SPECIAL COVERAGE
CHANDIGARH

LUDHIANA

DELHI



THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS

B U S I N E S S

FM: Look beyond balance sheets
Cement makers under fire for ‘inflating’ prices
New Delhi, March 24
In the backdrop of cement players refusing to cut prices, finance minister P Chidambaram today asked India Inc to look beyond their balance sheets and play a role in helping the government ensure macro-economic stability.

IPI gas project intact: Deora
Piped gas in more cities by 2009
Mumbai, March 24
Unperturbed by concerns raised by the US on the proposed $7.2 billion Iran-Pakistan-India gas pipeline, he made it clear India will go ahead with the project.

Bollywood actor Abhishek Bachchan at the launch of Motorola mobile phone ‘MOTOROKR E6’ in New Delhi on Saturday.
Bollywood actor Abhishek Bachchan at the launch of Motorola mobile phone ‘MOTOROKR E6’ in New Delhi on Saturday. — Tribune photo by Mukesh Aggarwal

Bank deposits up 30 pc in Haryana
Chandigarh, March 24
Banks have doubled the agriculture credit in Haryana in the past three years and have made rapid strides by financing agri-clinics.

Mittal refutes Posco takeover reports
Ghaziabad, March 24
Arcelor-Mittal today described as speculative the reports of the world’s largest steelmaker looking to acquire South Korean rival Posco for strengthening its foothold in Asia.


A model displays a creation by Nainika & Gauri on the fourth day of the Wills India Fashion Week in New Delhi on Saturday.
A model displays a creation by Nainika & Gauri on the fourth day of the Wills India Fashion Week in New Delhi on Saturday. —  Tribune photo by Mukesh Aggarwal

EARLIER STORIES

 

Aviation Notes
Anomalies in ground-handling policy
Since March 12, 2007, Capt A.K. Sharma has been functioning as Air-India’s general manager at the Indira Gandhi International Airport. He is responsible for airline’s day-to-day functioning at the airport.

Investor Guidance
Rent-free house is treated as perquisite

Q: 1) If an employee has been given rent-free accommodation by its company on a third party lease basis, will he pay for it as a perquisite?

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FM: Look beyond balance sheets
Cement makers under fire for ‘inflating’ prices
Tribune News Service and PTI

New Delhi, March 24
In the backdrop of cement players refusing to cut prices, finance minister P Chidambaram today asked India Inc to look beyond their balance sheets and play a role in helping the government ensure macro-economic stability.

Without mentioning the cement sector, the minister asked the industry in general to recognise their role “beyond balance sheets” in macro-economic stability.

At the India Today’s Conclave here, he said core inflation was affecting macro-economic stability.

“I have said this before and saying this once more that please don’t allow core inflation to be entrenched,” he said.

Chidambaram said the latest figures of inflation showed that while the pace of price movement had been going down for primary articles and fuels, power and lighting group, those for manufacturing products was moving up.

Earlier this week, the finance minister had met cement manufacturers to convince them to moderate prices. However, cement players categorically said that there was no scope for reducing prices at the present juncture, according to sources.

Meanwhile, Chidambaram has asked UPA’s coalition partners to compromise and urged regional parties, including the Left, to acquire a national outlook for accelerating economic growth to 10 per cent.

“That (high growth) will require our coalition partners make compromises, give up ideological positions to compromise so that politics can be taken forward,” he said.

“Good economics can drive India’s growth rate to a level higher than 9 per cent growth rate. Nine per cent growth must be sustained and increased to 10 per cent,” he added.

“Today we are at a juncture where politics is not supportive of good economics,” he said.

Turning down demand of certain sections to slow down growth for checking the rising prices, Chidambaram said even to share growth with lower sections of the society would require funds through high growth.

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IPI gas project intact: Deora
Piped gas in more cities by 2009

Mumbai, March 24
Unperturbed by concerns raised by the US on the proposed $7.2 billion Iran-Pakistan-India gas pipeline, he made it clear India will go ahead with the project.

“I don’t see any problem (on the IPI pipeline). No country can debar India from this project. We are committed to this,” Union petroleum minister Murli Deora said. He, however, did not give any timeframe for the project to start.

Buoyed by the success of piped gas in Mumbai and Delhi, the Centre today said up to Rs 12,000 crore would be spent in the next two years to extend this facility to 28 more cities including Kolkata, Chennai, Bangalore and Hyderabad.

“Rs 10,000-12,000 crore will be spent on the project and most of these cities will be covered by 2009,” Deora said.

The other prominent cities include Agra, Kanpur, Lucknow, Pune, Ahmedabad, Vijaywada, Navi Mumbai, National Capital Region, Allahabad, Indore and Vadodara.

Once completed, two crore households would be supplied piped gas in kitchens, releasing 16 crore LPG cylinders for supply of gas to two crore additional rural households.

Currently, five lakh households in Mumbai and Delhi are provided piped gas, Deora said, adding that the distribution network is to be extended to 200 more cities subsequently.

At present, only 4 per cent of the natural gas in the country is being utilised for piped gas and this was expected to go up to 40 per cent once the projects are completed. — PTI

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Bank deposits up 30 pc in Haryana
Ruchika M Khanna
Tribune News Service

Chandigarh, March 24
Banks have doubled the agriculture credit in Haryana in the past three years and have made rapid strides by financing agri-clinics.

This was revealed during the 99th state-level bankers’ committee meeting for Haryana held here today.

K. Raghuraman, executive director, PNB, presided over the meeting, while Umesh Nanda, commissioner and secretary, institutional finance and credit control, Haryana, was the chief guest.

Raghuraman said total deposits of the banks in the state increased from Rs 40,063 crore in December 2005 to Rs 52,222 crore in December 2006, up 30.3 per cent.

Considering the high levels of indebtedness in the state, the agriculture department has now been asked to send details to the banks, regarding rural indebtedness to informal sector.

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Mittal refutes Posco takeover reports

Ghaziabad, March 24
Arcelor-Mittal today described as speculative the reports of the world’s largest steelmaker looking to acquire South Korean rival Posco for strengthening its foothold in Asia.

“These are all speculations,” Arcelor-Mittal chief executive officer L.N. Mittal told reporters here when asked if he planned to acquire the world’s fourth-biggest steel firm.

Expressing concern on the slow progress of its proposed steel plants in Jharkhand and Orissa, Mittal said the company was in talks with both states as well as the Centre to expedite land acquisition and resolve other issues. — PTI

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Aviation Notes
Anomalies in ground-handling policy
by K.R. Wadhwaney

Since March 12, 2007, Capt A.K. Sharma has been functioning as Air-India’s general manager at the Indira Gandhi International Airport. He is responsible for airline’s day-to-day functioning at the airport.

Captain Sharma’s last posting was as a regional director in London where he was subjected to various charges, including molestation probe. He has been absolved of those charges. He will, however, continue to face vigilance inquiry and only after he is absolved of this probe he will be given the rank of executive director. When in London he had a running battle with the management and was locked out of the office for several months.

Analysts say the Cabinet has cleared the new ground handling policy in a haste. It was cleared on February 1, 2007. But the civil aviation ministry has not been able to notify, as it finds many shortcomings in the policy.

The policy is two-pronged — one for the six metro airports at Delhi, Mumbai, Chennai, Kolkata, Bangalore and Hyderabad, and another for non-metro airports, numbering more than 30.

There are several anomalies in the policy which, if put into operation, will force private and foreign carriers to utilise new company’s services. There are apprehensions that new joint venture may charge more money than no-frill airlines can afford to pay.

In the meantime, Air-India and Indian have decided to jointly submit bid for the Hyderabad airport, which is being constructed at a rapid speed. Both these airlines have tied up with the Singapore Air Terminal Service (SATS). Air-India and Indian will have 51 per cent stake while SATS’s share will be 49 per cent.

The GMR Hyderabad International Airport, which is responsible for the construction, has not yet revealed its plan in regard to ground handling. The Bangalore airport has also finalised its plans for ground handling. But overall picture of ground handling is murky, as far as aviation analysts are concerned.

It is learnt that at all metro airports there will be a minimum of two authorised ground handling service providers in addition to subsidiaries of Air-India and Indian. At other airports, airlines may be allowed to have self-handling, if they so wish.

Airbus A-320s are plagued by hydraulic failures. There are several instances of failures, which the government has also conceded. On the basis of complaints by Indian, the Airbus authorities have brought about certain modifications but they are not foolproof, as they ought to be. There is a question mark on reliability.

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Investor Guidance
Rent-free house is treated as perquisite
by A.N. Shanbhag

Q: 1) If an employee has been given rent-free accommodation by its company on a third party lease basis, will he pay for it as a perquisite?

2. What if the same case has been for self-lease?

3. In case of home loan from the employer, whether the principal repayment and interest payable is deductible under IT rules.

— Niranmal

A: 1) Yes, it is treated as a perquisite.

2) Even if the house belongs to the employee, he will be liable to pay tax on the perquisite value for the accommodation provided by the company to him.

If the employee has taken the house on lease, the house will not be company provided and there will be no perquisite value.

3. Under section 24 deduction up to Rs 30,000 is available on interest on capital borrowed for acquiring, constructing, repairing, renewing or reconstructing, whereas the enhanced limit of Rs 1,50,000 is applicable on loans taken on or after April 1, 1999 only for acquiring or constructing. The acquisition or construction should be completed within three years from the end of the year in which the capital was borrowed. It is possible to claim this deduction on two or more loans. In any case, the ceiling on total amount of deduction is Rs 1,50,000 in a year. If the house is rented out, the entire interest payable without any ceiling can be deducted from the rent received.

It is necessary for the assessee to obtain a certificate from the lender that such interest was payable in respect of the amount advanced for acquisition or construction of the house, or as refinance of the principle amount outstanding under an earlier loan taken for such purpose.

Additional deduction u/s 80C, within the overall limit of Rs 1 lakh for the repayment made of the principal amount is available. This deduction is available only on loans for acquiring or constructing a housing property but not for any addition, alteration, renovation or repair. This deduction on repayment of capital is available on loan taken from specific sources whereas for deduction of interest the loan can be taken from any source.

The deduction u/s 80C and the interest u/s 24 are allowed only when the income from house property becomes chargeable to tax. In other words, the construction should be complete, the flat should be ready for occupation and the municipal annual value is known.

Income from alimony

Q: I have obtained divorce from my husband. The court has asked him to deposit Rs 11 lakh with a nationalised bank. The income therefrom will be paid to me for maintenance during my lifetime. In the event of my death, the money will be handed over to him. Do I have to pay any income tax on this amount of Rs 11 lakh or the interest received from the bank?

— Nilkanti

A: Diversion of income by overriding title is taxable in the hands of the ultimate beneficiary whereas the application of income is taxable in the hands of the recipient.

Income received from property charged under a court’s decree with maintenance allowance to a dependent and spent on maintenance is diversion of income at source and therefore, taxed in the hands of the dependent — Raja Bejoy Singh Dudhuria v CIT [1933] 1ITR135 (PC). As far as the payer is concerned, income from property, though paid as maintenance allowance under a decree of court (without maintenance being a charge upon the property yielding the income) is application of income and therefore, chargeable to tax — CIT v Sitaldas Tirathdas [1961] 41ITR367 (SC).

In the case presented by you, the court has earmarked a certain property worth Rs 11 lakh for generating income for your maintenance. This amount of Rs 11 lakh is not income but a capital receipt in your hands. However, any income therefrom is taxable in your hands.

As far as your former husband is concerned, but for the court decree, the income arising from these Rs 11 lakh would have been taxable in his hands. In the instant case, it is diversion of income at source and therefore, not taxable for him.

Agricultural income

Q: I am aware that an individual has to file his income tax return if his gross income exceeds Rs 1 lakh per annum irrespective of his tax liability. Kindly advise, is it required to file the return in the following hypothetical cases if a person has:

1) Only agricultural income exceeding Rs 1 lakh per annum.

2) Agricultural income (less than Rs 1 lakh/annum) plus income from other sources like interest on savings etc (less than Rs 1 lakh/annum), total exceeding Rs 1 lakh /annum.

— Anant

A: 1) If a person has only agricultural income, he need not file the tax returns, irrespective of the size of his income.

2. If the total of normal and the agricultural income exceeds Rs 1 lakh, the return is required to be filed.

Exemption for tuition fee

Q: I am salaried person. My children are studying in class II and nursery class for which I am incurring annual tuition fees of Rs 9,000 and Rs 5,400, respectively. Whether the total expenditure of Rs 14,400 is eligible for tax rebate under 80 C.

— Suraj

A: The exemption is available against tuition fees paid, whether at the time of admission or thereafter, to any university, college, school or other educational institution situated within India for full-time education of any two children of the individual. However, the eligible amount shall not include any payment towards any development fees or donation or payment of similar nature.

Rebate on LIC premium

Q: My wife and I both are government employees. There is an LIC policy in my wife’s name. I have paid its yearly premium/installment from my bank account by cheque. Can I claim rebate from income tax for this premium amount?

— Purba

A: Contributions in the name of spouse and all children, major or minor, married or otherwise, (including married daughters) to i) any life insurance company for life cover ii) LIC deferred annuity iii) PPF iv) ULIP and Dhanaraksha are eligible for the deduction u/s 80C.

The authors may be contacted at wonderlandconsultants@yahoo.com

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