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Bandra-Kurla Complex Case
Ambani siblings in yet another feud
Anil’s firm moves Bombay High Court
Mumbai, May 19
Yet another battle between Mukesh and Anil Ambani have reached the courts. Anil Ambani’s Reliance Communication and Infrastructure (RCIL), which lost out to Mukesh’s Reliance Industries Ltd (RIL) in a bid for a 75,000 sq. metre plot of land at the Bandra-Kurla complex (BKC) here, has moved the Bombay High Court against decision by the Mumbai Metropolitan Region Development Authority (MMRDA) to increase floor space index (FSI) from 2 to 4 on the entire BKC complex.

Microsoft buys aQuantive for $6 billion
Silicon Valley, May 19
Software giant Microsoft has announced the biggest acquisition in its history by buying digital marketing firm aQuantive for $6 billion in an all-cash deal.

Amendment to IT Act clips commissioners’ wings
Chandigarh, May 19
A major amendment to the Income Tax Act, 1961, has clipped the wings of the commissioners of income tax regarding registration of the NGOs, charitable and religious institutions for income tax exemption purposes.

Abolition of roaming charges under study
Tiruchirappalli, May 19
A proposal to abolish domestic roaming charges imposed by mobile phone service providers is being considered by the government, Union IT and communications minister A Raja said today.

Aviation Notes
Diplomatic immunity not required for spouses
According to aviation norms, Paramjit Kaur and 15 year-old Amarjit (not son of Paramjit) do not fall in the category of illegal immigrants.

Investor Guidance
Switchover from one MF scheme to another attracts capital gains tax
Q: I have a query related to switchover. If I start with equity fund growth option, stay for one month and then switch over entire amount to liquid fund growth option, will capital appreciation be taxed?



A model displays an outfit as part of the 2007/08 Chanel Cruise Show presented by Karl Lagerfeld at Santa Monica airport, California, late on Friday. — AFP

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Bandra-Kurla Complex Case
Ambani siblings in yet another feud
Anil’s firm moves Bombay High Court
Shiv Kumar
Tribune News Service

Mumbai, May 19
Yet another battle between Mukesh and Anil Ambani have reached the courts.
Anil Ambani’s Reliance Communication and Infrastructure (RCIL), which lost out to Mukesh’s Reliance Industries Ltd (RIL) in a bid for a 75,000 sq. metre plot of land at the Bandra-Kurla complex (BKC) here, has moved the Bombay High Court against decision by the Mumbai Metropolitan Region Development Authority (MMRDA) to increase floor space index (FSI) from 2 to 4 on the entire BKC complex.

In its plea, RCIL has contended that MMRDA has violated the terms of contract entered into by the agency with prospective bidders.

RIL paid a whopping Rs 1,104 crore for the plot in 2006. RCIL contended that the MMRDA had offered the land on a “fixed land use” basis under which no additional FSI would be granted to the developer. Originally, the FSI on the plot was 1.52.

In its petition, RCIL contended that benefits from the increased FSI would flow entirely to RIL and not to the state.

It is also contended that the plot would have fetched a higher price if the decision to increase the FSI was announced before the bidding began.

“All benefits emerging out of enhancement of land use pattern flow to RIL as lessees of the said plot of land. The MMRDA and the state government do not get any benefit proportionately compared to the benefits accruing to RIL. This results is unjust enrichment to RIL and action of the MMRDA and the state government is contrary to law, arbitrary and unreasonable, and an abuse of powers,” RCIL said in its petition.

RCIL has also filed a plea under the Right to Information Act seeking details on the Maharashtra government’s decision to increase the FSI. RCIL contended that increased FSI would enable the Mukesh Ambani group to construct extra built-up space to the tune of 1,85,000 sq mts worth Rs 7,700 crore.

Media reports said, the government’s decision to hike the FSI was granted based on a plea by RIL. The Mukesh Ambani company had requested for an increase FSI in order to construct additional built-up area.

The argument reportedly forwarded by RIL was that the adjoining Dharavi slum with its poor infrastructure had a higher FSI of 4.

Meanwhile, RIL has emerged as the sole bidder to construct one lakh square metres of parking space at the BKC. The two-storeyed parking space would accommodate 2,000 cars.

While RIL would have the rights for the space of 1,000 cars, the rest would be handed over to the MMRDA. RIL is planning its headquarters and a big convention centre at the BKC.

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Microsoft buys aQuantive for $6 billion

Silicon Valley, May 19
Software giant Microsoft has announced the biggest acquisition in its history by buying digital marketing firm aQuantive for $6 billion in an all-cash deal.

"The advertising industry is evolving and growing at an incredible pace, moving increasingly toward online and IP-served platforms, which dramatically increases the importance of software for this industry," Microsoft CEO Steve Ballmer said in a statement.

The Seattle-based agency is Microsoft's largest-ever purchase and came at a high cost to the software giant — a $66.50 per share offer that is 85 per cent higher than aQuantive's closing price on Thursday.

The purchase consolidates Microsoft's position in display ads that use sound and video, an area where the company still ranks ahead of Google, which dominates the market for ads linked to search terms.

The acquisition comes a day after WPP bought 24/7 Real Media in a deal that valued the group at $649 million. Earlier, Google snapped up DoubleClick for $3.1 billion and Yahoo acquired the RightMedia advertising exchange outright for $680 million.

The aQuantive acquisition enables Microsoft to strengthen relationships with advertisers, agencies and publishers by enhancing the company's advertising platforms and services beyond its current capabilities to serve MSN.

"It is a big bet on advertising monetisation for the long-term growth of the company and this is a significant step forward," president of Microsoft's platform and services division Kevin Johnson said in a statement. — Agencies

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Amendment to IT Act clips commissioners’ wings
Pradeep Sharma
Tribune News Service

Chandigarh, May 19
A major amendment to the Income Tax Act, 1961, has clipped the wings of the commissioners of income tax regarding registration of the NGOs, charitable and religious institutions for income tax exemption purposes.

The Finance Act, 2007, has removed the powers vested with the commissioners for the condonation of delay by stipulatiing that for any application made on or after June 1, 2007, the registration will be granted from the financial year in which the application is made and not the from retrospective effect, according to sources.

In order to avail the benefit of condonation of delay for the earlier years, any trust or institution, which had not filed its application within one year of its creation, may file such application before June 1. Application filed on or after June 1 will entitle the applicant to claim exemption of income from the financial year in which the application is made and not for the earlier years, according to chief commissioner of income tax RS Mathoda.

The amendment in the section 12-A of the Income Tax Act will have a major effect on the NGOs, charitable and religious trusts, which claim or intend to claim exemption under section 11 and 12 of the act, the sources said.

It will set the anomalies governing the income tax exemption to trusts and charitable institutions right as the earlier provisions were allegedly misused by certain trustees, Prem Inder Rattan, general secretary of the Chandigarh Income Tax Bar Association, says.

Registration under section 12-A of the IT Act is a precondition for availing exemption of income under sections 11 and 12 by a charitable trust.

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Abolition of roaming charges under study

Tiruchirappalli, May 19
A proposal to abolish domestic roaming charges imposed by mobile phone service providers is being considered by the government, Union IT and communications minister A Raja said today.

Talking to reporters at the airport here, Raja said discussions were still on in this regard in line with a commitment by his predecessor Dayanidhi Maran.

Maran had promised to waive roaming charges as a "gift to the nation" on June 3, coinciding with the birthday of his granduncle and Tamil Nadu Chief Minister M Karunanidhi.

According to estimates, the move will collectively take away Rs 4,000 crore from various telecom operators.

Asked about the chances of bringing telephone services in Chennai under the Mahanagar Telephone Nigam Limited (MTNL), Raja said decisions on such policy matters could not be taken in a haste. — PTI

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Aviation Notes
Diplomatic immunity not required for spouses
by K.R. Wadhwaney

According to aviation norms, Paramjit Kaur and 15 year-old Amarjit (not son of Paramjit) do not fall in the category of illegal immigrants.

Two passengers on their way to Toronto from Delhi fell in the category of ‘stowaways’.

In accordance to aviation yardstick, an illegal immigrant is one who is carrying documents (ticket, passport and visa) in his /her name but some of these documents are fake or false.

In the case of Paramjit and Amarjit, they were not having any document in their names when they were apprehended at the Indira Gandhi International Airport on April 18, 2007.

Paramjit had ticket, passport and visa of Sharda Ben while Amarjit had documents standing in the name of Amit, son of Babubhai Katara, a Gujarat MP.

The hold-in area, according to commanders, is a ‘penalty box’. Here Paramjit, half asleep and dazed, spelt out her real name and this lapse proved the undoing of both her and Amarjit.

The photos on passports did not remotely resemble Paramjit and Amarjit.

If the detection had not taken place on ground but in mid-air, they would have been deported from the first port of disembarkation.

On arrival in Delhi, they might have been questioned by security but that was about all. The original airline would have been fined for carrying ‘stowaways’.

Now, why did Katara choose Toronto (Canada) and not New York (the USA) since the two ‘defaulting’ passengers had to travel to the USA?

The inquiries reveal that in US passenger’s details on passport carry his/her photo. This device has not become operative in Canada yet.

According to rules, all MPs, judges (Supreme Court and high courts) and bureaucrats of the status of joint secretary and above are granted diplomatic passports. This may be explained. But why is this facility extended to their spouses?

When, in mid 80s, senior police officers were hauled up for smuggling from entourage of the then Prime Minister Indira Gandhi, all baggage rules under went sea-changes.

Similarly, diplomatic privileges to politicians and bureaucrats and to their spouses need re-thinking.

According to senior customs officials, much of the smuggling and violations of human traffickings are undertaken by important persons.

“But for immunity rules, many politicians and diplomats would have been in jails,” they said.

The bottom-line is : “Law is an ass”. As long as there are loop-holes, cunning people, whether politicians, bureaucrats or diplomats, will reap harvest of advantages.

Tighten rules. There is no need for diplomatic immunity to spouses.

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Investor Guidance
Switchover from one MF scheme to another attracts capital gains tax
by A.N. Shanbhag

Q: I have a query related to switchover. If I start with equity fund growth option, stay for one month and then switch over entire amount to liquid fund growth option, will capital appreciation be taxed? I have not redeemed/withdrawn money. I am only switching from one scheme to another.

— Shubhang

A: Switchover from one scheme of a mutual fund to another scheme is treated as transfer for the purpose of taxation and is subject to capital gains. In the above case, since you are switching from equity-oriented fund within one month, you will be liable for short-term capital gains tax @10 per cent plus surcharge if applicable and education cess.

Interest on GPF, PPF

Q: In the new budget (year 2007-08), what will the rate of interest on GPF, PPF?

— Rajeev Kapur

A: The rate of interest on PPF remains unchanged at 8 per cent per annum while, that of GPF is not decided by the budget or the finance act. The related committee takes decision on year to year basis.

Refund of TDS

Q: I am as SAS agent of post offices. Now, TDS is being deducted from my commission, which I earn on F.D. account. I do not have a PAN number. Is this TDS refundable? If so, what procedure should I adopt? Will I have to file IT-return every year?

— Anita

A: The TDS is not the same as your tax liability. This liability is to be computed on the basis of income tax rates, which depend upon your income and exemptions, deductions and rebates you can claim. If your tax liability is less than TDS, the only practical way to get refund is to file IT-returns.

You need a PAN for filing returns. If your total income is less than tax threshold of Rs 1,35,000 (Rs 1,45,000 for 2007-08) you do not need PAN. Post office will issue a TDS certificate when you apply for it.

Under Section 139A(5B), tax deductor is required to quote PAN of the person to whom any sum/income/amount has been paid after deducting tax at source.

Under the second proviso to Section 139A(5B), requirement of intimating and quoting PAN will not apply in case of a person whose total income is not chargeable to income tax or who is not required to obtain a PAN, if such person furnishes a declaration in Form-197A.

Fixed income MFs

Q: Recently, several mutual funds have introduced FMPs (fixed maturity plans). Even from tax saving point of view, FMPs seem a good investment. But, the data taken for FMPs is for 2006-2007, when the market was on upward swing. Now for the last 3 to 4 months, the market is unpredictable. Can we expect a return of over 9.5 per cent from any FMPs ? What should be the criteria of selecting such FMPs that can give a return not less than 9 pc?

— Darshan

A: FMPs are fixed income mutual funds. They have nothing to do with the sensex movements, but only with interest rate movements. You can look upon this instrument as a fixed deposit offered by mutual funds. Before investing, the mutual funds indicate the yield that investor can expect from the scheme.

The word used is “indicates” and not “assures” as SEBI rules do not allow mutual funds to assure returns. In any case, in an FMP investors would know beforehand what the return is going to be. Since last four months, yields have increased marginally as interest rates are on an upswing. To choose an FMP, you should do what you would do while choosing a fixed deposit, i.e. invest with a fund house with pedigree and reputation.

Short-term FMPs

Q: I wish to invest in short term (about 3 months) fixed maturity plans (FMPs). There is both dividend and growth options in such schemes. From the tax point of view, is there any difference in the various options in such schemes? Which will give better net return? I am a senior citizen with about 5 lakh of taxable income at present.

— Vasudev

A: Dividend is tax-free in your hands but suffers from Dividend Distribution Tax (DDT) before it is paid to you. In the case of growth option, you will have to pay tax on the growth portion at the rate of 30.9 per cent, which is the rate applicable to you on short-term capital gains. DDT rate applicable to FMPs is 14.165 per cent. Even in an unlikely event of the underlying plan being classified as liquid fund, the DDT will be 28.325 per cent. In either case, you have tax arbitrage. So, for short-term FMPs (less than one year), always choose the dividend option.

The authors may be contacted at wonderlandconsultants@yahoo.com

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