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THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE
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B U S I N E S S

Satyam Saga
Rajus sent to judicial custody till Jan 23
Hyderabad, January 10
The fallen IT icon B Ramalinga Raju was today sent to jail, three days after he confessed to committing a massive fraud in Satyam Computers, which he founded 21 years ago.

Satyam CFO arrested
Hyderabad, January 10
Satyam Computers chief financial officer Vadlamani Srinivas was taken into custody by the Andhra police here tonight.

Govt to cut fuel prices
Mumbai, January 10
The government will reduce the prices of petrol, diesel and cooking gas, says Union Petroleum Minister Murli Deora. Speaking to reporters here today, Deora said petrol prices would go down by Rs 5 while diesel would be cheaper by Rs 3. LPG would be cheaper by about Rs 25, Deora said.


EARLIER STORIES



Panasonic's SDR-SW21 underwater camcorder is on display submerged in water in a fish tank, at the 2009 Consumer Electronics Show in Las Vegas, Nevada, on Saturday. The rugged camcorder functions underwater as deep as 6.5 feet and can withstand a drop from as high as four feet.
Panasonic's SDR-SW21 underwater camcorder is on display submerged in water in a fish tank, at the 2009 Consumer Electronics Show in Las Vegas, Nevada, on Saturday. The rugged camcorder functions underwater as deep as 6.5 feet and can withstand a drop from as high as four feet. — AFP

Dec job loss in US: 5.24 lakh 
Washington, January 10
US employers shed a massive 524,000 jobs in December, pushing unemployment to a 16-year high of 7.2 per cent, according to data yesterday suggesting the worst recession in decades may be deepening. The ailing economy shed 2.6 million jobs over the course of 2008, the most since 1945, the US Labor Department said in its monthly update.

Central Bank cuts lending rates
Mumbai: Central Bank of India on Saturday cut its lending rates by 0.75 per cent effective from Monday. Now, the Bank's benchmark prime lending rate stands at 12.5  per cent.

Aviation Notes
IGIA security not ‘foolproof’
The Indira Gandhi International Airport (IGIA) does not appear to be 'trouble free' from the nasty happenings. The possibility of heinous crimes like 'terror tremor' continues to lurk because many weak zones remain unplugged. Many 'unauthorised', 'unwanted' persons continue to loiter about even in sensitive and forbidden areas by flashing passes.

Investor Guidance
Gift by daughter to father is tax-free
Q: I am a retired person, 69 years of age with no source of income except interest on a few small FDs. Can my daughter give me a gift or an interest free loan? Could you kindly explain the exact procedure which is acceptable to the tax authorities and her employer.







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Satyam Saga
Rajus sent to judicial custody till Jan 23
Suresh Dharur
Tribune News Service

Hyderabad, January 10
The fallen IT icon B Ramalinga Raju was today sent to jail, three days after he confessed to committing a massive fraud in Satyam Computers, which he founded 21 years ago.

Raju and his brother Rama Raju, the disgraced managing director of the software giant, were produced before a local magistrate here, who remanded them to a two-week judicial custody till January 23.

Minutes later, they were shifted to Chanchalguda central jail amid tight security as the media captured the most painful images in the country’s corporate history.

The police also arrested the company’s chief finance officer V Srinivas from the city.

Earlier, the Raju brothers were subjected to a sustained interrogation by multiple agencies at Andhra Pradesh police headquarters. The teams of officials from the state CID, the economic offences wing of the union finance ministry and Registrar of Companies grilled Raju over the Rs 7,100 crore scandal in the country’s fourth largest software company.

Amid high drama, Raju, along with his brother, had surrendered before the state Director General of Police S S P Yadav at the latter’s office here last night.

Soon after, the police arrested them and registered cases under a string of IPC sections, including 420 (cheating), 120B (criminal conspiracy), 406 (criminal breach of trust), 468 (forgery) and 471 (using as genuine a forged document).

Sending shock waves across the country, 54-year-old Raju made a disgraceful exit as Satyam chairman, admitting to accounting manipulations over years and making stunning revelations of how the balance sheet was inflated to show more profits.

In between the grilling sessions, medical tests were conducted on Raju twice to ascertain his health condition. The Raju brothers spent the night at DGP’s office.

Raju was extensively grilled till 2 am today and the interrogation continued after breakfast and lasted till 4.30 pm, the police sources said.

The SEBI team was to interrogate him at 4 pm today but it could not be done as he was in police custody. The police sources said SEBI would need to file a separate application seeking permission to question him.

Later in the evening, CID sleuths took Raju brothers to the residence of 6th metropolitan magistrate at Judges Colony in Maredpally area. After examining the papers, the magistrate remanded them to judicial custody till January 23.

His blood pressure is fluctuating abnormally. The magistrate has directed the jail doctor to monitor his health closely and give him necessary treatment, Raju’s lawyer said.

After Raju brothers were taken to the Magistrate, the police top brass, including the DGP, met Chief Minister YS Rajashekar Reddy and briefed him about the interrogation. They informed that they would again apply for police custody of Ramalinga Raju on Monday.

Meanwhile, Raju’s lawyer said he would move a bail application on Monday.

In a parallel development, the SEBI officials gathered documents from Satyam offices in the city. They summoned Raju to appear before them for questioning. However, Raju’s lawyer S Bharath Kumar deposed before the SEBI panel on behalf of his client.

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Satyam CFO arrested

Hyderabad, January 10
Satyam Computers chief financial officer Vadlamani Srinivas was taken into custody by the Andhra police here tonight.

Srinivas, who resigned a day after the fraud came to light, was first picked up in the evening for questioning and was later formally placed under arrest, IG (CID) VSK Kaumudi said.

Srinivas has been arrested on the same charges that have been slapped on the Raju brothers - criminal conspiracy, cheating, use of forged documents, forgery and criminal breach of trust. He was picked up by the CID sleuths from Madhapur here and taken to the state police headquarters where the investigation team was grilling him. — PTI

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Govt to cut fuel prices
Tribune News Service

Mumbai, January 10
The government will reduce the prices of petrol, diesel and cooking gas, says Union Petroleum Minister Murli Deora.

Speaking to reporters here today, Deora said petrol prices would go down by Rs 5 while diesel would be cheaper by Rs 3. LPG would be cheaper by about Rs 25, Deora said.

He, however, did not specify when the price cut would come into effect. The minister said it could be brought about in about 10 to 15 days.

PTI adds: Oil companies have minimised the losses on petrol and diesel, as crude oil prices have lowered to $40 per barrel from its peak of $147 a barrel in July last year.

"From this quarter onwards, we expect the oil marketing companies to start making profits. But, if the crude oil price rises beyond $40 per barrel, then it (profit) will not happen," Deora added.

When asked about a reduction in kerosene prices, he said it was already available at the cheapest rate in India of Rs 9 per litre.

On December 6, the government had reduced prices of petrol and diesel by Rs 5 and Rs 2 per litre, respectively, as global crude prices hovered around four-year low.

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Dec job loss in US: 5.24 lakh 

Washington, January 10
US employers shed a massive 524,000 jobs in December, pushing unemployment to a 16-year high of 7.2 per cent, according to data yesterday suggesting the worst recession in decades may be deepening.

The ailing economy shed 2.6 million jobs over the course of 2008, the most since 1945, the US Labor Department said in its monthly update. Of those, 1.9 million were lost in the past four months.

The Labor Department also revised higher the number of job losses for the prior two months. The October figure was changed to show a loss of 423,000 jobs from 320,000 and November's data to a loss of 584,000 from 533,000.

The jobless rate, which is calculated on a separate household survey, climbed to 7.2 per cent from 6.8 per cent a month earlier, hitting the highest level since January 1993, the report showed.

The report, seen as perhaps the best indicator of economic momentum, "suggests that both the US economy and job market fell off a cliff" at the end of 2008, said Nariman Behravesh, chief economist at IHS Global Insight.

Behravesh said he expects "the jobs hemorrhage to continue through much of 2009" at a heavy pace and to ease if a large economic stimulus package can be enacted quickly.

"Nevertheless, the current pace of job losses means that the unemployment rate will rise into the 9.0 to 9.5 per cent range at a minimum before leveling off," Behravesh said.

Yet some economists said the report showed the pace of job losses may have peaked as companies retrench and cut as much as possible. — AFP

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Aviation Notes
IGIA security not ‘foolproof’
by K.R. Wadhwaney

The Indira Gandhi International Airport (IGIA) does not appear to be 'trouble free' from the nasty happenings. The possibility of heinous crimes like 'terror tremor' continues to lurk because many weak zones remain unplugged. Many 'unauthorised', 'unwanted' persons continue to loiter about even in sensitive and forbidden areas by flashing passes.

The overall functioning of the IGIA will show mark improvement if one agency is entrusted with the responsibility of the 'intelligence-safety-security' of men and machinery at the IGIA. The officials of other agencies like Bureau of Aviation Security, Delhi police, may have their 'unit heads' but they should be merged into one main body. The boss or trouble-shooter should be one, who should oversee functioning and operations of all units.

The concept of multiple agencies has failed. The idea of appointing 'chowkidar over chowkidar' has failed. The Home Ministry is now toeing the idea of the National Security Guards (NSGs) who, for their prompt commando duties, are free to get rooms and accommodation around the airport, but even this unit should function under the main security outfit.

As government has appointed Central Industrial Security Force (CISF) to guard IGIA and other international airports, it should be fully armed to check, supervise, monitor and maintain discipline at the airports. The majority of hotels are indeed privately managed. But the government should, from time to time, undertake inspections of their security functioning.

Even private houses/homes are guarded against heinous crimes and attacks by hoodlums. Why hotel managements should have been lax in security when they levy enormous tariffs. The terror struck because all three stumps — intelligence, security and hotels were left unguarded.

Rescheduling of flights

No fog, no disruptions of flights. This became a reality at the IGIA. There were no long spells of delays on certain days during the week because visibility was enough for pilots to operate flights. The fact has also emerged that the ILS facilities are not enough at IGIA for commanders to take risks and land.

Disturbed at the fog menace, some airlines altered the operation timings. Among them was Air India. It advanced timings. "We have advanced the departure timing of Delhi-New York non-stop flight from 12.30 a.m to 11.30 p.m. to avoid fog", said official of the National Aviation Company (NAC), adding: "this arrangement will continue until January 31, 2009".

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Investor Guidance
Gift by daughter to father is tax-free
by A.N. Shanbhag

Q: I am a retired person, 69 years of age with no source of income except interest on a few small FDs. Can my daughter give me a gift or an interest free loan? Could you kindly explain the exact procedure which is acceptable to the tax authorities and her employer. — C K Saksena

A: As per the Income Tax Act, any gift given by daughter to father would be fully tax-free. Note that there is no tax deduction on the gift per se. To put it differently, the gift will be made by your daughter from her post tax income. However, the gift transaction will be tax-free for the both of you. As far as the procedure is concerned, a simple note from your daughter stating that she is giving you this gift out of her natural love and affection for her father and a reply from you accepting the same would suffice. This note should be dated (as on the day of the gift) and kept on record. Her employer has no locus standi on how she applies her post tax income and hence their acceptance to the gift is not relevant.

Income of a minor

Q: I am earning member in my family falling into the highest tax bracket.

My wife works but comes under a lesser bracket.

My daughter is 12-year-old, and according to my auditor any investments made in her name, income received there on is taxable in my hands. Is he right? He further states that income from investments made in name of minor is taxable in the parents’ hands who is in the highest bracket? — Darius Kabrajee

A: All income earned by a minor child is taxed in the hands of the parent who has an Indian income more than that of the other, unless the child has a physical or mental handicap or the child earns an income by virtue of its special skills or knowledge. There is a paltry exemption of Rs 1,500 per year per child (more, the merrier). Once the child becomes a major, the amount that was being clubbed when he was a minor, ceases to be clubbed.

In the case of the spouse, the income on gifted corpus is clubbable. There is a slick advantage in giving gifts to spouse. Once you have paid the tax on this first-stage interest, it becomes her asset. Any income thereon is not clubbed in the hands of the donor. It is taxed in the hands of the donee.

For clarity, suppose you have given a gift of Rs 10 lakh and she has invested this amount in RBI Savings Bonds. She will earn interest of Rs 80,000 and you have to include this amount in your income chargeable to tax and pay tax thereon. Suppose she invests this amount of Rs 80,000 in additional Bonds. She will earn interest of Rs 80,000 on the original corpus you have gifted and also Rs 6,400 on the investment of her interest of Rs 80,000. You are required to continue to pay tax on Rs 80,000 but not on Rs 6,400. In other words, you pay tax on the interest earned on the original corpus gifted to her, but the interest on interest is taxable in her hands.

There is no clubbing provision in respect of gifts to major children.

Exemption on meal vouchers

Q: 1) I get Rs.2,200 worth Sodexo Meal vouchers per month. Ours is five days week office. How much tax exemption can I get? Will it be the full amount or @Rs 50/- per day i.e. Rs 1,100 per month?

2) If I work on holiday or sit late in office and make arrangement for food and pay myself and my employer later on reimburses, will it be taxable or not? — Lokesh Dhureja

A: As per Sec. 115WB (2), where the employer is a company, a firm, an AOP or BOI, a local authority and an artificial judicial person any expenditure on or payment for food or beverages provided by the employer to his employees in office or factory is not considered as perk. Neither the employer pays FBT nor does the employee pay any income tax thereon. Same is the case for expenditure on or payment through paid vouchers which are not transferable and usable only at eating joints or outlets.

However, there are some employers such as an individual, HUF, any charitable trust or institution registered u/s 12AA political party who are not liable to pay this FBT. In their case:

The value of free food and non-alcoholic beverages provided by such employer, shall be the expenditure incurred by the employer, unless these are provided during working hours at office premises or through paid non-transferable vouchers usable only at eating joints, up to Rs. 50 per meal or tea or snacks. Such a facility provided during working hours in a remote area or an off-shore installation has no limit.

Any excess paid over the limits specified above will get taxed in the hands of the employee.

The authors may be contacted at wonderlandconsultants@yahoo.com

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