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THE TRIBUNE SPECIALS
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Oswal seeks separate policy for textile industry
Ludhiana, December 26
SP Oswal SP Oswal, Chairman, Vardhman Group of Mills, has said that the recent ban on registration of export of cotton yarn by the government was not in the spinning industry’s interest. “We cannot start and stall export of cotton yarn at will. Banning registration of cotton yarn export is not a good trade policy.

Tax Advice
No need to keep books of account up to income of Rs 60 lakh
Q. I am a small businessman carrying on retail trade. My annual turnover is likely to exceed Rs 40 lakh in the financial year 2010-11. I used to pay my tax by declaring 8% of the gross turnover as my income up to assessment year 2010-11. Now my expected gross turnover is likely to exceed Rs 40 lakh. Am I required to keep the books of account for filing my tax return on the basis of such books?

Market Update
Volatility likely to stay
Last week the BSE Sensex and Nifty regained their psychological 20,000 and 6,000 mark, respectively, as higher advance tax payment by top Indian firms boosted sentiment. The Sensex rose 208 points to 20,073 and the Nifty rose 62 points to close at 6,011.


 

EARLIER STORIES



People dressed up as Father Frost, the equivalent of Santa Claus, and Snow Maiden, take part in a festive procession in central Minsk as part of Christmas celebrations on Saturday. More than 600 took part in the fancy dress procession.
People dressed up as Father Frost, the equivalent of Santa Claus, and Snow Maiden, take part in a festive procession in central Minsk as part of Christmas celebrations on Saturday. More than 600 took part in the fancy dress procession. — Reuters
Apple, Jobs hit new heights in 2010
New York, December 26
Apple dethroned Microsoft as the world's most valuable technology company in 2010 as its co- founder Steve Jobs soared to new heights with the touchscreen iPad tablet computer and the latest iPhone. Britain's Financial Times last week named Jobs its "Person of the Year" and even US President Barack Obama joined in the plaudits to the 55-year-old chief executive of the Cupertino, California-based gadget-maker.

Hansa industrial park’s 2nd phase soon
Chandigarh, December 26
Punjab-based steel products maker Hansa Group is set to start work on the second phase of its industrial park at Dera Bassi. The second phase will come up on 50 acres of land.

 





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Oswal seeks separate policy for textile industry
K.S. Chawla

Ludhiana, December 26
SP Oswal, Chairman, Vardhman Group of Mills, has said that the recent ban on registration of export of cotton yarn by the government was not in the spinning industry’s interest.

“We cannot start and stall export of cotton yarn at will. Banning registration of cotton yarn export is not a good trade policy. The textile industry is expanding and any interference at this stage is not healthy for the industry. This dissuades the buyer because of the poor reliability,” he said in an exclusive chat with The Tribune.

He added that the rise in the prices of cotton and cotton yarn was a global trend. Optimistic about Punjab’s industrial growth, he wants the state government to invest in setting up of industrial parks for new industries.

Oswal, widely regarded as the brain behind the textile industry in Punjab, says the parks may be set up in areas where land prices are not too high. The parks must be well-connected by road and rail. The government might treat the investment as long-term subsidy to create employment, he added. He wants the state to improve the efficiency of bureaucracy and bring it on a par with Madhya Pradesh and Himachal Pradesh.

The investment climate in the state is conducive because of entrepreneurship and with infrastructure growth and normal power supply, industry could grow further, he adds. He adds that textile industry has grown well in Punjab and the Ludhiana cluster has attracted stronger capital.

Stating that recent moves by the textile industry to set up plants outside the state were a result of high land cost in Punjab, he said: “Can I imagine getting 500 acres of land in Punjab at the present rates in the state.”

Incidentally, Vardhman has acquired 600 acres, Trident has bought 700 acres, Nahar-200 acres and Salujas 300 acres- all in Madhya Pradesh. The Punjab government is expanding its skill development and technical education, a policy the magnate agrees with. The Punjab Government should set up a committee consisting of Principal Secretary (Industry), Principal Secretary (Finance) and Secretary (Taxation) to monitor the tax structure of other states in comparison with Punjab to remove tax disparities and anomalies in the system. Speedy sanctions and approvals could help, he avers.

With Chief Minister Parkash Singh Badal overseeing the department, there was some improvement. “The Punjab Government should come out with a separate industrial policy for the textile industry and a responsible bureaucrat should be made responsible who should be accountable for the growth of the industry in the state,” he adds.

He cited China and Bangladesh as competitors in the garment segment and Pakistan as a rival in cotton yarn.

Banning registration of cotton yarn export is not a good trade policy. The industry is also investing in the expansion of the textile industry and any interference at this stage is not a healthy thing for the industry.

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Tax Advice
No need to keep books of account up to income of Rs 60 lakh
by SC Vasudeva

Q. I am a small businessman carrying on retail trade. My annual turnover is likely to exceed Rs 40 lakh in the financial year 2010-11. I used to pay my tax by declaring 8% of the gross turnover as my income up to assessment year 2010-11. Now my expected gross turnover is likely to exceed Rs 40 lakh. Am I required to keep the books of account for filing my tax return on the basis of such books?

— Kashi Ram

A. According to the provisions of Section 44AD of the Act, an individual, Hindu undivided family or a partnership firm who is a resident in India and carrying any business except the business of plying, hiring or, leasing of goods carriages whose total turnover or gross receipts in the previous year do not exceed an amount of Rs 60 lakh need not keep books of account provided such an assessee declares income @ 8% of the total turnover or gross receipts or higher than the said amount. You can, therefore, continue to file return on the same basis as you were filing earlier provided your turnover does not exceed Rs 60 lakh for the financial year 2010-11. It may be added that the above increased limit of Rs 60 lakh is applicable for the assessment year 2011-12 and onwards.

Rebate on tuition fee

Q. Can I claim income tax exemption for the free education offered to me for my child in the school. The fee is given as a perk. I fill the 12B form every year.

— Subha

A. According to the provisions of Section 80C of the Income-tax Act 1961 (the Act), a deduction is allowable to an individual assessee (within the overall limit Rs 1 lakh) in respect of the amount paid as tuition fee, whether at the time of admission or thereafter to any university, college, school or other educational institution situated within India for the purpose of full time education of any of his two children. In my opinion, you would not be entitled to claim tax deduction as you have not paid any tuition fee to the school. The treatment of the perquisite towards free education cannot be treated as payment of the tuition fee.

Tax on gratuity

Q. This is with reference to your advice in The Tribune dated 29.11.2010. Is gratuity taxable? Under this head a query was raised by Virender Gupta w.r.t tax liability on death-cum-retirement gratuity of an employee of a local authority, Punjab State Electricity Board, on revised pension rules. Your goodself replied “the amount of gratuity received due to the revision of pay scales would not be exempt from tax". In this regard, I want to draw your kind attention to sec 10(i) wherein any sum received on account of death-cum-retirement gratuity received under the revised pension rules or holders of civil posts under a state or to the employee of a local authority was totally exempted from income tax. However, the limit of Rs 3,50,000 under section 10(iii) read with second proviso deals with the employees other than employees of central and state government. I also find here to place that the Payment of Gratuity Bill, 2010, had proposed to enhanced the figure of Rs 3,50,000 to Rs 10,00,000. In the position stated above, do you think that the tax advice dt. 29.11.2010 needs amendment to the extent above discussed.

— Rohit

A. The term “Local Authority” has not been defined by the Act. However, section 3(31) of the General Clauses Act, 1871, defines the term “local authority” as under:(31) “local authority” shall mean a municipal committee, district board, body of port commissioners or other authority legally entitled to, or entrusted by the Government with, the control or management of a municipal or local fund.

An Electricity Board in my opinion would not be covered within the term “local authority” in accordance with the above definition and therefore, the provision of section 10(10)(i) of the Act would not be applicable to employees of Punjab State Electricity Board. However, in case the gratuity benefit is allowable on account of the fact that the employees are members of the civil services of the State or members of civil post under State, the provision of section 10(10)(i) would become applicable and the amount of gratuity received by such employees would be exempt from tax liability in its entirety.

II

Q. This is with reference to your clarification sought by Sh. Virender Gupta regarding the deduction of income tax from the DCRG (Death-Cum-Retirement Gratuity) of the Pensioners of Punjab State Electricity Board, Patiala who retired between 01.01.2006 to 23.05.2010, published in The Tribune dated 29.11.2010. Kindly reclarify the matter immediately keeping in view the following points:

1. Gratuity Act 1972 is not applicable to the Pensioners of Punjab State Electricity Board, Patiala as PSEB is exempted by a special notification of the Punjab Govt.

2. All pensionary benefits including DCRG are being given to its Pensioners as per Punjab Govt. Civil Service Rules Vol-II in toto.

3. Earlier when pay scales were revised w.e.f. 01.01.1986 & 01.01.1996 and when maximum limit of Gratuity was increased, no tax was deducted from the enhanced amount of DCRG, as PSEB Employees/Pensioners are covered under the Punjab Govt. Pension Rules.

— H.S. Gupta

A. Section 10(10) of the Act covers three type of situations. Section 10(10)(i) of the Act applies to Central, State and Defence employees. Section 10(10)(ii) applies to those employees who are covered under the provisions of Payment of Gratuity Act, 1972. Section 10(10)(iii) of the Act applies to those employees who are neither covered by section 10(10)(i) of the Act nor 10(10)(ii) of the Act. It has been mentioned by you in the query that the Payment of Gratuity Act, 1972, is not applicable to Punjab State Electricity Board, Patiala. Therefore, unless and until the employees of Punjab State Electricity Board are considered as employees of a local authority or are covered under the revised Pension Rules of the Central Government, or as the case may be, the Central Civil Services (Pension) Rules, 1972 or under any similar scheme applicable to the members of the civil services of the Union or holders of posts connected with defence or of civil post under the Union or to the members of the all India services or to the members of civil services of a State or holders of civil posts under the State, the provisions section 10(10)(iii) of the Act would become applicable. The exemption limit under section 10(10)(iii) of the Act is same as applicable to employees covered under the pensions of the Payment of Gratuity Act 1972. You may, therefore, check up with the Punjab State Electricity Board whether the employees of the Board are covered under any of the above Rules & Regulations. In case they are so covered, the gratuity amount received by such employees would not be taxable in its entirety.

Gift from relative

Q. I am married for the past seven years. This year my in-laws had purchased a Maruti Alto car (Rs. 2.75 lac) by paying in cash from Chandigarh in my wife's name. My wife is a house wife and had no source of income. How should I handle it while filing Income tax refund so that there is no or minimum tax liability. Someone had guided me to show the income of my wife as gift from my in-laws. I had heard about gift but have no idea about it. Kindly help me.

— Kirti Walia

A. The gift of Maruti Alto car to your wife by your in-laws will not have any tax liability in your hands. There would be no tax liability in the hands of your father-in-law/mother-in-law as Gift-Tax Act 1958 is not in operation these days. Your wife would also not be liable to pay tax as any gift received from her parents is exempt from the income-tax. The car being a gift to your wife by her parents, is not required to be reflected in your tax return.

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Market Update
Volatility likely to stay
by Lalit Batra

Last week the BSE Sensex and Nifty regained their psychological 20,000 and 6,000 mark, respectively, as higher advance tax payment by top Indian firms boosted sentiment. The Sensex rose 208 points to 20,073 and the Nifty rose 62 points to close at 6,011.

The combined advance tax payment by top 100 corporate taxpayers rose 18.7 per cent to Rs 27,531 crore in third quarter of 2010 over the same period last year, indicating better corporate performance in the third quarter.

This week, the market may stay volatile due to the expiry of near month December 2010 futures and options (F&O) contracts this Thursday. Meanwhile, the rise of crude oil price to $91 per barrel may force the oil marketing companies to hike the price of diesel in coming days which may lead to increase in inflation and hence put spikes in the nascent recovery seen in the markets. Markets will, however, turn their attention to third quarter earnings that corporates are expected to announce from the second week of January onwards.

Foreign institutional investors (FIIs), who have made record purchase this year, resorted to profit booking this month and have sold shares worth Rs 1,260 crore till December 22.

Eros International

Eros International Media Ltd (EMIL) is part of the Eros group, which is a global player within the Indian media and entertainment sector and has been distributing Hindi films overseas over the past three decades. EIML is in the business of co-production and distribution of films in India. Eros International pic (Eros pic), the holding company of the Eros group, is a promoter of EIML and is listed on the Alternative Investment Market of the London Stock Exchange.

The company is into Hindi, Tamil, Marathi, and Punjabi films. It sources content through either the acquisition route or the co-production route. The company either acquires the film from the producer at various stages of production for an agreed contractual value or co-produces the film from inception as per the agreed terms.

Despite being in the film co-production and distribution business, its unique business model enables the company to recover the bulk of its cost upfront through pre-sales of overseas rights, music rights and broadcasting rights and in-film advertising. EIML has an exclusive tie-up with its parent company for international distribution rights that covers 39 per cent of the cost.

EIML is one of the rare media companies that have shown an impressive and profitable growth even in the recent recessionary phase. To sustain its growth in future, the company has chalked out aggressive plans to invest close to Rs 1,000 crore in co-production and acquisition of film rights over the next 18-24 months.

With its proven track record, de-risked business model and aggressive ramp-up plans, we believe the company is well poised to gain from the rising discretionary spending on film entertainment driven by the country’s favourable demographics. Investors with risk appetite may buy the stock around the current market price of Rs 150 for medium term for the story of the media company to pan out.

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Apple, Jobs hit new heights in 2010

New York, December 26
Apple dethroned Microsoft as the world's most valuable technology company in 2010 as its co- founder Steve Jobs soared to new heights with the touchscreen iPad tablet computer and the latest iPhone.

Britain's Financial Times last week named Jobs its "Person of the Year" and even US President Barack Obama joined in the plaudits to the 55-year-old chief executive of the Cupertino, California-based gadget-maker.

Jobs' appearance on a San Francisco stage in January to unveil the iPad capped what the FT called "the most remarkable comeback in modern business history." "It wasn't simply a matter of the illness that had sidelined him for half the year before, leaving him severely emaciated and eventually requiring a liver transplant," the newspaper said.

"Little more than a decade earlier, both Mr Jobs' career and Apple, the company he had co-founded, were widely considered washed up, their relevance to the future of technology written off," it said. — AFP

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Hansa industrial park’s 2nd phase soon
Tribune News Service

Chandigarh, December 26
Punjab-based steel products maker Hansa Group is set to start work on the second phase of its industrial park at Dera Bassi. The second phase will come up on 50 acres of land. Growing commercialisation in industrial area in Chandigarh has pushed small and micro units to move away from the city. Ancillary units of Punjab Tractors, HMT Limited, Swaraj Tractors, fabrication industry and auto components makers are among those who have bought the plots.

Majority of the industrial plots out of the 325 in the first phase has been bought by owners of small scale and micro units based in Chandigarh.

“Around 60 per cent plots have been taken up by entrepreneurs who plan to shift their units from Chandigarh,” said Arun Gupta, Director, Hansa Group today.

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