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  • CBDT resolves disputes under Mutual Agreement Procedure (MAP) of Tax Treaties !!

    CBDT resolves disputes under Mutual Agreement Procedure (MAP) of Tax Treaties !!
    The Central Board of Direct Taxes (CBDT) has resolved 180 cases through a Mutual Agreement Procedure (MAP).
    The total amount of income locked- up in dispute in these cases is approximately Rs. 5,000 crore.
    The resolved cases pertain to various sectors of the economy like software services, IT enabled services, manufacturing and consultancy services, etc.
    The countries with which cases have been resolved are USA, Japan, United Kingdom and China.
    MAP has emerged as an effective alternative tax dispute resolution mechanism.
    In the last two years, increased focus on MAP has resulted in resolution of large number of disputes relating to double taxation.
    Double Taxation Avoidance Agreements (DTAAs) i.e. Tax Treaties signed by India with various countries contain an Article to relieve taxpayers from double taxation through a Mutual Agreement Procedure (MAP).
    The MAP program is led by one or more Competent Authorities designated by the signatory countries to resolve tax disputes under the provisions of each treaty.
    About CBDT:
    The Central Board of Direct Taxes (CBDT) provides essential inputs for policy and planning of direct taxes in India and is also responsible for administration of the direct tax laws through Income Tax Department.
    The CBDT is a statutory authority functioning under the Central Board of Revenue Act, 1963.

  • DD News | Late Edition | Make in India Week

    Context: Make in India week was organised in Mumbai.

    Q. What’s the significance of such events?

    • 1.  Such events are very important as they put together under one roof major investors and entrepreneurs from developed and developing world with Indian investors and policymakers.
    • 2. It provides opportunity for collaboration between Indian and foreign investors.
    • 3. Policymakers can directly address their concerns and present India as a prime investment destination

    Q. Capital goods policy was announced in the event. Tell us it’s salient features.

    Copy Pasting from our news card

    1. News: The government introduced a National Capital Goods Policy
    2. Purpose: To spur capital goods sector and the Make in India initiative. It aims to turn the country into a world class hub for capital goods
    3. Objective: To increase production of capital goods from Rs. 2.30 lakh crore in 2014-15 to Rs. 7.50 lakh crore in 2025
    4. To raise direct and indirect employment from the current 8.4 million to 30 million by 2025
    5. Key Elements: Availability of finance, raw material, innovation and technology, productivity, quality and environment-friendly manufacturing practices, increasing skill availability, promoting exports and creating domestic demand

    Target is also to increase share of capital goods in manufacturing from 12% at present to 20% by 2025. It will hugely benefit MSME sector.

    Q. Intentions to invest are all great but what are the steps needed to realize intention to invest into actual on the ground investment?  

    Government need to improve ease of doing business in India.

    • 1. Skills building
    • 2. Infrastructure investment
    • 3. Labour reform
    • 4. Finance i.e. banking reform, resolve the NPA mess
    • 5. Tax reforms, Tax department is sending contradictory signals

    Q. What are some of the steps that govt has already taken to ease doing business in India?

    Ease of doing business ranking has improved from 142 to 130 and it is expected to improve further as government has already taken following maesures

    1.  Establishment of commercial courts
    2.  insolvency and bankruptcy code is in parliamentary
    3.  arbitration act amendment
    4.  GST bill

    But it requires smooth functioning of parliament to finally pass these legislative proposals. All the political parties should come on board for the sake of Indian economy and it’s youth who need jobs.

    Q. Even if this wish list is delivered, how can industrial sector grow in such a gloomy global economic environment?

    • Strength of Indian economy is domestic demand.  Jobs to 65% population which is under 35 will create further demand.
    • We should not wait for global economy to pick up as our major export markets are unlikely to recover any time soon. Our exports are down for 13 consecutive months.
    • That’s why we need more reforms so that FDI come in. In the 1st half of 2015, we received highest FDI in the world and in 2016, we are expected to receive over 40% more FDI.
    • PM Modi has added another D called deregulation to his 3Ds of democracy, demography and demand to encourage FDI inflows.

    Q. So what are the expectations from the budget?

    1. 1. House functions smoothly and major bills mentioned above are passed.
    2. 2. Very importantly, government has to correct inverted duty structure which leads to reverse tariff escalation.

    Inverted duty structure is an anomalous situation in which prices of raw material is costlier than prices of finished products. For instance, to protect steel manufacturers, govt  has imposed minimum import price on steel but cycle made from steel in China now becomes cheaper than Indian made cycle as Chinese manufacturers are using cheaper steel.

    Govt has to decide who it wants to protect, a handful of raw material manufacturers or finished product manufacturers who actually create so many jobs, many of them in MSME.

  • North Korean Fusion Bomb test in bid to change world power equation

    The January 6, 2016 ‘thermonuclear’ test by the Democratic People’s Republic of Korea (DPRK) is the fourth in the series of nuclear tests beginning in 2006. Is it a quest to attain credible deterrence against USA, Let’s see it!

    Let’s first go into some North Korean nuke history.

    What has North Korea tested in the past?

     

    • North Korea’s tests in 2006 and 2009 are thought to have been plutonium fission devices, but speculation was rife that its 2013 test was of an uranium-enriched device, though this has never been confirmed. <In general, uranium devices are much more difficult to fabricate and operate>
    • A test based on a uranium device would spell new dangers because weapons-grade plutonium enrichment happens in large facilities
    • That are easier to spot and uranium enrichment uses many, possibly small, centrifuges that can be hidden away
    • North Korea has also depleted its stocks of weapons-grade plutonium but has plentiful reserves of uranium ore
    • The fusion/H-bomb finds root in the history, as more powerful and technologically advanced than atomic weapons, such as those that devastated 2 Japanese cities in World War II
    • H-bombs use fusion, the merging of atoms to unleash massive amounts of energy, whereas atomic bombs use nuclear fission, or the splitting of atoms.
    fatMan image - A mockup of ‘Fat Man’, the bomb that blew up over Nagasaki on August 9, 1945. Credit: euthman/Flickr, CC BY 2.0
    fatMan image – A mockup of ‘Fat Man’, the bomb that blew up over Nagasaki on August 9, 1945. Credit: euthman/Flickr, CC BY 2.0

     

    What is Nuclear fusion?

    • In physics, nuclear fusion is the process by which multiple nuclei join together to form a heavier nucleus
    • It is accompanied by the release or absorption of energy depending on the masses of the nuclei involved.
    • In a hydrogen bomb, 2 isotopes of hydrogen, deuterium and tritium are fused to form a nucleus of helium and a neutron
    • This fusion releases 17.6 MeV of energy. Unlike nuclear fission, there is no limit on the amount of the fusion that can occur

    Let’s get back to learn some changing equations in new world order.

    Is it quest to attain deterrence against United States?

    • The supreme leader Kim Jong Un (KJU) had warned that, if aggressors dare to provoke us, even to a slight degree, we will never
      tolerate it, and respond resolutely with a merciless sacred war of justice, a great war for national reunification
    • It declared: “The United States has persisted in ignoring our just demand for replacing the Armistice Agreement with a separate pact to remove the danger of war, ease tension and create a powerful environment in the Korean peninsula. The Korean Armistice Agreement is the armistice which ended the Korean War. It was signed between U.S. and North Korea in 1953.
    • Instead, it has clung to its anachronistic policy hostile towards the DPRK, escalating the tension and egging its vassal forces on to stage a ‘human rights’ racket against the country
    • In May 2015, Pyongyang had announced that it had successfully tested a Submarine Launched Ballistic Missile (SLBM). However, South Korean experts had treated this claim with considerable scepticism 
    • Whether the most recent North Korean test was that of a Hydrogen Bomb will be known after a while, but the objective was miniaturisation of the system so that the nuclear weapon can be mounted on a missile 
    • North Korea has made it known that it wants recognition by the world community as a nuclear weapon power and no amount of external pressure would force it to pause in that quest

    What was the Global Reaction?

    • The UN Security Council condemned the nuclear test, declared that it is a ‘clear violation’ of its previous resolutions, and pledged to pursue new sanctions against North Korea
    • USA, South Korea and Japan have agreed to work together to forge a united and strong international response to North Korea’s reckless behaviour
    • Japan hinted at some unilateral measures, include strengthening of the anti-missile defence systems protecting Japan from a North Korean attack

    Who is in the real position to apply pressure on North Korea?

    • Only China is in a position to apply some credible pressure on North Korea since 88 per cent of North Korea’s foreign trade is with China
    • According to the South Koreans, China has been applying the existing UN sanctions against North Korea faithfully and the export of about 900 dual-use items has been prohibited to that country
    • China is comfortable with strategic ambiguity about the nuclear status of North Korea
    • But the insistence of an open declaration by the North of its Nuclear Weapon Power status would disrupt its strategic calculations in the region as the response from Japan could upset the regional power equation
    • Seoul expects China to do more to denuclearise North Korea particularly in view of the rapidly warming ROK-China relations

    Has North Korea’s approach towards South Korea changed?

    • In the midst of heightened tensions, there are signs that North Korea is working with the aim of driving a wedge between the United States and South Korea
    • For which it is pursuing 2 independent policies – one of nuclearisation and acceptance as a nuclear weapons power
    • The second of not upsetting the apple cart with South Korea and continue with the current policy of no peace – no war
    world nuke test image - Source: Wikimedia Commons, CC BY-SA 2.5
    world nuke test image – Source: Wikimedia Commons, CC BY-SA 2.5

    Conclusion on sidelines

    • Analysing the events of the past 1 year, it would be fair to conclude that Kim Jong Un has firm control over all the levers of power in North Korea, including the military
    • The reclusive country would continue on the course set by Kim II Sung and Kim Jong II, pursuing a policy of ‘Military First’, the ‘Juche’ concept of self-reliance and seeking effective nuclear strike capability against the United States
    • Juche is a political philosophy, became the official autarkic state ideology of the DPRK in 1972 Although foreign scholars often describe juche as “self-reliance,” the true meaning of the term is much more nuanced.
    • The peninsula would continue to be divided as neither side is keen on unification despite their public protestations in favour of reuniting the long-divided country
    • The paramount objective of the DPRK leadership continues to be the survival of the regime and its politico-economic system, and it is unlikely to allow tensions with South Korea or the United States to come to a point that would lead to hostilities

    Whatever the truth of this test, for diplomacy, observers say it dashes any hopes of North Korea returning to stalled talks involving the US, Russia, China and others.

    Published with inputs from Arun

  • Monetary Policy Committee Notifications

    To read about the basic concepts of economics at play here:

    1. Economics | Fiscal Policy Explained
    2. Economics | Monetary Policy Explained with Examples

  • Euthanasia Mercy Killing

  • Genetically Modified (GM) crops – cotton, mustards, etc.

    Genetically Modified Organisms(GMO): Developments and Concerns

    Recently, Genetic Engineering Appraisal Committee (GEAC) decided to put on hold the government’s decision to commercialise genetically modified (GM) mustard, because of growing outrage by farmer groups against it. Let’s understand its basics in brief!

    What is GMO?

    • GMOs can be defined as organisms (i.e. plants, animals or microorganisms) in which the genetic material (DNA) has been altered in a way that does not occur naturally by mating and/or natural recombination
    • It allows selected individual genes to be transferred from one organism into another, also between non related species
    • Foods produced from or using GM organisms are often referred to as GM foods
    • Recently in India, GM mustard crop was introduced, which was later withdrawn. There is a raging debate going on advantages and disadvantages of GMOs
    • For a long time, further study was requested by farmers, environmentalist on GMO crops

    <Genetic Engineering Appraisal Committee (GEAC) is a body under the Environment Ministry that regulates the use of genetically modified organisms>

    Why are GM foods produced?

    • GM foods are developed – and marketed – because there is some perceived advantage either to the producer or consumer of these foods
    • This is meant to translate into a product with a lower price, greater benefit (in terms of durability or nutritional value) or both
    • Initially GM seed developers wanted their products to be accepted by producers and have concentrated on innovations that bring direct benefit to farmers (and food industry generally)
    • One of the objectives for developing plants based on GM organisms is to improve crop protection

    What really is India’s recently developed GM mustard?

    • A team of scientists at Delhi University led by former vice-chancellor Deepak Pental has bred DMH-11, a genetically modified (GM) mustard hybrid
    • Hybrids are normally obtained by crossing two genetically diverse plants from the same species
    • The first-generation offspring resulting from it has higher yields than what either of the parents is individually capable of giving
    • But there is no natural hybridisation system in mustard, unlike in, say, cotton, maize or tomato
    • What team has done is, that they have created a viable hybridisation system in mustard using GM technology
    • The resulting GM mustard hybrid, it is claimed, gives 25-30% more yield than the best varieties such as ‘Varuna’ currently grown in the country

    Is there a need, in the first place, for developing a mustard hybrid?

    • In 2014-15, India imported 14.5 million tonnes of edible oils valued at $10.5 billion
    • With the country’s own annual edible oil production stuck at below 7.5 million tonnes, of which mustard’s share is roughly a quarter
    • So, there is need to raise domestic crop yields and cut dependence on imports
    • Hybrid technology is a potential technique to boost yields, as has been successfully demonstrated in a host of crops

    What are the environmental risks?

    • GMOs contaminate forever. GMOs cross pollinate and their seeds can travel far and wide
    • It is impossible to fully clean up our contaminated gene pool
    • Genetic engineering allows plants to survive high doses of weed killers, resulting in higher herbicide residues in our food
    • GMO crops are creating ‘super weeds’ and ‘super bugs,’ which can only be killed with more toxic poisons

    Are there any advantages?

    Insect Resistance

    • Some GMO foods have been modified to make them more resistant to insects and other pests
    • This means the amount of pesticide chemicals used on the plants are reduced, so their exposure to dangerous pesticides are also reduced

    Stronger Crops

    • Another benefit that GM technology is believed to bring about is that crops can be engineered to withstand weather extremes and fluctuations,
    • This means that there will be good quality and sufficient yields even under a poor or severe weather condition

    Environment Protection

    GM crops often requires less time, tools and chemicals, and may help with reducing greenhouse gas emissions, soil erosion and environmental pollution

    More Nutritious Foods

    According to the UN Food and Agricultural Organization (FAO), some GM foods have been engineered to become more nutritious in terms of vitamin or mineral content.

    Economic Benefits

    • Larger production leading to increased farm income, reduced poverty, low food prices and thus reduced hunger and malnutrition.
    • Besides new food products are also included, diversifying food varieties

    Then, Why has there been so much concern about GM foods among some public interest groups, activists and consumers?

    • Since the first introduction on the market in the mid-1990s of a major GM food (herbicide-resistant soybeans), there has been concern about such food among activists and consumers, especially in Europe
    • In fact, public attention has focused on the risk side of the risk-benefit equation, often without distinguishing between potential environmental impacts and public health effects of GMOs
    • Consumers have questioned the validity of risk assessments, both with regard to consumer health and environmental risks, focusing particulary on long-term effects
    • Consumer concerns have triggered a discussion on the desirability of labeling GM foods, allowing for an informed choice of consumers

    What further developments can be expected in the area of GMOs?

    • GM organisms are likely to include plants with improved resistance against plant disease or drought, crops with increased nutrient levels, fish species with enhanced growth characteristics
    • For non-food use, they may include plants or animals producing pharmaceutically important proteins such as new vaccines
    Published with inputs from Arun

  • Can someone please explain the gravitational waves?

    In easy to understand layman terms, please….

  • Question of the Day

    Critically examine WTO-Nairobi Package and its implication on India?

  • Important judgements of Supreme Courts in 2015 | Part 1

     

    #1. NJAC held unconstitutional

    Supreme Court Advocates on Record Association vs. Union of India

    “The judiciary cannot risk being caught in a web of indebtedness towards the government.”

    It is after 35 years that a constitutional amendment has been quashed by the top court.

    Summary:

    Within a year of both houses of Union Legislature passed much awaited National Judicial Appointments Commission Bill, the Supreme Court struck down the NJAC Act by 4:1. Justices J S Khehar, MB Lokur, Kurian Joseph and Adarsh Kumar Goel declared the 99th Amendment and NJAC Act unconstitutional while lone minority, Justice Chelameswar upheld it. The judgement rendered by five judges runs over 1000 pages.

    Major observations of the Supreme Court:

    • Does not provide an adequate representation, to the judicial component in the NJAC.
    • Insufficient to preserve the primacy of the judiciary, in the matter of selection and appointment of Judges, to the higher judiciary (as also transfer of Chief Justices and Judges, from one High Court to another)
    • The Law Minister:

    The inclusion of the Union Minister of Law and Justice as an ex officio Member of the NJAC is:

     

    • ultra vires the provisions of the Constitution, because it impinges upon the principles of “independence of the judiciary” & “separation of powers”
    • Violative of the “basic structure” of the Constitution
    • Against Principles of Natural Justice: Because Government is the major litigant and cases involve large sums of money. And inclusion of Law Minister would be against “judge of own case“, a part of PNJ.

     

    • Will of the people: The Union government had previously argued that NJAC represented the will of the people. However, rejecting the Centre’s argument, court noted that “the will of the people is the Constitution while the Parliament represents the will of the majority at a given point of time which is subordinate to the Constitution”.

    Culture of Reciprocity: Bench feared a culture of “reciprocity” of favours: FEELINGS OF PAY BACK TO POLITICAL-EXECUTIVE WOULD BE DISASTROUS TO THE INDEPENDENCE OF JUDICIARY, especially when govt is the major litigant in higher courts.

     

    #2. Yakub Memon & the midnight hearing

    Yakub Abdul Razak Memon vs. State of Maharashtra

    Summary:

    The year 2015 witnessed a rare event of the Apex Court opening its gates for hearing an urgent Writ petition. Yakub Memon’s final plea before the Apex Court was heard in Court Room 4 which was opened for an unprecedented 90-minute hearing that started at 3.20 AM and ended a little before dawn. The Bench comprising Justice Dipak Misra, Justice Amitava Roy and Justice P.C. Pant agreed and observed that granting further time was not necessary in the present case. The bench said the execution was “inevitable” after rejection of the mercy petitions. Yakub was executed the very next day on his birthday.

    Background:

    • Memon, a CA by profession was awarded the death sentence by a special TADA Court in Mumbai on July 27, 2007 for his role in the serial blasts.
    • Charges also included arranging finances for carrying out the 13 serial explosions.
    • Explosions left 257 dead and over 700 injured across the city on March 12, 1993.
    • In 2013, Supreme Court had upheld the TADA Court verdict convicting Memon for his role in the Bombay blasts.
    • Memon is the only one of 11 people whose death sentence in the case has been upheld. The sentences of the others were commuted to life imprisonment.

    Observations of the Supreme Court:

    • Stay on the death warrant could be a ‘travesty of justice‘: since ample opportunity was provided to Memon, after the rejection of the first mercy petition.

    Memon’s review petition was heard for ten days, when law mandates a hearing of only half an hour.

    • The President rejected after due consideration of all relevant fact. 22 years have passed since the incident. There is no error in judgments passed by this court.
    • At the drop of a hat one can add new challenges and developments and expect the President to act in exercise of power under Article 72 and thereafter on rejection of clemency they would challenge that in a court of law.

    Counter arguments:

    • The authorities were “hell bent” on executing Memon without giving him the right to challenge the rejection of his mercy petition by the President as right to life of a condemned prisoner last till his last breath.
    • How the President could have rejected Yakub’s fresh mercy plea in such a short time.
    • According to rules, the nearest legal centre must be contacted the day mercy plea gets rejected. That did not happen.
    
Published with inputs from Swapnil

  • Current affairs from May-15 to Dec-15

    Hi CD,

    Do we have any link to download current affairs from July-15 to Dec-15 in our forum? If no, any plans to develop one like monthly editions we have. This is to cover overall glance of CA for year 2015-16.

    Best Regards,
    Kiran

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