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Change of guard at Ranbaxy
CEO Malvinder quits, Atul Sobti new MD
A view of Ranbaxy’s plant at Mohali.New Delhi, May 24
Ranbaxy Laboratories chairman, CEO and managing director Malvinder Mohan Singh today stepped down, within a year of its acquisition by Japanese giant Daiichi Sankyo

A view of Ranbaxy’s plant at Mohali. A Tribune photograph

Market Update
Steep correction not anticipated
The decisive victory of the Congress in the Lok Sabha polls provided the much-needed ammunition to the market to hit the double upper circuit filters for the first time in the history last Monday. This was much anticipated after the kind of number of seats the Congress has managed to win, since this will ensure that the government need not have to rely on the Left parties to form the government.


EARLIER STORIES



Chinese workers construct a part of the 1,318-km Beijing-Shanghai high-speed rail link, in Bengbu, eastern China's Anhui province.
Chinese workers construct a part of the 1,318-km Beijing-Shanghai high-speed rail link, in Bengbu, eastern China's Anhui province. China recently approved a two-trillion-yuan ($300 billion) investment in its railway infrastructure over the next two years in a bid to spur growth in the face of the global economic crisis, aiming to have 120,000 km of tracks laid down by 2020, up from 79,000 at present. — AFP

Tatas to start e-mall
Mumbai, May 24
Salt-to-software maker, the Tata Group, is gearing up to start an electronic mall through which products made by all group companies would be sold on-line in the next two months. "We are in the process of doing that. A team of ours is developing the project. This is going to start in the next two months," a top Tata Group official told PTI.

DLF diverted funds: Taxmen
New Delhi, May 24
The Income Tax authorities have slapped a tax liability of Rs 300-400 crore on realty leader DLF over what they called understatement of income and fund diversion. The liability was raised after a special audit by the Income Tax department in the accounts of DLF for the year 2005-06.

Tax Advice
Leave encashment above Rs 3 lakh taxable
Q. I have retired from PSEB on 30.04.2009 as SE from BBMB under Ministry of Power (after serving in BBMB against Punjab’s share quota since 1986). My 300 days leave encashment amounts to Rs 5,11,000. Shall I be liable to income tax on the amount exceeding Rs 3 lakh. Income tax amounting to Rs 65,000 has been deducted as income tax by the BBMB. Please advise. — Y.P. Dhir






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Change of guard at Ranbaxy
CEO Malvinder quits, Atul Sobti new MD

Malvinder Mohan Singh
Malvinder Mohan Singh 

New Delhi, May 24
Ranbaxy Laboratories chairman, CEO and managing director Malvinder Mohan Singh today stepped down, within a year of its acquisition by Japanese giant Daiichi Sankyo, marking an end of family's 48-year long association with the company.

Atul Sobti, currently Ranbaxy's chief operating officer, has been appointed as CEO and managing director, and Tsutomu Une, non-executive director of Ranbaxy, has been elected as chairman of the Board.

"It was a difficult decision to separate from Ranbaxy," Singh said in a statement after the board meeting of the Ranbaxy-Daiichi Sankyo here.

Singh was appointed for a term of five years in 2008 by Ranbaxy-Daiichi and severance package is in accordance with the terms of employment.

"But it was the right time for me to do so. I leave with complete confidence that the initial transition phase that followed Daiichi Sankyo's acquisition of majority shareholding interest in Ranbaxy has been completed successfully," he said.

Although no particular reason was given by the new management, Sobti, while addressing the press conference said that "priority is to implement Ranbaxy's business plans to accelerate in achieving our vision of hybrid business model".

Daiichi had bought 63.92 per cent stake in Ranbaxy last year for an estimated amount of Rs 22,000 crore and since then the company has been facing tough times in terms of mounting losses and problems with the US drug regulator.

The company has posted a net loss of over Rs 1,032 crore for the year ended December 2008 as compared to net profit of Rs 617.72 crore in the previous year. This could have triggered change of guard at the top level.

Commenting on the development, Takashi Shoda, a director of Ranbaxy and CEO of Daiichi-Sankyo, said, "We very much appreciate the efforts of the Singh family, which grew Ranbaxy from a small, local Indian company to a large MNC it has become today." When asked if the company would remain listed, Une said, "We want to keep Ranbaxy as a listed company."

The Board of the company now stands reduced to seven members with two other board members — Balinder Singh Dhillion and Sunil Godhwani — also stepping down.

The new board has four independent directors, along with Une and Sobti.

Asked how will the replacement of Malvinder Singh could be managed, Sobti said, "Replacement of Malvinder is never going to be easy but the decision is taken." He stressed that the hybrid model to be developed by the company would bring "huge benefits" to both (Ranbaxy and Daiichi) and the decisions taken today would help in faster achievement of the vision of creation of the hybrid model.

When asked what is happening on the regulatory hurdles faced by the company in the US, Sobti said, "We are progressing well with the USFDA and the negotiations are on the right track." — PTI

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Market Update
Steep correction not anticipated
by Lalit Batra

The decisive victory of the Congress in the Lok Sabha polls provided the much-needed ammunition to the market to hit the double upper circuit filters for the first time in the history last Monday. This was much anticipated after the kind of number of seats the Congress has managed to win, since this will ensure that the government need not have to rely on the Left parties to form the government.

This will enable the newly elected government to go ahead with various reforms, which was otherwise consistently toppled by the left allies.

The new government is likely to pursue divestment of state-run undertakings and other financial sector reforms in the coming days, which were relegated to the back seat due to persistent opposition from the Left parties.

During this week, consistent profit making can be expected but a steep correction is not anticipated, though fundamentally the Indian market looks expensive compared to the emerging market peers. Investors should watch for the progress of the monsoon and the Budget that will be presented by the new government. These two critical factors, along with global news, will drive the market in the next couple of months.

Strategy: Going forward

In the last couple of months, the market has retraced more than 50 per cent from its lows and it was only prudent to check how some of the stocks that we had recommended in the past six months have fared and what should now be our strategy going forward. Though we remain positive on the overall market from a long-term perspective, but the recommendation below are stock-specific and based on the runup in the stock price and/or some new development at the company.

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Tatas to start e-mall

Mumbai, May 24
Salt-to-software maker, the Tata Group, is gearing up to start an electronic mall through which products made by all group companies would be sold on-line in the next two months.

"We are in the process of doing that. A team of ours is developing the project. This is going to start in the next two months," a top Tata Group official told PTI.

Without divulging much details, the official said products made by all Tata Group companies would be sold through the channel.

Sources, however, said that the e-mall, like any other e-commerce portals, would be the electronic variant of the brick and mortar malls that has revolutionised the shopping experience in recent times.

The proposed e-mall of the Tata Group is aimed at serving people who find it difficult to spend time on shopping and ensuring them convenience of shopping at home thereby saving their time and efforts capitalising on the information technology penetration of the country, sources said.

Industry experts said that six triggers like, saving time and efforts, wide variety, convenience of shopping at home, good discounts, getting detailed information of the product to able to compare products and brands motivate the shoppers to buy online.

Buying online would also help customers financially as e-marketers offer great deals and discounts to them. This is facilitated by elimination of maintenance, real estate cost of the seller and selling its products online.

There are, however, certain concerns that crop up among the buyers while buying on-line. First of all, a buyer could not be sure of the product quality. However, given the respect that the Tata brand attracts, on-line buyers could be rest assured of the quality of products.

Online buying does not allow buyers to bargain, which is very much vivid among the buyers. There is also chances of credit card misuse. The touch and feel while buying would be missing and the buyers would have to wait for the delivery.

The Tata Group comprises 96 operating companies in seven business sectors — information systems and communications, engineering, materials, services, energy, consumer products and chemicals. — PTI 

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DLF diverted funds: Taxmen

New Delhi, May 24
The Income Tax authorities have slapped a tax liability of Rs 300-400 crore on realty leader DLF over what they called understatement of income and fund diversion. The liability was raised after a special audit by the Income Tax department in the accounts of DLF for the year 2005-06.

With the kind of discrepancies found in the books of the company, it appears that the auditor of the company has not done its job properly, sources said. A written query e-mailed to the company remained unanswered.

The company, sources said, took loans from banks for some residential and shopping mall projects but diverted the funds to subsidiaries which essentially were involved in land bank building. This activity led to an addition of Rs 120 crore to the taxable income head of the company. — PTI

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Tax Advice
Leave encashment above Rs 3 lakh taxable
by S.C. Vasudeva

Q. I have retired from PSEB on 30.04.2009 as SE from BBMB under Ministry of Power (after serving in BBMB against Punjab’s share quota since 1986). My 300 days leave encashment amounts to Rs 5,11,000. Shall I be liable to income tax on the amount exceeding Rs 3 lakh. Income tax amounting to Rs 65,000 has been deducted as income tax by the BBMB. Please advise. — Y.P. Dhir

A. Yes, you will be liable to pay tax on the amount of leave encashment received in excess of Rs 3,00,000. Accordingly, the balance amount i.e. Rs 2,11,000 would be added to your total income and taxed accordingly. I may add that the reply is based on the presumption that the computation of Rs 5,11,000 has been made in accordance with the provisions of Section 10 (10AA) of the Act.

ITR 4

Q. In ITR 4, there is a column containing four items applicable in no accounts case. I want to know on what basis should we show these debtors, creditors, stock & cash balance, gross receipts, gross profit, expenses & net profit. Suppose we want to show estimated income from boutique of a lady assessee, is it compulsory to give details of all of these items or some of these will be sufficient? Also, I want to know whether the Income Tax Department can verify these figures and demand details. What is the maximum limit of gross receipts, debtors, creditors & cash, which we can show in no accounts case and whether case can be picked for scrutiny on the basis of these information? Please clarify. — Desilva

A. The maximum amount of gross receipt applicable in case of an assessee engaged in retail trade in any goods or merchandise is Rs 40 lakh in a year.There is no maximum limit with regard to the amount of debtors, creditors or cash in such a case. 

Section 44AF of the Income-tax Act 1961 (the Act) requires that in such cases (i.e. where the turnover or gross receipt do not exceed Rs 40 lakh) a sum equal to 5 per cent of the total turnover in the previous year on account of the business of retail trade in any goods or merchandise or, as the case may be, a sum higher than the aforesaid sum as declared by the assessee in his return of income shall be deemed to be the profits and gains of such business chargeable to tax under the head “profits and gains of business or profession”.

The debtors, creditors, stock and cash balances have to be shown as actually existing in the case of such a trade. These cannot be on estimate basis. It may be added that in case of retail trade, at least a cashbook is definitely maintained, which shows the cash balance in hand as at the end of each day.

Therefore, it should not be difficult to indicate the amount of cash held in hand as on the last day of the previous year relevant to any assessment year. The stock will have to be physically taken so as to give the figure thereof.

Even a retail trader who is not maintaining accounts would know how much he is to recover from the parties to whom the goods have been sold on credit as also the amount payable to the suppliers or other parties from whom he or she has purchased goods or services on credit. Such amounts should be, therefore, based on the actual figures and not on estimate basis.

Long-term capital gain

Q. I sold the shares that I purchased many years ago. I earned long-term capital gain of Rs 13,97,670 on these shares on which the Securities Transaction Tax is paid. What I understand is that this long-term gain is exempt from tax. Is it necessary to show these gains in exempt column of ITR 4? If yes, then when I try to show these gains in exempt column of ITR 4 which is applicable in my case, then my software of income tax asked for information regarding name of shares, sale date, sale amount, transfer expenses, purchase date & purchase amount. Unless I input these figures, exempt gains does not adjust properly in return form (ITR 4). I have no records of these details with me. Now what is the best option available to me? — Sam, Kurukshetra

A. You have indicated that you have earned a long-term capital gain of Rs 13,97,670 on the sale of shares on which Securities Transaction Tax has been paid. The details with regard to the name of shares, sale date, sale amount, transfer expenses, purchase date and purchase amount are essential to compute the amount of capital gains. 

In my opinion, the figure of capital gains amounting of Rs 13,97,670- (the figure of capital gain indicated in the query) could not have been computed without these details. These details should be in the possession of the person who has computed the figure of Rs 13,97,670. In any case, the details with regard to the sale should be available in the broker’s note through which the sale of shares has been affected.

Presuming that the details with regard to date of purchase and purchase amount are not available, it would be proper to make a mention with regard to the non-availability of the details with the caption not available and fill in the return of income accordingly.

IT return

Q. I have following queries:

1. My son is in the USA doing MBA. Where and how he can submit his IT return for the AY 2009-10. He is in the USA w.e.f. 19/01/2009.

2. By what date the revised IT return of AY 2008-09 can be submitted? — Bhajan Singh, New Delhi

A. Your queries are replied here under:

(i) Your son is required to file a return of income if his income exceeds the maximum amount not chargeable to tax. The limit applicable for assessment year 2009-10 is Rs 1,50,000. He can file his return in the city where he was permanently residing and on the basis of which he had obtained his Permanent Account Number.

(ii) The revised income tax for assessment year 2008-09 can be filed up to 31st March 2010.

IT return and arrears

Q. Class IV employee is likely to get arrears from 1992 to 2009 as per the decision of the Punjab and Haryana High Court. Arrear sheet will be prepared financial year-wise since 1992. Will the person getting arrears have to obtain the permission of Income-tax office and which form number is to be used? (Is the employer authorised to give this benefit). — Ram Lal Goel

A. No permission is required from the Assessing Officer or any other authority of tax department for receiving arrears of your salary. However, in case your taxable income for the year exceeds Rs 1,50,000 after inclusion of such arrears, a return of income will have to be filed by you on or before the date of the Assessment Year. You can, however, claim a relief under Section 89 of the Act by filing Form No. 10E with your employer. 

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