The Tribune, Chandigarh, India

	Row with NTPC RIL asks govt to re-allocate gas New Delhi, October 11 Turning the heat on NTPC, Reliance Industries has asked the government to re-allocate the gas the state-run power utility is refusing to take, to other customers so that it is not forced to cap output from its eastern offshore fields. NTPC, which has been allocated 2.67 million standard cubic meters per day of gas from RIL’s KG-D6 fields, has after months of deterring signed contracts to take only one-fifth of its quota. It has refused to sign contracts for 2.1 mmscmd gas allocated to its existing Kawas and Gandhar power plants in Gujarat on the grounds that it is located in legal dispute over supplies to expansion projects at these sites at price RIL committed in a 2004 tender. "In view of the persistent stand of NTPC not to sign Gas Sales and Purchase Agreement (GSPA) for its Kawas and Gandhar plants, it is requested that the 2.1 mmscmd of gas allocated to the Kawas and Gandhar plants be reallocated to other customers," RIL president & CEO (petroleum) and member on the company board PMS Prasad wrote to the Petroleum Secretary on October 7. RIL had initially opposed selling gas to NTPC pending the case in Bombay High Court over supply of gas to the Kawas and Gandhar expansion projects at USD 2.34 per mmBtu. The state-run firm, however, vehemently fought back for supplies saying while the court case was for expansion projects, the government allocated supplies were for existing plants. When RIL relented and the government confirmed the allocation of 2.67 mmscmd at approved price of $4.20 per mmBtu, NTPC said it won’t sign the GSPA unless the Mukesh Ambani firm agrees to signing the pacts “without prejudice” to the ongoing court case. “Despite RIL having agreed to sign the GSPAs with the caveat that these GSPAs would be ‘without prejudice’ to the ongoing matter that is sub judice, NTPC continues to maintain that it does not want to discuss the GSPA for the existing Kawas and Gandhar plants even though the ongoing litigation relates to the proposed expansion of Kawas and Gandhar,” Prasad wrote. RIL is forced to keep output at just over 40 mmscmd of gas from KG-D6 fields despite having a capacity to produce nearly 65 mmscmd as customers like NTPC are not taking their allocated quantity and the government has failed to name new buyers beyond the initial volumes. “Keeping in view the huge demand for gas in the country and also the fact that several customers are awaiting allocation of gas, it is only fair that the gas declined to be taken by NTPC for their Kawas and Gandhar plants be relocated to other customers,” the letter, copies of which were also marked to Power Secretary HS Brahma, said. — PTI
	Market Update Q2 results to set the tone by Lalit Batra Despite better-than-expected results and higher guidance from Infosys, RIL bonus issue and supportive global cues, Indian markets struggled last week to find direction at higher levels. Sensex lost three per cent to close at 16,642. A sell-off in telecom stocks on concerns over declining tariffs and rising competition started the downfall. After a rally in the rupee against the dollar which overshadowed an upward revision in earnings from information technology bellwether Infosys last Friday, the next batch of second quarter results will dictate trend on the domestic bourses. A set of strong results is likely to prompt another round of earnings upgrades by analysts as the economic revival story gains traction. However, a disappointing second quarter scorecard may trigger sharp correction in the markets. HDFC, HDFC Bank, Axis Bank, TCS, Bajaj Auto and Ultra Tech Cement are some of the biggies that will unveil their second quarter results during the week. Stock and sector-specific activity may dominate trade in the coming days as the expectations of the results will dictate the trend. On the macro front, the key data due this week is industrial production for August which shall be unveiled today. Economic growth indicators have been signalling a revival for some time now and industrial recovery is gaining momentum. On the flip side, a likely surge in inflation due to higher food prices and a pickup in credit offtake may put an upward pressure on interest rates. A rise in interest rate may put a lid on an economic recovery. Indiabulls Power Indiabulls Power Ltd (IPL), a part of the Indiabulls Group, is coming with a public issue of 339,800,000 equity shares of Rs 10 each. There will also be a green shoe of up to 50,900,000 equity shares. The company will be raising Rs 1,359 crore at the lower price band of Rs 40 and Rs 1,529 crore at the higher price band of Rs 45. IPL is in the business of developing, constructing and operating thermal and hydropower projects. The company currently has five thermal power projects under development, which will have a combined installed capacity of 6,615 MW by September 2013 and entails a total capital outlay of over Rs 31,000 crore. The company is also in the process of evaluating the establishment of a 1,320 MW coal-fired thermal power project in Jharkhand and a 2,640 MW coal-fired thermal power project in Chhindwara, Madhya Pradesh. Valuation Currently, IPL has no operational power plant. Its first power plant is expected to be operational only by February 2012. The three power projects aggregating 3,975 MW are relatively at advanced stages of implementation with coal linkages/captive mines in place and boilers turbines generators (BTG) equipment supply orders for two of these projects has been placed with Chinese vendors. The other two projects are still in quite initial stages of development. Hence we believe that execution risk in this company is on the higher side. All its future earnings are highly sensitive to its ability to complete projects on time with all the remaining coal linkages, procurement of equipment and PPA agreements in place. While comparing with other power utilities, IPL (post-issue) looks attractively priced in terms of price/book (P/B) as well as market capitalisation/ MW basis. However, we feel that such discount given to IPL is justified given that its earnings will start kicking in only from FY2013. Till then execution risk remains high and cash flow remains negative. We feel that the upside trigger in the stock in the short to medium term would be achieving major milestones like financial closures, tie-up for the equipment and awarding of ultra mega power projects (UMPPs; as IPL has already expressed its interest in bidding for future UMPPs). Though IPL is priced better than some of the recent public offerings from power utilities companies, the scope for the short-term gain is limited.
	No move to curb CEOs’ salaries: PM Mumbai, October 11 In the midst of the debate over what salaries CEOs should be taking home, Prime Minister Manmohan Singh today ruled out any move to impose restrictions on their remuneration, saying it is best left to boards of companies. "We still believe that the salaries are best determined by the boards of various companies and the government as such has no intention of imposing restrictions on CEOs' salaries," he said, replying to a question whether the government was concerned about salaries of CEOs. "In my address to one of the meetings of CII, I had raised the issue in a general way," the Prime Minister said, adding the government has not taken any view on the issue. The debate on the pay packets of industry honchos was triggered by remarks of Corporate Affairs Minister Salman Khurshid who had said, "When we are working on this (austerity), we can hardly say that we (will) shut our eyes on what salary the CEOs are going to take." Earlier, Singh met corporate bigwigs and prominent people from other walks of life in an interaction aimed at propagating the Congress-led government's achievements, ahead of the October 13 Maharashtra Assembly polls. — PTI
	Tax Advice File form 15G for non-deduction of TDS by S.C. Vasudeva Q. I am 61-year old and retired. I have an FD of Rs 15 lakh in State Bank of India and interest is paid annually @ 11.1% (say Rs 1,66,500). My queries are as below: How much TDS bank should deduct on interest (interest is paid quarterly). If I submit Form No 16H, should the bank deduct my TDS or not. According to bank officials, TDS on total interest i.e. Rs 1,66,500 is deducted @10.33%, if Form 16H is submitted otherwise TDS is deducted @20% as per Income-tax Rules. My annual income does not exceed taxable limit (if I do some savings under Section 80C/80D) from all sources. I file return regularly and claim refund. — Joginder Singh Saini A. The Finance (No.2) Act 2009 provides that in respect of assessees other than a company tax at source should be deducted from interest income other than interest from securities @10% plus education cess of 3%. In your case, therefore, the tax is deductible @10% plus education cess of 3% thereon. It seems you meant Form 15H as there is no Form 16H prescribed in the Income-tax Rules 1962. Form 15H can be filed by a person who is of the age of 65 years or more during the previous year. The said form is therefore not applicable in your case as you are of 61 years of age. You could have filed Form 15G for non-deduction of tax at source in case the interest income received/receivable by you would have been less than the maximum amount which is not chargeable to tax. The bank officials have incorrectly stated the rate of tax @ 20%. The rate of 20% is applicable in case of non-residents. Gift from mother Q. My mother is 85 years old and has a senior citizen account in a Post Office with myself (her daughter) as a nominee. ii) The account will mature this year and she wants to give the proceeds of that account (Rs 4 lakh) to me so that I can open an account in my name. It is like a gift to me. iii) What should I do for my income tax requirements. She has been showing that Rs 4 lakh in her IT returns for the past five years. Should she give me anything in writing. — HK Bedi A. The amount of Rs 4 lakh received from your mother will be treated as a gift to you. Such a gift can be made by executing a simple letter by her and an acceptance letter by you. Copy of such letters can be filed with the tax department in case a query in this respect is raised during the course of assessment of either of you. Tax on gift Q. I have received a gift of Rs 3,00,000 from six persons (50,000 each) from my friends who are not my relatives. I want to know my tax liability on this amount in FY 2008-09? — Mahesh Aggarwal A. According to Section 56 of the Income Tax Act 1961, where any sum of money, the aggregate value of which exceeds Rs 50,000 is received without consideration by an individual in any previous year on or after 1st day of April 2006, the aggregate value of such sum would be treated as his income and taxable as income from other sources. In view of the above provisions, the amount of Rs 3 lakh received by you will be treated as income from other sources and included as part of your total income. It is not possible to compute the tax liability as the particulars with regard to your other income have not been indicated in the query. Constitution of HUF Q. I have an HUF consisting of myself male and three married daughters. Can I gift a certain sum to my daughter (who does not have any children yet) and can she form an HUF. What would be the case if she has a male issue. — Raj Kumar A. The daughters have been given the status of co-parceners by the amended provisions of the Hindu Succession Act 1956 in case of a joint Hindu family property. The law has been amended to this extent only. The provisions of Mitakshare branch of Hindu Law applicable in this part of the country have been codified to the extent provided in the aforesaid Act. There are other provisions of Hindu Law which have not been codified so far. These provisions do not have a concept of women being a Karta of a Hindu Undivided Family. This is possibly on account of the fact that a married daughter becomes part of the family comprising of her husband and her children. You may therefore gift a certain sum to her husband’s family which will comprise of his wife (your daughter) and their children. It would be advisable to keep the amount of gift below Rs 50,000 so as to steer clear of the provisions of Section 56 of the Act.