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Iran-Pak-India pipeline in limbo
Iran refuses to sell LNG below market price

New Delhi, July 23
The Indian government is expected to dump Iran-Pakistan-India (IPI) gas pipeline in the next few days over an apparent excuse of high gas price demanded by Iran and changed security scenario in the region after Mumbai bomb blasts.

‘Breguet’ watches at Ludhiana expo
Ludhiana, July 23
‘Breguet’ watches, invented by AL Breguet 200 years ago and patronised by the likes of Queen Marie Antoinette, Napoleon Bonaparte, Queen Victoria and Sir Winston Churchill, will be up for grabs at a wedding expo being held here.

Most expensive bottle of liquor
Mexico City, July 23
Producer Tequila Ley .925 announced yesterday that it had sold a bottle of Mexico’s best-known beverage in a gold and platinum casing for a whopping $225,000 in what it claims is the most expensive spirit sale on record.


EARLIER STORIES



 
A Pakistani national prepares an advertisement billboard for a beauty salon at a roadside in Rawalpindi on Sunday
A Pakistani national prepares an advertisement billboard for a beauty salon at a roadside in Rawalpindi on Sunday. Home-based beauty salons are rapidly growing in the country as most women get training from beauty institutes and then start their business at home. — AFP 

RBI may hike interest rates
New Delhi, July 23
The RBI is expected to announce another hike in interest rates by 25 basis points while releasing the policy review on Tuesday. The bankers are preparing for the hike in interest rates due to pressures in domestic and global markets.

UN recognition for RIL
New Delhi, July 23 Reliance Industries has become the first Indian oil and gas company to get recognition from the UN Environmental Programme for Corporate Sustainability Report (CSR).

Market Scan
Wait for fresh investments

Sensex closed the last week at 10,088 on Friday, registering a loss of 598 points (5.59 per cent) during the week. Although the international crude prices have come down, the market has failed to stabilise. In an analysis made by DSP Merrill Lynch, a gloomy picture has been painted of the growth prospects of the Indian industry. 

Tax Advice
Donor liable to pay tax on income from gifted money

Q. As per Section 64, income from gift of money given by husband to wife is taxable in the hands of husband. However, the budget 2004 states that gifts upto Rs 25,000 and Rs 50,000 (from 01.04.2006) between relations can be received without tax. Please clarify if the gift given to wife by husband is taxable in the hands of wife or income arising out of it is taxable in the hands of husband.

PAN not must for Sikkim investors

 

 

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Iran-Pak-India pipeline in limbo
Iran refuses to sell LNG below market price
Tribune News Service

New Delhi, July 23
The Indian government is expected to dump Iran-Pakistan-India (IPI) gas pipeline in the next few days over an apparent excuse of high gas price demanded by Iran and changed security scenario in the region after Mumbai bomb blasts.

Meanwhile, the fate of $-22 billion contract for liquefied natural gas (LNG) signed with Iran in June 2005 is in limbo as Tehran has declined to sell fuel below market price.

Official sources said the IPI project will remain a pipe dream, as security experts and public sector oil companies have demanded a review of the project, considering uncertainty of India’s relations with Pakistan after Mumbai blasts, and a bullish regime in Iran.

A final decision about the fate of project could be announced at the third meeting of the tripartite working group on the IPI gas pipeline project to be held here on August 3- 4.

After the Israeli attacks in Lebanon, the security experts have warned that the US may take a tough stand against Iranian and Syrian governments for supporting Hizbolah militants, leading to economic sanctions and prolonged conflict in the region.

The Petroleum Ministry sources said the government was also taking legal opinion to sue the Iranian government. In an interview to NDTV, Iranian Foreign Minister Manouchehr Mottaki said today there were "some specific difficulties" to implement the project. Iran had in June 2005 agreed to supply five million tonnes of LNG for 25 years beginning in 2009-10. "I think now both sides understand it is a little bit complicated because of the changing circumstances from the time when the contract and the agreement were signed," he said.

New Delhi has made it clear to Tehran that both sides have to abide by the contract and that fresh terms and conditionalities would not be acceptable.

Official sources said Tehran was seeking at least $7.2 per mbtu price for gas it wanted to sell to India and Pakistan while New Delhi was willing to pay not more than $4.2 per mbtu for gas delivered at its border.

"If the Indian side is not ready to buy our gas at its real price, we have no obligation to sell it at the price lower than the real one," Iranian Oil Minister Kazem Vaziri-Hamaneh had said earlier this month.

Meanwhile, GAIL (India) Ltd has also expressed concern regarding the future of its projects with Iran. GAIL and the National Petrochemical Company of Iran had entered into an agreement to set up a gas cracker unit in Iran at an investment of Rs 8,000-10,000 crore in 2005. "There are uncertainties involved due to the geopolitical developments in the country. Everything depends on how the government handles the situation," sources in the company said. 

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‘Breguet’ watches at Ludhiana expo

Ludhiana, July 23
‘Breguet’ watches, invented by AL Breguet 200 years ago and patronised by the likes of Queen Marie Antoinette, Napoleon Bonaparte, Queen Victoria and Sir Winston Churchill, will be up for grabs at a wedding expo being held here.

Swiss watch company Ethos will showcase the watches at the expo, priced at Rs 28.63 lakh each and studded with 64 diamonds, including three solitaires at the crown, base and back.

“Each Breguet watch is handmade and is a masterpiece in itself. Because of its uniqueness, it has always attracted tasteful patrons,” Ethos Swiss Watch Studios CEO Yasho Saboo said here.

In the archives kept at the Breguet museum in Paris, one could find clients for the watch, among whom are big names in history such as Queen Marie-Antoinette, Napoleon Bonaparte, the Sultan of Ottoman Empire, Caroline Muratyqueen of Naples, Queen Victoria and Sir Winston Churchill, he said.

Ethos had earlier showcased the watch in Delhi and in Bangalore and now planned to introduce it in Ludhiana, Mr Saboo said, hoping that the watch that had so far not been bought by anyone in India, would find buyers at the expo.— PTI 

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Most expensive bottle of liquor

Mexico City, July 23
Producer Tequila Ley .925 announced yesterday that it had sold a bottle of Mexico’s best-known beverage in a gold and platinum casing for a whopping $225,000 in what it claims is the most expensive spirit sale on record.

“This is a really unique bottle of tequila and our client, a US-based collector of fine wines and spirits, will treasure this prize to add to an already impressive collection,” said company CEO Fernando Altamirano.

Mr Altamirano said he would applying to the Guinness Book of Records, claiming that he had sold the most expensive bottle of liquor ever. The buyer’s name was not revealed in the statement.

Tequila, made from agave, a blue cactus-like plant native to western Mexico, sells for as little $10 a bottle.The record-breaking bottle was part of a new range of luxury tequilas unveiled by Tequila Ley last week. Named “Aztec Passion Limited Edition,” it was cased in two kilograms of gold and platinum. —AP

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RBI may hike interest rates
Tribune News Service

New Delhi, July 23
The RBI is expected to announce another hike in interest rates by 25 basis points while releasing the policy review on Tuesday. The bankers are preparing for the hike in interest rates due to pressures in domestic and global markets.

However, they are of the view that the central bank is unlikely to make any changes in CRR, SLR and bank rate. “A robust domestic and improving global economic outlook, together with a build-up in inflationary pressures call for a reverse repo rate hike of 25 bps (0.25 per cent) to 6 per cent,” said a senior official of Vijaya Bank.

Despite assertions of Finance Minister P Chidambaram that there is ‘no reason for rise in inflation and interest rate’, bankers are gearing up for a hike in interest rate, that would definitely have adverse impact on the home loans, personal loans and other lending.

The bankers felt that rise in crude oil prices, crisis in West Asia and continuing demand for credit in manufacturing and service sector could force the RBI to revise interest rate.

The RBI is likely to raise repo and reverse repo rates, Oriental Bank of Commerce Chairman K.N. Prithviraj said, adding interest rates were hardening as deposit growth is low, but loan growth was high.

The chairmen of Canara Bank, Indian Bank, Bank of Maharahtra and Vijaya Bank also agreed that market expects 0.25 per cent increase in repo and reverse repo rates by the RBI.

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UN recognition for RIL

New Delhi, July 23
Reliance Industries has become the first Indian oil and gas company to get recognition from the UN Environmental Programme for Corporate Sustainability Report (CSR).

The recognition in the form of “In Accordance” status from the Global Reporting Initiative, a collaborating centre for the UNEP, is for the maiden report of the Mukesh Ambani-led Reliance group’s flagship company highlighting financial performance to social and civic responsibilities.—PTI

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Market Scan
Wait for fresh investments
by J.C. Anand

Sensex closed the last week at 10,088 on Friday, registering a loss of 598 points (5.59 per cent) during the week. Although the international crude prices have come down, the market has failed to stabilise.

In an analysis made by DSP Merrill Lynch, a gloomy picture has been painted of the growth prospects of the Indian industry. This report substantially downgrades the chances of growth in the “Indian industry profit” this year, especially downgrades the chances of growth in the “Indian industry profit” this year, especially for those whose earnings are “vulnerable” to borrowing costs, global commodity prices and energy costs. According to the report while earnings for the first quarter this year will be strong, margin pressure would affect the second and third quarters. It warns the investors against becoming “complacent” in expecting strong earning growth. DSP Merrill Lynch has also revised its expected growth-rates downward from 23.8 per cent growth rate in profit for the Sensex companies to 15 - 17 per cent. It predicts the “bleakest” outook for the banking and auto sectors, while calling for a cautious outlook on the metals and energy sectors.

During June, foreign investors have largely withdrawn from many emerging markets. In the case of India, the foreign reserves have gone down from $ 162.91 billion to $ 137.21 billion. The foreign investors are moving away from risky stock markets to relatively safe and stable markets of Europe, Hong Kong and Japan etc.

The first quarter results of the corporate sector have been, with some exceptions, quite good. The top software companies like Infosys, TCS, Satyam and Wipro have done very well, and even better than market expectations. But some top companies like Hero Honda and Tata Steel have disappointed the market. Pharma results have been mixed. Some good as in the case of Cipla, Ranbaxy and some not so good as in the case of Nicholas Piramal Larsen & Toubro, Exide, SKF bearings, Everday and TTC have reported good results. Sensex has not stabilised as yet and some foreign analysts are of the view that it could even plunge to the 8,000-8500 level where it would look relatively stable.

An increase in cost inputs, high crude and energy prices and the withdrawal of FIIs from the Indian and other emerging markets may affect market prices and squeeze profit margins. The falling exchange rate of the Rupee against the US dollar is another factor for the Indian economy.

The investors should wait and mark time before moving in to make fresh investments. They should go in for leaders in those sectors and industries that are likely to be less affected by rising prices.

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Tax Advice
Donor liable to pay tax on income from gifted money
by S.C. Vasudeva

Q. As per Section 64, income from gift of money given by husband to wife is taxable in the hands of husband. However, the budget 2004 states that gifts upto Rs 25,000 and Rs 50,000 (from 01.04.2006) between relations can be received without tax. Please clarify if the gift given to wife by husband is taxable in the hands of wife or income arising out of it is taxable in the hands of husband.

— G.K. Gupta, Faridabad

A. No income-tax or gift tax is payable on the gift made by the husband to his wife. However, the income earned on the gifted amount is required to be taxed in the hands of the donor under Section 64 of the Income-Tax Act 1961 (the Act).

Tax liability on legal heirs

Q. I have encashed a bank FD made by my late father out of his funds on 10.02.1993 with my name as second holder - payable to either or survivor.

He expired on 10.08.1995 before the maturity date of the FD. The person who was in custody of this FD handed over the FD to me in August 2004.

When I approached the bank for getting payment of this FD, the bank renewed it till 06.12.2004 saying that the interest for the previous nine years can only be paid if the FD gets renewed for some period. After 06.12.2004, I got it encashed.

Please let me know whether the maturity proceeds received from the bank will be treated as capital receipt inherited by me from my late father without any income tax liability on me.

— Gomti Gupta, Ludhiana

A. The maturity proceeds of the fixed deposit in the name of your father, excluding interest would be a capital receipt in the hands of the legal heirs of the deceased. As a joint holder of the fixed deposit receipt, you are entitled to receive the amount on the maturity of the fixed deposit receipt since the fixed deposit receipt was issued as payable to either or survivor. The legal ownership of the estate of your father would, however, be governed by the provisions of Hindu Succession Act 1956. The interest received on such maturity would also be taxable in the hands of the legal heirs.

II

Q. Mr A died in 1995 at the age of 88 years. He was a regular income tax assessee and a partner in a business concern. His business assets got extinguished in the year of his death and his income tax return for that year was duly filed. In addition, he had some FDs in various banks, the interest income from which was regularly shown in his IT. returns. These FDs remained in the custody of a person other than any legal heir. No steps could, therefore, be taken for the encashment of these FDs. Now the legal heirs want to encash the same and distribute the proceeds equally among themselves.

As there has been no renewals during the intervening about nine years, the entire interest for about 10 years is being considered by the banks, to have accrued in the year of payment and will be deducting applicable TDS.

My query is as under:-

1. Will there be any liability of the legal heirs to file the income tax return of the deceased in case the total interest exceeds the exemption limit.

2. What is the exemption limit in this case — normal or that for a senior citizen. At the time of death, the deceased was 88 years old.

3. Amount will be collected from banks by one legal heir and distributed among all. Who will be liable to file the return. Can all heirs file the return jointly.

4. Can there be any adverse effect due to the fact that no return was filed for the previous years.

5. Amount received by each heir will be the capital receipts in their respective hands without any tax liability

— Man Mohan Lal,
Ludhiana

A. The interest earned on the fixed deposit would be taxable in the hands of the legal heirs.

2. In the case of an individual, the tax is payable only if the total income of such individual exceeds Rs 1,00,000 except in case of women where the applicable limit is Rs 1,35,000. However, an individual who is a senior citizen is not chargeable to tax in case his/her total income does not exceeds Rs 1,85,000. This limit is applicable for the assessment year 2006-07.

3. The collection of amount by an individual will not make him liable to the payment of income-tax on the interest earned on the fixed deposits.

4. It should be possible to avoid any penal action for not inclusion of interest in the income of legal heirs in view of the fact that fixed deposit receipts were not in the possession of the legal heirs.

5. The amount received by each legal heir, excluding interest would be a capital receipt in his/her hands.

Gift to son

Q. My son is an NRI. I want to gift him some money, which I intend to deposit in MIS of the Post Office in his favour, Can I do so?

— K.C. Dhawan, Ludhiana

A. There is no prohibition in the Act for gifting any amount to a son. However, the gift made by you should be accepted by the donee. It is, therefore, preferable to exchange letters for the purposes of making and accepting the gift. Further, the gifted amount should be deposited in bank account of your son. He should thereafter invest such gifted amount in any of the investments permitted to be made in India by a non-resident Indian.

Rebate u/s 80U

Q. I am physically handicapped person having 60 per cent physical disability. I have been working in a Punjab Government Department. As such I have been claiming rebate/exemption under Section 80U of Income Tax Act for the last so many years as is admissible under Section 80U. But this year, due to introduction of New Section 80C, my DDO is refusing to give me this rebate/exemption as provided under Section 80U of Income-tax Act. On the plea that all such rebate/exemptions has been included/merged in new Section 80C (subject to max. Rs 1 lakh).

Please clarify whether I am entitled for this exemption/rebate under Section 80U for the current Financial Year 2005-06 (Assessment Year 2006-07) irrespective of the rebate admissible under Section 80C.

— Dhan Paul Jain, Mohali

A. Your DDO is under a wrong impression that provisions of Section 80U of the Act have been merged with the provisions of Section 80C of the Act.

Section 80U of the Act is still very much in place and, therefore, there is no reason that the deduction under the said section should not be allowed to you.

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PAN not must for Sikkim investors

Gangtok, July 23
SEBI has exempted all categories of investors residing in Sikkim from the mandatory requirement of obtaining PAN cards.
With the Indian Income Tax Act, 1961, yet to be implemented in Sikkim, which continues to be governed by its own Income Tax manual, 1948, investors of the state cannot obtain PAN cards made compulsory for them by an earlier SEBI order for opening and operating any Demat (dematerialised) account in any bank of the state. — PTI

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