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Maytas Deal
Satyam's board was divided
Hyderabad, January 17
The unanimous approval of Satyam's erstwhile board to the Maytas deal was not unanimous in letter and spirit, the minutes of the infamous December 16 meeting revealed today.

Rajus sent to police custody
Hyderabad, January 17
After spending a week in jail, the disgraced former chairman of Satyam Computers B Ramalinga Raju will now be sent to police custody for interrogation in connection with the Rs 7,000-crore fraud in the country’s fourth largest software company.

Meltdown hits mega projects in Haryana
Chandigarh, January 17
The economic slowdown has shattered the ‘realty dreams’ of Haryana. The state, which till recently, was priding itself as ‘the investment destination’, is now facing the recession blues, with most of the investors now pulling out from the SEZ projects in the state.


EARLIER STORIES



Vehicles are stuck in a heavy traffic in downtown Beijing on Saturday. Growth in the auto sector slowed to 6.7 per cent last year, the lowest level in a decade, according to reports in the state media, a dramatic slowdown from 2007 when the industry enjoyed growth of 21.8 per cent.
Vehicles are stuck in a heavy traffic in downtown Beijing on Saturday. Growth in the auto sector slowed to 6.7 per cent last year, the lowest level in a decade, according to reports in the state media, a dramatic slowdown from 2007 when the industry enjoyed growth of 21.8 per cent. — AFP

Aviation Notes
Strengthen flight inspection directorate
The Ministry of Civil Aviation is largely to blame for drastic fall in air safety norms in the country. It sadly promotes ad hocism in the vital and sensitive area of civil aviation in which a slight lack of vigilance and discipline can play havoc with human lives and sophisticated, costly machinery.

Investor Guidance
Cash gift up to Rs 50,000 exempted
Q: One of our friends passed away and we would like to contribute some money to his family/wife for the welfare of his children. Please let us know what's the best way to do it and avoid any taxes associated with it. We were thinking to transfer money directly to his wife's account and ask her to convert that to fixed deposit and receive income every month. I'm not sure that's the only way. Any help would be appreciated.





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Maytas Deal
Satyam's board was divided

Fraud blot on India Inc: PM

Mumbai: Describing the Satyam episode as a “blot” on India’s corporate image, Prime Minister Manmohan Singh today said the government is determined to get to the bottom of the fraud and punish the guilty.

Asking the industry to prevent fraudulent activities, he said India Inc should come out stronger from the Satyam fraud by keeping a close watch on their systems.

Hyderabad, January 17
The unanimous approval of Satyam's erstwhile board to the Maytas deal was not unanimous in letter and spirit, the minutes of the infamous December 16 meeting revealed today.

While the board had 'unanimously' passed the resolution for the $1.6 billion acquisition of two Maytas firms, run by Satyam founder Ramalinga Raju's family, many of the five independent directors raised concerns over the deal.

The concerns related to the valuation, actual benefits to the shareholders being a related party transaction and assurance about board being used as a "rubber stamp" and the company moving away from core business of IT.

Even after the passage of the resolution, the board members asked the company to make sure that compliance was ensured to their comments and proper justification was provided in case the actual value of the acquisition target turned out to be below what was told to them.

The minutes of the board meeting, held on December 16 and chaired by M Rammohan Rao, says that "without prejudice to the unanimous approval by the board members of the above resolution (acquisition of Maytas Properties), board members further reiterated that compliance shall be ensured for the comments made by all directors as deliberated and discussed during this meeting...

"...particularly that proper justification be provided to the board members in the event the valuation of Maytas Properties is significantly higher than the aggregate of the actual value of completed projects, current market realisation value of the work-in-progress and the basic market value notified by the state government for registration of lands awaiting development."

The board had approved an investment of up to Rs 6,410 crore towards acquiring Maytas Properties through various instruments, "as may be valued by the company in consultation with bankers, consultants and other intermediaries, pursuant to the applicable statutory and regulatory requirements." — PTI

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Rajus sent to police custody
Tribune News Service

Hyderabad, January 17
After spending a week in jail, the disgraced former chairman of Satyam Computers B Ramalinga Raju will now be sent to police custody for interrogation in connection with the Rs 7,000-crore fraud in the country’s fourth largest software company.

A local court here today ordered that Raju be sent to police custody for four days to enable the CID sleuths to question him.

Based on a petition by CID seeking police custody, the sixth additional metropolitan magistrate issued the order granting police custody of Raju, his brother and former managing director and former chief financial officer V Srinivas.

All three are presently lodged in Chanchalguda central jail here following their arrest on January 9. The police custody will be applicable from January 18 to, the court said.

The three tainted corporate bigwigs would be produced before the court at 10 am on January

. Raju’s lawyer S Bharat Kumar said he would file a revision petition in high court challenging the order.

The court has posted for January 19 the hearing on bail petition by Raju and another petition by market regulator SEBI’s petition seeking permission to question him while in judicial custody.

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Meltdown hits mega projects in Haryana
Ruchika M. Khanna
Tribune News Service

Chandigarh, January 17
The economic slowdown has shattered the ‘realty dreams’ of Haryana. The state, which till recently, was priding itself as ‘the investment destination’, is now facing the recession blues, with most of the investors now pulling out from the SEZ projects in the state.

Real estate majors — Unitech and DLF — have already conveyed to the state government that they will not be able to finish their projects on time. Unitech had proposed to set up a 10,000-acre SEZ at Kundli on the KMP Expressway. DLF had proposed to set up two SEZs — a 3,000-acre SEZ at Ambala and 12,500-acre at Gurgaon. While Unitech officials have already conveyed their inability to go ahead with the project, DLF, too, has said that it has been unable to acquire any land for the project.

The Sabeer Bhatia-promoted Nanocity, too, is being delayed because the company has not been able to acquire land for its project at Panchkula. Though the company had signed up with Parasvnath Developers by divesting its stake in the project, the real estate developer has not been able to acquire land for the project, though the due diligence for almost 500 acres has been done.

Another major project, European Technology Park, has been delayed owing to a clearance from the Supreme Court.

Till date, the state has received 94 proposals for setting up special economic zones (SEZs), which would translate into an investment of Rs 2,00,000 crore. Top officials in the state government admit that given today’s economic scenario, an overwhelming majority of these projects are unlikely to see the light of day soon. No wonder that the jittery Haryana government is now closely observing the situation and is regularly reviewing all these projects.

M L Tayal, principal secretary to Chief Minister, Haryana, said this could be attributed to the economic slowdown. “When recession has set in, SEZs, which are basically projects to promote manufacturing, have taken a hit. Haryana is not insulated from the overall economic state of affairs. None of our projects are delayed due to land acquisition problems, as the state has one of the best land acquisition policies in the country," he said.

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Aviation Notes
Strengthen flight inspection directorate
by K.R. Wadhwaney

The Ministry of Civil Aviation is largely to blame for drastic fall in air safety norms in the country. It sadly promotes ad hocism in the vital and sensitive area of civil aviation in which a slight lack of vigilance and discipline can play havoc with human lives and sophisticated, costly machinery.

Despite vociferous protests, the ministry refused to recognise the merits and sills of officials slogging in the directorate-general of civil aviation (DGCA) for years. It kept granting extensions to the DGCA, who had already attained his super-annuation. Uncertain of his future, he did not take decisions in vital areas like flight inspection until new IAS-cadre DG, Nasim Zaidi, took over recently. The ball is now moving but at a snail's pace.

The scenario has, however, nose-dived to such abysmal level that the Indian air safety has been bracketed with Uganda. Considered as ‘consistently inconsistent’ in adhering to vital safety norms, the US Federal Aviation Adminsitration (US-FAA) is seriously contemplating in black-balling India. If such an eventuality happens, Indian international operations, particularly to the US, will be considerably affected.

Capt A.Ranganathan, an experienced aviation expert, says, "Lack of trained ground control manpower, insufficient screening of pilots and inadequate safety standards have led to several runway overruns and runway confusions in the last year and a half". He asks: "Is the DGCA waiting for a disaster before deciding to act?"

The ministry does not question FAA's threat but it is just wanting time to set its house in order, which, according to analysts, is in peril. The new DG Zaidi, just back from deputation in the International Civil Aviation Organisation (ICAO), is reportedly using his contacts to help India emerge out of the black cloud, hovering around Indian skies.

The recommendation of downgrading India from category one to two was made after FAA team had made on-the-spot investigations at Delhi and other international centres. One does not know whether the FAA's threat is genuine or a mere arm-twisting exercise to 'let the uncertainty exist in Indian skies'. The fact is that the safety parameters have fallen alarmingly low. This is mainly because the apex body is yet to show its teeth to erring pilots and ground operators.

The first and foremost, according to analysts, is to strengthen Flight Inspection Directorate (FID). Some private pilots are said to have the department but the base should be much wider and stronger so that violations in air and on ground are reduced. The DGCA is a regulatory body and it should see to it that discipline is maintained by pilots.

The analysts firmly believe that Indian civil aviation will continue to occupy its pride of place if the FID fixed as it used to function about a decade ago.

There is a proposal to have a heliport at the Indira Gandhi International Airport (IGIA).

The aviation analysts question the proposal on the ground that the IGIA was already very crowded and congested, why make it worse? The heliport, according to them, will increase VIP and political traffic and it will cause further confusion in the already confused arena.

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Investor Guidance
Cash gift up to Rs 50,000 exempted
by A.N. Shanbhag

Q: One of our friends passed away and we would like to contribute some money to his family/wife for the welfare of his children. Please let us know what's the best way to do it and avoid any taxes associated with it. We were thinking to transfer money directly to his wife's account and ask her to convert that to fixed deposit and receive income every month. I'm not sure that's the only way. Any help would be appreciated. — David S

A: Where any sum of money exceeding Rs. 50,000 is received without consideration by an individual or an HUF from any person, the whole of such sum will be charged to income tax of the recipient under the head, Income from Other Sources.

Assuming that your friend’s wife does not have any income, you can give a gift of Rs 1,80,000 to her without attracting any tax liability in her hands.

Note that the phrase any sum of money suggests that the new provisions are applicable to cash gifts only and not other assets such as immovable property or jewellery, Bank FD, shares, etc. In other words, such other assets gifted even by a stranger will be free from tax.

Long-term capital gains

Q: As per the income tax law, long-term capital gains (LTCG) tax is exempt u/s 54EC if the amount is invested within 6 months in infrastructure-related Bonds of NHAI or REC, and the ceiling on this investment is Rs 50 lakh per financial year.

My query is related to this last aspect. Suppose an LTCG of say, Rs 70 lakh is made in the month of January 2009. Can Rs 50 lakh be invested u/s 54EC in the current financial year before 31st March 2009 and the remaining Rs 20 lakh in the next financial year, i.e. after 1st April 2009, but before 31st May 2009 (total investment of 70 lakh within 6 months of making the LTCG, but spread over two financial years). In this manner can one save LTCG tax on the entire sum of Rs 70 lakh? I am sure your guidance in this respect could be of interest to many of your readers. — C. Kapadia

A: Your understanding is perfect. The ceiling on the investment applies to the financial year. Therefore, you can save the entire Rs 70 lakh of capital gains by investing over two successive financial years

IT return

Q: My husband gets his form 16 with tax deductions from his company. We attach the same with Saral form and handover to the I.T. dept. through such a service provider.

Since 2/3 years, we have built our bank FD portfolio. We have TDS certificates and have attached the same for the year 2004-2005.

For 2005-2006 we were unable to locate the TDS certificates as my husband shifted from Pune. We want to be clear on our books. Please guide how do we proceed as we have TDS certificates for 06-07 and the 07-08 will be recd in May 08 which we want to attach with the Saral form. — Vanita Jhamb

A: Notification no. S.O. 752 (Ee) dt 28-3-08 has introduced 8 different ITR Forms which have to be used by assessees. The change is effective for and from FY 07-08. These do not require any attachments, including TDS certificates. Only the relevant information is to be filled at appropriate places. Saral stands deleted.

For individuals having Income from Salary & Interest ITR-1 is required to be used. The returns filed late does not elicit TDS refund. Note that the last date for filing returns for FY 08-09 is 31.7.09.

Insurance proceeds

Q: In the case of single premium insurance plans, I am told that in some cases the maturity proceeds could be taxable. Can you throw some more light on the tax provisions that are applicable? Most agents or even brochures are silent on this point. — Manoj

A: Though it is generally believed that insurance policy proceeds are free of tax, as per Sec. 10(10D), if the premium payable on any insurance plan in any year exceeds 20% of the sum assured, the proceeds cease to be exempt and instead will be fully taxable. In the case of case of single premium plans, check the percentage of the premium to the sum assured. If the same is more than 20%, then any proceeds (except on death of the policy holder) would be taxable.

The authors may be contacted at wonderlandconsultants@yahoo.com

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