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Coop banks under RBI scanner
Destination India for 2 US airlines
US Airways’ merger okayed
7 firms bid for GAIL project
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Russia denies visa to Anil Ambani
Left MP seeks probe into booming Sensex
Zee Tele to transfer news business
Positive attitude of AAI must for airport revamp
No fixed norms to discern share trader from investor
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Coop banks under RBI scanner
Bangalore, September 17 The country’s central bank is making “special enquiries” with UCBs in this context, Mr Reddy said when asked if the RBI is keeping a track on diversion of funds illegally to stock markets by UCBs. In addition to permissible exposures by UCBs to stock markets, which come under normal reporting system, the RBI is now trying to get “special reports” on the nature of capital market exposure by UCBs, he said. “So, we are keeping a track... careful. Normally itself, we keep track. But now we are making special enquiries, and so far no particular case of any serious diversion has come to our notice,” Mr Reddy said. “But still we have to keep a watch and we are keeping a special watch,” the RBI Governor added. India’s stock markets are on an upbeat mood, and yesterday, Sensex rallied smartly by 97 points to scale yet another new peak at 8,388.80 on sustained inflows from FIIs as also private mutual funds.
Consolidation not on agenda
Consolidation of urban cooperative banks (UCBs) in the country is not on the RBI’s agenda, Mr Reddy said today. RBI is not even encouraging UCBs in this respect, he told reporters here. “Question of consolidation in urban cooperative banking system is entirely on the basis of an enabling mechanism. The very nature of cooperative is that essentially it’s local. Consolidation is not on top of the agenda (of RBI) under any circumstances,” he said. RBI is prepared to consider any proposal on mergers and acquisitions if the banks concerned came forward, and the country’s central bank would give its opinion, which would be based on the balance sheet and protection of depositors.
— PTI
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Destination India for 2 US airlines
Baggage load reduced Many of European and North American carriers have decided to reduce the baggage allowance of economy class travellers. Now passengers travelling to various destinations in North America will be allowed only two suitcases weighing 23 kg each as checked in baggage. Till now, permitted check in baggage limit was two suit cases of 32 kg each. Thus the baggage allowance has been cut by more than 25 per cent.
Chandigarh, September 17 While American Airlines will operate on Delhi-Chicago sector, Continental will air link Delhi with Newark in New Jersey. While North American air carriers are evincing interest in expanding Indian market, Air Canada, the only international air carrier operating a non-stop flight between New Delhi and Toronto, has decided to make a halt in Zurich, Switzerland. By end of October, the popular Delhi-Toronto-Delhi flight will be replaced by Delhi-Zurich-Toronto-Zurich-Delhi flight. While more and more international carriers, especially North American and European are interested in expanding their Delhi operations; South East Asian carriers continue to view Amritsar as a major market. Another international air carrier eyeing Indian market in general and North India in particular is Malaysian airline, which wants to extend its operations to Amritsar. Though initially Malaysian airline was keen to start its Amritsar operations from November 1 this year, but the plan has been deferred for the time being. Malaysian will become second Asian airline after Singapore airline to extend its operations to Amritsar. Amritsar-Singapore flight helps passengers bound for various destinations in South east, down under (Australia-New Zealand) besides the Los Angeles and Vancouver sector of North America. Impressed by the success of Singapore airlines, Malaysian airlines, too, is keen to increase its share from the second north Indian air hub after Delhi. Sources in the aviation sector maintain that British Airways may soon extend its operations to Amritsar as it can cater to travel needs of Indian diaspora to almost entire Europe and North America.
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US Airways’ merger okayed
Alexandria,Va., September 17 Judge Stephen Mitchell of the US Bankruptcy Court for the Eastern District of Virginia signed off on the deal that will create the fifth largest domestic airline by passenger volume. The parties must wait for 10 days before completing the transaction. US Airways says the merged company will have $2.5 billion in cash, including unrestricted and restricted amounts. The merger plan anticipates oil prices of $58 per barrel in 2006 and $57 per barrel in 2007. Oil was trading around $64 a barrel on Friday.
— Reuters
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7 firms bid for GAIL project
New Delhi, September 17 The deadline for submission of bids ended yesterday. The bids have been received from three foreign and four Indian manufacturers. The Indian parties that have submitted their bids include Jindal Saw Ltd, Welspun Gujarat Stahl Rohren Ltd, Man Industries Ltd and PSL Ltd. The foreign parties that have submitted their bids include Leman Commodities S A, Switzerland; Sumitomo, Japan and Liaoyang Steel Company Ltd, China. The re-tendering of the project followed the government’s directive to cancel earlier bids due to controversy over the usage of technology. The project is likely to be completed in February, 2007. Steel plates or HR steel coils, used in the manufacturing of pipes for this pipeline tender, can be sourced by successful bidders from steel manufacturers, either overseas or Indian, who meet the criteria stipulated in the tender. The indicative list of steel suppliers include seven reputed international steel manufacturers namely, Thyssen Krupp, Germany; Mannesmann Salzgitter Roehrenwerke, Germany; Dillinger Huette, Germany; Ilva (Riva Group), Italy; Azovstahl, Ukraine; Posco, Korea and Voest Alpine, Austria.
— UNI
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Russia denies visa to Anil Ambani New Delhi, September 17 Terming visa problem as a major obstacle in improving bilateral business relations, India's Ambassador to Russia, Kanwal Sibal today said: "Some young entrepreneurs from India led by Anil Ambani and Anand Mahindra wanted to have a business meeting in St Petersburg. But their application was rejected by the Russian embassy.” Referring to the stringent visa norms, he said India was holding talks with the Russian Foreign Office to have a business visa facilitation agreement with that country. Sibal, however, said that he was not very hopeful of a quick solution to the problem. — PTI
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Left MP seeks probe into booming Sensex
New Delhi, September 17 Suspecting that manipulation by a bull syndicate had brought about the flare up, he said reports that the FII inflows had pushed the growth was incorrect, as their involvement was "not more than 5 per cent of the total transaction" at about Rs 20,000-Rs 30,000 crore every day in the secondary market. In a letter addressed to Prime Minister Manmohan Singh and handed over to Finance Minister P Chidambaram, Das Gupta said he feared that some of the past scam masters were pulling the strings from behind. The MP also said banks were investing money "quite disproportionate to their exposure limits and LIC was making use of its investable surplus funds, and mutual funds too were in the fray favouring the bull run led by a notorious
syndicate." — PTI
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Zee Tele to transfer news business
New Delhi, September 17 It yesterday said its shareholders would consider the proposal through a postal ballot. The company has appointed C R Mehta, former member of the Company Law Board, as the scrutiniser for conducting the postal ballot process in a fair and transparent manner.
— UNI
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by A.N. Shanbhag
No fixed norms to discern share trader from investor
Q: We are a public limited company trading in shares. We take delivery of shares and sell them. Will our profits be charged at 10 per cent or treated as normal business profits. All investments are of short-term nature (held for a day or weeks).
— Uday A:
This has been a contentious issue since a long time. The IT Act doesn’t specify the parameters to gauge exactly who is a trader and who is an investor. It’s depends upon the facts of the case and the ITO’s discretion. Mind you, merely taking delivery doesn’t automatically make you an investor.
Leave salary
Q: I resigned from a company in September, 2004, and received leave salary. I also paid one month’s salary as a notice pay. Can you please confirm, what tax benefits/deductions can I get? — Paresh A: If leave encashment is received at the time of leaving the job or at the time of retirement, then Section 10 (10AA) provides exemption, which is explained below. In the case of a non-government employee, leave salary is exempt from tax to the extent of the least of the following: 1.Cash equivalent of the leave salary in respect of the period of earned leave standing to the credit of employee at the time of retirement/superannuation (earned leave entitlements cannot exceed 30 days for every year of actual service rendered for the employer from whose service he has retired) ; or 2.Ten months’ “average salary”; or 3. Rs. 3 lakh 4.The amount of leave encashment actually received at the time of retirement. Salary - Meaning of - “Average salary” for the aforesaid purpose is to be calculated on the basis of average salary drawn during the period of 10 months immediately preceding the retirement/superannuation/leaving Retirement or otherwise - Exemption under Section 10(10AA) is available in respect of cash equivalent of earned leave at the employee’s credit only at the time of retirement, whether such retirement is on superannuation or otherwise. The word “otherwise” covers the case of retirement, which takes place not at the time of superannuation but any other time. According to the Madras High Court in CIT v. R.J. Shahney [1986] 159 ITR 160, and the Bombay High Court in CIT v. D.P. Malhotra [1998] 229 ITR 394 voluntary retirement from service is one such case which comes within the four corners of the words “otherwise than superannuation”. The words “or otherwise” should not be construed ejusdem generis, but rather as extending the scope of the statute to include the case of retirement which does not take place at the superannuation but some other time. Barring the case of “termination” of service, any other case of leaving service (whether under the voluntary retirement scheme of the employer or by way of resignation by the employee) is covered by Section 10(10AA).
HUF account
Q: I have opened an HUF account in post office MIS on February 1, 2005. The government has directed to close all HUF account by December 31, 2005. Please clarify whether this account opened as HUF account prior to May 13, 2005, will also be required to be closed or not. Please confirm whether the amount invested after May 13, which I am supposed to withdraw, can be invested in 8 per cent taxable bonds of RBI, SBI etc in HUF category. — R.K. Jain A: As per our understanding, there is no circular that has directed closure of all HUF account by December 31, 2005. HUFs will not be allowed to make any fresh investments in PO instruments any more. Kindly check with the post office in your area. After receiving your query, we have already checked with the PO in our area and found that they are not aware of such a circular.
Tax on property
Q: I have bought a house in Delhi, the EMI for which is Rs.10,054. My income is Rs.5 lakh per annum and that of my wife is Rs 3 lakh per annum. The property is in my wife’s name. Since I have a larger income and hence a larger tax bracket, I would ideally want to take the entire exemption and do away with savings instruments like the NSCs and investment bonds for my wife’s. Do you think any other way is wise enough? Please suggest. Or else, how would you suggest me going about claiming the rebate on housing loan. — Abhay A:
Since the property is in your wife’s name, you will not be able to claim any deduction on it. You should have bought the property in equal shares. I am afraid, now nothing can be done for claiming the deduction except buying a share in the property, which will have stamp duty implications. However, the good news is that the housing rebate basically takes your wife into the 20 per cent tax bracket and some back of the envelope calculations show me that the difference between you claiming the rebate and she doing so, in terms of your combined tax outgo is only about Rs. 5,000...so its not that significant. For 80C instead of NSC, bonds etc. use ELSS where the returns over three years have been spectacular in the past and have all probability of being so in the future.
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