B U S I N E S S

TRAI takes mobile operators to task
New Delhi, January 15
Taking serious note of the deteriorating quality of mobile services throughout the country, telecom regulator TRAI has pulled up the Cellular Operators Association of India saying that the operators were taking a plea of delay in interconnectivity and spectrum- related issues as a cause for poor quality.

Volvo to introduce CNG models
New Delhi, January 15
After ushering in a new era of inter-city bus travel in the country with its luxury coaches, the Swedish busmaker Volvo is now planning to alter the intra-city segment by introducing its CNG models in India.

‘Old beauties’ steal hearts at Auto Expo
New Delhi, January 15
Even as modern-day luxury cars are vying to hog the limelight at the ongoing Auto Expo here, oldies are turning to be no less head turners. “So far, we have received a good response.

Visitors at the Maruti pavilion in Pragati Maidan during the 8th Auto Expo, 2006, in New Delhi on Sunday. — PTI photo

Merger of PSBs opposed
Chandigarh, January 15
The All-India Bank Officers Association has opposed the merger of public sector banks. It has instead demanded the expansion of public sector bank branches. Addressing the fourth conference of the Punjab State Committee of the AIBOA, Mr R J Sridharan, General Secretary of the association, said there were just 27 public sector banks, having 49,000 branches all over the country.

Market UPDATE

Correction in markets as RIL, Infosys disappoint
Last week saw the benchmark indicies lose ground on the back of profit booking across most sectors triggered by a fall in some key index heavyweights. Sensex lost about 3 per cent last week to close at 9,374 Nifty was lower over 2 per cent to settle the last week at 2,850.

Central State Bank of Pakistan's newly appointed Governor Shamshad Akhtar speaks to the media in Karachi on Saturday. Akhtar, a former Director-General of the ADB, is the first woman head of the bank since its inception in 1948. — AFP

	FM to convince Left that FDI in retail is right January 15, 2006
	Sebi now unearths IDFC IPO scam January 14, 2006
	Govt to divest stake in PSUs through third route January 13, 2006
	Infosys shuns Bangalore for further expansion January 12, 2006
	Govt notifies 8.5 pc interest rate on EPF January 11, 2006
	Reliance seeks sops for selling petrol, diesel January 10, 2006
	Six CMs woo NRIs for investment January 9, 2006
	Centre asks states to sign pacts for coop revival January 8, 2006
	FinMin averse to Mexico as partner in airport revamp January 7, 2006
	Private players allowed to run container trains January 6, 2006

Certain donations qualify for 100 pc deduction
Q. What are the donations that I can do as an individual and get 100% tax exemption ? My prime aim is donation (of course) and also tax saving in the form of exemption. As a salaried person, does only section 80G is applicable to me for donation purposes, or are there some other sections of the Income Tax Act, such as Section 35, under which also I can claim a 100% rebate on the donated amount?

TRAI takes mobile operators to task

New Delhi, January 15
Taking serious note of the deteriorating quality of mobile services throughout the country, telecom regulator TRAI has pulled up the Cellular Operators Association of India (COAI) saying that the operators were taking a plea of delay in interconnectivity and spectrum- related issues as a cause for poor quality.

It is understood that operators have not taken any steps for reducing the time period in the interconnection agreements for provision of interconnection either through mutual discussions or through legal measures, TRAI said in a strongly- worded letter to the COAI.

TRAI's decision to question the operators on the quality of services assumes importance especially since the tariffs of mobile services have been continuously falling down while quality of service not adhering to the set benchmarks may ultimately prove disastrous for the industry as a whole.

TRAI had issued a directive to all operators in November last year to ensure that the quality of service in their networks should be within the prescribed benchmarks by December 31, 2005.

The COAI denied allegations levied by TRAI and asked it to withdraw its directive as certain facts need to be verified as mentioned in the regulator's letter.

The service providers have also not taken any legal measure in cases where the provision of interconnection has been delayed badly. DoT seeks of spectrum from Dept of Space for WiMax roll-out

It is not just the Ministry of Defence, whom DoT is pushing for spectrum, it is also asking the Department of Space to vacate some of the radio waves for use of an advanced wireless broadband technology 'WiMax' that can be rolled out in the inaccessible areas, thus helping bridge the telecom divide.

"Some spectrum on 2.3-2.5 Ghz band have been made available to the operators going for WiMax roll-out. We have to coordinate with the Department of Space for releasing spectrum 3.3-3.8 Ghz as well as 2.5-2.7 Ghz band so that we can give it to WiMax operators. But it will take time", DoT sources said. — PTI

Volvo to introduce CNG models

New Delhi, January 15
After ushering in a new era of inter-city bus travel in the country with its luxury coaches, the Swedish busmaker Volvo is now planning to alter the intra-city segment by introducing its CNG models in India.

Volvo Buses Head and Vice-President (South Asia) Akash Passey said the company would bring in its CNG models to India in the next one year. “The CNG models will be introduced in the city bus segment,” he said.

Volvo India, which had been focusing on the inter-city and tourist coach market in India till now, announced its entry into the city bus segment with its new Volvo city bus at the ongoing Auto Expo here.

“Before introducing our CNG models, we would like to first establish ourselves in the intra-city area,” Mr Passey said.

The company has already bagged an order of 25 buses from the Bangalore Metropolitan Transport Corporation. Volvo is also in talks with the Delhi Transport Corporation for launching these intra-city buses. The company is also in talks with Jet Airways and Kingfisher Airlines for its city bus.

Priced at Rs 70-80 lakh with a premium of 20 per cent over Volvos inter-city buses, the chassis will be assembled at Volvo’s Bangalore factory. The City Bus will be manufactured from the same assembly line from which Volvo trucks are built. The body is built at the Jaico Automobile Engineering Company, near Bangalore.

Honda to launch sub-150 cc bike

Meanwhile, Honda Motor Cycle and Scooter India (HMSI) is set to fire up competition in the executive motor cycle segment with the launch of a 125 cc bike, its second motor cycle in the Indian market, by April.

“After creating considerable excitement in the market through its 150 CC bike Unicorn, the company is gearing up for the launch of a sub-150 CC bike in the executive segment,” Industry sources said.

HMSI’s entry into the crowded executive segment with the bike, codenamed ‘MC2’, is expected to fuel a price war in the segment.

HMSI’s plans to enter the executive segment assumes significance as its Japanese rival, Suzuki, has also recently announced plans to launch two 125 cc bikes in the market by March. — Agencies

‘Old beauties’ steal hearts at Auto Expo

New Delhi, January 15
Even as modern-day luxury cars are vying to hog the limelight at the ongoing Auto Expo here, oldies are turning to be no less head turners.

“So far, we have received a good response. It assumes greater significance as cars with latest designs and high-end technology are also on display (at the expo),” General Secretary, Heritage Motoring Club of India (that conducts Vintage car rallies) Vijendra Gupta said.

Displayed from the stable of the club’s members include vintage beauties like Standard Coventry (1927), Mercedes-680 K Supercharged (1927)and Minerva AL (1928).

This is the third year HMCI is displaying old models at the expo, and some of the vintage cars could even fetch over Rs 1 crore, he added.

For the historically inclined, the Studebaker Commander (1930), once used to ferry leaders such as Mahatma Gandhi and Moti Lal Nehru, is a great attraction. — PTI

Merger of PSBs opposed
Tribune News Service

Chandigarh, January 15
The All-India Bank Officers Association (AIBOA) has opposed the merger of public sector banks (PSBs). It has instead demanded the expansion of public sector bank branches. Addressing the fourth conference of the Punjab State Committee of the AIBOA, Mr R J Sridharan, General Secretary of the association, said there were just 27 public sector banks (PSB), having 49,000 branches all over the country. "The coverage of each bank branch has to be expanded, so we need more banks", he said.

He, however, justified the merger of public and private sector banks. During the meet, the bank officers demanded that default in repayment of loans or non-performing assets (NPAs) of Rs 1 crore and above should be made a criminal offence. While 95 per cent of the small loans are paid in time, there are just 10,000 bank account holders who have NPAs worth Rs 40,000 crore.

 

MARKET UPDATE

by Lalit Batra

Correction in markets as RIL, Infosys disappoint

Last week saw the benchmark indicies lose ground on the back of profit booking across most sectors triggered by a fall in some key index heavyweights. Sensex lost about 3 per cent last week to close at 9,374 Nifty was lower over 2 per cent to settle the last week at 2,850. The disappointing third-quarter results of Reliance Industries Ltd (RIL) and lower-than-expected net profit growth reported by Infosys Technologies pulled the market down last week. Another fact that might have spoiled the mood on the bourses was the stretched valuations of the front-line stocks after a 23 per cent rise in Sensex in the past 10 weeks. However, mid cap and small cap indices closed last week with gains. In the short run, the quarterly results would dictate the movement of the market though the market remain volatile.

Royal Orchid Hotels

Royal Orchid Hotels, a hospitality chain, currently owns four hotels Hotel Royal Orchid, Royal Orchid Harsha and Royal Orchid Central in Bangalore and Royal Metropole in Mysore. The four hotels together have 435 rooms in total and operate eight food and beverage outlets and 12 banquet hall. West Bridge Ventures recently picked up nearly 8 per cent stake in the company for Rs 25 crore.

The Royal Orchid group is among the biggest hoteliers in Bangalore.

The company intends to expand its presence to major cities across India. To begin with, it has initiated development in Hyderabad and Pune and is exploring opportunities in Mumbai, Delhi and Chennai.

The hotel and tourism sector is experiencing significant growth, driven by increased business and tourism, and the Bangalore hotel market remains one of the best performing hotel markets in India and in the region. This augurs well for the company.

Coming to the pricing of its IPO at the upper end of the price of Rs 165 the stock is available at PE of 23 (On fully diluted equity for year March, 2006 at the lower end of Rs 150), it is available at a discounting of 21 times the earnings. Though the valuations are rich, investors with a long-term perspective can invest at the upper end of the price for decent returns.

 

Tax Advice

by S.C. Vasudeva

Certain donations qualify for 100 pc deduction

Q. What are the donations that I can do as an individual and get 100% tax exemption ? My prime aim is donation (of course) and also tax saving in the form of exemption. As a salaried person, does only section 80G is applicable to me for donation purposes, or are there some other sections of the Income Tax Act, such as Section 35, under which also I can claim a 100% rebate on the donated amount?

— Vineet Aggarwal

A. There are a large number of entities in which the deduction for donations made is allowable to the extent of 100% Some of funds in the above category are: the National Defence Fund set up by the Central Government; the Jawaharlal Nehru Memorial Fund referred to in the Deed of Declaration of Trust adopted by the National Committee as its meeting held on the 17th day of August, 1964; or the Prime Minister’s Drought Relief Fund; the Prime Minister’s National Relief Fund; the Prime Minister’s Armenia Earthquake Relief fund; the Africa (Public Contribution - India) Fund; the National Children’ s Fund; the Indira Gandhi Memorial Trust, the deed of declaration in respect whereof was registered at New Delhi on the 21st day of February, 1985; the Rajiv Gandhi Foundation, the deed of declaration in respect whereof was registered at New Delhi on the 21st day of June, 1991; the National Foundation for Communal Harmony; a University or any educational institution of national eminence as may be approved by the prescribed authority in this behalf.

Section 35 of the Income tax Act is part of Chapter IV which relates to computation of income under the head profits and gains from business, vocation or profession carried on by the assessee. Accordingly, the deduction allowable under Section 35 of the Act is to be treated as a business expenditure provided the same has been incurred in the manner laid down in the said section. It may thus not be possible for you to get the deduction under section 35 of the Act against your salary income.

Ceiling on PPF

Q. Please advise whether the contribution to the PPF account during the financial year 2005-06 is eligible for the rebate under section 80C?

(a) Whether the ceiling on the contribution to PPF is Rs.70,000/- or up to Rs 1 lakh for the above-said rebate?

(b) Whether the assessee who has got no tax liability after permissible rebate / deductions etc. and no refund due as well is still supposed to file Income Tax Return?

— Kanwar Raghbir Singh

A. The answers to your queries are as under:

(a) The contribution to the Public PPF is eligible for rebate under section 80C of the Income tax Act, 1961, for the financial year 2005-06 relevant to the assessment year 2006-07.

(b) The ceiling with regard to the contribution to the PPF continues to be Rs.70,000/- as the PPF rules have not been changed so as to bring it in line with the provisions of Section 80C of the Act.

(c) In accordance with the amended provisions of Section 139 of the Act, every person, if his total income during the previous year without giving effect to the deductions under Section 80C of the Act etc. exceeds the maximum amount which is not chargeable to tax, is required to file the Income tax return. Accordingly, an assessee who is not liable to be taxed after permissible deductions, is obliged to file a return of income in accordance with the amended provisions of the Act.

Gallantry award

Q. Is the annuity paid by Punjab Govt. to the gallantry award winners exempted from Income tax? Or is it taxable? If exempted, under which clause. Please clarify.

— Lt. Col. J.S. Lakhman

A. Section 10(18) of the Act exempts any income by way of such gallantry award as the Central Government may by notification in the official gazette specify in this behalf. The relevant notification no. is SO 1048 dated 24.11.2000 as amended by notification no. 22/2001 [F.No. 142/29/99-TPL], dated 29.01.2001. You may therefore please look up the notification to ascertain whether the particular gallantry award received by you from the Punjab Government is exempt from tax.

Interest taxable

Q. Is the interest earned in savings account is taxable.

— P.K. Gupta

A. The interest earned on a savings Bank Account was not taxable up to Rs.12,000/- under section 80L of the Act till the assessment year 2005-06. In view of the amended provisions of the Act, such interest would be taxable for the assessment year 2006-07 and onwards even if the amount of such interest is below Rs. 12,000/-.

Disability pension

Q. I am getting disability pension (30%) from the Army for the disability. I got during my Army service Rs.570 + D.A. pm. w.e.f. 1st April 2005.

Please advise whether the same is taxable or some relief is available under the Income tax Act for the year 2005-06 (current year)

— B.D. Garg

A. The pension received by you is not exempt from tax. However you can claim the deduction allowable under Section 80U of the Act provided you comply with those conditions which are provided for in the said section. The section requires that every person claiming a deduction under this section shall furnish a copy of the certificate issued by the medical authority in the form and manner as may be prescribed along with the return of income. The deduction allowable under the aforesaid section is Rs 50,000/- for minor disability and Rs. 75,000/- in the case of a severe disability. The disability for the purposes of the above section means blindness, low vision, leprosy- cured, hearing impairment, locomotor disability mental retardation and mental illness.

HBA and tax

Q. My queries are as under:

(i) Whether interest on HBA is deductible from the gross salary for the year 2005-06.

(ii) Whether the refund of house building instalments have any tax rebate and what is mere amount on which rebate is given.

(iii) Whether for higher education of children exemption is given on tuition fee and what is the maximum amount on which rebate is given for the year 2005-06.

— Santosh

A. The answers to your queries is as under:

(i) The interest on house building advance is deductible against the income from house property and is not deductible from the gross salary.

(ii) The instalments paid towards the repayment of house building advance are allowable as deduction from the total income under Section 80C of the Act. The maximum amount of deduction allowable under the aforesaid section is Rs.1 lakh.

Tuition fee paid to any university, college or other educational institution situated within India for the full time education of the individual himself, wife or any child of such individual is allowable as deduction under Section 80C of the Act. As stated above, the maximum deduction allowable under the aforesaid section is Rs. 1 lakh, meaning thereby that within the said amount of Rs. 1 lac you can claim deduction in respect of instalments paid towards the house building advance as well as towards the tuition fee paid for higher education of your children.