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All eyes on Ambanis’ new growth plans
RIL demerger may take up to one year
Industrial buoyancy may continue: CII
New EDs for seven banks
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Market set to test new highs
Trust liable to file income tax return
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All eyes on Ambanis’ new growth plans
Mumbai, June 19 Having hived off his pet Reliance Infocomm to Anil, the Mukesh Ambani group has begun scouting for fresh avenues of investment. Sources say the Mukesh group will get into retail which is all set to emerge as the next big sector in India. RIL, which has huge cash surpluses, is likely to commit as much as Rs 10,000 crore in the retail foray over the next several years. In the past five months when it was clear that Reliance Infocomm would go to Anil Ambani, senior RIL officials began to purchase plots of land across the country to set up hyper-malls on the lines of WalMart, sources said. A number of senior executives with experience in retailing have moved back to RIL from Infocomm, sources said. So far RIL representatives have quietly mopped up plots of land in 75 locations across the country, sources said. RIL expects to buy 200 plots of land by end-2007, according to sources. RIL has already set up a prototype mall in Gujarat and is expected to roll out similar establishments in various parts of the country. Rumours that RIL may tie up with Kishore Biyani’s Pantaloon group, promoters of Big Bazaar, is already roiling the stock markets. On the other hand, Anil Ambani is firming up plans to grow Reliance Capital in a big way. With his faction of Reliance slated to get a huge infusion of cash from the Mukesh Ambani group, Anil is said to be planning a move into retail banking. The market expects a big announcement from Reliance Capital. The Ambani’s links with K V Kamath will also see increased movements in ICICI stocks, according to brokers. Both Reliance Capital and Reliance Energy are expected to hit the capital market for raising equity. Reliance Infocomm is also likely to come out with an IPO in the immediate future. Analysts also expect technological convergence with Reliance Energy and Reliance Infocomm sharing infrastructure. Reliance Energy provides power to suburban Mumbai and its infrastructure may be used by Infocomm to ramp up telecom services in the country’s financial capital, sources say. In the immediate future, the Anil Ambani’s group will have “A Dhirubhai Ambani Enterprise” to differentiate this group from the Mukesh Ambani group.
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RIL demerger may take up to one year
New Delhi, June 19 “It (demerger) is feasible. We have done a lot of thinking on this. We are now planning it as per legal requirements,” RIL Director Y.P. Trivedi heading the Board committee authorised to recommend a “suitable scheme of reorganisation”, told PTI Mr Trivedi said demerger of the flagship company to effect the deal could take up to 10-12 months. While effecting the change, the underlying principle would be to protect the interest of over three million shareholders, he said. “Shareholders interest and share value will not be eroded when the process (of demerger) is done,” Mr Trivedi asserted. Stating that the process was time consuming and complex, Mr Trivedi said: “There are so many things to be done. There are legal problems, then there will have to be meetings as per court requirements etc.” Asked as to how an RIL shareholder could have his interests protected in another entity to be created from the flagship company for Anil Ambani, he said “This can be taken care of by concept of demerger. It requires legal planning.” About the top-level changes, including the restructuring at board levels consequent to the settlement, Mr Trivedi said even he was a Director on the Board of Reliance Infocomm and he would quit.
— PTI
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Anil visits Tirupati
Tirupati: A day after settlement of the acrimonious ownership row in the Reliance empire, Mr Anil Ambani visited the Tirupati temple on Sunday to thank Lord Venkateshwara for resolution of the crisis in the family.
Accompanied by wife Tina and sons Anmol and Anshul, Anil Ambani airdashed from Mumbai on Sunday morning to offer prayers at the temple. Shortly after the feud between him and his elder brother Mukesh became public last November, Anil had visited the temple and said he had come to pray for peace and tranquility in the family and seek strength to carry forward the legacy of his late father, Dhirubhai Ambani, who created the largest private sector conglomerate from the scratch. Anil returned to Mumbai in the afternoon.
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Both free to use Reliance name, logo
New Delhi, June 19 “Both Mukesh and Anil companies’ will use the Reliance brand,” senior RIL Director Y.P. Trivedi, who is heading the Board Committee on Corporate Governance, told PTI. Asked as to how the two separate entities could use the same brand and logo, Mr Trivedi said: “It can be done. It has happened in India in other cases. It can be Reliance A or Reliance B.”
— PTI
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Industrial buoyancy may continue: CII
New Delhi, June 19 The Business Survey Outlook for April-September 2005 showed that the Business Confidence Index (BCI) of Indian industry for April-September 2005 rose 0.9 points to 65.7 points over October 2004-March 2005. The Current Situation Index (CSI), which compares the current business conditions with the previous six months, stands at 63.8, showing a gain of 0.7 points. The Expectation Index (EI) stood at 66.8 points, an increase of 1.1 points over the last survey. The increase in overall confidence index is in line with the responding firms' expectation of positive immediate prospects for their firms and industry, the survey said. The CSI is indicative of the fact that the economy has picked up as per industry expectation during the previous six months, it said, adding the CSI for Indian economy increased by 4.8 points and the index for the activity sector also rose by 0.5 points.
— PTI
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New EDs for seven banks
New Delhi, June 19 "The government has filled the posts of executive director of seven banks," an informed source said. PNB General Manager C P Swarnakar, who was instrumental in the bank's successful public offer two months ago, has been appointed ED in the same bank. Swarnakar replaced K C Chakraborty at PNB, who became Chairman and Managing Director of Indian Bank. Two general managers of Union Bank of India were promoted — P L Gairola will be ED of Bank of India while K L Gopalkrishnan will go to Corporation Bank. A C Mahajan of BoI will take charge as the ED of Bank of Baroda, while M D Mallya of Corporation Bank will move to Oriental Bank of Commerce. U S Kohli of Punjab & Sind Bank will move to Dena Bank and S Lahiri of UCO Bank will join United Bank of India as
ED. — PTI
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by S.C. Vasudeva
Trust liable to file income tax return
Q. A charitable education trust comprising honorary trustees has been created with the aid given by some donors with the aim and object of giving scholarships / monetary aid to deserving poor students out of the interest accrued from the said fund, existing in the form of term deposit with a scheduled bank of the country.
i) Is the trust liable to file a return of its interest income and donations; Any limit or ceiling? ii) Are the donations liable to income tax? iii) Is the interest accrued from the said fund liable to income tax? iv) Is it obligatory for the trust to apply for PAN under all circumstances? — Balbir Singh Saini A.
A charitable trust has to get itself registered with the tax authorities under Section 12A of the Income-Tax Act, 1961 (The Act) so as to seek exemption from the taxability of its income (be it donations or any other income) under Section 11 and 12 of the Act. An application in the prescribed form (Form 10 A) has to be made within one year of the date of creation of the trust for the purpose and filed with the Commissioner of Income Tax. Presuming that the above procedure has been followed, the answers to your queries are given hereunder: - 1. The trust is liable to file a return of income from interest and donations if its total income exceeds the maximum amount which is not chargeable to income tax. 2. The donations are to be included as part of the total income of the trust. 3. The interest earned by the trust shall form part of the total income of the trust. 4. The trust should apply for PAN as it may be required to seek exemption from deduction of tax at source.
Gratuity calculation
Q. I am thankful to you for responding to my query published on May 9. The bank has not been responding to my repeated request letters sent to them by registered post till date. As per bank gratuity sheet dated January 29, 1997, my details are as under:
1. Total gratuity Rs 1,86,184 2. Exempted gratuity Rs
1,25,974 3. Taxable gratuity Rs 60,210 4. Tax
deducted under Section 10(10) iii Rs 23,350 5. Date of
joining the bank 17-03-1973 6. Date of retirement 31-12-1996 7.
Total Service 23 yrs, 11 months 15 Days 8. Average last 10
months salary Rs 10,953 9. As per Punjab & Sind Bank
Employees Gratuity Fund Rules as on April 1, 1995. Tax
exempted limit Rs 2.5 lakh. — H.S. Gujral A. On the basis of data given by you the gratuity would be compared as under:- Completed years' of service: 23 years Average salary for last 10 months: Rs 10,953 Gratuity in accordance with Section 10(10)(iii) of the Act: (23 X 10,953) / 2: Rs 1,25,960 The amount paid to you by the bank has thus been computed correctly.
Gift and IT return
Q: "I am retired and a senior citizen. My son is in Central Government service and recently returned from UK after 3 years. He has got joint saving a/c in a bank at Karnal with his wife (my daughter-in-law). He gifted Rs 5 lakh to me out of his savings by writing a simple letter which I accepted and acknowledged with thanks. He mentioned cheque no. of his joint account with his wife of Karnal bank in his gift letter. My daughter-in-law was here for a short duration. She invested Rs 5 lakh by issuing cheque to the postmaster from the same joint account to purchase KVPs in her name as first and my name as 2nd investor in KVP application forms. She was not aware of the said letter of gift to me from my son. She is a housewife and not an income tax payee. She lives with my son at his places of postings. I want to show accrued interest of these KVPs of Rs 5 lakh in my income tax return every year from this financial year 2005-2006 as I am an income tax payee. Can I do so as per the said gift letter of my son? Because, we cannot withdraw the said amount from post office before two and half years." — O.P. Gupta A:
A gift is a voluntary transfer of property to another made gratuitously and without consideration. The issuance of a letter without enclosing therewith the cheque and never acceptance of such a letter would not result into a gift of property, as the transfer thereof from person to another is an essential ingredient of an act of gift. Apart from the above stated fact, in your case cheque has been issued by your daughter in law from the joint account with her husband for the purchase of KVP. The act of purchasing KVP has also been performed by her. The interest on KVP, therefore, cannot be shown as your income. The accrued interest will have to be shown as the income of your son as the source of investment in KVPs is provided by your son.
Readers are welcome to send questions for tax advice. These should be brief, to the point and not exceed 100-150 words. The letters shold be sent to Tax Advice C/o The Tribune, Sector 29, Chandigarh-160020 or emailed to: taxadvice@tribunemail.com
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