Sunday, August 1, 1999
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B U S I N E S S | Sunday, August 1, 1999 |
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SAIL loss mounts 96 per
cent to Rs 610 crore
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‘No stay on
arrears’ |
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‘Restructuring
integral to corporate planning’
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SAIL loss mounts 96 per cent to Rs 610 crore Steel Authority of India Ltd (SAIL) today announced a 96.1 per cent increase in its losses for the quarter ended June 30 at Rs 610 crore as against Rs 311 crore recorded in the corresponding period last year.The huge loss was mainly due to higher interest burden at Rs 576 crore, up by 32 per cent over the same period last year and higher depreciation during April-June 1999 which stood at Rs 311 crore showing an increase of 25 per cent, according to the unaudited provisional results. With domestic demand continuing to lag behind supplies, selling prices came under heavy pressure and despite posting a growth of 15 per cent in domestic sales quantum, net sales realisation declined sharply in first quarter this year. Commenting on the financial performance of the first quarter, SAIL Chairman and Managing Director Arvind Pande said: “In the long run, export competitiveness is the only solution — a path on which we have already embarked.” The trend of rising sales and controlling operational costs would not be accentuated in future, Pande said adding that by itself, these would not be adequate and need to be supported by a comprehensive restructuring of the company. To offset the higher capital charges comprising higher interest and depreciation to the tune of Rs 200 crore during the first quarter this year, SAIL resorted to identifying internal measures like cost reduction and revenue enhancement. Prism Cement which commenced operations in August 1997, on Saturday announced its maiden net profit of Rs 0.52 crore for the quarter ended June 30, 1999, compared to a net loss of Rs 9.29 crore in the corresponding period last year. The company recorded sales of Rs 91.39 crore, marking a 31 per cent increase over the corresponding quarter last year. Tata Donnelley Limited has recorded a 5.6 per cent jump in the net profit at Rs 1.07 crore during the first quarter of 1999-2000 as against Rs 1.02 crore a year ago. It has recorded a 19.5 per cent growth in sales. In the quarter June 30, 1999 the company recorded a total income of Rs 17.63 crore as compared to Rs 14.89 crore in the same period last year. Profits before tax were up by 18.1 per cent over the corresponding period, while the net profits grew at 5.6 per cent due to a higher tax outgo. Mr Hoshang Billimoria, Managing Director, attributed the growth of the company to its continuing focus on value added products. Tata Donnelley has achieved an over 300 per cent increase in the income over the last seven years and its profit after tax has increased by 543 per cent in the same period. The company has also recorded a four-fold increase in its asset base in the last seven year. Bausch & Lomb has recorded a 45.5 per cent drop in the net profit during the first quarter of the current fiscal to Rs 1.98 crore from Rs 3.79 crore a year earlier the sales turnover was Rs 25.70 crore. Reckitt and Colman has recorded a 24.8 per cent drop in the net profit during the first half of 1999 to touch Rs 11.48 crore as against Rs 15.31 crore a year earlier. The net profit during the second quarter ended June 30, 1999, stood at Rs 6.24 crore, down from Rs 10.11 crore in the same period last year. Shaw Wallace and Company has recorded a whopping 129 per cent surge in the net profit during the year ended June 30, 1999, to touch Rs 23.82 crore as against Rs 10.38 crore in 1998-99. The pre-tax profit jumped 135 per cent to Rs 26.93 crore from Rs 11.43 crore in the previous year. IFCI has reported an over 50 per cent fall in its net profit in the first quarter of the current fiscal at Rs 30.36 crore as against Rs 64.22 crore in the corresponding period last fiscal. The IFCI recorded a marginal increase in its income from operations which stood at Rs 730.26 crore during April-June, 1999, as against Rs 711.09 crore in the corresponding period. Rallis India Ltd reported a 4 per cent increase in its net profit at Rs 1.02 crore for the quarter ended June 30, 1999 compared to the corresponding period last year. Net sales and income from other operations rose by 6.25 per cent to Rs 286.93 crore while other income stood at Rs 0.83 crore (Rs 0.44 crore in the corresponding quarter last year). Coates of India Limited has reported increased net profit and turnover during the second quarter ended June 30, 1999. The net profit increased to Rs 2.91 crore from Rs 2.46 crore last year while in the first six months the net profit increased to Rs 4.49 crore against Rs 3.37 crore last year. Essar oil has recorded a 6 per cent rise in its net profit to Rs 12.18 crore in the quarter ended June 30, 1999, as against Rs 11.52 crore in the corresponding period last year. But the company’s income has dwindled by 15.92 per cent to Rs 62.41 crore in the first quarter from Rs 74.23 crore in the same period last year. Essar Steel has witnessed losses in the first quarter this fiscal nearly quadrupling to Rs 137.96 crore, which is 3.86 times the Rs 35.7 crore loss reported in the corresponding quarter last year. The total income of the company has also shrunk 28.66 per cent to Rs 495.17 crore in the quarter ended June 30, 1999, from Rs 694.05 crore in the same period last year. Sundaram Fasteners has
recorded a 44.6 per cent jump in the net profit during
the first quarter of 1999-2000 to touch Rs 10.22 crore as
against Rs 7.05 crore a year earlier. It achieved a total
domestic sales of Rs 89.20 crore, up 33 per cent from Rs
67.06 crore a year earlier. —Agencies |
‘No
stay on arrears’ NEW DELHI, July 31 — The Centre today clarified that it would be at liberty to accept payments towards arrears by telecom operators pending disposal of the public interest litigation challenging the new telecom policy. “ The Delhi High Court has not passed any restraint order as reported in a section of the media”, the government said in a statement issued today. The clarification states that Attorney General Soli Sorabjee asked for time to respond to the suggestion put by the court. He stated that till Tuesday, August 3, no irreversible step would be taken by the government and no third-party rights would be created. The High Court had yesterday directed the Department of Telecom (DoT) not to take any further step with regard to the new telecom package till August 3 and sought details of revenue earning under the proposed scheme. A division bench comprising Chief Justice S N Variava and Justice S K Mahajan directed DoT to file an affidavit giving details about the estimated revenue collection under the new policy by August 3. The court said it wanted to know whether under the new policy the government would earn the same amount of money they would have got under the old licence fee scheme. The bench asked whether the government had made any revenue projections under the new revenue sharing regime. Further the judges asked whether the operators will make up for the shortfall if revenues under the new dispensation fall short of the licence fee which the government had projected to collect over 10 years. Estimates carried out by
the cellular industry, however, project that the
government would generate around 2,500 crore during
2000-05 through the new scheme. The estimates project 9.4
million subscribers by the end of ten years and a 33.5
million user base by the end of the licence term which is
twenty years. |
Container
project goes on stream CHANDIGARH, July 31 — With the issue of a notification by the Commissioner of Customs, Sheva Navi Mumbai, the Container Freight Station (CFS) of the Punjab State Container & Warehousing Corporation Limited (CONWARE) has gone on stream. CONWARE set up India’s largest covered CFS at a total cost of Rs 90 crore on a 27.5. acre plot in Dronagiri Node, Navi Mumbai Construction of the project commenced in September, 1996, and was completed in July, 1999. It is the first multilevel warehousing facility of the country in which loaded containers go to the first floor by ramps and subsequently to the second floor too. It will endeavour to provide services of international standards to the export/import trade at competitive cost. The CFS was earlier made partially operational in August, 1998, with the parking and handling of empty containers. The corporation has also set up a “Custom Bonded Warehouse” in two covered godowns of 6000 sq.mtrs. capacity each, on the first floor of the CFS complex, which was notified by the Customs in January, 1999. The full commercial
operations at the Container Freight Station are now being
started from 09.08. 1999, which will be fully
computerised and run with modern equipment to provide
time-bound and reliable service to the users. A radio
connective computerised document processing system (EDI
systems) has also been set up in consultation with the
customs Department. |
IndusInd Bank net climbs 62.15 pc MUMBAI, July 31 (PTI) — Hinduja-owned IndusInd Bank has reported a 62.15 per cent jump in its net profit to Rs 25.02 crore in the first quarter of the current fiscal from Rs 15.43 crore in the corresponding period last year. The bank’s operating profit has mounted 80.11 per cent to Rs 45.1 crore in the quarter ended June 30, 1999, from Rs 25.04 crore in the same period last year, according to the unaudited financial results of the bank released here today. The bank’s total income has risen 8.42 per cent to Rs 188.58 crore during April-June this year from Rs 173.94 crore in the corresponding period the previous year. The interest income of IndusInd Bank went up 18.07 per cent to Rs 165.26 crore in the quarter ended June 30, from Rs 139.97 in the corresponding quarter last year. But the other income of the bank declined 31.4 per cent to Rs 23.32 crore from Rs 33.97 crore last year. The total expenditure of the bank also came down by 3.64 per cent to Rs 143.48 crore in the first quarter this year from Rs 148.90 in the same period last year. Operating expenses moved up to Rs 15 crore from Rs 13.6 crore. Deposits grew 23.25 per cent to Rs 4,374.59 crore from last year’s Rs 3,549.38 crore whereas advances inched up 1.7 per cent to Rs 2351.70 crore from Rs 2312.64 crore. The reserves have
increased by 6.9 per cent to Rs 395.75 crore from Rs
370.25 crore. |
‘Restructuring
integral to corporate planning’ CHANDIGARH, July 31 — The PHDCCI and the Institute of Company Secretaries of India, Chandigarh Chapter jointly organised a seminar on corporate restructuring here today Inaugurating the seminar, Mr A K Luthra, Commissioner of Income Tax, Chandigarh the Finance Act, 1999, has introduced certain provision relating to direct tax treatment of transactions involving sale or purchase of running business etc. While sales through demerger and amalgamation are sought to be made tax free along with benefits of carry forward of losses and depreciation, slump sales of undertakings are sought to be taxed, he added. Mr Vikram Sahgal, Chairman, Chandigarh Committee of the PHDCCI, said restructuring has become integral to corporate strategy and is a popular means for achieving synergistic operations diversification in creasing market power and sometimes also to achieve tax and growth advantages. Mr Anil Aggarwal,
Chairman, Chandigarh Chapter of the Institute of Company
Secretaries, explained technical and legal aspects of
corporate restructuring. The technical session was
chaired by Mr A.K. Chakraborty, of BHEL. |
AS the stock market recovers and the sensitive index rises, the small investor is once again enthused to trade in stocks and shares and take advantage of the current boom in the market. And why not? However, dabbling in stocks and shares also brings with it certain related problems like delay on the part of the company in despatching allotment letters, refund orders, delay in the transfer of securities, non-receipt of share certificates and default in repayment of deposits. So this week I will explain briefly, where the consumer stands vis-a-vis the Consumer Protection Act in such cases. In the case of Tata Timken vs Consumer Protection Council, where the complaint pertained to delay in repaying unsuccessful applicants for equity shares and partly convertible debentures offered by the company, the National Commission quoted the Supreme Court in the case of Morgan Stanley Mutual funds vs Kartick Das and said prospective investors were not consumers under the CP Act. However, consumer courts have adjudicated over complaints arising after the purchase of shares, debentures, units, and have also awarded compensation for any loss caused as a result of deficiency in service. In the case of Vijay Gandotra vs Apple Industries, decided in April 1996, for example, the District Forum, Lucknow awarded Rs 7,000 as compensation to the consumer for the loss suffered by her on account of a delay of nearly two years on the part of the company in transferring the shares in her name. It also awarded interest on the dividend. The State Commission, and later the National Commission, before which she sought enhancement of the compensation however dismissed it on the ground that she had not been able to prove to the satisfaction of the court that the company had received the share certificates of September 27, 1990, as alleged by her. In the case of Unit Trust of India vs Mrs Kavita Gupta and others, decided in January 1997, the UTI was directed to pay compensation to the three complainants for the delay in delivering unit certificates. While the District Forum II Delhi directed the UTI to deliver the certificates or pay back Rs 50,000 collected from each of them towards the 5,000 Master Gain units (of Rs 10 each) with 18 per cent interest (UTI subsequently delivered the certificates), the State Commission awarded Rs 22,250 to each of them as compensation. The appellants had pointed out that they had contracted to sell the units for Rs 11.34 per unit through a stock broker. On UTI’s failure to deliver the certificates, they not only lost Rs 6,500 each on the deal, but also had to pay Rs 2,000 to the stock broker for cancellation of the deal. In addition, the price of the units subsequently fell to Rs 7, as a result of which they had suffered a loss of Rs 3 per unit, adding up to Rs 15,000 (for 5,000 units). The National Commission however reduced the compensation to Rs 8,500 each on the ground that the complainants were entitled only to the loss which they suffered on account of non-delivery of unit certificates, after they had entered into a sale transaction and not for any presumptive loss based on principles of lost opportunity or any other opportunity thereafter. It also directed the UTI to pay 15 per cent interest on the compensation amount from March 15, 1993 till the date of payment. In the case of Pramod Kumar Bothra vs Ishwar Chand Sharma, the State Commission directed the stockbroker to make good the monetary loss to the extent of Rs 3 lakhs suffered by the consumer as a result of the stockbroker failing to follow the specific instructions of the consumer on the sale of shares and debentures. The court also awarded Mr Sharma interest on the amount, Rs 20,000 as damages, besides Rs 5,000 as costs. Mr Sharma had contacted the stockbroker for the sale of a large number of shares and debentures held in the joint names of his son and daughter-in-law. Since they were in Dubai, they had given Mr Sharma the power of attorney to take this step. Mr Sharma asked the stockbroker to sell the shares only after obtaining the relevant permission of the Reserve Bank of India and to credit the proceeds to the non-resident (external) account of his son. The stockbroker, however, sold them even before the permission from the RBI came through. If he had followed his instructions and sold them later, he would have got at least Rs 2 lakh more because of the steep rise in the price of some of the shares. But that was not all. The stockbroker did not credit the amount to Mr Sharma’s son account. As a result again, Mr
Sharma (or his son) lost over Rs 1 lakh on account of
devaluation of the Indian currency against the US dollar.
The court took into account all these factors while
awarding compensation to Mr Sharma. |
Q: What does the expression “Full wages last drawn”? Wages drawn at the time of termination of his employment or wages which he would have drawn on the date of award? Ans: Bombay H.C. in Amar Dye Chem Ltd. v C.M. Kadam (1999-I-LLJ-1110) expressed the view thus: The controversy in this writ petition pertains to the true meaning of expression “full wages last drawn” in S. 17(B) of the Industrial Disputes Act, 1947. Reference of this case to the Full Bench was necessitated because of the Division Bench decisions of this court in Elpro International Ltd. v Mr K.B. Joshi ( 1987-II-LLJ-210) and in the Carona Sahu Co. Ltd. v A.K. Manafkhan (1995-I-LLJ-47). In the latter case it was held that “full wages last drawn” means the wages which the workman would have drawn if he had been reinstated in the service as per the award. The controversy is whether the expression “full wages last drawn” in S. 17(B) means wages drawn by the workman at the time of termination of his employment or wages which he would have drawn on the date of the award. The controversy, however, now stands concluded by the decision of the S.C. dated 19.11.97 in Dena Bank v Kiritkumar T. Patel reported in (1998-I-LLJ.1). In that case, the S.C. has held that the words “full wages last drawn” must be given their plain and material meaning and they cannot be given extended meaning as given by this court in Carona Sahu Co. Ltd. Following the ratio of the S.C. ruling, the Bombay H.C. in the instant case held that “full wages last drawn” in S.17(B) means wages drawn by the workman at the time of termination of employment and not the wages which he would have drawn on the date of the award. Thus, the ratio of this court in Carona Sahu Co. Ltd. is no more a good law. Similarly, the view of this court in Elpro International Ltd. to the effect that in exercise of powers U/Art. 226 and 136 of the Constitution, an order can be passed denying the workman the benefit granted U/s. 17(B) is also not a good law. That way, the H.C.
disposed of the present writ petition. |
Q: We are registered as a dealer both under the provisions of the Punjab General Sales Tax Act, 1948, and the Central Sales Tax Act 1956. We deal in hardware goods, iron & steel articles and other related items. While filing the sales tax returns of second quarter in relation to the assessment year 1997-98, certain sales representing turnover of first point tax paid goods were erroneously omitted from being declared in the returns despite these entries had been duly recorded in our regular account books. At the time of assessment, the assessing authority opines “we are liable to pay penalty for making false report in the sales tax returns”. Our submission that it was just a case of technical error for which no penal action is called for more particularly when we have disclosed these facts suo motu at the time of assessment does not find favour with the assessing authority. Kindly advise with reference to some case law on the point, if possible. Surinder Mohan Dixit, Ludhiana Ans: The approach of the assessing authority having regard to the facts explained by the queriest is wholly unwarranted and unlawful as no case for imposition of penalty under the existing provisions of law is made out simply because certain sales were not brought to the notice of the assessing authority at the time of filing the returns. If the information to this effect is duly brought on record though belatedly at the time of initiation of the assessment proceeding this act does not invite any penal action more particularly when the entire turnover already stands recorded in the books of account kept and maintained by the assessee. Omission to declare a part of the turnover that flows out of an unintentional act on the part of an assessee does not constitute a valid ground for holding that he has reported “a false” information to the assessing authority. This view stands reiterated on more than one occasion by the Supreme Court. One of these cases came to be known as State of Tamil Nadu v. S.G. Jayaraj Nadar & Sons, 28 Sales Tax Cases 700 wherein it was held in the context of the provisions contained in the Madras Sales Tax Act that no penalty for concealment of turnover can be levied if the turnover not declared in the sales tax returns was found entered in the regular account books. The principles laid down in this case fully applies to the situation arising out of the case relating to the queriest. Q: Kindly advise under what circumstances, a refund payable to a dealer under the provisions of the Haryana General Sales Tax Act 1973, can be legally withheld by the assessing authority? Also quote the relevant provisions of law in this context. Umesh Malhotra, Panipat Ans:
Section 44 of the Haryana General Sales Tax Act, 1973
which lays down the procedure for withholding of refund
provides, inter alia, “Where an order giving rise to
a refund is the subject matter of an appeal or further
proceedings or where any other proceedings under this Act
are pending, and the assessing authority or a person
appointed to assist the Commissioner under Sub-section
(1) of Section 3, as the case may be, is of the opinion
that the grant of the refund is likely to adversely
affect the recovery, he may withhold the refund and refer
the case to the Commissioner for order..........” A
careful reading of this provision shows if the order
constituting the basis for refund is the subject matter
of appeal or some other proceedings or that any other
proceedings are pending and the assessing authority or
any other authority feels satisfied that the grant of
refund will adversely the recovery, the refund admissible
to the party can be held back. |
Q. My son is doing his Post Graduation in a medical college and hospital. He is getting stipend of about Rs. 1,25,000 per year. He is paying tuition fee of Rs. 1,00,000 per year and hostel rent of Rs. 6,000 per year along with electricity charges, etc. to the same Institution for the said course. Kindly let me know the following and oblige:- 1. It stipend taxable? 2. Can the fee and/or hostel rent, etc. be adjusted against the stipend? 3. Any other way such as cost of books, etc. to save the tax besides L.I.C., N.S.C. /P.P.F., etc.? — Subhash Kapoor, Jalandhar. Ans: On the facts stated by you “stipend” will not be taxable. It is not a salary income, because there is no relationship of employer and employee. It is also not taxable as income from other sources. Once it is a non-taxable amount, the question of adjustment of fees, hostel payment, etc. from stipend amount does not arise. Q: I am a State Government employee and consequent upon the revision of the pay scale on the recommendations of the 5th Pay Commission, an amount of Rs. 40,758/- has been credited to my Provident Fund by my DDO during the financial year, 1998-99, on account of arrears of revised pay from 1.1.1997 to 31.12.1997 in compliance with the decision of the State Government. Incidentally, my savings that qualify for 20 per cent rebate U/S 88 of the Income-Tax Act, 1961, already exceeds the overall mandatory limit of Rs. 60,000/- during 1998-99 without taking into account the arrears of Rs. 40,758/- credited to my Provident Fund. To reduce the tax liability on arrears, I intend to take recourse to Section 89 which permits splitting and includable such arrears in the income of the years to which they relate. In my case the amounts includable in the incomes for the financial years, 1995-96, 1996-97, and, 1997-98, calculate to Rs. 3,588, Rs. 18,385 and Rs. 18,785, respectively. 2. Kindly enlighten me whether inclusion of aforementioned arrears in the income of the relevant financial years would also qualify for 20 per cent rebate U/S 88 since they have not been paid to me in cash rather credited to my PF account in pursuance of the directions of the State Government. — M. Sharma, Karnal. Ans: You can take advantage of the provisions of Sections 89 of the Income-Tax Act, 1961, regarding relief when salary, etc. is paid in arrears. However while taking the benefit of Section 89, you will not be eligible for adjustment of amount paid in the Provident Fund account in a subsequent but to be adjusted for the earlier years. Thus, the benefit of tax rebate as per Section 88 will not be available on the future deposits made in the PF account. Q: Post retirement I opened a PPF account in a post office on March 27, 1993. Later for convenience, I shifted the account to an authorised bank mid June, 1997. I believe one can make some withdrawals — non-refundable- after some stipulated time. Please do let me know when can I do so and what is the allowed percentage of the amount credited till then. Will such withdrawal be tax-free? Trust there is no difference between a PPF in a P.O. or a bank? — P.M. Sachdev, Kalkaji, Delhi. Ans: The withdrawals from the Public Provident Fund A/C can be made after the expiry of 5 years from the end of the year in which the initial subscription was made. The application for this purpose has to be made in Form-C. The withdrawal from the balance to your credit should not exceed 50 per cent of that amount that stood to your credit at the end of the fourth year immediately preceding the year of withdrawal. Not more than one withdrawal will be permissible during the year. The Provisions relating to withdrawal from the Public Provident Fund are are contained in Section 9 of the P.P.F. Schemes, 1968. There is no difference in PPF A/C either with the bank or post office. The withdrawal from PPF A/C is tax-free. Q: Please clarify the following queries on IT.:- 1. What will be the status of a post October, 1998 gift of Rs. 3 lakh in the hands of a donee? I believe the donee will not be liable to gift- tax, but will the amount of the gift count as his income in addition to his other income in addition to his other income for I.T purposes? 2. Who of two joint A/C holders of the P.O. Monthly Income Scheme — the first or the second A/C holder — is individually liable to income-tax on the monthly interest accruing beyond the exemption limit U/S 80 L? Or can both the A/C holders share the liability beyond the exemption limit as mutually agreed by them? — Gurkirpal Singh Sekhon, Chandigarh. Ans: In
respect of gifts prior to October 1, 1998 the same are
liable the same are liable to charge of gift-tax @ 30 per
cent. As far as donor is concerned, the liability will be
there to gift-tax for gifts prior to October 1, 98. In
the case of a donee even for the gifts received prior to
the date, there is not liability to gift-tax at all
irrespective of the amount of the gift. For example, if
the donee received 10 gifts each of Rs. 30,000 from 10
different persons prior to October 1, 1998, the donee
will not be liable to any tax on such gifts. The gift
amount received prior to the date will also not be
included in the income of the donee for income-tax
purposes. In the case of two joint account holders of the
Post Office Monthly Income Scheme, what is relevant is
not that they are two joint A/C holders but the question
which is relevant is as to who is the owner of the funds
which have been invested or deposited in the P.O. Monthly
Scheme. Generally speaking, the first A/C holder is to be
treated as the owner of the income arising from the P.O.
scheme. In case the funds have been jointly invested that
amount can be treated as income of both the joint A/C
holders. However, as there is no clear ruling on the
point in the Income-Tax Act, it is advisable that the
income from the scheme should be treated as income of the
person whose name appear as the first holder. |
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