252Fgovt-allows-entry-of-private-players-in-future-planetary-outer-space-projects%252Farticleshow%252F75777747.cms/1/01000172fe1afb99-b45ff72a-7a11-4ec5-b7f5-af4f908a1f88-000000/MqqOH-9ekTxbuqpOA4fzb3YGMfI%3D168&source=gmail&ust=1593487484953000&usg=AFQjCNFfta4nwWHWky0Pr4TGLFFuMLRb6Q" href="https://bn9wksbn.r.us-east-1.awstrack.me/L0/https:%2F%2Ftimesofindia.indiatimes.com%2Findia%2Fgovt-allows-entry-of-private-players-in-future-planetary-outer-space-projects%2Farticleshow%2F75777747.cms/1/01000172fe1afb99-b45ff72a-7a11-4ec5-b7f5-af4f908a1f88-000000/MqqOH-9ekTxbuqpOA4fzb3YGMfI=168" rel="noopener noreferrer" style="color: #21ce99; text-decoration-line: none;" target="_blank">regulations</a> impeded the private sector from fully participating in space exploration. And just a few days back, the Union cabinet finally approved the formation of a new organization- the Indian National Space Promotion and Authorisation Centre (<a data-saferedirecturl="https://www.google.com/url?q=https://bn9wksbn.r.us-east-1.awstrack.me/L0/https:%252F%252Fwww.business-standard.com%252Farticle%252Fcurrent-affairs%252Fprivate-firms-can-build-own-rockets-as-govt-opens-up-sector-isro-chief-120062500456_1.html/1/01000172fe1afb99-b45ff72a-7a11-4ec5-b7f5-af4f908a1f88-000000/68JmFX0CSoe1PMKHuW6uZx4bIfg%3D168&source=gmail&ust=1593487484953000&usg=AFQjCNECqZTFi_wcVZeASyuG1ypcaXrdfw" href="https://bn9wksbn.r.us-east-1.awstrack.me/L0/https:%2F%2Fwww.business-standard.com%2Farticle%2Fcurrent-affairs%2Fprivate-firms-can-build-own-rockets-as-govt-opens-up-sector-isro-chief-120062500456_1.html/1/01000172fe1afb99-b45ff72a-7a11-4ec5-b7f5-af4f908a1f88-000000/68JmFX0CSoe1PMKHuW6uZx4bIfg=168" rel="noopener noreferrer" style="color: #21ce99; text-decoration-line: none;" target="_blank">IN-SPACe</a>) under the Department of Space (DoS). IN-SPACe will now be in charge of regulating, guiding and promoting the activities of the private sector in the space industry. More importantly, through INSPACe, private companies will be allowed to build their own facilities on DoS premises after they vet their application.</div><div style="font-family: "din pro", "din web", sans-serif; font-size: 16px;"><br /></div>
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And this is a big positive. Here's ISRO chairman, Dr. Sivan <a data-saferedirecturl="https://www.google.com/url?q=https://bn9wksbn.r.us-east-1.awstrack.me/L0/https:%252F%252Fwww.wionews.com%252Findia-news%252Findian-start-ups-sent-requests-after-private-sector-allowed-in-space-isro-308978/1/01000172fe1afb99-b45ff72a-7a11-4ec5-b7f5-af4f908a1f88-000000/zaQ8tmUrCadoLEyF3YHnGW8qPB0%3D168&source=gmail&ust=1593487484953000&usg=AFQjCNEwtrzXRD20oCAcno3tk_kUq7FFjg" href="https://bn9wksbn.r.us-east-1.awstrack.me/L0/https:%2F%2Fwww.wionews.com%2Findia-news%2Findian-start-ups-sent-requests-after-private-sector-allowed-in-space-isro-308978/1/01000172fe1afb99-b45ff72a-7a11-4ec5-b7f5-af4f908a1f88-000000/zaQ8tmUrCadoLEyF3YHnGW8qPB0=168" rel="noreferrer" style="color: #21ce99; text-decoration-line: none;" target="_blank">explaining</a> this bit.</div><div style="font-family: "din pro", "din web", sans-serif; font-size: 16px;"><br /></div>
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<em>“Under the present situation, ISRO has reached its limit on providing our services due to manpower limitations and we can’t scale up more than 3 per cent market share. That’s why we need private players to get involved and that will also boost market share when they diversify into many </em></div><div style="font-family: "din pro", "din web", sans-serif; font-size: 16px;"><em>services"</em> </div>
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Sandeep Bhujbalhttp://www.blogger.com/profile/14051123456091166205noreply@blogger.com0tag:blogger.com,1999:blog-7594912604760819727.post-89046861684247880522020-06-25T22:13:00.000-07:002020-06-25T22:13:34.230-07:00Essar Shipping Limited vs. CIT (Bombay High Court)<div dir="ltr" style="text-align: left;" trbidi="on">
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<strong>S. 28(iv): The Dept's argument that the waiver of a loan constitutes an operational subsidy which is taxable is not correct. There is a fundamental difference between “loan” and “subsidy” & the two concepts cannot be equated. While “loan” is a borrowing of money required to be repaid back with interest; “subsidy” is not required to be repaid back being a grant. Such grant is given as part of a public policy by the state in furtherance of public interest. Therefore, even if a “loan” is written off or waived, which can be for various reasons, it cannot partake the character of a “subsidy”. The waiver of a loan cannot be brought to tax u/s 28(iv) of the Act</strong></div>
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Conceptually, “loan” and “subsidy” are two different concepts. As per the Concise Oxford English Dictionary, Indian Edition, the term “loan” has been explained as a thing that is borrowed, especially a sum of money that is expected to be paid back with interest; the action of lending. Black’s Law Dictionary, Eight Edition, describes “loan” as an act of lending; a grant of something for temporary use; a thing lent for the borrower’s temporary use, especially a sum of money lent at interest; to lend, especially money. In Supreme Court on Words and Phrases, it is stated that “loan” necessarily supposes a return of the money loaned; in order to be a loan, the advance must be recoverable; “loan” is an advance in cash which includes any transaction which in substance amounts to such advance</div>
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Sandeep Bhujbalhttp://www.blogger.com/profile/14051123456091166205noreply@blogger.com0tag:blogger.com,1999:blog-7594912604760819727.post-77811457343758005842020-03-19T05:20:00.000-07:002020-03-19T05:20:14.561-07:00ECB launched bond buying Program to ease euro zone economy <div dir="ltr" style="text-align: left;" trbidi="on">
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<span style="background-color: white; color: #555555; font-family: "arial" , "helvetica neue" , "helvetica" , sans-serif; font-size: 14px; text-align: center;">The 3Cs - </span><strong style="background-color: white; color: #555555; font-family: Arial, "Helvetica Neue", Helvetica, sans-serif; font-size: 14px; line-height: inherit; text-align: center;">Coronavirus, Crude oil and Credit Risk</strong><span style="background-color: white; color: #555555; font-family: "arial" , "helvetica neue" , "helvetica" , sans-serif; font-size: 14px; text-align: center;"> seem to have shocked the whole world. The infection from the pandemic and the economic fallout is taking a toll on equity markets. Though central banks and the government are pacifying sentiments through rate cuts and liquidity infusion, the fall in the markets is highly disturbing due to the rising </span><span style="font-family: sans-serif; font-size: 14px;">confirmed coronavirus cases and deaths in Europe surpassed China on Wednesday, the ECB launched a €750B bond-buying program to stop a pandemic-induced financial rout shredding the eurozone's economy. The new policy brings this year's planned purchases to €1.1T, with the new round alone worth 6% of the bloc's GDP. Eurozone government bonds surged after the decision, with 10-year Italian bond yields dropping as much as 90 bps to 1.40%. Spanish and Portuguese 10-year bond yields slid around 30 bps each, while benchmark 10-year German Bund yields were down 12 bps at 0.35%.</span></div>
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Sandeep Bhujbalhttp://www.blogger.com/profile/14051123456091166205noreply@blogger.com0tag:blogger.com,1999:blog-7594912604760819727.post-60001748073897151672020-03-11T21:30:00.000-07:002020-03-11T21:35:06.429-07:00Global Economy getting worse. <div dir="ltr" style="text-align: left;" trbidi="on">
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The Price of oil tumbled overnight and could go much lower still.</div>
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Global supply disruptions and slackening demand could lead to global recession.</div>
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Quarter 1 earnings reports will generally be bad and forward guidance could be even worse.</div>
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Expect another rate cut from the Fed and possibly a fiscal stimulus package from Washington, with maybe a short-term rally coming soon.</div>
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Further downside in equities appears likely as fear and economic disruptions create global uncertainties.</div>
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Sandeep Bhujbalhttp://www.blogger.com/profile/14051123456091166205noreply@blogger.com1tag:blogger.com,1999:blog-7594912604760819727.post-79079339868798027622017-08-21T04:23:00.000-07:002017-08-21T04:23:04.851-07:00Rosneft acquire Essar Oil 49.13% stake <div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: arial; font-size: 14.98px;">A consortium led by Rosneft announced the completion of a $12.9B deal to acquire Essar Oil, strengthening ties between the world's largest oil producer and the fastest growing fuel consumer. Rosneft </span><span style="font-family: arial; font-size: 14.98px;">will get a 49.13% stake in Essar, while the Trafigura-UCP consortium via Kesani Enterprises will get another 49.13% holding. The remaining 1.74% stake will be held by retail shareholders.</span></div>
Sandeep Bhujbalhttp://www.blogger.com/profile/14051123456091166205noreply@blogger.com0tag:blogger.com,1999:blog-7594912604760819727.post-36906018210583370802017-05-24T21:21:00.000-07:002017-05-24T21:21:15.740-07:00Moody downgrade China's rating<div dir="ltr" style="text-align: left;" trbidi="on">
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China's great wall of debt! Moody's has lowered the nation's credit rating to A1 from Aa3, citing Beijing's waning financial strength and rising liabilities. It marks the first time a major ratings agency has downgraded the country in more than 25 years. The move also received a backlash from China's finance ministry, which said the decision was "absolutely groundless" and was based on an "inappropriate calculation method."</div>
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Sandeep Bhujbalhttp://www.blogger.com/profile/14051123456091166205noreply@blogger.com0tag:blogger.com,1999:blog-7594912604760819727.post-34709108360023628892017-05-24T01:25:00.001-07:002017-05-24T01:25:27.526-07:00President Trump's first budget proposal<div dir="ltr" style="text-align: left;" trbidi="on">
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<span style="font-family: arial, sans-serif;"><span style="background-color: white;">President Trump's first full budget proposal lands on lawmakers' desks, with a proposed $3.6T in spending cuts over the next decade. Congress will still be allowed to spend $4.1T in 2018, including a big boost to defense, border security and infrastructure, while cutting Medicaid, food stamps and other social programs. The plan also calls for selling half of the nation's Strategic Petroleum Reserve and permitting drilling in the Alaska refuge.</span></span></div>
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Sandeep Bhujbalhttp://www.blogger.com/profile/14051123456091166205noreply@blogger.com0tag:blogger.com,1999:blog-7594912604760819727.post-24022716505875322402017-05-21T22:50:00.000-07:002017-05-21T22:50:02.094-07:00S. 54/ 54F: There is no requirement that the investment in the new residential house should be situated in India prior to the amendment by the Finance (Nos.2) Act, 2014 w.e.f. 01/04/2015<div dir="ltr" style="text-align: left;" trbidi="on">
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ITO vs. Nishant Lalit Jadhav (ITAT Mumbai)</div>
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A similar situation, though in the context of section 54F of the Act, has been considered by the Hon’ble Gujarat High Court in the case of Smt.Leena J. Shah (supra); notably, so far as the impugned issue is concerned, the requirement of sections 54F & 54F of the Act is pari-materia, inter-alia, requiring the assessee to make investment in a new residential house in order to avail the exemption on the capital gains earned. As per the Hon’ble High Court, prior to the amendment the only stipulation was to invest in a new residential property and that there was no scope for importing the requirement of making such investment in a residential property located in India</div>
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Sandeep Bhujbalhttp://www.blogger.com/profile/14051123456091166205noreply@blogger.com0tag:blogger.com,1999:blog-7594912604760819727.post-76026345749856484142017-05-19T07:20:00.000-07:002017-05-19T07:20:05.239-07:00S. 56(2)(vi): A HUF is a "group of relatives". Consequently, a gift received from a HUF by a member of the HUF is exempt from tax as provided in the Explanation to s. 56(2)(vi)<div dir="ltr" style="text-align: left;" trbidi="on">
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DCIT vs. Ateev V. Gala (ITAT Mumbai)</div>
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From a plain reading of section 56(2)(vi) along with the Explanation to that section and on understanding the intention of the legislature from the section, we find that a gift received from “relative”, irrespective of whether it is from an individual relative or from a group of relatives is exempt from tax under the provisions of section 56(2)(vi) of the Act as a group of relatives also falls within the Explanation to section 56(2)(vi) of the Act. It is not expressly defined in the Explanation that the word “relative” represents a single person. And it is not always necessary that singular remains singular. Sometimes a singular can mean more than one, as in the case before us. In the case before us the assessee received gift from his HUF. The word “Hindu Undivided Family”, though sounds singular unit in its form and assessed as such for income-tax purposes, finally at the end a “Hindu Undivided Family” is made up of ‘a group of relatives”</div>
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Sandeep Bhujbalhttp://www.blogger.com/profile/14051123456091166205noreply@blogger.com0tag:blogger.com,1999:blog-7594912604760819727.post-72561483005950729402017-05-11T05:19:00.000-07:002017-05-11T05:19:18.779-07:00Transfer Pricing: Law explained as to when the “Resale Price Method” (RPM) can be used with respect to related parties under Rule 10B (1)(b) + Law on determining arm’s length rate of the corporate guarantee commission/fee explained<div dir="ltr" style="text-align: left;" trbidi="on">
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<b>Zee Entertainment Enterprises Ltd vs. ACIT (ITAT Mumbai)</b></div>
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The Transfer Pricing Officer has selected RPM as most appropriate method for determining the arm’s length price of the transaction of sale of programmes and film rights to ATL in contrast to the TNM method selected by the assessee. The first controversy is as to whether the Transfer Pricing Officer was justified in selecting the RPM as most appropriate method. Section 92(1) of the Act provides that the arm’s length price in relation to the international transaction shall be determined by any of the methods prescribed therein, being the most appropriate method. Notably, the phraseology of section 92C(1) of the Act makes it clear that the selection of the most appropriate method is to be made “having regard to the nature of transaction or class of transaction or class of associated persons or functions performed by such persons or such other relevant factors………………..”. Further, Rule 10B of the Rules enumerates the various methods to determine the arm’s length price of an international transaction and for the present purpose, what is relevant is clause(b) of Rule 10B(1) of the Rules, which prescribes the manner in which the RPM is to be effectuated.</div>
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Sandeep Bhujbalhttp://www.blogger.com/profile/14051123456091166205noreply@blogger.com0tag:blogger.com,1999:blog-7594912604760819727.post-25869017547602822332017-05-09T22:39:00.003-07:002017-05-09T22:39:55.490-07:00S.14A disallowance has to be made also with respect to dividend on shares and units on which tax is payable by the payer u/s 115-O & 115-R. Argument that such dividends are not tax-free in the hands of the payee is not correct. S. 14A cannot be invoked in the absence of proof that expenditure has actually been incurred in earning the dividend income. If the AO has accepted for earlier years that no such expenditure has been incurred, he cannot take a contrary stand for later years if the facts and circumstances have not changed<div dir="ltr" style="text-align: left;" trbidi="on">
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<b>Godrej & Boyce Manufacturing Co Ltd vs. DCIT (Supreme Court)</b></div>
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While it is correct that Section 10(33) exempts only dividend income under Section 115-O of the Act and there are other species of dividend income on which tax is levied under the Act, we do not see how the said position in law would assist the assessee in understanding the provisions of Section 14A in the manner indicated. What is required to be construed is the provisions of Section 10(33) read in the light of Section 115-O of the Act. So far as the species of dividend income on which tax is payable under Section 115-O of the Act is concerned, the earning of the said dividend is tax free in the hands of the assessee and not includible in the total income of the said assessee. If that is so, we do not see how the operation of Section 14A of the Act to such dividend income can be foreclosed. The fact that Section 10(33) and Section 115-O of the Act were brought in together; deleted and reintroduced later in a composite manner, also, does not assist the assessee. Rather, the aforesaid facts would countenance a situation that so long as the dividend income is taxable in the hands of the dividend paying company, the same is not includible in the total income of the recipient assessee. At such point of time when the said position was reversed (by the Finance Act of 2002; reintroduced again by the Finance Act, 2003), it was the assessee who was liable to pay tax on such dividend income. In such a situation the assessee was entitled under Section 57 of the Act to claim the benefit of exemption of expenditure incurred to earn such income. Once Section 10(33) and 115-O was reintroduced the position was reversed. The above, actually fortifies the situation that Section 14A 44 of the Act would operate to disallow deduction of all expenditure incurred in earning the dividend income under Section 115-O which is not includible in the total income of the assessee.</div>
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Sandeep Bhujbalhttp://www.blogger.com/profile/14051123456091166205noreply@blogger.com0tag:blogger.com,1999:blog-7594912604760819727.post-82279757118277099502017-04-26T04:09:00.002-07:002017-04-26T04:09:11.221-07:00Article 5 India-UK DTAA: Entire law on what constitutes a "permanent establishment" in the context of the 'Formula One Grand Prix of India' event explained after extensive reference to case laws, OECD Model Convention and commentary by Philip Baker, Klaus Vogel and other experts<div dir="ltr" style="text-align: left;" trbidi="on">
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Formula One World Championship Limited vs. CIT (Supreme Court)</div>
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The term “place of business” is explained as covering any premises, facilities or installations used for carrying on the business of the enterprise whether or not they are used exclusively for that purpose. It is clarified that a place of business may also exist where no premises are available or required for carrying on the business of the enterprise and it simply has a certain amount of space at its disposal. Further, it is immaterial whether the premises, facilities or installations are owned or rented by or are otherwise at the disposal of the enterprise. A certain amount of space at the disposal of the enterprise which is used for business activities is sufficient to constitute a place of business. No formal legal right to use that place is required. Thus, where an enterprise illegally occupies a certain location where it carries on its business, that would also constitute a PE. Some of the examples where premises are treated at the disposal of the enterprise and, therefore, constitute PE are: a place of business may thus be constituted by a pitch in a market place, or by a certain permanently used area in a customs depot (e.g. for the storage of dutiable goods). Again the place of business may be situated in the business facilities of another enterprise. This may be the case for instance where the foreign enterprise has at its constant disposal certain premises or a part thereof owned by the other enterprise. At the same time, it is also clarified that the mere presence of an enterprise at a particular location does not necessarily mean that the location is at the disposal of that enterprise.</div>
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Sandeep Bhujbalhttp://www.blogger.com/profile/14051123456091166205noreply@blogger.com0tag:blogger.com,1999:blog-7594912604760819727.post-62702476088239353302017-04-13T22:38:00.001-07:002017-04-13T22:38:47.579-07:00China's 2017 outlook brightened as export rose 16.4% Y/Y<div dir="ltr" style="text-align: left;" trbidi="on">
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China's 2017 export outlook brightened after the government reported better than expected trade growth for March and as U.S. President Trump suddenly declared China is not a currency manipulator. China's exports rose at the fastest pace in more than two years in March, up 16.4% Y/Y, while import growth remained strong at 20.2%; the country's crude oil imports hit a record high of nearly 9.2M bbl/day. Analysts said the stronger trade data reinforces the growing view that economic activity in China has remained resilient and that global manufacturing is improving.</div>
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The yuan climbed to its biggest one-day advance vs. the dollar in nearly three months after President Trump abandoned his earlier pledge to name China a currency manipulator and said the dollar was too strong. China equities are higher, also enjoying a boost from news of stronger than expected growth in exports. But Japan’s Nikkei average lost as much as 1.3% to its lowest level since December, as the yen hit five-month highs against the dollar. European bourses also are lower in the early going as the euro strengthens vs. the dollar.</div>
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Sandeep Bhujbalhttp://www.blogger.com/profile/14051123456091166205noreply@blogger.com0tag:blogger.com,1999:blog-7594912604760819727.post-24420557464203853212017-04-11T04:18:00.002-07:002017-04-11T04:18:29.424-07:00Though Explanation 2 of s. 147 authorizes the AO to reopen an assessment wherever there is an "understatement of income", the AO is not entitled to assume that there is "understatement of income" merely because the assessee's income is "shockingly low" and others in the same line of business are returning a higher income. The invocation of the jurisdiction u/s 147 on the basis of suspicions and presumptions cannot be sustained<div dir="ltr" style="text-align: left;" trbidi="on">
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Rajendra Goud Chepur vs. ITO (AP & T High Court)</h4>
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<span style="font-size: 12.8px;">Without any concrete facts, reopening cannot be ordered merely on the presumption that the returned income is very shockingly lower than the total gross receipts. Therefore, we are of the considered view that the Assessing Officers completely erred in reopening assessments on the basis of either a suspicion that there is suppression of income or on the basis that persons in the same line of business are returning a higher income. Without even mentioning the comparables, no initiation of proceedings under Section 147 can be made</span></div>
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Sandeep Bhujbalhttp://www.blogger.com/profile/14051123456091166205noreply@blogger.com0tag:blogger.com,1999:blog-7594912604760819727.post-87075146951833230532017-04-11T04:15:00.005-07:002017-04-11T04:15:44.529-07:00A disallowance u/s 14A & Rule 8D has to be made even in respect of securities that are held as stock-in-trade by the assessee. However, the disallowance has to be computed by taking into consideration only those shares which have yielded dividend income in the year under consideration<div dir="ltr" style="text-align: left;" trbidi="on">
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<b>Kalyani Barter (P) Ltd vs. ITO (ITAT Kolkata)</b></div>
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The object of s. 14A is to disallow the direct and indirect expenditure incurred in relation to income which does not form part of the total income. There is no dispute that part of the income of the assessee from its business is from dividend which is exempt from tax whereas the assessee was unable to produce any material before the authorities below showing the source from which shares were acquired. The mere fact that those shares were old ones and not acquired recently is immaterial. It is for the assessee to show the source of acquisition of those shares by production of materials that those were acquired from the funds available in the hands of the assessee at the relevant point of time without taking benefit of any loan. If those shares were purchased from the amount taken in loan, even for instance, five or ten years ago, it is for the assessee to show by the production of documentary evidence that such loaned amount had already been paid back and for the relevant assessment year, no interest is payable by the assessee for acquiring those old shares.</div>
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Sandeep Bhujbalhttp://www.blogger.com/profile/14051123456091166205noreply@blogger.com0tag:blogger.com,1999:blog-7594912604760819727.post-47182376152943947242017-04-07T05:33:00.002-07:002017-04-07T05:33:21.881-07:00Bogus share capital/ premium: The proviso to s. 68 (which creates an obligation on the issuing Co to explain the source of share capital & premium) has been introduced by the Finance Act 2012 with effect from 01.04.2013 and does not have retrospective effect. Prior thereto, as per Lovely Exports 317 ITR 218 (SC), if the AO regards the share premium as bogus, he has to assess the shareholders but cannot assess the same as the issuing company's unexplained cash credit<div dir="ltr" style="text-align: left;" trbidi="on">
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CIT vs. Gagandeep Infrastructure Pvt. Ltd (Bombay High Court)</h2>
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The proviso to Section 68 of the Act has been introduced by the Finance Act 2012 with effect from 1st April, 2013. Thus it would be effective only from the Assessment Year 2013-14 onwards and not for the subject Assessment Year. In fact, before the Tribunal, it was not even the case of the Revenue that Section 68 of the Act as in force during the subject years has to be read/understood as though the proviso added subsequently effective only from 1st April, 2013 was its normal meaning. The Parliament did not introduce to proviso to Section 68 of the Act with retrospective effect nor does the proviso so introduced states that it was introduced “for removal of doubts” or that it is “declaratory”. Therefore it is not open to give it retrospective effect, by proceeding on the basis that the addition of the proviso to Section 68 of the Act is immaterial and does not change the interpretation of Section 68 of the Act both before and after the adding of the proviso.</div>
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Sandeep Bhujbalhttp://www.blogger.com/profile/14051123456091166205noreply@blogger.com0tag:blogger.com,1999:blog-7594912604760819727.post-20447809769502463252017-04-05T22:15:00.000-07:002017-04-05T22:15:10.964-07:00CBDT Clarifies Imp Law On Cash Transaction Limits Imposed By Sections 269ST And 271DA<div dir="ltr" style="text-align: left;" trbidi="on">
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The CBDT has issued a press release dated 5th April 2017 by which it has provided important clarification regarding the restriction imposed on cash transaction by sections 269ST & 271DA inserted by the Finance Act 2017 to the Income-tax Act. These sections provide that no person (other than those specified therein) shall receive an amount of two lakh rupees or more (a) in aggregate from a person in a day; (b) in respect of a single transaction; or (c) in respect of transactions relating to one event or occasion from a person, otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account.The CBDT has clarified that the said cash transaction limit of Rs 2 lakh will not apply to withdrawal from banks, cooperative bank and post offices</div>
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Sandeep Bhujbalhttp://www.blogger.com/profile/14051123456091166205noreply@blogger.com0tag:blogger.com,1999:blog-7594912604760819727.post-55907171670816406312017-03-31T04:20:00.000-07:002017-03-31T04:20:23.993-07:00Trump Requests Cuts To Medical Research <div dir="ltr" style="text-align: left;" trbidi="on">
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New media reports indicate the Trump administration is seeking to cut funding for the National Institutes of Health (NIH) this fiscal year. Proposed fund would go into the construction of border wall and military spending.</div>
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Earlier in the month, President Donald Trump had released his budget for next year, in it, NIH saw cuts of close to 20 percent in funding for medical research.</div>
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Now it appears the president is asking congress to cut $1.2 billion from research grants within the agency for this fiscal year, which ends in October. Bloomberg and Politico reported on the $18 billion in cuts to “discretionary spending bills.”</div>
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Sandeep Bhujbalhttp://www.blogger.com/profile/14051123456091166205noreply@blogger.com0tag:blogger.com,1999:blog-7594912604760819727.post-2030909586189800272017-03-30T04:05:00.003-07:002017-03-30T04:05:45.776-07:00S. 35D: Premium collected by a company on subscribed share capital is not “capital employed in the business of the Company" within the meaning of s. 35D so as to enable the claim of deduction of the said amount as prescribed u/s 35D<div dir="ltr" style="text-align: left;" trbidi="on">
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Berger Paints India Ltd vs. CIT (Supreme Court)</div>
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Capital employed in the business of the company is the aggregate of three distinct components, namely, share capital, debentures and long term borrowings as on the dates relevant under sub-clauses(i) and (ii) of Clause(b) of the explanation extracted above. The term ‘long term borrowing’ has been defined in clause (c) to the explanation. It is nobody’s else that the premium collected by the Company on the issue of shares was a long term borrowing either in fact or by a fiction of law. It is also nobody’s case that the premium collected by the Company was anywhere near or akin to a debenture. What was all the same argued by the counsel for the appellant was that premium was a part of the share capital and had therefore to be reckoned as ‘capital employed in the business of the company’. There is, in our view, no merit in that contention.</div>
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Sandeep Bhujbalhttp://www.blogger.com/profile/14051123456091166205noreply@blogger.com0tag:blogger.com,1999:blog-7594912604760819727.post-57129875516666740972017-03-23T04:31:00.001-07:002017-03-23T04:31:53.575-07:00High Stakes for HealthCare Votes<div dir="ltr" style="text-align: left;" trbidi="on">
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The odds of getting an Obamacare replacement bill passed by the House improved late Wednesday as the White House reportedly offered to get rid of the set of minimum benefits health insurers are now required to provide customers. That could win over some members of the Freedom Caucus ahead of today's crucial health care vote, which investors see as a litmus test for President Trump's broader plans and trade on Wall Street.</div>
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Sandeep Bhujbalhttp://www.blogger.com/profile/14051123456091166205noreply@blogger.com0tag:blogger.com,1999:blog-7594912604760819727.post-56219593331894009122017-03-23T04:23:00.000-07:002017-03-23T04:23:26.134-07:00S. 32: Title to immovable property cannot pass when its value is more than Rs.100/- unless it is executed on a proper stamp paper and is also duly registered with the sub-Registrar. Accordingly, a lessee cannot be said to be the "owner" for purposes of claiming depreciation. Under Explanation 1 to s. 32, the lessee is entitled to depreciation on the cost of construction incurred by him but not on the cost incurred by the owner and reimbursed by the lessee<div dir="ltr" style="text-align: left;" trbidi="on">
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<b>Mother Hospital Pvt. Ltd vs. CIT (Supreme Court)</b></div>
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We are in agreement with the view taken by the High Court. Building which was constructed by the firm belonged to the firm. Admittedly it is an immovable property. The title in the said immovable property cannot pass when its value is more than Rs.100/- unless it is executed on a proper stamp paper and is also duly registered with the sub-Registrar. Nothing of the sort took place. In the absence thereof, it could not be said that the assessee had become the owner of the property. As is clear from the plain language of the Explanation, it is only when the assessee holds a lease right or other right of occupancy and any capital expenditure is incurred by the assesee on the construction of any structure or doing of any work in or in relation to and by way of renovation or extension of or improvement to the building and the expenditure on construction is incurred by the assessee, that assessee would be entitled to depreciation to the extent of any such expenditure incurred. In the instant case, records show that the construction was made by the firm. It is a different thing that the assessee had reimbursed the amount. The construction was not carried out by the assessee himself. Therefore, the explanation also would not come to the aid of the assessee</div>
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Sandeep Bhujbalhttp://www.blogger.com/profile/14051123456091166205noreply@blogger.com0