Banking Reforms for Housing Sector

Addressing the problem of housing shortage in the country requires other multiple interventions besides financial intervention. ‘Affordable Housing for All’ has been a stated national policy of the Government of India. Many of the programmes of the Government are designed to provide affordable housing to lower-income households through the subsidy-cum-loan schemes. In order to further expand the market to the lower-income segment of the populace, the availability of mortgage guarantee products like Credit Risk Guarantee Fund for Low Income Housing has been launched by the Central Government.

Government has taken following measures to spur growth in the housing sector.

Budget Announcements FY 2014-15

• The corpus of Rural Housing Fund and Urban housing Fund have been augmented to Rs. 8000 crore and Rs. 4000 crore respectively to refinance banks. Housing Finance Companies (HFCs) and other Financial Institutions.
• To encourage development of Smart Cities, which will also provide habitation for the neo-middle class, requirement of the built up area and capital conditions for FDI has been reduced from 50,000 square metres to 20,000 square metres and from USD 10 million to USD 5 million respectively with a three year post completion lock-in.
• To further encourage this, projects which commit at least 30 per cent of the total project cost for low cost affordable housing have exempted from minimum built up area and capitalization requirements, with the condition of three year lock-in.

Other measures

• In order to encourage affordable housing, the Reserve Bank of India (RBI) has permitted Bank to raise long-term bonds to lend to housing segment.
• In terms of extant RBI instructions, banks have been advised to allow finance to facilitate the growth of house sector through finance provided to individuals or groups of individuals including cooperative societies.
• Banks may consider request for additional within overall ceiling for carrying out alternative additions/repairs to the house/flat already financed by them.
• Banks to ensure that their housing finance is channeled by way of term loans to housing finance institutions, housing boards, other public housing agencies, private builders etc, primarily for augmenting the supply of serviced land and constructed units.
• Finance provided for construction of residential houses to be constructed by public housing agencies like HUDCO, Housing Boards, local bodies, individuals, co-operative societies, employers, priority being accorded for financing construction of houses meant for economically weaker sections, low income group and middle income group.
• Finance for construction meant for improving the conditions in slum areas for which credit may be extended directly to the slum-dwellers on the guarantee of the Government, or indirectly to them through the State Governments.
• RBI has carved out a separate sub sector out of ‘Commercial Real Estate (CRE)’ as ‘Commercial Real Estate Residential Housing (CRE-RH) with the intention of providing regulatory support to lending towards residential housing projects by allowing lower provisioning and risk-weights.

The restructuring norms in case of CRE projects have been relaxed wherein extension of Date of Commencement of Commercial Operation within one year enable loans to remain standard assets.

 

 
Press Information Bureau
Government of India
Ministry of Finance

FDI in Listed/Unlisted Companies

As per the ‘Consolidated FDI Policy Circular 2014’, amended through Press Notes 7 & 8 of 2014, in sectors/ activities not under the prohibited list, FDI from 20% to 100%, subject to applicable laws/regulations and other conditionalities is permitted. In sectors/ activities not listed therein, FDI is permitted up to 100% on the automatic route, subject to applicable laws/ regulations; security and other conditionalities. There is no proposal to contain FDI to 10% in listed companies or revise sectoral cap in unlisted companies.

Press Information Bureau
Government of India
Ministry of Commerce & Industry

Indirect Tax Revenue (Provisional) Collections for the period April – November 2014

Indirect Tax Revenue (Provisional) collections have increased from Rs 3,06,814 crore in April-November 2013 to Rs. 3,28,662 crore during April-November 2014. Thus an increase of 7.1% has been registered during April-November 2014 over the corresponding period in the previous year.

Service Tax collections have increased from Rs. 91,982 crore in April-November 2013 to Rs.1,02,592 crore during April-November 2014 registering an increase of 11.5%. This amounts to an achievement of 47.5 % of the target fixed at BE 2014-15.

Collections from Customs increased from Rs.1,11,844 crore during April-November 2013 to Rs. 1,23,308 crore during April-November 2014 registering an increase of 10.2%. This is an achievement of 61.1% of the target fixed at BE 2014-15.

Details of Indirect Tax revenue (provisional) collections during April-November 2014, along with growth rate compared to the corresponding period in the previous year.

For the period April – November 2014

                                                                                                             (Rs. in crores)

Tax Head		For the month		% Growth	Upto the month		% growth	% of BE achieved
	B.E. 2014-15	2013-14	2014-15		2013-14	2014-15
Customs	201819	13137	17185	30.8	111844	123308	10.2	61.1
Central Excise*	205452	13544	14952	10.4	102988	102762	(-) 0.2	50.0
Service Tax	215973	10224	11923	16.6	91982	102592	11.5	47.5
Total	623244	36905	44060	19.4	306814	328662	7.1	52.7

*Exclusive of cess administered by other departments.

Press Information Bureau

Government of India

Ministry of Finance

ITAT follows AS-10 to include one-time vehicle tax in cost of vehicle treating it as capital expenditure

M. DINSHAW & CO. (P.) LTD. V. DY. CIT [2014] 48 taxmann.com 190 (Mumbai - Tribunal)

 

Facts:

The issue that arose in the instant appeal was:

Whether one time vehicle tax paid by the assessee was includible in cost of vehicles, (eligible to depreciation) or, was in nature of revenue expenditure, deductible under Section 37(1)?

The Tribunal held in favour of revenue as under:

• Section 43(1) defines the term 'actual cost' as under: "Actual cost" means the actual cost of the assets to the assessee, reduced by that portion of the cost thereof, if any, as has been met directly or indirectly by any other person or authority.
• The definition emphasizes on the elements, which would not form a part thereof, so that the principles of commercial accounting would apply in determining the actual cost. Even otherwise, it was a trite law that in the absence of a statutory definition or mandate, the accounting prescription would prevail.
• It is only where the law specifically provides for a particular course of action, inconsistent with the accounting mandate, that the same shall prevail and override the latter, viz., section 43B.
• Para 20 of ‘Accounting Standard-10 - Accounting for Fixed Assets’ required that the cost of a fixed asset would comprise of its purchase price and any attributable cost of bringing the asset to its working condition for its intended use.
• One-time tax for the lifetime of "all motor cars and omnibuses used or kept for use" in the State of Maharashtra was a tax for user, active or passive, of the motor vehicle in the territory of Maharashtra. Therefore, payment of tax, only enabled the vehicle being put to its intended use; in fact, represented a condition thereof, and would form part of its cost.

Gymkhana Club providing sports and other facilities only to its members could not be treated as a charitable trust

ADIT(E) V. NAVI MUMBAI MERCHANTS GYMKHANA [2014] 47 taxmann.com 53 (Mumbai - Tribunal)

Where assessee-club was involved in providing sports activities accompanied by facilities like liquor bar, playing cards, restaurant, marriage hall, catering services, etc. to a certain group of persons, i.e., members of club, activities of assessee-club would not fall in definition of charitable purpose.

Facts:

• The assessee-trust, claiming to be a charitable trust, filed its return of income declaring total income at nil. The Assessing Officer (‘AO’) noticed that, though the assessee-trust had been granted registration under section 12A, yet, the activities of the assessee-trust were not charitable activities.
• He, therefore, held that the assessee was not entitled to exemption under section 11. He, accordingly, taxed the assessee's receipts. On appeal, the CIT(A) observed that the assessee-trust had been conferred the benefit of exemption under section 11 up to assessment year 2008-09.
• The sports and other activities carried out by the assessee-trust would partake the character of general public utility which term was included in the definition of charitable purpose as defined under section 2(15). He, therefore, held that the assessee-trust was eligible for exemption under section 11. The aggrieved-revenue filed the instant appeal.

The Tribunal held in favour of revenue as under:

• The assessee had been involved in providing sports and recreational facilities to its members only. The AO had given a categorical finding that, though the membership of the club was open to public yet it had been restricted in many ways. Even the membership was offered on payment of very high premium.
• High class premium services, such as facility of liquor bar, playing cards, restaurant, marriage hall, catering services, etc., were provided to the members, which could not be said to constitute any charitable activity.
• Members who constituted high class, influential and rich persons could obtain services, that too on payment of high premium. However, the assessee-trust was also offering the facility of sports to its members that by itself could not partake the character of charitable activity.
• It was not the case of the assessee-trust that such sports activities had resulted into any benefit to the public at large or any section of the society. The sports activities accompanied by facilities like liquor bar, playing cards, restaurant, marriage hall, catering services, etc., were limited to a certain group of persons.
• There was no element of charity involved in such activities rather the activities of the club were meant for leisure and pleasure of the members of the club and the membership had been restricted to certain individuals. Thus, there was no infirmity in the order of the AO in holding that the activities of the assessee-trust would not fall in the definition of charitable purpose as defined under section 2(15).

CIT couldn’t revise order of Assessing Officer because Assessing Officer lost his jurisdiction due to a circular issued by CBDT subsequently

CIT V. KAILASH CHAND METHI [2014] 47 taxmann.com 59 (Rajasthan)

 

Income tax Officer had valid jurisdiction at time of issuance of notice under section 143(2), subsequent disqualification would not deprive him of jurisdiction of making assessment.

Facts:

• The Assessing Officer (‘AO’) issued notice under section 143(2) after analyzing various claims made by the assessee. The ITO passed assessment order, which was partly allowed by the CIT(A).
• However, later on the Commissioner initiated proceeding under section 263. But on basis of detailed submission of assessee, said revisional proceeding was dropped by him.
• Thereafter, the subsequent CIT initiated revisional proceeding on ground that there was an internal circular according to which with effect from 1-4-2001 for any return of income of any assessment year, being over Rs. 5 lakh, ITO would have no jurisdiction, as jurisdiction in such case would lie with Dy. CIT /ACIT.
• On appeal, the Tribunal quashed the order of CIT. The aggrieved-revenue filed the instant appeal. 

The High Court held in favour of assessee as under:

• The AO had the jurisdiction when the notice under section 143(2) was issued. Once the ITO had valid jurisdiction at the time of issuance of notice, the Assessing Officer ought to have informed the assessee if there was some internal circular.
• The opinion of CIT that the ITO had no jurisdiction could not be said to be proper, as the assessee appeared on valid notice and after considering all the submissions or representation, the ITO passed the order.
• It was not the case where the ITO had passed order in a cryptic or summary manner accepting the returned income. The order could not be termed to be erroneous only because the CIT was not satisfied with the conclusion.
• If the CIT was of the view that the AO had passed the order without jurisdiction then he ought to have initiated departmental enquiry against such officer. No such information had been brought forward from the appellant-revenue or perused from the order of Commissioner under section 263.
• Thus, the order of CIT under section 263 would be deemed as a change of opinion and would tantamount to abuse of powers granted to him. The practice adopted by the CIT amounted to unnecessary harassment to the assessee for no fault of his. Thus, there was no infirmity or perversity in the order of the Tribunal so as to call for any interference.

CCI Approves the Proposed Merger Between Sun Pharma and Ranbaxy Subject to Modification

The Competition Commission of India (Commission) in its meeting held on 5^th December, 2014 (05.12.2014) approved the proposed merger between Sun Pharma and Ranbaxy, subject to the parties inter alia carrying out the divestiture of their products relating to seven relevant markets for formulations. Further, the Commission also directed that the proposed merger shall not take effect before the parties have carried-out the divestiture of the products so specified as per the order of the Commission.                                                             

For more details, please visit http://www.cci.gov.in/May2011/OrderOfCommission/CombinationOrders/C-2014-05-170.pdf

Earlier on 6^th May, 2014(06.05.2014), the Commission had received a notice from Sun Pharmaceuticals Industries Limited (Sun Pharma) and Ranbaxy Laboratories Limited (Ranbaxy) in relation to the merger of Ranbaxy into Sun Pharma.

On the basis of combined market share of the parties, incremental market share as a result of the proposed combination, market share of the competitors, number of significant players in the relevant market etc., the Commission focussed its investigation on some relevant markets for formulations where the proposed combination was likely to have an appreciable adverse effect on competition in the relevant market in India.

In addition to these relevant markets, the Commission also investigated two pipeline products of Ranbaxy and possibility of any vertical foreclosure in the market for active pharmaceutical ingredients (APIs).

On the basis of the replies submitted by the parties, the Commission after having considered the same decided that the adverse effect of the proposed combination on competition can be eliminated by suitable modification under the provisions of the Competition Act, 2002.

Accordingly, the Commission in its meeting held on 05.12.2014 approved the proposed merger between Sun Pharma and Ranbaxy, subject to the parties inter alia carrying out the divestiture of their products relating to seven relevant markets for formulations. Further, the Commission also directed that the proposed merger shall not take effect before the parties have carried out the divestiture of the products so specified as per the order of the Commission. 

Press Information Bureau
Government of India
Ministry of Corporate Affairs