SPECIAL COVERAGE
CHANDIGARH

LUDHIANA

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THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS
B U S I N E S S

Blackberry Row: Govt toughens stand
Asks telecom cos to enable interception or stop services
New Delhi, February 13
Hardening its stance against Blackberry for not providing a solution to intercept Enterprise mail services, the government today said telecom operators will have to stop any such services that can not be monitored as per the satisfaction of law enforcement agencies.

FDI in Dec up 31 pc to $2 bn
New Delhi, February 13
Snapping two months of declining trend, foreign direct investment (FDI) in India increased 30.69 per cent to $2 billion (about Rs 9,000 crore) in December 2010. In December 2009, India had attracted FDI worth $1.54 billion (Rs 7,185 crore).

Steel industry wants import duty to go
Mumbai, February 13
The domestic steel industry today requested the government to cut down import duty to nil from 5 per cent and levy duty on HR coils to contain inflation. The request comes in the wake of steel prices shooting up by over 30 per cent in the last two months, on fears of possible increase in coal prices from major producing nation Australia.


EARLIER STORIES



Coal India eyes more assets in US
Mumbai, February 13
Even as talks to buy an around 15 per cent stake in US-based Peabody Energy's coal properties in Australia near their conclusion, state-run Coal India is eyeing the West Virginian assets of another American company, a top executive has revealed.

Market Update
Bourses still in bearish mode
Markets may continue to remain choppy as the telecom scam investigation widens and the consequent uncertainty caused in the domestic political space. In the near term, the concern about corporate governance standards of Indian firms may continue to weigh on stocks as well.

Tax Advice
No tax liability on gift of property to son
Q. Please clarify the following points:
(a) I have some investments in mutual funds, FDRs, and I have a residential house where I am living. My son is an NRI in the USA. I have willed my moveable and immoveable assets in favour of my son. Can you suggest how I can transfer a portion of my FDRs/ mutual fund holdings in his name during my lifetime?





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Blackberry Row: Govt toughens stand
Asks telecom cos to enable interception or stop services

New Delhi, February 13
Hardening its stance against Blackberry for not providing a solution to intercept Enterprise mail services, the government today said telecom operators will have to stop any such services that can not be monitored as per the satisfaction of law enforcement agencies.

BlackBerry-maker Research in Motion (RIM) has been saying that it cannot provide access to the popular BlackBerry Enterprise Service (BES) as it does not possess any key and the security architecture is the same around the world.

"It is between the licencee (operators) to tell RIM that look if you can't do this, you can't use my network. It is as simple as that. I have only to deal with the licencee. I do not deal with RIM matters. I do not have any agreement with Blackberry," Union Home Secretary G K Pillai told PTI.

He noted this was in line with a condition in the licence agreement between the government and service providers that states, "Whoever uses your network, we must be able to intercept that in a form to the satisfaction of the Law Enforcement Agency." Asked whether the government has extended the deadline of January 31 for RIM to provide a solution to the satisfaction of LEAs, Pillai said, "We have not extended the date, but it has not been terminated also."

"Our aim is to make sure that whatever goes through our networks, we should be able, if required, intercept it... The issue is that we want that if you are using the network as per the licencing condition, there must be a provision for us to intercept... those which we want to intercept and that must be readable and legible format."

Eight operators, including Bharti, Vodafone, Idea, RCom, Tatas and also two state-owned firms BSNL and MTNL are offering BlackBerry services across the country and it has emerged a popular service among corporates for its enterprise mail service.

RIM vice-president (Industry, Government and University Relations) Robert E Crow, who was in India recently, had said, "There is no possibility of us providing any kind of a solution. There is no solution, there are no keys to be handed... It's not possible to do so because the keys of the service are in possession of the corporate enterprises." However, the argument is not bought by the security establishment.

The Home Secretary said, "Even messenger services - they all said we can't do it... We can't do it... Only when we said, okay, we are gonna close it down, they came and said here is the solution. I have a feeling... under pressure they'll do it." There are over one million BlackBerry subscribers in India and the number is growing fast. Indian security agencies have been demanding access to all BlackBerry services as part of efforts to fight militancy and security threats over the Internet and through telephone communications. PTI

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FDI in Dec up 31 pc to $2 bn

New Delhi, February 13
Snapping two months of declining trend, foreign direct investment (FDI) in India increased 30.69 per cent to $2 billion (about Rs 9,000 crore) in December 2010. In December 2009, India had attracted FDI worth $1.54 billion (Rs 7,185 crore).

However, during the nine-month period (April-December) of the current fiscal, FDI declined 23.14 per cent to $16.03 billion over the year-ago period, a source told PTI.

India had received $20.92 billion in FDI during the same period of the previous fiscal, 2009-10.

In view of declining foreign investment inflows, the Reserve Bank of India (RBI) is considering setting-up a panel to find out the reasons for FDI slowdown and suggest ways to encourage it.

According to economists, investors are cautious as the global economic recovery is fragile and uneven, specially in Europe.

In 2009-10, India's FDI had declined to $25.88 billion from $27.33 billion in the previous financial year.

FDI inflows in October 2010 dipped by about 40 per cent to $1.4 billion over the year-ago period. In November, too, it dipped by 7 per cent to $1.6 billion. PTI

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Steel industry wants import duty to go

Mumbai, February 13
The domestic steel industry today requested the government to cut down import duty to nil from 5 per cent and levy duty on HR coils to contain inflation. The request comes in the wake of steel prices shooting up by over 30 per cent in the last two months, on fears of possible increase in coal prices from major producing nation Australia.

"Steel manufacturers have increased prices by 30 per cent in the last two months anticipating that Australia may hike the coke price in view of the recent floods that impacted its coal mines," The All India Confederation of Small & Micro Industries Association president Sudarshan Sareen said.

There is no reason for the Indian steel producers to effect a hefty Rs 9,000 per tonne increase in prices in January and February 2011. Even the public sector SAIL has become a party to this steep increase in steel prices, which is only adding to the current inflationary trends, Sareen said.

Industrial output dipped to a 20-month low of 1.6 per cent in December from 18 per cent in the same month in 2009.

Indian steel consumption is seen more than doubling to 122 million tonnes in 2015 on robust investment and infrastructure demand. An unprecedented hike in steel prices would have a major impact on products, Sareen said. PTI

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Coal India eyes more assets in US

Mumbai, February 13
Even as talks to buy an around 15 per cent stake in US-based Peabody Energy's coal properties in Australia near their conclusion, state-run Coal India is eyeing the West Virginian assets of another American company, a top executive has revealed.

The world's largest coal producer has earmarked Rs 6,000 crore to fuel its inorganic growth overseas over the next 2-3 years in order to expand its coal base and meet burgeoning demand at home, the official said.

"Due diligence is on to buy up to a 15 per cent stake in the Australian assets of US-based Peabody Energy Corp. We hope the deal will be sealed soon. We are also looking at buying some stake in another company in West Virginia. We are upbeat and aggressive about international acquisitions and have earmarked Rs 6,000 crore for the same," Coal India Director R Mohan Das told PTI here.

He, however, declined to divulge any details on the prospective acquisition of active mines in West Virginia, saying the talks are at a preliminary stage. PTI

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Market Update
Bourses still in bearish mode
by Lalit Batra

Markets may continue to remain choppy as the telecom scam investigation widens and the consequent uncertainty caused in the domestic political space. In the near term, the concern about corporate governance standards of Indian firms may continue to weigh on stocks as well. Worries about high inflation and rising interest rates and fears of slowdown in corporate profits due to rising cost pressures may also keep the markets under check.

Last week, markets lost over one and a half per cent on persistent selling by FIIs. The FIIs have sold over $ 1.5 billion of equity since the start of 2011. The Bombay Stock Exchange Sensex ended the last week at 17,728, whereas the Nifty closed at 5,310.

With the third quarter results almost over, the focus will now shift to the expectations from the Union Budget to be presented by the Finance Minister on the 28th of this month. The Union Budget will be set against a very challenging macroeconomic backdrop. High crude prices (around $ 90 per barrel), domestic inflation is ruling at elevated levels and current account deficit is at historically high levels. These challenges are supplemented by continuous expansionary fiscal policy.

Technical charts indicate that a short-term bottom out may have been made last Friday, but the markets are still firmly in the bear grip. However, long-term investors may start biting into fundamentally strong stocks if the markets were to slide below 17,000.

Infrastructure sector

The sector has underperformed over the past 12 months relative to the BSE Sensex, barring L&T which has performed broadly in line with the Sensex.

This underperformance was on the back of issues on execution front delays on financial closure (FC), environment clearance issue, slowdown in order inflow and land acquisition related problems and resultant slowdown on the earnings front. However, we believe that the worst is over for most companies on the execution front and we expect earnings momentum to pick up going ahead on the back of strong order book.

Currently, markets are also wary of a slowdown on the order inflow front over the recent months which might impact the revenue growth going ahead. With some recent projects getting conditional clearance from the environment ministry, we believe that things have started easing up on this end. In the road segment, there are already signs of a pickup as the NHAI has asked for financial bids for projects worth approximately Rs 50,000 crore. These orders can be expected to flow over the next three to six months. Hence, investors may look to buy L&T, IVRCL and ITNL with a medium-term perspective.

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Tax Advice
No tax liability on gift of property to son
by S.C. Vasudeva

Q. Please clarify the following points:

(a) I have some investments in mutual funds, FDRs, and I have a residential house where I am living. My son is an NRI in the USA. I have willed my moveable and immoveable assets in favour of my son. Can you suggest how I can transfer a portion of my FDRs/ mutual fund holdings in his name during my lifetime?

(b) How I can transfer my house in the name of my son, with minimum tax liability?

(c) Can he open an NRO account jointly with me, and if I deposit money in this account, can it be transferred to his account in the USA ?

Nihal Singh

A. (a) You can gift your FDRs and mutual fund holdings to your son. Since your son is a non-resident in India, this would require a few formalities to be complied with. You have to seek the necessary clarification from the relevant mutual fund and the bank for doing so.

(b) You can gift house property to your son. This will require an execution of a gift deed which will have to be registered with Sub-Registrar of the area where the property is situated. This will involve payment of stamp duty on the fair market value of the property. The gift of FDRs, mutual fund and house property to your son would not involve any income-tax liability.

(c) The non-resident ordinary account can be opened in the name of a person not resident in India. You can however be given authority by your son to operate the said account on his behalf. The deposit in the said account can be in respect of income arising to non-resident or any amount accrued to him in India. It may not be possible for you to deposit your own funds in the said account.

Form 15H

Q. I am 67 and filing my income tax return every year. For the F.Y. 2011-12, my total taxable income without taking into account my savings under Section 80C is likely to be below Rs 1,85,000.

Can I submit Form 15H to a bank from whom I will receive interest income of just more than Rs 50,000 during the year to get TDS exemption?

Ram Lal

A. In accordance with the provisions of the Act , an individual who is more than 65 years of age can file declaration in duplicate in Form 15H, if his total income of the previous year in which such income is to be included in computing his total income will be Nil. The Finance Act 2006 has added a proviso to Section 139 of the Act which requires a person to file his return of income whose total income without giving effect to the deduction allowable under Section 80C of the Act exceeds the maximum amount which is not chargeable to income tax. The issue whether the estimated total income to be taken for filing Form 15H is to be considered without giving effect to the deductions available under 80C of the Act is not free from doubt. However, pending any clarification on this issue you can file Form 15H to enable the bank not to deduct tax at source.

Interest on MIS scheme taxable

Q. I am a retired Punjab Govt. pensioner and a senior citizen. Pease clarify the following points:

(a) Whether the monthly interest and the amount payable on maturity in M.I.S. for six years in a Post Office/bank is countable for purpose of tax or is covered for benefit under Section 80(C)?

(b) Presumably, the interest accrued on Sr. Citizen Scheme in a Post Office/ Bank is covered under Section 80(C) up to an investment of Rs 1,00,000 only. In that case, interest earned on investment beyond that limit only in this scheme is to be counted for purpose of tax calculation. For example, if invested money under this scheme is Rs 1,10,000, then only the amount of Rs 10,000 is to be calculated for purpose of tax in I.T. return.

T.C. Sharma

A. The monthly interest and the amount payable on maturity in monthly saving scheme in Post Office is not deductible under Section 80C of the Act. The interest earned on such a deposit is taxable. However, deposit of an amount under Senior Citizen Saving Scheme is covered for deduction under Section 80C of the Act within the overall limit of Rs 1 lakh. The allowable deduction is in respect of the amount of deposit made in an account under Senior Citizen Savings Scheme 2004. The interest accrued in such a deposit account is taxable. Therefore, in the example cited by you, only Rs 1,00,000 would be deductible under Section 80C of the Act and balance amount of Rs 10,000/- would form part of your total income.

Tax liability

Q. I am a female. Kindly work out my income tax for financial year 2010-11 and also the TDS. The company deducted TDS without education cess.

Detail of income as under:

Gross salary income Rs 4,29,230

Interest income from pvt. company Rs 1,70,000

Savings Rs 1,00,000

R.B. Singh

A. On the basis of figures given in the query, your total income would work out at Rs. 4,99,230. You will be liable to pay tax of Rs. 30,923 plus education cess @ 3% thereon which would work out at Rs 928. The aggregate amount payable would thus be Rs. 31,851.

The computations are based on the presumption that you are below 65 years of age. The deduction of tax by the company excluding education cess would not have any implications as you are not concerned with tax deduction at source, the same being liability of the tax deductor. You would be liable to pay the tax according to your total income and any tax deducted at source would be allowable as deduction against the payable amount of tax.

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