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THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS

B U S I N E S S

Sensex may touch 25,000 mark in two years: Survey
New Delhi, December 9
The Sensex, which has attained dizzying heights in the past two years, is expected to remain bullish and top the 25,000 mark in the next two years, according to a Ficci survey on market movements.

Ratan Tata disfavours hostile takeovers
Ratan Tata New Delhi, December 9
Ratan Tata, chief of Tata Group, which leads in India Inc's global acquisition ambitions, has disfavoured hostile takeovers saying that "we walk" rather than getting into boardroom wars in case of opposition to an acquisition bid.

Indian Hotels ups stake in Orient-Express
New York: Indian conglomerate Tata group has raised its stake to 11.5 per cent in Orient-Express Hotels, while proposing a strategic tie-up with the owner of numerous luxury brands in the US and Europe.

Homoeopathy to be 2,600-cr industry
New Delhi, December 9
By 2010, domestic homoeopathy market is expected to touch Rs 26 billion mark as it would continue to grow between 25-30 per cent against 13-15 per cent of pharmaceutical industry, according to industry chamber Assocham.



EARLIER STORIES

 
In this handout picture, a Suzlon windfarm is shown in Dhule. Suzlon has been built into Asia's biggest wind energy firm over the past 12 years by 49-year-old mechanical engineer and Indian entrepreneur, Tulsi Tanti, who has seen his firm overtake Siemens of Germany to grab the fifth spot last year as one of the world's leading wind energy companies.
In this handout picture, a Suzlon windfarm is shown in Dhule. Suzlon has been built into Asia's biggest wind energy firm over the past 12 years by 49-year-old mechanical engineer and Indian entrepreneur, Tulsi Tanti, who has seen his firm overtake Siemens of Germany to grab the fifth spot last year as one of the world's leading wind energy companies. — AFP

GAIL in pact with RGTIL for KG gas
New Delhi, December 9
GAIL (India) Ltd and Reliance Gas Transportation Infrastructure Limited (RGTIL) have signed an agreement for transmission of natural gas from the Krishna Godavari (KG) basin.

4-door electric car to hit Indian roads
Chennai, December 9
India's first four-door electric car is all set to be launched by city-based Bavina Industries.

IBM brings world’s fastest chip to India
Bangalore, December 9
IT major IBM has launched the world's fastest computer processor chip called the dual-core Power6 in India.

Tax Advice
Income from private practice taxable
Q. I am a veterinary doctor serving the Punjab government as veterinary officer. We have been allowed private practice and are allowed to charge visiting fee as per rates fixed by the government from the owner whose premises we visit to treat/examine the sick animal. We have to pay 1/3 to the government.


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India – 2nd most expensive market
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Sensex may touch 25,000 mark in two years: Survey
Tribune News Service

New Delhi, December 9
The Sensex, which has attained dizzying heights in the past two years, is expected to remain bullish and top the 25,000 mark in the next two years, according to a Ficci survey on market movements.

This view, expressed by a majority of the respondents to the survey on market movements as perceived by the stakeholders, has emerged despite the fact that overall business confidence is at a five-year low and GDP growth has dipped to 8.9 per cent in Q2 of 2007-08 from 10.2 per cent in Q2 of the previous year.

The market index has been fluctuating of late due to various factors — rupee appreciation, PN turmoil, Fed rate cuts, increasing crude oil prices, sub-prime crises et al. But this doesn't seem to have dampened the market sentiment. In fact, the mood of the market players is overly optimistic, the survey reveals.

The survey, 'Indian capital markets — ahead of curve', captures the sentiment of the market and the market stakeholders. The respondents of the survey are mainly brokers, CFOs, finance managers, investment bankers, mutual funds, portfolio managers, and asset management companies.

Fifty-eight per cent of the respondents believe that the market in one year will achieve 20,000-23,000 levels and another 23 per cent feel that it would move beyond 23,000. Fifty-five per cent of the respondents predict the market level to reach 25,000 and above at the end of two years and about 26 per cent feel that Sensex would remain between 23,000 and 25,000.

On the sector-wise stars of the markets, the respondents have identified banking and engineering sectors as well-performing sectors, according to the majority of respondents. On the other hand, IT, pharma and auto are the few sectors that are likely to under perform.

With bank credit becoming more expensive and ECBs tighter, the capital market is the only other option for raising funds. This could also be one of the reasons for bullish sentiments. In the near future, more private placements and issues are expected to hit the market, leading to high turnovers, in both the cash and derivative segments.

On market valuations, the survey reveals that the market opinion is divided, though marginally in favour of fair valuation as evident from the results. Fifty-three per cent of the respondents described the Indian markets to be fairly valued, while 47 per cent believe it to be overvalued.

The depth of the market has been a major cause of concern as 53 per cent of the respondents still feel that the market is shallow and adequate measures should be taken to widen the market, otherwise the market will remain exposed to some level of volatility.

Some participants also suggested that a number of PSUs, which are not currently listed, should be allowed to be listed. There are other compelling arguments for the government selling its stake via the market. Such offers, it is felt, help deepen the market and also enable equitable spread of wealth generated by these companies.

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Ratan Tata disfavours hostile takeovers

New Delhi, December 9
Ratan Tata, chief of Tata Group, which leads in India Inc's global acquisition ambitions, has disfavoured hostile takeovers saying that "we walk" rather than getting into boardroom wars in case of opposition to an acquisition bid.

In an interview to CNBC TV 18, he said, "the managements and the boards, as a condition precedent, have in all our acquisitions said that it must have their support not their opposition. If they oppose, we walk."

To a particular question on whether persisting on having some sort of alliance with Orient Express Company, in which his group company Indian Hotels has bought 10 per cent stake from market place, even after being rejected amounted to nearing hostile takeover bid, Tata said it did not.

"All I want to say is that we went to the management basically to seek an alliance and were misunderstood by the management of that company as seeking a takeover." "Krishna Kumar (vice-chairman of Indian Hotels) has had meetings with the management. If it were a hostile takeover, you would expect that we would have made an open offer to all the shareholders which we have not done. So, it is not a hostile takeover. It was never meant to be and it was misunderstood and hopefully corrected," he added.

Citing the example of his another group company Tata Motors’ acquisition of the Daewoo Commercial Vehicle, Tata said, "the Daewoo management continues to exist. I think we have one or two persons in Korea mostly working on integration. The same is true with Corus, NatSteel and Tetley.

So, there has been a definite pattern. You could not do that with a hostile takeover." "Our formula has been one of compatible merging rather than a hostile acquisition, he said. — PTI

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Indian Hotels ups stake in Orient-Express

New York: Indian conglomerate Tata group has raised its stake to 11.5 per cent in Orient-Express Hotels, while proposing a strategic tie-up with the owner of numerous luxury brands in the US and Europe.

Late on Friday, Bermuda-headquartered and US-listed Orient-Express disclosed in a regulatory filing here that Indian Hotels, a Tata group company, has raised its stake to 11.5 per cent through open market purchases.

Earlier in September, Tata group had said it had acquired a 10-per cent stake in Orient-Express for $211.3 million and was seeking talks for a proposed strategic partnership.

Indian Hotels purchased additional 632,920 shares of Orient-Express in the open market for $35.7 million between September 17 and December 7, thus raising its stake to 11.5 per cent. — PTI

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Homoeopathy to be 2,600-cr industry
Tribune News Service

New Delhi, December 9
By 2010, domestic homoeopathy market is expected to touch Rs 26 billion mark as it would continue to grow between 25-30 per cent against 13-15 per cent of pharmaceutical industry, according to industry chamber Assocham.

In a paper on homoeopathy, brought out by Assocham, it has been stated that the growth of homoeopathy is not only confined to India, but world over its size has gone beyond Rs 135 billion and interestingly the growth rate is almost on par and that is around 25 per cent.

France, interestingly contributes the largest size in world homoeopathy market, which is estimated at Rs 45 billion, points out the paper.

It cites reasons for growing homoeopathy market in India, saying that homoeopathy, besides providing effective means for treating chronic ailments, is also easily accessible online to over 1 crore patients across the country.

Releasing the paper, Assocham president Venugopal N Dhoot said homoeopathy, which a few years ago was not considered a long-lasting solution, has lagged behind allopathic in many respects as it kills the roots of ailments without any side effects.

Dhoot made a mention of Assocham’s recent survey on "Homoeopathy adoption on rise" in which it was found out that in metros like Delhi, Mumbai, Kolkata, Chennai, Bangalore and other satellite towns like Chandigarh, Hyderabad, Lucknow etc., of nearly 5,000 patients randomly surveyed, it was found that over 55 per cent spoke very high for homoeopathy.

There are over four lakh registered homoeopaths in the country currently, with approximately 13,000 more being added every year.

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GAIL in pact with RGTIL for KG gas
Tribune News Service

New Delhi, December 9
GAIL (India) Ltd and Reliance Gas Transportation Infrastructure Limited (RGTIL) have signed an agreement for transmission of natural gas from the Krishna Godavari (KG) basin.

The agreement was signed by GAIL director (marketing) B.C. Tripathi and RGTIL director R.K. Dhadda.

The Gas Transmission Agreement (GTA) provides for transportation of natural gas from the exploration block located in the Krishna-Godavari (KG) Basin in the east coast of India through GAIL’s network and for booking of capacity by GAIL in RGTIL’s east-west pipeline.

GTA is a framework agreement, which provides for booking of capacity through execution of Capacity Tranche agreements (CTA).

GAIL currently has a network of about 6,700 km with transmission capacity of about 150 million standard cubic metres per day. The utilisation of the pipeline asset will be increased by such arrangement. RGTIL is laying a 48 inch (diameter), 1,400-km long east-west pipeline from Kakinada to Gujarat.

The GTA is a sequel to the memorandum of understanding signed between the two companies in March this year for cooperation in identified areas in natural gas sector.

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4-door electric car to hit Indian roads

Chennai, December 9
India's first four-door electric car is all set to be launched by city-based Bavina Industries.

The four-seater steel-bodied hatchback resembling Hyundai Santro and Daewoo Matiz would zip through Indian roads from April 14, managing director of Bavina Industries S Rajasekhar told PTI.

The fully-loaded version of the car costs around Rs 2.5 lakh and boasts of facilities, including AC, power window and centralised locking, like any other small, premium hatch-back. The fully-charged car would run for 110 km with AC switched on and another 20 km without AC. — PTI

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IBM brings world’s fastest chip to India

Bangalore, December 9
IT major IBM has launched the world's fastest computer processor chip called the dual-core Power6 in India.

With this launch, the company's System p570, which the company says is the world's most powerful midrange consolidation machine, and bladeCenter JS22 servers, both powered by this new chip, would be available in the country, said IBM India and South Asia director, systems and technology group, Shashi B Mal. — PTI

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Tax Advice
Income from private practice taxable
by S.C. Vasudeva

Q. I am a veterinary doctor serving the Punjab government as veterinary officer. We have been allowed private practice and are allowed to charge visiting fee as per rates fixed by the government from the owner whose premises we visit to treat/examine the sick animal. We have to pay 1/3 to the government.

I want to know whether this money is chargeable to income tax under the income from business and profession, whether net amount is taxable i.e. should we deduct expenses involved in rendering treatment, whether the rates permitted are binding to us or we can charge less/none altogether? Please also guide if we will be governed by same rules and regulations in respect of our income from private practice, as the rules governing income from business/profession?

— Amit Srivastav

A. The income from private practice would be taxable under the head ‘profits and gains of business or profession’.

(ii) The net amount after deducting expenses incurred wholly and exclusively purposes of profession shall be taxable. You will also be entitled to the deduction of the payment of 1/3 amount to the government.

(iii) The rates fixed by the Government should be charged as any charge above the same would be not in accordance with the scheme of the things. The income would be taxable in respect of amounts charged by you.

(iv) The rules governing the computation of income under aforesaid head would be applicable for computing your income from profession.

Life insurance policy

Q. I am working as DM in AXIS Bank. My wife is not working and is dependent on me. I want to buy a life insurance policy and the premium for the same will be paid by me. I want to know whether such premium will be included in 1 lakh bracket under Section 80c and whether I can avail full tax benefit for the premium of my wife?

— Shiv Mohan Garg

A. In accordance with the provisions of Section 80C of the Income-tax Act, 1961, any sum paid or deposited by the assessee in the previous year to effect or to keep in force an insurance policy on the life of, in case of an individual, the individual himself, wife or husband and any child of such individual. In view of the specific provisions of the above section, you would be entitled to a deduction out of your total income in respect of the premium paid for a policy taken on the life of your wife. The deduction would be within the over all limit of Rs 1 lakh provided for by Section 80C of the Act.

Gift tax

Q. My nephew (elder sister's son) is settled in the USA and is in India these days. He wants to gift cash $5000 to my wife i.e. his maternal aunt. Would this gift be exempted from gift tax?

— Ramesh Bhatia

A. Section 56(2)(vi) of the Act provides that where any sum of money, the aggregate value of which exceeds Rs.50,000, is received without consideration, by an individual from any person after the April 1, 2006, the whole of the aggregate value of such sum shall be treated as income of the recipient.

However, the proviso of such section exempts any sum of money received from any relative. The term relative has been defined as under by the said section:

(i) spouse of the individual;

(ii) brother or sister of the individual;

(iii) brother or sister of the spouse of the individual;

(iv) brother or sister of either of the parents of the individual;

(v) any lineal ascendant or descendant of the individual;

(vi) any lineal ascendant or descendant of the spouse of the individual;

(vii) spouse of the person referred to in clauses (ii) to (vi).

As would be evident from the above, the receipt of gift by your wife from your sister’s son would not be covered within the above exception and would be taxable in the hands of the recipient if the amount received is more than Rs 50,000.

Form 12B

Q. I am working in a public school. The school gives free education to my son as a perk. Though I do not pay the fees but it accounts towards the fees, which amounts to Rs 2,800 per month. This is added to my taxable income. They also provide a Form 12B along. What is the purpose of this form? Can I get tax exemption on my son’s fees?

— Subha Rathore, Chandigarh

A. In view of the provisions of Section 80C of the Act, you are entitled to a deduction for any amount paid as tuition fee whether at the time of admission or thereafter to any school situated within India for full time education of your son. This deduction is allowable within the overall limit of Rs 1 lakh specified by the said section in respect of various items covered by the said section. Form 12B has been supplied in support of the perquisite added to your salary. This would prove that in effect the said amount has been paid to you for the purposes of tuition fee of your son for which you can seek deduction under Section 80C of the Act.

HUF

Q. I have a five-year-old son. I want to create my HUF for investing in stock market and IPOs. My father was not having any HUF nor was I member of any HUF. In this context, I would be obliged if you can provide me the following clarifications:

(i) What is the procedure for creation of an HUF? What are the rules which govern creation of HUF?

(ii) How can one obtain initial corpus for HUF. i.e whether through gift from blood relations, or from my personal account or from any other source?

(iii) Whether HUF can do investments in stock market & IPOs by opening demat account?

(iv) Any special care to be taken for creation of HUF.

(v) What are the provisions for winding up or closing the HUF at a later stage?

— Mahesh Kumar Singla, Panchkula

A. The answers to your queries are as under:

The joint and undivided family is the normal condition of Hindu society. An undivided family is ordinarily joint not only in estate but also in food and worship. The existence of a joint estate is not an essential requisite to constitute a joint family and a family, which does not own any property, may nevertheless be joint. However, for the purposes of being a taxable entity, an HUF must have an income from a joint property. For the purpose of joint property, your father can make a gift to your family consisting of yourself, your wife and children. The amount should come from his personal account.

(ii) The HUF can not be a shareholder. However, a Karta can be a shareholder of a company.

(iii) The amount should preferably be received from your father by a cheque alongwith an affidavit duly signed and attested so as to prove that the amount of gift has been received from your father by the HUF. The amount of gift should be kept below Rs 50,000. This is because of an abundant caution as the provisions of Section 56(2)(iv) of the Act are not free from doubt as to the definition of relative qua HUF.

The HUF shall have to be totally partitioned in case you want to distribute the corpus thereof to the members of the HUF.

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BRIEFLY

Karvy foray
Mumbai, December 9
Hyderabad-based Karvy Stock Broking plans to float a Non-Banking Financial Company (NBFC) by March next year. "Karvy will apply for the NBFC licence in the next 1-2 months," source close to the development said, adding that "the NBFC is expected to get operational by March." The group also plans to expand globally and has zeroed in on Singapore and London for its foray. — PTI

Stemcor JV
New Delhi, December 9
UK-based Stemcor and domestic steel major Ispat Industries have entered into a joint venture (JV) to set up a coke oven plant at the latter's unit near Mumbai at an investment of Rs 900 crore. "Stemcor will hold 76 per cent stake and Ispat will hold 24 per cent," investment banking sources said. — PTI

RPG plan
Mumbai, December 9
RPG Enterprises has said it would invest Rs 14,000 crore over the next three years across sectors like power generation and transmission, retail, entertainment, and IT. The power sector will account for the maximum investment at about Rs 8,000-9,000 crore. — PTI

LG Electronics
Chandigarh, December 9
LG Electronics has announced the launch of R200, India’s first notebook PC with a 2.5 inch auxiliary LCD display. With the launch, LG has enhanced its notebook range in the innovative series and the company will now increasingly focus on introducing more such technology products frequently. R200 is priced at Rs 79,990. — TNS

Tourism Malaysia
Chandigarh, December 9
Tourism Malaysia has announced Malaysia year-end sale package of Rs 29,999 for five nights and six days. The carnival will be held from December 1-31 in Kuala lumpur and all the major cities of Malaysia. — TNS

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