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THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS
B U S I N E S S

Satyam to invite takeover bids
Hyderabad, February 21
Satyam's new board today decided to invite bids from strategic investors to steer the company and fire its statutory auditor Price Waterhouse, which failed to detect a massive accounting fraud in the IT giant.

Raju’s custody extended till March 7
Hyderabad, February 21
The CBI has taken over the investigation into the multi-crore fraud in Satyam Computers.

Banks go slow on ATMs’ expansion
Chandigarh, February 21
The high installation and running cost for ATMs and doing away with fees for use of ATMs from the next fiscal has hit the expansion plans of various banks for opening of new ATMs.

Investor Guidance
2nd home loan: No cap on rebate on interest payable
Q: I have gone through some past Q&As in this column. At one place, u/s 24 you have mentioned that if an individual takes a loan on a second house, the entire interest is eligible for tax deduction without any limitation.



EARLIER STORIES



Aviation Notes
Airlines’ losses on the rise
The woes of civil aviation continues to multiply. The physical health of most of the airlines is very feeble. The losses are mounting. Analysts predict that the cumulative losses may even break the Rs 4,000-crore barrier before the fiscal 2009-10 ends.





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Satyam to invite takeover bids

Hyderabad, February 21
Satyam's new board today decided to invite bids from strategic investors to steer the company and fire its statutory auditor Price Waterhouse, which failed to detect a massive accounting fraud in the IT giant.

The decision of the government-appointed board will allow suitors to make formal offers to acquire Satyam, whose books, according to its founder B Ramalinga Raju, was fudged for many years.

Engineering giant Larsen and Toubro has acquired over 12 per cent stake in Satyam through open market transactions, while B K Modi-led Spice Corp has said it was interested in acquiring a controlling 51 per cent stake in the IT major — ranked the fourth largest before the fraud came to light.

The Company Law Board on Thursday gave its nod for sale of a minimum 26 per cent stake in Satyam.

A statement from Satyam said the board, chaired by Kiran Karnik, also recommended to the government the removal of auditor Price Waterhouse and appointment of a new bookkeeper.

PW's partners S Gopalakrishnan and Talluri Srinivas, who were handling the Satyam account, are currently in judicial custody awaiting trial.

The statement also said Satyam has received new orders worth $250 million in the past seven weeks.

"The indomitable spirit of Satyamites has helped us to win new purchase orders and work extensions totaling to over $250 million since January 7, 2009. The recent successes include a single order of $50 million," Satyam's CEO A S Murty said in the statement.

Board member Deepak Parekh said the board today approved the procedure to be followed for inviting a strategic investor and decided to seek regulatory approvals early next week.

Earlier, capital market regulator SEBI had relaxed the takeover regulations to facilitate sale of troubled companies such as Satyam. — PTI

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Raju’s custody extended till March 7
Suresh Dharur
Tribune News Service

Hyderabad, February 21
The CBI has taken over the investigation into the multi-crore fraud in Satyam Computers.

A 16-member CBI team, headed by DIG V V Lakshminarayana, visited Andhra Pradesh police headquarters here today and held discussions with the officials of the state CID which was probing the scam so far.

“We have briefed about the status of the investigation and handed over to the CBI team all evidence gathered so far,” the Inspector General of CID (Economic Offenses Wing) V S K Kaumudi said.

The CBI has filed an FIR in the designated court here for CBI cases against former chairman of Satyam B Ramalinga Raju, company directors, auditors and others. Raju had made a disgraceful exit on January 9 after confessing to a massive Rs 7,200-crore accounting fraud in the software giant.

In its probe, the CBI will be assisted by officials of Income-Tax Department, Registrar of Companies, Securities and Exchange Board of India (SEBI), Serious Fraud Investigation Office (SFIO) and the Stamps and Registration Department of the state government. They will also be assisted by representatives of Institute of Chartered Accountants of India and Institute of Cost and Works Accountants of India.

Meanwhile, the officials of the Income Tax Department today questioned Raju in Chanchalguda jail and recorded his statement.

In a related development, a local court extended by two weeks the judicial remand of Raju, his brother and former managing director Rama Rau, former chief financial officer V Srinivas and two auditors of Pricewaterhouse S Gopalakrishnan and T Srinivas.

All accused are lodged in Chanchalguda prison here. On completion of their judial remand term today, the sixth chief additional metropolitan magistrate Ramakrishna extended their custody till March 7.

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Banks go slow on ATMs’ expansion
Ruchika M. Khanna
Tribune News Service

Chandigarh, February 21
The high installation and running cost for ATMs and doing away with fees for use of ATMs from the next fiscal has hit the expansion plans of various banks for opening of new ATMs.

Most of the public sector banks have decided not to go ahead with expansion of new ATMs in the urban areas. The expansion, if any, will be done only in the semi-urban and rural areas. Though bankers are unwilling to come on record on the issue, in private they agree that with inter-bank ATM usage getting free of cost from April 1, they are now trying to consolidate their ATMs in urban areas.

The high cost of installation of ATM (almost Rs 10 lakh) and the high operational cost of average Rs 30,000 in urban areas (on account of rent, electricity charges, transfer of money for filling off site ATMs; and, providing round-the-clock security) is the main reason why the banks have decided to go slow on their urban expansion. Other than centrally located places, where opening of new ATMs would help in brand building for banks, banks will desist from opening new ATMs in urban areas. Bankers, however, say that they have aggressive plans for ATM expansion, with two- thirds of the new ATMs to be installed in semi-urban and rural areas.

Y K Shukla, deputy general manager, Central Bank of India, said there was a high concentration of ATMs in urban areas. “But there is a huge demand for ATMs in the semi-urban and rural areas. Even the operational cost of ATMs in rural areas is reduced drastically because of low rents,” he said, adding that two-thirds of the 16 new ATMs for the bank will be opened in rural areas.

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Investor Guidance
2nd home loan: No cap on rebate on interest payable
by A.N. Shanbhag

Q: I have gone through some past Q&As in this column. At one place, u/s 24 you have mentioned that if an individual takes a loan on a second house, the entire interest is eligible for tax deduction without any limitation.

Let's say I have a second house, which is purchased by taking a second housing loan and this house is self-occupied property. Can I claim the entire interest amount paid under Section 24 apart from the interest paid under the first housing loan financed for the first house? What if I have not exhausted the full Rs 150, 000 for the first house?

— Venkatesh Hegde

A: Yes, your understanding is perfect.

If you have two houses, only one of them of your choice will be treated as self-occupied and the other as deemed let-out. This means that while the interest will be fully exempted, there will also be a notional rent figure that will be taxable, even if you use the premises for your own self and do not lease it out. In other words, on commercial properties and on houses given on rent or second houses, there is no limit on the deduction for interest paid or payable on housing loans.

Tax liability

Q: I am supposed to be laid off from the company at the end of the month. I am being paid three months salary and am supposed to get bonus (I will be getting Rs 1,54,000). At present my taxable income is Rs 2,00,000 and have made an investment of Rs. 58,000. Would you please advise me what will be the amount be charge to tax?

— Ashish

A: Even if the extra amount is being paid to you not for services rendered but as compensation due to the layoff, the amount will be fully taxable as salary. Hence your total income for the year would be Rs. 3,54,000. You can invest an extra amount of Rs. 42,000 under Sec. 80C so as to reduce your taxable income to Rs 2.54 lakh.

Tax on NSS withdrawals

Q: I had invested in NSS-87 since its inception till it was replaced by NSS-92.

However, I continued with the scheme till July 2008 when I closed my account for good and earned sizable amount. This was my first and last withdrawal during the entire period of 20 years.

I am a senior citizen of 68 years of age and till now I was in non-taxable income bracket.

Please advise me as to what will be my tax liability for A.Y. 2009-10.

Can I claim tax relief under NSS-92 as it was only an extension of NSS-87 with different nomenclature?

— Satish

A: You are under the wrong impression that NSS-92 is an extension of NSS-87. These are two distinct and separate schemes. Balance from NSS-87 could not be transferred to NSS-92.

If the account holder withdraws from NSS-87 when he is alive, the entire amount of withdrawal is taxed in his hands. Withdrawal by the nominee after the death of the account holder is not eligible to tax. Moreover, if the amount of withdrawal is Rs 2,500 or more, TDS is applied at the rates applicable during the year of withdrawal.

Please note that you can invest up to Rs 1 lakh in avenues u/s 80C (PPF, NSC, Life Insurance etc.) to claim deduction from income over and above the tax threshold of Rs. 2.25 lakh for senior citizens.

The authors may be contacted at wonderlandconsultants@yahoo.com

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Aviation Notes
Airlines’ losses on the rise
by K.R. Wadhwaney

The woes of civil aviation continues to multiply. The physical health of most of the airlines is very feeble. The losses are mounting. Analysts predict that the cumulative losses may even break the Rs 4,000-crore barrier before the fiscal 2009-10 ends.

Some of the carriers, with weak financial muscle, may be compelled to fold up. Reputed private airlines continue to reduce over-head expenses by terminating services of senior staff, cutting salaries of pilots and cabin crews, reducing operations on uneconomic routes and even withholding purchase of new aircraft.

The airlines owe state-run refiners as much as Rs 3,610 crore. One national and two private airlines are the biggest defaulters. Despite government 'indulgence' they refuse to pay arrears. The situation has come to such a pass that the oil companies are contemplating to provide fuel on the basis of 'cash and carry'. One oil company has already stopped selling fuel to one private airline on credit.

The scenario has become complex and complicated because traffic is not picking up. For this difficult situation, the private airlines are themselves to blame. "They increase fares at the drop of hat and refuse to reduce even when the government slashes prices of fuel", said three well-known travel agents.

What is cause for concern is that regular flyers have lost their faith in airlines. They maintain that the slogan of 'time is money' is no longer true because flights are cancelled, clubbed together without any prior information. Amidst this depressing scenario, the fog continues to play havoc with operation of flights. .The sophisticated instruments landing system, bought at high price, has failed to sort out problems because of multiple reasons. Even in mid-February, as many as 50 flights were disrupted. The problem appears to be unending. It is causing concern to authorities while airlines continue to suffer heavy losses owing to delays and disruptions.

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