SPECIAL COVERAGE
CHANDIGARH

LUDHIANA

DELHI



THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS
B U S I N E S S

Case against Satyam for money laundering
New Delhi, April 5
The Enforcement Directorate (ED) has registered a case against Satyam Computer and its tainted founder-chairman B Ramalinga Raju for alleged money laundering.

PM panel lowers growth projection to 6.5-7 pc
New Delhi, April 5 With slackening demand hitting Indian trade more than anticipated, the Prime Minister’s economic advisory committee (PMEAC) has lowered India’s growth rate forecast to 6.5-7 per cent from earlier projection of 7.1 per cent for 2008-09.

Edelweiss sees 60% decline in realty prices
Mumbai, April 5
Financial services provider Edelweiss expects decline in real estate prices by around 60 per cent over the next five to six years from its peak in the first quarter of 2008.

RIL-RPL merger
RIL shareholders’ vote result today
Mumbai, April 5
The result of voting to consider the Reliance Industries-Reliance Petroleum merger will be announced tomorrow, a Reliance spokesperson said.





EARLIER STORIES



Candies are displayed at a candy store in San Francisco, California
sweet comfort:
Candies are displayed at a candy store in San Francisco, California. As the economy continues to struggle, candy sales are rising as Americans seek to comfort themselves during the difficult economic times. — AFP

TCS, RIL paid money to Obama’s aide: Report
New York, April 5
India’s top-most corporate entity Reliance Industries (RIL) and Tata group firm TCS are among firms which paid thousands of dollars to US President Barack Obama’s top economic adviser Lawrence Summers either for his association with the firm or for giving speeches, say reports.

Freddie, Fannie to shell out $210 m as bonuses
New York, April 5
At a time when executive compensation has come under the lens, beleaguered American mortgage majors Fannie Mae and Freddie Mac are planning to shell out $210 million as bonuses to over 7,600 employees.

Recession hits Mickey Mouse too
Los Angeles, April 5
With the economic recession bringing down footfalls in its theme parks, entertainment giant Walt Disney Co has announced that it has eliminated about 1,900 jobs.

Tax Advice
One can claim relief u/s 89 for pension/salary arrears
Q. This is in reference to your reply on “Tax on Arrears” on 40 per cent as per the Central Government VI CPC Recommendations order in 2008-09 and 60% in Financial Year 2009-10 (next year).





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Case against Satyam for money laundering

New Delhi, April 5
The Enforcement Directorate (ED) has registered a case against Satyam Computer and its tainted founder-chairman B Ramalinga Raju for alleged money laundering.

The ED stepped into the multi-crore rupee fraud in Satyam after it claimed to have found prima facie evidence against Raju and others of violating the Prevention of Money Laundering Act.

The CBI will file the chargesheet against Raju and others accused in the Satyam scam on April 9.

The ED sources alleged that Raju had diverted funds of Satyam into purchasing nearly 50 plots in Medchal and Qutbullahpur near Hyderabad.

The ED alleged that several hundred crore rupees had been diverted from the Satyam accounts and had been invested in purchasing land and other infrastructure for Maytas.

The directorate will go through deals of the IT company and ascertain their genuineness, including payments made to acquire companies abroad.

The ED will also send a team to a few countries to investigate and get documents of bank accounts opened in violation of Indian laws.

The ED is examining whether some of the bank accounts had been opened by the Satyam group in tax havens to re-route money back to India as investment in Maytas.

The ED, along with the Serious Fraud Investigation Office and Registrar of Companies, is trying to ascertain the antecedents of a Mauritius-based company used for channelising money to Maytas.

The ED may also look into non-repatriation of proceeds of exported goods, unauthorised accounts in foreign countries, under-invoicing of exports and over-invoicing of imports and any kind of invoice manipulation, syphoning off of foreign exchange through fictitious and bogus imports and illegal acquisition of foreign exchange through hawala.

B Ramalinga Raju, the sources claimed, had confessed during investigations to using the Satyam money to buy prime land in and around Hyderabad, a process that had been going on for last three years.

Raju has confessed that he diverted funds of the IT company to the two real estate firms promoted by his family. — PTI

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PM panel lowers growth projection to 6.5-7 pc

GDP to grow 4 pc this fiscal: Barclays

Projecting a GDP growth rate of 4 per cent for the current fiscal, British banking major Barclays has said tight liquidity conditions coupled with broad-based contraction in economic activity is likely to impact the country’s performance. “Our FY 09-10 GDP growth forecast is four per cent. The uncertainty around our FY 09-10 GDP growth forecast is large,” Barclays Capital said in a report. The report noted that unlike the slowdowns seen in the mid-1990s and the early 2000s, this time tight liquidity conditions would hamper growth and the contraction in economic activity would be broad-based geographically.

New Delhi, April 5
With slackening demand hitting Indian trade more than anticipated, the Prime Minister’s economic advisory committee (PMEAC) has lowered India’s growth rate forecast to 6.5-7 per cent from earlier projection of 7.1 per cent for 2008-09.

“It (growth rate for 2008-09) may go somewhere between 6.5-7 (per cent), that is the current estimate. 7.1 per cent was earlier estimate, obviously it has to be lower. Because contraction of trade turned out to be much greater than it was anticipated,” PM’s Economic Advisory Council chairman Suresh Tendulkar said here.

In January, PMEAC revised down its growth projection to 7.1 per cent for 2008-09 from 7.7 per cent projected earlier due to “painful adjustments to the abrupt changes in the international economy”.

Even the Central Statistical Organisation's advance estimates have pegged the growth rate at 7.1 growth for 2008-09.

Tendulkar said the global crisis affected the Indian economy through export and export-related industries and capital outflows, which took place not because of lower profitability but foreign institutional investors had their obligation to meet back home.

“There was deeper than expected recession in advanced countries. The psychology of gloom and doom which was essentially pervaded in the industrialised countries was imported to this country,” Tendulkar said.

The Indian financial markets are also integrated with the rest of the world and so they were also hit, he said.

To boost the economy, the government came out with three stimulus packages - in December last year, in January and in the interim Budget in February - providing incentives to various sectors.

The Reserve Bank also took monetary easing measures by infusing more than Rs 4,00,000 crore since October.

Despite stimulus packages, industrial output again fell in January. — PTI

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Edelweiss sees 60% decline in realty prices

Mumbai, April 5
Financial services provider Edelweiss expects decline in real estate prices by around 60 per cent over the next five to six years from its peak in the first quarter of 2008.

“Property prices in India increased sharply over the past 6-7 years, rising two-and-a-half times over 2001 prices. We expect a price correction of 58 per cent in real terms from the peak,” Edelweiss said in a report on real estate sector.

Stating that the industry has so far witnessed around 24 per cent correction in real terms, the report said the industry witnessed 8-10 months decline of the expected 5-6 years.

“We expect prices to correct by another around 30 per cent in nominal terms in the next three years. However, prices in real terms, will continue to decline for about a year thereafter,” it said.

Analysing global property cycles across 15 countries, Edelweiss said volumes were closely related to GDP growth and real returns on properties but share a weak relation with interest rates.

“From September 2006, the GDP growth rate has started falling and has come down significantly to 7.6 per cent in September 2008. We expect the rate to go down further to 6 per cent by FY10,” it said.

Edelweiss said reduced hiring by the IT sector and decline in disbursement of home loans were worsening the real estate demand scenario.

Three out of top five IT/ITes companies have reduced the pace of recruitment considerably with Wipro reducing its headcount marginally. Homeloans have been also falling sharply, it said.

Edelweiss also said the threat of capitulation was likely to resurface in the sector. — PTI

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RIL-RPL merger
RIL shareholders vote result today

Mumbai, April 5
The result of voting to consider the Reliance Industries-Reliance Petroleum merger will be announced tomorrow, a Reliance spokesperson said.

Equity shareholders, secured and unsecured creditors of Reliance Industries took part and voted at the court-convened extra-ordinary general meeting (EGM) of Reliance Industries on Saturday.

On April 9, equity shareholders, secured and unsecured creditors of Reliance Petroleum would meet at an extra-ordinary general meeting to be held in Jamnagar, the spokesperson said.

The boards of the two companies had earlier approved the all-share merger deal, which entails shareholders getting one share of RIL for every 16 shares held in RPL.

Following the share swapping, RIL would have 3.7- million shareholders and the promoters’ holdings, including that of its chairman Mukesh Omani, will fall by 2 per cent to 47 per cent. RIL is holding 75.38 per cent in RPL, which would be cancelled on absorption, the EGM notice said.

Seek special dividend after merger

RIL shareholders have asked for a 100-200 per cent dividend after the merger of RPL with RIL.

“Reliance Industries' management should reward its shareholders with a special dividend of 100 to 200 per cent as the company has paid a hefty Rs 3,000-crore stamp-duty and registration fees to the Government,” RIL shareholder Kirti Shah said here on Saturday.

RIL spokesperson refused to comment on the matter. — PTI

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TCS, RIL paid money to Obama’s aide: Report

New York, April 5
India’s top-most corporate entity Reliance Industries (RIL) and Tata group firm TCS are among firms which paid thousands of dollars to US President Barack Obama’s top economic adviser Lawrence Summers either for his association with the firm or for giving speeches, say reports.

According to the financial disclosure reports made public by the White House, Summers earned millions of dollars over the past year for being part of the advisory board and for giving speeches to various financial institutions, including some of those, which were later, rescued under the government’s bailout programme.

Out of two Indian companies, TCS paid the director of Obama’s National Economic Council $67,500 for an engagement in September 21, 2008, Internet newspaper Huffingtonpost reported.

RIL was listed under the section wherein compensation in excess of $5,000 was paid by the Indian corporate giant to Summers for being the member of the International Advisory Board, Huffingtonpost added.

Summers was paid a whopping $2.7 million as speaking fees for more than 40 appearances before different organisations and companies. — PTI

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Freddie, Fannie to shell out $210 m as bonuses

New York, April 5
At a time when executive compensation has come under the lens, beleaguered American mortgage majors Fannie Mae and Freddie Mac are planning to shell out $210 million as bonuses to over 7,600 employees.

Out of the total amount, the two entities, bailed out by the Federal government, have already paid $50.8 million in 2008. The details were revealed in a letter by James B Lockhart III, the director of the Federal Housing Finance Agency (FHFA), to Senator Charles E Grassley. FHFA is in charge of Fannie Mae and Freddie Mac.

Together, both companies would be paying a bonus of $210.2 million. The letter said bonuses would be paid to 3,545 employees at Fannie Mae and 4,057 people at Freddie Mac.

A total of $112.6 million would be given to Fannie Mae employees and $97.6 million to those at Freddie Mac.

The publicly owned Fannie Mae and Freddie Mac were rescued by the US Federal government in 2008 in the wake of the ravaging financial meltdown. Nearly $200 billion was pumped in to shore up the fortunes of the two entities. — PTI

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Recession hits Mickey Mouse too

Los Angeles, April 5
With the economic recession bringing down footfalls in its theme parks, entertainment giant Walt Disney Co has announced that it has eliminated about 1,900 jobs.

Disney, which employs about 80,000 people in its parks and resorts unit, said 1,200 people were laid off and about 700 positions were left unfilled in domestic theme parks.

The bulk of the cuts occurred at Walt Disney World in Orlando, where about 1,400 jobs were eliminated. About 300 jobs will be cut from the Disneyland Resort in Anaheim, with the remainder coming from corporate headquarters in Burbank, the Los Angeles Times reported. — PTI

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Tax Advice
One can claim relief u/s 89 for pension/salary arrears
by S.C. Vasudeva

Q. This is in reference to your reply on “Tax on Arrears” on 40 per cent as per the Central Government VI CPC Recommendations order in 2008-09 and 60% in Financial Year 2009-10 (next year). Is it understood that relief when salary pension drawn in arrears or in advance under Section 89(1) (read with Rule 21A) could be claimed after filing particulars of arrears for financial year /previous years 2005-06, 2006-07, 2007-08 as per annexure I, from income tax, while calculating income-tax due on income inclusive of 40% arrears worked out and drawn from financial year 2005-06, financial year ending March 31, 2006, from financial year 2006-07, 2007-08, 2008-09 and assessment year 2009-10. I am a senior citizen aged 74 years, and a retired Central government employee.

— Yoginder Verma, Haridwar

A. Your presumption that relief under Section 89 of the Act can be claimed when the salary/pension is received in arrear/advance is correct. The required particulars are to be filed as per Rule 21A of the Income-tax Rules 1962. The rules also provide that an employee entitled to the relief under Section 89 of the Act, may furnish the particulars in Form 10E to the person responsible for deducting tax at source under Section 192 of the Act. It may be added that an assessee can claim a relief under the aforesaid section from the assessing officer also. One can claim relief u/s 89 for pension salary arrears.

Family pension

Q. I am a widow drawing family pension in addition to my salary. My gross salary will be about 2.7 lakh, family pension Rs.1 lakh and interest on FDR Rs.30,000 in financial year 2008-09. After excluding exemption limit of Rs.1,80,000 and Rs. One lakh for investment under Section 80C, my taxable income will be Rs.1,20,000.

I understand that standard deduction of Rs.15,000 (max) is allowed to widow on family pension. I want to know:

1. The amount of standard deduction which I can avail on my family pension of Rs. 1 lakh during financial year 2008-09.

2. What will be my taxable income and liability for the financial year 2008-09?

3. I received Rs.52,636/- as family pension (September 11, 2007 to March 31, 2008) which had been included in my income tax return for the financial year 2007-08 without claiming standard deductions. My husband expired on September 10, 2007. Can I claim Rs.15,000 and submit fresh IT return?

— Reeta Talwar

A. Your queries are replied hereunder:

(i) The maximum amount of deduction allowable in respect of the family pension is Rs.15,000 or 1/3 of the pension whichever of the two is less.

(ii) Your taxable income for the financial year 2008-09 would work out at Rs.2,85,000. On the basis of the figures indicated in the query, the IT payable thereon would be Rs.10,815 including surcharge for education cess at the rate of 3 per cent.

(iii) You can file the revised return for the financial year 2007-08 upto March 31, 2010, for claiming the standard deduction in respect of the family pension received by you.

Form 15-H

Q. I am a senior citizen and a Cancer patient. I want your guidance in the following:

1. I submitted form 15-H for not deducting TDS from my interest income from FDs as I have the income from all sources below Rs 2,25,000 (exemption). I regularly submitting my returns. But I was called by ITO Jallandhar to explain from where this FDs amount came to me, so I showed my I.T. return. Then he told me not to submit form 15-H and claim refund every year of TDS as he has the records of form 15-H only and not of IT returns. So he has to call the assessee for clarification. What is the solution to this problem?

2. I want to give loan to my wife on simple interest (3.5%) on her request as she wants to do some business or deposit the amount of loan i.e. Rs. 2 lakh in bank to earn interest 11 per cent. Can I give this amount as loan or there is some limit?

3. If I take loan from my FDs the bank takes an interest from me. Is this interest paid by me to the bank deductible from my interest income on my FDs to show net income of interest in my return to be submitted in the same financial year.

— DP Lakhanpal, Nawanshahr

A. Your queries are replied hereunder:

a) In accordance with the provisions of the Act, a person whose income without claiming any deduction under Chapter VIA of the Act (e.g. deduction for insurance, provident fund etc.) does not exceed the maximum amount chargeable to tax is not required to file an IT return. The officer, therefore, cannot insist that the Income-tax return be filed by you even if income is below the taxable limit. You need not appear personally but have all the right to send the information by post in case the same is asked for by the department.

b) You can give a loan to your wife with or without interest provided the same is required for her own use. In case the same is to be utilised for carrying on a business or keeping the same in a deposit account, the chargeable rate of interest should not be less than the market rate of interest. Otherwise, there is every likelihood of your wife’s income arising from the investment of such a loan being clubbed with your income.

c) The interest paid to bank on a loan obtained against the FD is deductible in case the loan has been used for carrying on activity in the nature of business or profession, the profit from which is taxable. In such cases, the interest paid would be allowable as a deduction against the income so earned. However, in case the loan is taken for personal use it may not be possible to get the deduction against the interest earned on the fixed deposit.

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BRIEFLY


Bollywood actor Mugdha Godse presents a creation on the final day of Kolkata fashion week
Bollywood actor Mugdha Godse presents a creation on the final day of Kolkata fashion week on Sunday. — Reuters

Banks may cut lending rates by 0.5 pc
MUMBAI:
With inflation nearing zero and signs of economic revival, bankers on Sunday hinted at cutting lending rates by 0.5 per cent and deposit rates by 0.5-0.75 per cent in two-three weeks. “Given that the inflation is low, lending rates may go down further by 0.5 per cent in the next two to three weeks and deposit rates by 0.5-0.75 per cent. Banks will bring down their interest rates in line with a reduction in cost of funds,” Bank of India chairman and managing director TS Narayanasami said here.

GCC to slip into recession in 2009: Report
DUBAI:
The Gulf Cooperation Council (GCC) economies are expected to slip into a recession in 2009 as a result of the severe deterioration in the global economic scene, a National Bank of Kuwait report has said. The report entitled ‘GCC: Fiscal stimulus and reforms are optimal choice under current circumstances’, however, said the GCC economies were “well positioned to face the storm.” “The dominance of their public sectors in economic activity should provide a measure of stability, including on the employment (of nationals) front,” it said.

FICCI for moratorium on trade barriers
NEW DELHI:
With protectionism becoming a threat to global commerce, apex chamber FICCI has asked rich nations, particularly the US, to desist from putting trade barriers at least for a year. “One-year moratorium should be imposed on putting any restrictions for trade. The US, in particular, should not put any trade barrier,” FICCI secretary general Amit Mitra said. In the G-20 declaration in London on Thursday, 20 rich and emerging economies agreed to “name and shame” the countries resorting to trade barriers.

GE, Intel join hands for tele-health services
DUBAI:
Intel Corporation and General Electric on Sunday announced an alliance to market and develop home-based health technologies for patients’ chronic conditions. GE chairman and CEO Jeff Immelt and Intel president and CEO Paul Otellini announced the alliance on Sunday, along with an investment of more than $250 million over the next five years for the research and product development of home-based health technologies.

Source: Agencies

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