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THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS

B U S I N E S S

Iran, Pak seal gas deal
Dubai, September 29
Iran and Pakistan have finalised a deal on $7.4-billion gas pipeline project without the participation of India, ending settled differences on the agreement during four-day negotiations in Tehran.

NYX honcho on NSE board
New Delhi, September 29
Nelson Chai, the Chief Financial Officer and Executive Vice-President of New York Stock Exchange's arm, NYSE Euronext, has been appointed on the board of Mumbai-based National Stock Exchange(NSE) today. NYSE Euronext, owns a 5 per cent equity stake in the Mumbai-based NSE, the maximum investment currently permitted by a foreign investor in a stock exchange under the securities laws of India.

Amritsar SEZ
Sidhu wants to emulate Gujarat model
Amritsar, September 29
With his dream project of setting up an SEZ in Amritsar running into rough weather, Amritsar MP Navjot Sidhu has recommended to Punjab government to develop SEZ on the model of Gujarat, wherein farmers have participation in the project.

Reliance Power plans IPO
Mumbai, September 29
Anil Ambani Group's Reliance Energy is expected to decide tomorrow on taking public its subsidiary Reliance Power Ltd in a issue estimated at $2-3 billion, a move that can value the company at over $20 billion.

North-East woos Thailand investors
Guwahati, September 29
The government is banking on Thailand to get its Look-East Policy rolled for the benefit of investment-starved north-eastern states of India.

BHEL dividend
New Delhi, September 29
Bharat Heavy Electricals (BHEL) has paid a final dividend of Rs 406 crore to the government for the year 2006-07. Of the amount, Rs 207.2 crore has already been paid to the government as interim dividend.


Mittal Investments Chairman Lakshmi N. Mittal addresses the media in this file photo.
Mittal Investments Chairman Lakshmi N. Mittal addresses the media in this file photo. The European aerospace group EADS has said it would recommend the appointment of Indian steel magnate Lakshmi Mittal to the company's board of directors at a shareholder general assembly on October 22. — AFP

EARLIER STORIES

 

Aviation Notes
Coastal zone norm stalls Navi Mumbai project
by K.R. Wadhwaney
It is a good move to have separate runways for aircraft take off and landing at the busy Indira Gandhi International Airport (IGIA). This will facilitate commanders but the possibility of near-miss in air will continue unless efficiency of air traffic controllers is improved.

Investor Guidance
TDS rate on bond interest not clear
Q: I have invested a sum of Rs 10 lakh in 8 per cent RBI savings bonds. In respect of the interest payable for August, 2007, there has been a TDS of 20 per cent on the interest.

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Iran, Pak seal gas deal

Dubai, September 29
Iran and Pakistan have finalised a deal on $7.4-billion gas pipeline project without the participation of India, ending settled differences on the agreement during four-day negotiations in Tehran.

The two countries have agreed to sign draft agreement and a letter of understanding by the end of October, a senior Iranian official said today.

The India-Pakistan-Iran talks in Tehran, which began on September 24, was not attended by India, who said it will not attend the tri-nation meetings unless transit fee issue is resolved with Islamabad.

Iranian oil minister's special representative Hojjatollah Ghanimifard, however, said "Iran welcomes India whenever it joins us in the peace pipeline project." Ahmed Mokhtar, a senior adviser to Pakistani Prime Minister Shaukat Aziz and the country's petroleum secretary Farooq Qayyum, represented Pakistan at the talks.

The two countries are now scheduled to sign the final deal by November.

The two sides have prepared the final text of the agreement and Iranian and Pakistani officials will meet again in Islamabad on October 15-19.

Iranian oil minister's special representative Hojjatollah Ghanimifard told the official Iranian news agency that both countries have reached consensus on "all conditions of the deal, and the draft agreement is ready to be signed by lawyers and experts of different technical, financial and commercial sectors."

The Iranian and Pakistani representatives have settled differences on the deal during four-day negotiations which lasted until last night, IRNA reported today.

"According to the negotiations, the Pakistani side is to submit the draft agreement to us next week, and we will declare our views on it in a week," Ghanimifard said.

He noted that the last round of the discussions will be held in Pakistan in mid October. "The two sides will explore the draft agreement not to be contrary with the MoU already signed by the leaders of the countries parties to the project," he said.

According to the initial agreements in 1990, the project was to be carried out by Tehran, Islamabad and New Delhi to transfer Iranian natural gas to India through Pakistan. The 2,600-km pipeline would carry 60 and 90 million cubic meters of gas a day to Pakistan and India, respectively. — PTI

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NYX honcho on NSE board

New Delhi, September 29
Nelson Chai, the Chief Financial Officer and Executive Vice-President of New York Stock Exchange's arm, NYSE Euronext, has been appointed on the board of Mumbai-based National Stock Exchange(NSE) today.

NYSE Euronext, owns a 5 per cent equity stake in the Mumbai-based NSE, the maximum investment currently permitted by a foreign investor in a stock exchange under the securities laws of India.

"This further underscores NYSE Euronext’s commitment to develop business on an international scale. The partnership with NSE is mutually beneficial and this will extend NYSE Euronext's global reach by advancing our competitive position in India, Chai said in a statement.

He is also a member of the NYSE Euronext Management Committee.

The New York Stock Exchange, which is a subsidiary of NYSE Euronext (NYX), currently lists 12 companies from India.

Besides, NSE which ranks third globally by the number of trades in the equity market and hosting the flagship index, the Nifty 50, NYSE Euronext is a holding company created by the combination of NYSE Group Inc and Euronext NV. — PTI

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Amritsar SEZ
Sidhu wants to emulate Gujarat model
Vibhor Mohan
Tribune News Service

Amritsar, September 29
With his dream project of setting up an SEZ in Amritsar running into rough weather, Amritsar MP Navjot Sidhu has recommended to Punjab government to develop SEZ on the model of Gujarat, wherein farmers have participation in the project.

In an interview with The Tribune, Sidhu said in an innovative scheme being implemented in Gujarat, the farmers, whose land is acquired for setting up an SEZ, have a stake in it. Nearly 10 per cent of the total profit is used for development of infrastructure, like roads and bridges in the area.

Sidhu said he, along with Punjab local bodies minister Manoranjan Kalia, visited Ahmedabad recently and Kalia was impressed with the system being followed there as it ruled out any conflict with the farmers.

“I have sent a blueprint of the proposed project to the government and it is under consideration,” he said.

Reacting to the fact that his inability to get the SEZ set up in Amritsar had invoked sharp criticism, Sidhu said with the central government putting curbs on acquisition of land following protests in Nandigram, the state government cannot go ahead with the SEZ project in Amritsar.

An SEZ for Amritsar was a key issue on which Navjot Sidhu had fought his last election, but his sudden change of stance has come as a bolt from the blue for industrialists of the region, who had been seeking government attention to give impetus to trade in the region for a long time.

Prime Minister Manmohan Singh had also given his consent for setting up of SEZ in Amritsar in 2004, during the 400th anniversary of installation of Guru Granth Sahib.

Rajinder Singh Marwaha, president of Trade and Industry Association (border zone), said the pathetic condition of roads and sewerage system speaks volumes of the indifference of the state towards industry.

Even though Amritsar dearly needs an SEZ, the government should at least make a start by giving tax exemptions and other benefits as is being done in J and K.

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Reliance Power plans IPO

Mumbai, September 29
Anil Ambani Group's Reliance Energy is expected to decide tomorrow on taking public its subsidiary Reliance Power Ltd in a issue estimated at $2-3 billion, a move that can value the company at over $20 billion.

The Board of Reliance Energy would meet tomorrow to "consider every opportunity for growth and unlocking of shareholders' value", the company said in a statement to the stock exchanges.

The IPO for Reliance Power, which recently bagged the 4,000 MW Sasan power project, is considered to be part of revenue mobilisation exercise for its estimated Rs 1,00,000 crore investment plans. The meeting follows reports the company was looking at an initial public offer of up to Rs 12,000 crore shortly.

According to industry sources, over half a dozen bankers including Kotak, Enam, JM Financial and UBS were reportedly involved in the deal, but none of them could be contacted for confirmation.

When contacted, an REL spokesperson said, "as a matter of policy we would not like to comment on speculations." Besides Sasan project, Reliance Power is believed to be working on power projects totaling 25,000 MW. — PTI

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North-East woos Thailand investors
Bijay Sankar Bora
Tribune News Service

Guwahati, September 29
The government is banking on Thailand to get its Look-East Policy rolled for the benefit of investment-starved north-eastern states of India.

In an effort to pave the way for inflow of investment to N-E region, the union ministry for the Department of Development of N-R Region (DONER) will host a mega north-east investment opportunities week in Bangkok from October 1.

The high-level investment opportunities week is going to facilitate direct interaction between prospective investors from Thailand and representatives of N-E state governments as well as business delegates from the region.

Assam industries, commerce and power minister Pradyut Bardoloi, who is heading the Assam government delegation to the convention, informed that the investment opportunities week was being organised at Bangkok National Convention Centre.

The DONER minister Mani Shankar Aiyar is also attending the convention as representative of India. Besides, the government delegation from all N-E states, a 150-member business and trade delegation from the region will also attend the convention to seek collaboration and attract investments from Thailand.

The delegation from Assam government will make a power point presentation on investment opportunities in sectors of construction, power, tourism, inland water ways, agro food processing, handloom and handicraft, rubber and hydrocarbon, hospitality and IT enabled services.

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BHEL dividend
Tribune News Service

New Delhi, September 29
Bharat Heavy Electricals (BHEL) has paid a final dividend of Rs 406 crore to the government for the year 2006-07. Of the amount, Rs 207.2 crore has already been paid to the government as interim dividend.

BHEL CMD Ashok K Puri today handed over a cheque of Rs 198.9 crore to union minister for heavy industries and public sector enterprises Sontosh Mohan Dev. "This is the highest ever dividend at 245 per cent of equity we have paid. The government has 67.72 equity holding in the company and its share of dividend for 2006-07 stands at Rs 406 crore," Puri said.

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Aviation Notes
Coastal zone norm stalls Navi Mumbai project
by K.R. Wadhwaney

It is a good move to have separate runways for aircraft take off and landing at the busy Indira Gandhi International Airport (IGIA). This will facilitate commanders but the possibility of near-miss in air will continue unless efficiency of air traffic controllers is improved.

Statistics show that air traffic controllers (ATCs) are over-worked. The experienced ATCs, with knowledge of functioning and familiarity with routes, are grossly inadequate in number. Also ATCs have their own set of priorities.

They abruptly change the heights of aircraft for fringe benefits not realising that the action can be dangerous. Utter lack of discipline exists in the corridors.

There is an urgent need for greater coordination between the civil and defence operations. It is a healthy move if the directorate-general of civil aviation (DGCA) is able to make effective use of the defence airspace for civilian operations on a flexible basis. The defence operations are not on regular basis and airspace can be available for civil traffic if the authorities exercise with an open mind.

Two runways — main 28/10 and subsidiary 29/09 — are not parallel. This has been in existence for decades. But operations have been going on without much problem. In recent months, instances of near-miss have increased because there is lack of coordination between ATCs and commanders. Many foreign commanders have language problems while some foreign captains have been far too old to operate on the Indian routes. Two age rules are in operation - one for Indian pilots and another for foreign commanders.

It is a fallacy to say commanders will not be able to circle around the airport if one runway is specified for landing. The circling of the aircraft is decisively in the hands of the ATCs. If they conduct their functions meticulously, the circling time can be considerably reduced.

The merger pangs have surfaced. Air India and Indian have been directed by the Delhi High Court not to take any ‘administrative decision’ until litigations are finalised.

According to the petition, Air India and Indian cannot be merged without amending the law. How can a joint secretary be empowered to take a decision on the merger of two separate companies incorporated by statute? In another petition, filed by the engineering association, payment of wage arrears have been demanded. Keeping all these petitions in mind, the merger will be delayed. Air India owes employees Rs 350 crore in arrears and Indian Rs 1,100 crore.

The land problems for Navi Mumbai airport project at Panvel have resurfaced. The authorities have realised that at least 25 per cent of 1,100 hectares fall under coastal regular zone norms. Until this is denotified, the construction cannot be taken up. Analysts are surprised that the government, in principle, should have cleared the project without examining all aspects of it.

Judging from the latest development and hiccups concerning land, it seems the project will be further delayed. The Navi Mumbai airport is unlikely to be ready by 2013, as planned.

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Investor Guidance
TDS rate on bond interest not clear

Q: I have invested a sum of Rs 10 lakh in 8 per cent RBI savings bonds. In respect of the interest payable for August, 2007, there has been a TDS of 20 per cent on the interest. The surprising thing is that a friend of mine, who had a similar investment through another bank, has had only 10 per cent deducted. First of all, how is it that all of a sudden this TDS is applicable? And secondly, what is the correct rate? — Alok

A: So far, the interest on the bonds though taxable was not subject to tax deduction at source (TDS), thanks to the ministry of finance notification F4(10)-W&M/2003 dated January 13, 2004 stating that TDS is not be applicable. However, with effect from June 1,2007, any interest paid or payable during a financial year exceeding Rs 10,000 will be subject to TDS (Notification No. F.4 (10) - W&M/2003 dated May 31, 2007).

Now, the problem with the above mentioned notification is that while specifying that TDS will be applicable, it doesn’t specify the rate thereof. Which is why you find some banks deducting the same at 10 per cent and the others at 20 per cent.

For ascertaining the correct rate, one has to refer to Section 193 of the IT Act read with part II of the first schedule to the Finance Act, 2007. In other words, Section 193 specifies the securities on which TDS will be applicable and the schedule specifies the exact rate thereof. Hitherto, since interest on all government securities (including RBI bonds) was free of TDS, the schedule never contained any deduction rate as such for such instruments. However, now that the bonds have been subjected to TDS, though a consequential amendment has been carried out in Section 193, the schedule has remained untouched. Therefore, one has no option but to adopt the 20 per cent rate specified under the residuary clause for other income. If the government indeed intends the applicable rate to be 10 per cent, a notification clearly spelling out as much would be required to clear the confusion.

Tax and heir

Q: My father has sold a house and to save the capital gains, he was in the process of buying another property, which was under construction. Hence, he had parked the capital gain amount in the capital gain account scheme, from which he was making periodical payments to the builder. Last month, he passed away. Now, as the nominee, I am to receive the unused portion of the deposit. Would the same be taxable for me and do I have to use it similarly for paying for the property? — Mundra

A: If the assessee dies before the expiry of stipulated period (for purchasing the new asset), and later on the unutilised amount is refunded to the legal heirs, the board is of the opinion that in such cases the said amount cannot be taxed in the hands of the deceased. This amount is not taxable in the hands of legal heirs also as the unutilsed portion of the deposit does not partake the character of income in their hands but is only a part of the estate devolving upon them - Circular No. 743 dated May 6, 1996. Therefore, there would be no tax in your hands on the amount received by you. You may or may not continue to use this money to make the payments for the property under construction.

PAN, tax and NRI

Q: I have a query regarding PAN. Now, to invest in India, either in the stock market or in mutual funds, one requires PAN. How do I apply for PAN from London -- for example -- which address to provide for, my India address or London address? Do I have to apply as a resident Indian or an NRI? By taking PAN shall I be liable to filing yearly returns? I am in London on employment. — Marawala

A: First of all, obtaining a PAN doesn’t make you liable for paying income tax. Your liability to tax arises solely on the basis of whether you earn Indian income or not. As you are in London on employment, you will be an NRI and your London income will not be taxable in India. Coming to your PAN query, you have to make the application of PAN in Form 49A. It is suggested that you download the form from tin.nsdl.com. For proof of residence, submit the photocopy of your passport. The address that appears therein will do.

The authors may be contacted at wonderlandconsultants@yahoo.com by A.N. Shanbhag

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