Microsoft a monopoly: Judge
WASHINGTON, Nov 6 — A Federal US Judge has ruled that Microsoft is a monopoly, a decision that could lead to serious sanctions against the software empire built by Bill Gates.

Results testify recovery of industrial sector MUMBAI, Nov 6 — Analysis of the first half results of over a 1,000 listed corporates indicated a 18 per cent rise in sales and an 8 per cent rise in profits, testifying the recovery of the industrial sector.

HFCL may pump equity in Essar
NEW DELHI, Nov 6 — Himachal Futuristics Communication Limited is exploring the possibility of pumping in fresh equity in Essar Comvision Limited — the licencee for basic telecom services in Punjab.

TCIL pays Rs 15.12 crore to govt
NEW DELHI, Nov 6 — Telecommunication Consultants India Ltd today paid a dividend of Rs 15.12 crore to the Government for 1998-99.

Bureaucrat vs businessman
The Punjab Government has introduced draconian provisions in the Sales Tax Act. Almost every action how-so-ever unintentional it maybe can send any businessman to jail.

SBP donates 12.5 lakh for defence fund
CHANDIGARH, Nov 6 — Mr A.K. Batra, Managing Director, State Bank of Patiala, today handed over a draft in favour of Army Central Welfare Fund for Rs 12.49 lakh to Lt Gen Vijay Oberoi, GOC-in-C, Western Command at a simple ceremony held in the Western Command office.

• SBI Kisan card

Need to cut ST litigation
DISPUTES over sales tax matters between the taxing authorities and the tax payers now-a-days are fast increasing both in Punjab and Haryana.

LIC Jivan Mitra policy
CHANDIGARH, Nov 6 — LIC of India has launched Jivan Mitra-Triple Cover Plan which provides for increased risk coverage.

Markfed slips into the red
By Nirmal Sandhu
Tribune News Service

CHANDIGARH, Nov 6 — Once a cash cow of the Punjab Government, Markfed has slipped into the red, registering a whopping Rs 25.30 crore loss in the first six months of the current financial year ending September 30, 1999, it is learnt. The performance figures are yet to be officially released.

According to information supplied to the Markfed management by its district offices and industrial units, a major part of the loss — Rs 16.3 crore — comes from wheat operations followed by paddy (Rs 5.50 crore). Markfed procures wheat and paddy for supply to the Food Corporation of India.

Reliable sources in Markfed point out that all its industrial units have missed their profit targets. The Khanna plant of Markfed has reported a loss of Rs 1.71 crore, the Kapurthala plant Rs 63.53 lakh and the Gidderbaha plant Rs 62.46 lakh — all adding up to Rs 2.50 crore loss from the plants.

Markfed’s rice mills at Machhiwara, Nawanshahr, Baghapurana and Rajpura have fared no better and all have reported losses.

Officials attribute the losses of industrial units to “poor marketing” in the purchase of raw materials and sale of products.

Markfed had started making profits in 1985-86. Year after year its profits swelled. The year 1993-94 was the peak period when the cooperative monolith made Rs 74.2 crore profit.

Then started the downhill journey, courtesy mismanagement. The next financial year — 1994-95 — saw the profit decline sharply. On a turnover of Rs 4,817 crore in 1996-97, Markfed profit was at just Rs 31.16 crore. Things went from bad to worse, leading finally to losses.

Despite hardly being in the pink of health, Markfed did not hesitate in extending financial help to the cash-strapped State Government. It’s a case of sinking together.

What went wrong, who was responsible and how to turn around the premier cooperative institutions — said to be Asia’s biggest — are some of the issues that urgently need to be taken up at the highest level.

Need to cut ST litigation
By A.K. Sachdeva

DISPUTES over sales tax matters between the taxing authorities and the tax payers now-a-days are fast increasing both in Punjab and Haryana. More than 5,000 of cases are reportedly pending adjudication at different levels in the form of appeals, review, revisions and reference petitions in Haryana for one reason or the other. In Punjab the figure of such kind of litigations is stated to be much on the higher side. The points involved in all these cases are levy of tax, interest and penalty under different provisions of the Haryana General Sales Tax Act,1973, Punjab General Sales Tax Act,1948 and the Central Sales Tax Act,1956.As per the existing provisions of law which are more or less identical in both the States, a person who is proceeded against has to pass through a very lengthy procedure of appeal before the first appellate authority and then the Tribunal for redressal of his grievances. If the party pursuing these remedies does not feel satisfied with the decisions of these statutory bodies, he is forced to approach the High Court and sometimes even the Apex Court of India for necessary relief in the matter.

“We prefer to get the tax cases arising under the sales tax laws settled off the record by making under-hand payment to the tax authorities instead of taking recourse to inexhaustible litigations in appeal that creates a lot of difficulty to us” frankly admit the assessees in these two States as and when you enquire from them. Explaining the reasons behind this unfair practice that prevails in Punjab and Haryana several tax lawyers told this writer that it is almost impossible for a litigant disputing its tax liability under the existing system of adjudication to get timely and inexpensive justice from the statutory appellate authorities. “What kind of justice is this if you are openly called upon to pay up the illegally assessed amount of tax?” ask one of the senior counsel practising on taxation field.

Faced with similar difficulties in the course of implementation of the provisions contained in the Income Tax Act,1962 and the Central Excise Act,1944, the Government of India last year came out with a new system of resolving the disputes between the tax payers and the taxing authorities in the form of Kar Vivad Samadhan Scheme, 1998. For final settlements of disputes under the Income Tax Act,1961 as well as the Central Excise Act,1944, the litigants were invited to deposit certain sums out of the total additional demand raised against them. This policy evoked overwhelming response from the litigating assessees leading to huge collection of revenue.

It is well known fact that both the States of Punjab and Haryana intend to simply the laws relating to sales tax but no concrete steps so far have been taken in this direction. Abolition of system of roadside checkings of goods in the recent past is undoubtedly a right step in the right direction. It is now high time that both the States should introduce new schemes for expeditious disposal of long-pending disputes in order to ensure (i) reduction in the tax arrears; (ii) minimisation of sales tax litigations; and (iii) creation of tax-friendly environment in the States.

A scheme like Kar Vivad Samadhan Scheme,1998 needs to be introduced to achieve the aforesaid three-fold objectives. The following suggestions can also be taken into consideration:-

(i) where the disputes involve levy of tax, interest and penalty, the assessee concerned can be called upon to deposit 50 per cent of the assessed amount of tax while waiving off completely the levy of interest and penalty;

(ii) where the dispute barely relates to levy of interest or some kind of penalty levied under the provisions of law, the litigating parties can be called upon to deposit 50 per cent of the total disputed demand: and

(iii) The procedure for accepting declarations under the scheme should involve minimum paper formality to avoid hardships and that this process be completed within a minimum possible time.

HFCL may pump equity in Essar
Tribune News Service

NEW DELHI, Nov 6 — Himachal Futuristics Communication Limited (HFCL) is exploring the possibility of pumping in fresh equity in Essar Comvision Limited (ECL) — the licencee for basic telecom services in Punjab.

HFCL sources said that the company is exploring the possibility of joining the ECL project both as an equity investor and as a turnkey supplier.HFCL is implementing the Rs 120 crore fibre optic network in Punjab.

The company expects to benefit by way of Rs 750 crore worth of orders as the project is rolled out over the next five years in addition to creating wealth for its stakeholders by sharing the enhanced market capitalisation of ECL.

HFCL has reportedly earmarked Rs 100 crore corpus for a three year period that will be used to buy equity in cellular and basic service companies which buy equipment from the group and also in potential greenfield projects where it will be one of the partners.

HFCL sources said that the ECL team could be supplemented by HFCL’s technical inputs and turnkey project implementation skills.

ECL has been licensed by DoT to operate basic service in Punjab. Apart from offering voice telephony services, ECL will also offer Internet services through its network.

TCIL pays Rs 15.12 crore to govt

NEW DELHI, Nov 6 (PTI) — Telecommunication Consultants India Ltd (TCIL) today paid a dividend of Rs 15.12 crore to the Government for 1998-99.

TCIL recorded a profit of Rs 56.91 crore during 1998-99 as against Rs 46.67 crore in the previous year posting growth of about 22 per cent on a turnover of Rs 647.31 crore.

The dividend cheque was handed over to the Union Communication Minister Ram Vilas Paswan by TCIL Chairman and Managing Director A.S. Bansal.

Microsoft a monopoly: Judge

WASHINGTON, Nov 6 (AP) — A Federal US Judge has ruled that Microsoft is a monopoly, a decision that could lead to serious sanctions against the software empire built by Bill Gates.

The decision by US District Judge Thomas Penfield Jackson yesterday to apply the monopoly label is a significant setback for Microsoft Corp, as well as a clear recognition of the expansive influence of the software giant, whose windows products run most of the world’s personal computers.

“Microsoft has demonstrated that it will use its prodigious market power and immense profits to harm any firm that insists on pursuing initiatives that could intensify competition against one of Microsoft’s core products,” the Judge wrote.

Still, yesterday’s action does not necessarily mean the company will lose the case. Federal Law generally bans companies from maintaining monopoly power through illegal business practices, but not from achieving their success selling popular products or making shrewd business decisions.

Microsoft issued a statement calling the Judge’s findings “just one step in an ongoing process, with many more steps remaining we’re confident the American legal system will ultimately support our position and that our actions have benefited consumers.”

Assistant Attorney General Joel I Klein said, “this is a tremendous victory for America’s consumers. ... (that) shows once again that in America no person and no company is above the law.”

A final ruling could come by the end of the year, with any penalties or remedies spelled out next year.

Jackson could order that Microsoft be broken up into smaller companies that would compete against each other. Or he could choose from a range of lesser punishments, such as requiring Microsoft to allow rivals to sell and improve its dominant windows operating system, or prohibiting the company from interfering with new technology that could threaten windows.

Bureaucrat vs businessman
By P.D. Sharma

The Punjab Government has introduced draconian provisions in the Sales Tax Act. Almost every action how-so-ever unintentional it maybe can send any businessman to jail. It means we are entering the 21st century only physically carrying the crude thinking of many past century.

In revenue collection three parties are involved. The Government makes policies. Bureaucrats implement them. Businessmen are expected to follow these policies. All through 50 years after Independence finger of accusation is placed on the third category assuming the first two as honest doers of duty. How far is it fair is within the knowledge of everybody. When all three categories are a mixture of honest and dishonest persons treating the first two as totally in-fallible is quite unfair. When businessman makes allegations against the others, he is called upon to prove the unprovable fact. When bureaucrats simply signals that a particular businessman is dishonest he can be sent to jail. No body would mind even draconian provisions provided they are applicable on all three categories.

During President’s rule in Punjab when law and order was very bad growth in sales tax was very satisfactory. At times CST showed even a growth of 35 per cent, when it was very low in other States. This shows the general honesty of tax payers with non existent official interference.

The Punjab Government complains of low growth in sales tax revenue. Punjab has shown a growth of around 8 per cent which is higher than many States. It is a common knowledge that businesses in the country have been facing recession for the past over two years. The correct way to look at the things will be to see sales tax collection as a proportion of total investment made in a particular state.

Before liberalisation financial institutions made 28 per cent of their total investment in Maharashtra. After liberation very heavy investments have been made in few States like Gujarat; Andhra Pradesh; Tamil Nadu and Maharashtra. Sales Tax collection in these States have grown proportionally.

In the prevailing global business environments psychological rather than physical police like methodology can work. Even RBI is thinking of introducing a scheme to arrest growing bad bank debts by involving trade associations. Wrong-doer in any trade cannot escape the eyes of the fraternity. Frequent trade meetings with officials can bring the wrong doers in the main stream.

Present day governments are what they are. Businessmen should take initiative to eradicate malpractices wherever they are. Leaving the matter to officials will only bring the situation to the present level.

Irrational tax structure and lax enforcement in some States lead create troubles in other States. It is a common knowledge that sales tax regime in Delhi for instance is very lax. Delhi has become a very formidable market for all types of goods. Businessmen of Punjab and other States find it difficult to do business with Delhi dealers. At the same time they can not afford to ignore such a big market. Genesis of trouble lies here. Some attempts have been made in the past through meetings of Chief Ministers of Northern States to rationalise the things. Nothing tangible has come out. This issue should be given top priority through the intervention of Centre.

Making draconian laws lead only to malpractices. Already our laws are such as to include our country in the list of the most corrupt countries. Transparency International, German Organisation to remove corruption places our country in the top bracket of corrupt countries.

Businessmen of Punjab are resorting to an unprecedented type of agitation against the newly introduced Sales Tax provisions. The Punjab Government should withdraw these provisions in toto and have dialogue. Punjab’s economy is already on the down side. We have to act with wisdom and patience. The more things change, so goes the French saying, the more they remain the same.

SBP donates 12.5 lakh for defence fund
Tribune News Service

CHANDIGARH, Nov 6 — Mr A.K. Batra, Managing Director, State Bank of Patiala, today handed over a draft in favour of Army Central Welfare Fund for Rs 12.49 lakh to Lt Gen Vijay Oberoi, GOC-in-C, Western Command at a simple ceremony held in the Western Command office. Lt Gen. B.S. Malik, Chief of Staff of the Western Command alongwith Maj Gen P. Vig (General Administration) were also present at the ceremony.

Mr Batra said this is the third contribution made by the State Bank of Patiala and its staff members ever since the start of Kargil conflict.

Earlier, the bank donated a sum of Rs 12.51 lakh to the Prime Minister Relief Fund in addition to an amount of Rs 25.64 lakh contributed by the staff members.

Lt.Gen. Oberoi and Lt Gen B.S. Malik, appreciated the gesture and thanked Mr Batra for the contribution.

SBI Kisan card
Tribune News Service

CHANDIGARH, Nov 6 — Mr K.K.Mehra, Deputy General Manager of SBI, Zonal Office, Punjab, issued Kisan credit cards to farmers at Kheri Mallan village in Patiala. Mr Mehra also organised a seminar on NPA management and recovery for branches of Sangrur and Patiala districts.

Mr C.L. Sethi, Assistant General Manager said the farmers should avail of the benefits of newly launched Kisan Mitra Yojna. He also highlighted the features of the scheme.

Results testify recovery of industrial sector

MUMBAI, Nov 6 (PTI) — Analysis of the first half results of over a 1,000 listed corporates indicated a 18 per cent rise in sales and an 8 per cent rise in profits, testifying the recovery of the industrial sector.

“The rise in profits is noteworthy as they come after nearly two years of decline”, Centre for Monitoring Indian Economy (CMIE) has said in its November review.

The manufacturing sector has led in the recovery, recording a 21 per cent rise in sales and a 15 per cent rise in profits.

According to the CMIE analysis, growth in interest costs has declined substantially, widespread across companies. There was, however, an increase in depreciation provisioning while tax provisions increased by 22 per cent resulting in profits increasing by 15 per cent.

“Multinationals have outperformed all other ownerships groups in terms of the rise in profits”, it observed.

The industrial sector continued on the recovery path with the index of industrial production recording a 6 per cent rise in the first five months of the current fiscal, which was the forecast made by CMIE for the year.

The CMIE report pointed out that the gross fiscal deficit of the Central Government was lower in the first half of the current fiscal as against first half of 1998-99 reflecting the increase in tax collections in August and September, better non-tax revenues and stagnant non-plan expenditure.

Kharif cereal crops that had been withered due to lack of moisture experienced some benefit from the late rains in September-October especially in Tamil Nadu and Karnataka.

In Bihar the standing kharif paddy received the required water during the last phase.

CMIE has estimated the rabi rice output at 12 million tonnes (MT) as against 12.9 MT last year.

LIC Jivan Mitra policy
Tribune News Service

CHANDIGARH, Nov 6 — LIC of India has launched Jivan Mitra-Triple Cover Plan which provides for increased risk coverage. Under this plan, in the event of the natural death of the life assured, three times of the basic sum assured together with vested bonuses becomes payable. In addition to that if the death occurs due to accident, an amount equivalent to the basic sum assured is also paid.

by Pushpa Girimaji
Shaping consumer agenda for new millennium

VOLUNTARY Consumer groups in the country rarely get an opportunity to meet, exchange views and chalk out a common programme of action. The two-day convention of voluntary consumer organisations and activists held on November 1 and 2 at Vigyan Bhavan in New Delhi was one of those rare occasions when consumer representatives from different parts of the country came together and finalised the agenda for the new millennium.

Chalking out the agenda for strengthening the consumer movement in the new millennium is certainly not an easy task, given the fact that most consumers, particularly those in rural areas are still unaware of their rights. The myriad problems faced by consumers in India also make it difficult to prioritise the areas for consumer action. Consumer groups in fact have to take into consideration the vast disparities in the basic services available to rural and urban consumers while tackling issues of consumer concern. While the problems of rural consumers centre mostly around lack of basic amenities like clean and potable water, electricity, telecommunication, roads, transport and health services, the grievances of urban consumers pertain to the poor quality of these services provided to them.

There are of course common areas of concern such as adulteration of food, spurious and sub-standard drugs and poor implementation of consumer protection laws. In addition, consumers are also victims of inefficiency and corruption at all levels of governance. In the last few years, consumer groups have been demanding that all political parties spell out their policies vis-a-vis consumers, but unfortunately, political parties and politicians are yet to recognise the fact that every voter is also a consumer.

Meanwhile, the on-going process of economic liberalisation, globalisation and technological developments in the field of food processing, agriculture, communication, also makes it imperative that consumer groups deliberate over their impact on consumers and ensure that consumer interests are protected. The resolution passed at the end of the convention pertained to many of these issues.

The convention, for example, expressed concern over growing corruption at all levels of governance and called for several specific measures to ensure transparency and accountability in government and government organisations. The Freedom of Information Bill, 1997, should become a law at the earliest, the resolution said. It also called for widening and strengthening of the vigilance machinery at all levels, to tackle the menace of corruption. There should be time-bound and transparent adjudication of complaints filed before the vigilance agencies and every effort must be made to encourage citizens and consumer groups to complain, the resolution said. Taking a strong position on the issue, the convention said the new millennium would see the “Age of zero tolerance” of corruption and inefficiency and called for people’s participation in this crusade.

The convention, organised by the Consumer Coordination Council, a central body of consumer organisations and supported by many government and non-government organisations, including the Union Ministry of Consumer Affairs and Friedrick-Naumann-Foundation, discussed a number of issues of consumer concern. These included international trade and its impact on consumer, reforms in electricity, health, insurance and banking sectors, consumer rights and deprived citizens, senior citizens, consumer protection in the rural sector, consumer education in schools and colleges, environment and its impact on consumers and the consumer justice system.

The consensus arrived at the convention on many of these issues was reflected in the final resolution passed on four main topics: (a) economic liberalisation and its impact on consumers, (b) good governance and citizens charter, (c) consumer policy, consumer laws and redressal mechanism, (d) social and political changes. Besides representatives of consumer groups, the invitees to the convention included officials of government department, public sector undertakings, corporations, other non-government organisations, legislators, the academia and the media. Representatives of consumer groups from Pakistan also attended the convention.

The convention called for urgent reforms in the insurance sector so as to end the monopoly of LIC and GIC and usher in healthy competition. Welcoming the initiatives taken in the power sector, the convention emphasised the need for ensuring reliable and regular supply of quality power at competitive rates. It also called for adequate consumer representation on all regulatory authorities in sectors like telecommunication, power, insurance and banking.

For the first time, consumer groups also demanded accountability from their elected representatives. All political parties should make public their audited accounts and sources of funding, the convention demanded. Similarly, all public servants holding public offices should declare their assets before they take charge of any office and after their handing over the charge, the convention said. Another important resolution was to press for a complete ban on all forms of tobacco advertising.

If the enthusiasm exhibited by consumer representatives at the convention — there were about 900 of them — is any indication, the consumer voice is certainly going to be heard much more strongly in the new millennium.

by Praful R. Desai
Compassionate appointment

Q: When an application was made for appointment to service on compassionate ground after a long period of time, should such an application be considered?

Ans: The Supreme Court in State of UP v. Paras Nath (1999-II-LIJ. 454) held thus:

The purpose of providing employment to dependant of a government servant dying in harness in preference to anybody else, is to mitigate the hardship caused to the family of the employee on account of his unexpected death while still in service. To alleviate the distress of the family, such appointments are permissible on compassionate grounds provided there are Rules providing for such appointment. The purpose is to provide immediate financial assistance to the family of a deceased government servant.

None of these considerations can operate when the application is made after a long period of time such as 17 years in the present case. In Union of India v Bhagwan Singh (1996-I-LIJ. 1127). The SC was considering a similar application for appointment on compassionate grounds, 20 years after the death of the railway servant’s death. the SC held:

“The reason for making compassionate appointment, which is exceptional, is to provide immediate financial assistance to the family of government servant who dies in harness, when there is no other earning member in the family.”

No such consideration would normally operate 17 years after the death of the government servant. The HC was therefore, not right in granting any relief to the respondents.

In that way, the SC allowed the appeal. Consequently, the judgements and orders of the HC were set aside.

The New Bull

THE New Bull as he is referred to almost reverently at Dalal Street has commenced warehousing of FII favourites. One of his cronies says that he is taking advantage of the panic at the bourses following the sharp selling pressure exerted by the FII and accumulating the best stocks. His gameplan — Sell in January when the FIIs return to make fresh allocations. The stocks he is accumulating include ITC, HLL Castrol and BFL Software.

Textile pivotals

A veteran BSE broker has commenced accumulation of the stocks of textile pivotals predicting that this beleaguered industry is now on the verge of a major turnaround. His favourites include Bombay Dyeing, Pantaloon Fashions and Arvind Mills.

Bears bare claws

With the stockmarket going into a tailspin all of a sudden and shedding more than 500 odd points since it peaked, there are rumours that the fall has been precipitated by some of the Calcutta based bear operators who have trapped several bull operators at the counters of Zee Telefilms, Tata Tea and Infosys Technologies. What’s more, they are claiming the action has just begun.

by R.N. Lakhotia

Q: I shall be 65 on 19.3.99. I shall file the income-tax return for the financial year 1998-99 after 31.3.99. Shall I be entitled to tax rebate as Senior Citizen for the income for the year ending 31.3.99?

My son started his clinic. His gross income was Rs 18,000. Is he required to file income-tax return.

— G.P. Saldi, Hoshiarpur.

Ans: In respect of the Financial Year 1998-99 relevant to Assessment Year 1999-2000 you will be eligible for the tax rebate permissible to a senior citizen in respect of your income for the whole of the year. This is because you have become senior citizen during the Financial Year. The period during a particular Financial Year during which a person becomes senior citizen is not relevant in deciding the scope of tax rebate of a senior citizen. In respect of gross income of Rs 18,000 of your son who has started his clinic he is not required to file his Income tax return because the net taxable income is much below the exemption limit.

Q: I am government employee and investing annually in NSC and LIC. I have not claimed tax rebate on interest carried on NSC for the last three years and not shown interest on NSC as an income. Please guide how interest on NSC, LIC and ULIP can be calculated and under which act I can claim tax rebate on interest carried on last year’s NSC and how?

— For this financial year how much saving I have to show having annual earning Rs 1,44,000 only.

— Can I take policy such as LIC, NSC or ULIP, at my wife’s name who is housewife and claim tax rebate.

— Whether earning after maturity of scheme’s (above referred) is taxable?

— Kamal Kumar, Jammu

Ans: If you have forgotten to show accrued interest on NSC etc. in the earlier years, then you may revise your Income tax return for the pending Assessment Years to show therein the figure of accrued interest from NSC as well as the tax rebate available on such accrued interest thereafter make payment of the balance excess tax payable by you. In the alternative, you may show the income from NSC of the earlier years which you have forgotten to show in your Income tax return and which may now be shown in the Income tax return which you are filing, also claim tax rebate on such amount. In future, please continue to show accrued interest income year after year in your income of the year. If you are having income of Rs 1,44,000 during a Financial Year after standard deduction of Rs 20,000 permissible to a salaried employee and if you invest Rs 70,000 in eligible instruments for tax rebate u/s 88, then virtually there will be no income tax on you. It is assumed that you are a salaried employee, hence eligible for standard deduction. Further, please note that on maturity of NSC/LIC etc. no amount is liable to Income Tax. The policy of LIC if taken in the name of wife will enable you to claim tax rebate under the Income-tax Act. However, investment made in the name of the wife in NSC will not make you eligible for tax rebate u/s 88 of the Income-tax Act, 1961.

Q: An Idol of a Temple, owns land, where timber trees, called Deodar grow, this specie of the tree can be planted/and is self grown. When cut, it does not grow again from the cut stump. The Idol functions through the general house of its worshippers. The trees from the land was sold through Forest Corporation. The Idol through its worshipers created a trust in the name of the idol for the benefit of the general public and for maintenance and renovation of the temple complex (consideration). Trustees were appointed.

Now my questions in this connection are as follows. Kindly guide.

(a) Whether the trust is another person within the meaning of Gift Tax Act,1958.

(b) Whether the initial payment to the trust by the idol is liable to gift tax or is exempt under Section 5(1) (iv) or any other provision of the Act.

(c) Whether the transfer of the amount by idol to the trust with consideration of maintenance of temple complex etc. amount to a gift under the Act.

(d) whether the receipt of the amount of sale of trees is liable to Capital Gains Tax or income tax. Please answer these questions with provision of law.

— Hira Singh, Distt. Shimla

Ans: On the facts stated by you, please note that a detailed critical analysis of the facts and circumstances should be made to enable your organisation to do away from the clutches of Income-tax liability. However, please apply and obtain Income-tax Registration as well Exemption Certificate u/s 80G in respect of your new trust. The Trust is a separate legal entity under the Income Tax Act. The initial payment to the Trust by the existing body is actually a corpus donation which is not liable to Income-tax. Likewise, the transfer of the amount by the existing body to the trust etc. would be a donation and hence not liable to tax. If it is a corpus donation it is also not liable to be taxed as income of the recipient trust. However, if it is merely a voluntary donation, then it is liable to be treated as income of the trust and subjected to levy of income tax, if the net taxable income of the trust as per the provisions of Income-tax Act is in excess of Rs 50,000. There will be no liability to income-tax in respect of amount received on selling agricultural produce which would be tax exempted because it is actually income from agriculture.