B U S I N E S S

Don’t write us off, warns BlackBerry chief
Toronto/New York, April 16
After this week’s advance reviews slamming its PlayBook tablet, that is hitting markets on Tuesday, as ‘half baked’ and analysts calling the company a “broken brand”, Research In Motion (RIM) co-CEO Jim Balsillie has warned critics not to write the compnay off.

Investor Guidance
No restriction on source of funds for investment purpose
Q: I save about Rs 30,000 per month. Can I gift this amount to my son, who is major and a student without any income? If so, is a single gift deed in an offer and acceptance letter at the beginning or end of the financial year enough?

Aviation Notes
Ministries in row over Safdarjung Airport land
Since the day of closure of operations from Safdarjung Airport for security reasons, the prestigious strip has turned a 'disputed land'. More than two ministries have laid their claims for owning it. 

Don’t write us off, warns BlackBerry chief

Investor Guidance
No restriction on source of funds for investment purpose
by AN Shanbhag

Q: I save about Rs 30,000 per month. Can I gift this amount to my son, who is major and a student without any income? If so, is a single gift deed in an offer and acceptance letter at the beginning or end of the financial year enough?

When my son gets a job, can he claim deduction under Section 80C if he invests the money he is receiving as gift from me as a contribution to his PPF?

— Ganaraj B

A : You are free to gift your son any amount of money and there will be no tax on this transaction either on you or on him on account of the provisions of Section 56 of the Act. Also, if he were to invest this money, the interest would be his income and clubbing will not be attracted on account of the fact that he is no longer a minor. As far as the paper work is concerned, a single gift deed or letter at the end of the year incorporating the total amount gifted would suffice.

Even after your son starts earning regular income, he can invest the gifted money in PPF and claim deduction u/s 80C. Note that the maximum amount of deduction in the case of PPF is Rs 70,000 per year. In other words, there is no restriction on the source of funds for the purposes of investment. Earlier, there used to be a stipulation that the amount invested for tax deduction has to be from income chargeable to tax. Since the gifted amount is exempt, it would not have qualified as income chargeable to tax. However, such a stipulation does not exist anymore.

Investment in shares

Q: Whenever I file my tax return, I am not clear about the money invested in shares. ITR-2 asks whether you have invested more than Rs 1 lakh in buying shares from a company. Does it refer to buying from the IPO of a company or does it include shares bought from the secondary market as well? If I buy and sell shares of different companies from the secondary market and the total amount exceeds Rs 1 lakh, should I declare it in the return form? Usually it is not new money invested but involves reinvesting already invested money. Secondly, if I make a short-term capital gain (STCG) by selling shares of company in less than one year, can I save STCG tax by using the capital to buy another share?

— John TJ

A : You are referring to the disclosures required by the AIR schedule in the ITR forms wherein certain specific transactions above a particular monetary limit have to be disclosed. In the case inquired by you, it refers only to shares purchased in IPOs and not to secondary market transactions. Tax on STCG can not be saved by buying shares. In fact, tax on STCG cannot be saved at all.

Dividends from mutual funds

Q: As per my understanding, dividends from all mutual funds are non-taxable. Please confirm if it is so or only certain categories qualify for this.

— Srinivasan

A : Yes, all dividends from mutual funds are not taxable without exception. However, on non-equity funds there is a dividend distribution tax of 12.5% payable by the mutual fund directly before distributing the dividend. In the case of liquid funds or money market funds, such distribution tax stands enhanced to 25%. Only equity funds are free of this distribution tax. That being said, note that all dividends remain tax exempt in the hands of the investor. The distribution tax, as detailed above, is deducted by the mutual fund before distributing the dividend.

The authors may be contacted at wonderlandconsultants@yahoo.com 

Aviation Notes
Ministries in row over Safdarjung Airport land
by KR Wadhwaney

Since the day of closure of operations from Safdarjung Airport for security reasons, the prestigious strip has turned a 'disputed land'. More than two ministries have laid their claims for owning it. The fact is that the ‘valuable’ land belongs to the aviation sector. For decades, it was the only strip from where all the flying was undertaken. The airport at Palam, renamed as the Indira Gandhi International Airport, came much later. The Sadarjung strip was the only flying hub for Delhi and for students learning flying.

Shockingly since the closure of 'active' flying from it, the land has been lying unutilised with precious equipment rotting for disuse. The runway does need re-carpeting, but it is ideal for training. Many of the problems that plague the aviation Sector will be automatically sorted out if it is handed over to the Delhi Flying Club (DFC). The candidates will not have to fly abroad to undertake training at exorbitant fees.

The latest to lay its claims is the Urban Development Ministry which, according to its plans, wants to develop the spacious area for ‘recreational purposes’.

According to reports, many airlines are arriving 30-35 minutes before schedule and interfere with other flights, which are adhering to correct time of landing. This is down-right fudging and disturbing the schedule of operations. Why cannot Directorate-General of Civil Aviation (DGCA) blackball such airlines? Why should the DGCA undertake a needless exercise to determine average block time for all the routes across the country and then nab the defaulting careers?

The rules are already in existence. The DGCA should deal with the erring airlines and pilots firmly instead of formulating new procedures only to waste manpower. The more rules the DGCA frames, the more pitfalls will surface and cause its bosses more trouble. The DGCA manual is an excellent document and Director-General should see to it that the airlines adhere to the rules and guidelines without any infringement.

The Indian Commercial Pilots Association (ICPA) has done well that it has directed the Indian Airlines pilots not to take any risk in flying to Kabul, which is a ‘troubled spot’. Similarly, Kathmandu is a porous airport, where security is only for ‘naam-key-vasthe’.

Had there been adequate security at the airport, the hijacking of the Indian Airlines flight would not have occurred about a decade ago. The entire area around airport is porous. 

‘World economy may witness slowdown in 2012’

Boao (China), April 16
The global economy may slow down or even fall into recession again in 2012, Lou Jiwei, the head of China's $300 bn sovereign wealth fund, said on Saturday.

“We are relatively optimistic about 2011, but for 2012, it is possible there will be a big drop in economic growth or even recession,” Lou, chairman of China Investment Corp, told the Boao Forum for Asia on the southern Chinese island of Hainan. Lou said major economies may change their current pro-growth policies in the fourth quarter of this year, hurting economic performance.

In addition, oil supplies will likely be interrupted by the unrest in North Africa and the Middle East, he added. Lou said the economic situation in the United States would remain largely unchanged, while European countries would be dragged down by weak domestic demand.

He also expected emerging markets to raise interest rates and allow their currencies to strengthen, causing a slowdown in economic growth in those countries. — Reuters