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Bathinda refinery
Mittal, HPCL sign pact

New Delhi, March 25
India-born steel baron L.N. Mittal has formally signed an MoU with HPCL to become an equal partner in the latter’s Rs 16,000-crore Bhatinda refinery, infusing Rs 3,300 crore in the venture. Diving further into the Indian oil sector, president and CEO of the world’s largest steel company Arcelor-Mittal will now hold a 49 per cent stake in the special purpose vehicle for building the plant and laying a 1,100 km pipeline for wheeling crude from Mundra port.

Reliance Retail set for Punjab launch
Chandigarh, March 25
The Reliance Retail owned by Mukesh Ambani is all set to launch its operations in Punjab and Haryana on Baisakhi. The company’s first Reliance Fresh store (for fruits and vegetables, poultry and meat and FMCGs) will be set up in Jalandhar. Top company officials said after Jalandhar, they plan to open Reliance Fresh stores in Ludhiana and Amritsar.

BoB plans insurance foray
New Delhi, March 25
The Bank of Baroda (BoB) today said it is planning to foray into the life insurance business with a European partner soon.

Market Scan
Market tracks global cues

Unlike the Indian cricket team, domestic bourses were back to their winning ways last week, after posting loses for five consecutive previous weeks. The market managed to post gains, taking cues from a firm trend on bourses around the globe.



Model-turned-actor Katrina Kaif displays a creation by Varun Bahl at Wills Lifestyle Fashion Week in New Delhi late on Saturday
Model-turned-actor Katrina Kaif displays a creation by Varun Bahl at Wills Lifestyle Fashion Week in New Delhi late on Saturday. — PTI

EARLIER STORIES

 

  Tax Advice
TDS allowable as deduction against total tax payable

Q: I am holder of Rs 8 lakh 8 per cent RBI Cumulative Taxable Bonds. I am showing the accrued interest on these bonds every year in income tax return. I feel that under the rules the SBI authorities while making payment of the matured amount would deduct TDS, which would be a very high amount. 

 

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Bathinda refinery
Mittal, HPCL sign pact

New Delhi, March 25
India-born steel baron L.N. Mittal has formally signed an MoU with HPCL to become an equal partner in the latter’s Rs 16,000-crore Bhatinda refinery, infusing Rs 3,300 crore in the venture.

Diving further into the Indian oil sector, president and CEO of the world’s largest steel company Arcelor-Mittal will now hold a 49 per cent stake in the special purpose vehicle for building the plant and laying a 1,100 km pipeline for wheeling crude from Mundra port.

A tie-up with HPCL brings refinery expertise and could open doors for Mittal’s oil trading plans, according to industry experts with HPCL emerging as the preferred partner for getting into refining and gas business globally.

The Guru Gobind Singh Refinery project in Bhatinda, the agreement for which was signed here yesterday, will be completed by September 2010.

“This will be the first 49 per cent FDI in Indian refining industry and marks world investor confidence in the sector,” petroleum secretary M.S. Srinivasan said earlier this month.

The remaining 49 per cent equity in the 9 million metric tonnes per annum (MMTPA) refinery will be held by HPCL while two per cent of the project will be held by financial institutions. If the partnership with HPCL extends beyond Bhatinda to Vizag, it could also mean Mittal’s entry in petrochemicals, sources said. — UNI

ONGC cries foul

Mittal’s acquisition of 49 per cent stake in Bhatinda refinery has violated his pact with ONGC to pursue hydrocarbon opportunities exclusively with the flagship Indian firm, an ONGC official has said.

Though Mittal inked a joint venture agreement in July 2005 with the state-run firm to form ONGC-Mittal Energy Ltd (OMEL) for acquisition of oil and gas fields, refinery business and LNG projects, the steel czar recently decided to go it alone in investing Rs 3,300 crore in the Bhatinda refinery.

Besides, Mittal has on his own bought 50 per cent stake in a Kazakhstan oil firm from Russia’s Lukoil for $980 million and acquired 3 per cent stake in the $6-billion Chevron-operated Olokola LNG project in Nigeria.

“The July 24, 2005 agreement had earmarked 27 countries for exclusive pursuit of hydrocarbon opportunities by OMEL. For the rest of the world, it clearly stated that Mittal shall offer ONGC Videsh Ltd (OVL) a partnership in any venture or business opportunity it wishes to undertake in the hydrocarbon sphere,” said the ONGC official, who did not want to be named.

But there was no such restriction placed on ONGC, he said, adding Nigeria and Kazakhstan fall under the 27 exclusive countries marked for OMEL. — PTI 

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Reliance Retail set for Punjab launch
Ruchika M. Khanna
Tribune News Service

Chandigarh, March 25
The Reliance Retail owned by Mukesh Ambani is all set to launch its operations in Punjab and Haryana on Baisakhi. The company’s first Reliance Fresh store (for fruits and vegetables, poultry and meat and FMCGs) will be set up in Jalandhar.

Top company officials said after Jalandhar, they plan to open Reliance Fresh stores in Ludhiana and Amritsar. The company will operate in the region in four verticals - fruit and vegetable stores, mega malls (called hyper markets), super markets and consumer durable and information technology (CDIT) stores.

The company would first open 10 Reliance Fresh stores in Jalandhar and five each in Ludhiana and Amritsar. The exercise to find locations is also on for setting up these fruit and vegetable stores in Ambala, Karnal, Yamunanagar, Kurukshetra and Panipat in Haryana.

“The fruit and vegetable procurement would begin from April 1 and initially we have proposed to procure 125- 130 tons of fruits and vegetable daily. By the year-end, we would be procuring 350 tons of fruits and vegetables daily from farmers in the region. We have already set up 12 collection centres in Punjab for the purpose,” informed a top company official.

The company would come up with two CDIT stores in Ludhiana. “These stores would offer all kinds of multi-brand computer hardware, consumer durables and white goods. The two CDIT stores are expected to open by the mid of May,” said a company official.

Other than these, the company would be coming up with a mega mall - Hyper Market on 1.2 acres of land in Ludhiana. Another mall would come up on 1.75 acres of land at Sangrur. These malls will have major lifestyle brands, showcasing their product.

The company also proposes to set up super markets. The first super market is likely to be established in Panipat. 

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BoB plans insurance foray

New Delhi, March 25
The Bank of Baroda (BoB) today said it is planning to foray into the life insurance business with a European partner soon.

“We are talking to some shortlisted European insurance companies and would finalise the joint venture partner by April end”, the chairman and managing director of Bank of Baroda, Anil K. Khandelwal said.

The foreign partner will have 26 per cent stake in the joint venture life insurance company, he said adding: “We will sign an MoU with the foreign partner soon after we finalise the name.” Given the low penetration of insurance in the country and the extensive reach of BoB, he said, “There is a huge opportunity in this sector, which we want to tap.” The bank’s plans to enter the insurance sector was cleared by its board in September 2006. — PTI

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Market Scan
Market tracks global cues

by Lalit Batra

Unlike the Indian cricket team, domestic bourses were back to their winning ways last week, after posting loses for five consecutive previous weeks. The market managed to post gains, taking cues from a firm trend on bourses around the globe.

The spark for the rally came from the decision of the Bank of Japan (BoJ) to keep interest rates unchanged at 0.5 per cent. BoJ Governor Toshihiko Fukui stuck to the previous comments by saying, the bank would adjust rates gradually. Markets also reacted positively to the fact that the US Federal Reserve policy-setting meeting dropped an explicit reference to the possibility of taking rates higher in its statement, sparking talk abut the next move of a cut. The Fed left interest rates unchanged at 5.25 per cent.

In an important development, Securities and Exchange Board of India authorised all institutional investors, domestic and foreign, to sell short in the cash segment of the capital market. Though naked short-selling will not be allowed, the investors will have to fulfil their delivery obligation by borrowing shares through the securities lending and borrowing (SLB) mechanism. The SLB mechanism can be implemented through a clearing corporation or the custodian route, where investors can lend their shares to those who sold short.

While the current rally would have definitely soothed some frayed nerves, it however, should not be construed as something that will continue to happen week after week. Though the long-term growth story is intact, valuations from a medium-term perspective still look stretched for quite a few sectors and investors could do well to tone down their expectations a bit. It is not year after year that the indices would given returns in the region of 40 per cent to 50 per cent. A more realistic expectations should be somewhere in the region of 12 per cent to 15 per cent and that too in well managed companies with a strong track record.

Advanta India-IPO

A subsidiary of United Phosphorus (UPL), Advanta India has developed a global portfolio of wide range of hybrid seed varieties. Advanta India has three international subsidiaries in Australia, Thailand and Argentina.

Advanta Holdings B.V., a wholly owned subsidiary of Advanta India, acquired these subsidiaries from Bio-Win at euro 95 million, or around Rs 556.52 crore, on March 30, 2006. Of this, Rs 227.44 crore is still outstanding. Advanta India will be using the IPO funds to pay off this liability.

Advanta India has well-developed brands and distribution network in the markets where it operates.

Advanta India operates in a seasonal industry and is exposed to risks related to weather, disease and pests.

Valuation: Advanta India has set a price band of Rs 600 to Rs 650 per equity share of Rs 10 each, translating into a PE of 30.1 on the lower price band and 32.6 on the higher side of the price band. Investors may avoid the issue as the PE that the company is looking to sell its IPO is very stiff given the fact that the hybrid seeds is not a high growth business and is also prone to unpredictable fluctuations.

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Tax Advice
TDS allowable as deduction against total tax payable

by S.C. Vasudeva

Q: I am holder of Rs 8 lakh 8 per cent RBI Cumulative Taxable Bonds. I am showing the accrued interest on these bonds every year in income tax return. I feel that under the rules the SBI authorities while making payment of the matured amount would deduct TDS, which would be a very high amount. I shall have to claim refund of this amount because the tax due has already been paid by me on the accrued interest. Kindly advise as to whether there is any way to direct the authorities to deduct less tax or no tax on this account. In addition to these bonds my income is taxable and TDS is also deducted on that income. — Indu Bansal, Panchkula

A: The fact that you have already shown the accrued interest in your income tax return cannot be a reason for not deducting tax at source by the SBI. In accordance with the provisions of section 199 of the Act, the tax deducted at source is allowable as deduction against the total tax payable in the year in which such income on which tax has been deducted is assessable. You may not have any difficulty in convincing the assessing officer as part of the income would still be shown in the year in which the cumulative interest is received as also that the tax has already been paid for the other part of the income. In case the assessing officer does not allow the credit for the full TDS, you may have to revise the return of the preceding year if so permissible under law. In case the revision of return is not possible on account of the expiry of time limit, you may have to seek relief under section 264 of the Act by filing a revision petition before the commissioner of income tax.

Threshold limit

Q: I am a senior citizen. My income from all sources is much below the threshold limit i.e. Rs 1,85,000. Please advise if it is mandatory to file return. Details are: Annual pension: Rs 78,000, Interest from bank deposits: Rs 82,000, Total: Rs 1,60,000. — Lajpat Rai, Ludhiana

A: In accordance with the provisions of section 139 of the Income Tax Act 1961 (the Act), in case, the total income of an individual or HUF is below the maximum amount on which income tax is not chargeable under the provisions of the Act, such individual or HUF is not required to file an income tax return. On the basis of particulars given in the query you are not required to file return of income as your income is below the maximum amount on which income tax is not chargeable under the provisions of the Act.

TDS from salary

Q: I am an employee of a private company and my total annual income tax deduction amounts to Rs 1,20,000 (approx), which is deducted every month from my salary and remitted to ITO (as TDS) by my employer. Am I required to pay advance tax or not since my income tax for the full year is more than Rs 5,000. In have no other income except salary and bank interest.

I am living in my own house. If I am transferred out and give the house on rent, do I have to pay advance tax on account of rental income? 

— Ram Singh, Jalandhar

A: You have indicated in your query that you have no other income except salary and bank interest. However, you have not indicated the amount of bank interest. Further, it is also not evident from the query whether you have informed the principal officer of the company (who is authorised to deduct TDS from your salary) that such interest income be also included for the purposes of deduction of tax at source. In case, you have not done so, you will be liable to pay advance tax on your estimated total income for the year, which will comprise of salary and bank interest. While computing the advance tax, tax deductible at source will be taken into account and in case the net amount of tax after such adjustment exceeds Rs 5,000, you would be liable to pay the advance tax.

In case you let out your house you can avoid the payment of advance tax by informing the principal officer that your rental income should also form part of the total income so that tax at source can be deducted from such total income.

If you opt not to do so, the advance tax on the rental income as well as on the bank interest income will have to be paid on due dates.

I-T return

Q: I am a retired employee aged 71 years. My annual income exceeds Rs 1,85,000, including bank interest, senior citizen saving scheme interest and MIS interest. I am a handicapped person and getting rebate of Rs 50,000 under section 80(u) and my income comes to NIL after getting this rebate and as a result thereof, I submit my return every year as nil return.

Kindly let me know whether I can discontinue filing income tax return or not?

— Kewal Krishan Sanon, Patiala

A: In accordance with the newly introduced provisions of section 139 of the Act, every person, being an individual or HUF if his total income in respect of which he is assessable under the Act without giving effect to the provisions of Chapter VI-A of the Act exceeds the maximum amount which is not chargeable to income tax, is required to file his income tax return on or before the due date. Since you are claiming a deduction under section 80U of the Act, and your total income would be below taxable limit after claiming such deduction, you would be required to file return for the assessment year 2006-07 and onwards. 

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