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Reliance Info signs $ 750m loan deal
Refineries not ready to meet April 1 deadline
Playing games to widen mobile user base
Bajaj plans gearless scooter
Boeing, Airbus gear up for big battle
Thin line exists between tax planning and evasion
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Reliance Info signs $ 750m loan deal
New Delhi, December 25 Reliance Infocomm signed a deal with US Exim Bank, Export Development Canada, and Citigroup for financing facilities of $ 750 million for telecom projects in India. “This marks the closure of RIC’s total debt financing of $ 2.2 billion (about Rs 10,000 crore).” The financing deal, signed last night, comprises of $ 500 million of Exim Bank-guaranteed loans and the remaining is from Export Development Canada (EDC) with total repayment period of 10 years after providing for one and a half year for completion of the network in 5,000 cities, a company statement said. Citigroup, a financial service provider, is the arranger of the loan. The deal comes just ahead of the meeting of the Reliance Industries’ Board on Monday, where equity pattern and investment in Infocomm is likely to be discussed in view of a demand made by the flagship company’s Vice-Chairman and Managing Director Anil Ambani. Reliance Infocomm sources said that the exposure was not on the balance sheet of RIL and the finances were arranged on its own balance sheet. Reliance Infocomm ended the year 2003-04 with a turnover of over Rs 2,700 crore and net loss of Rs 390 crore. While the statement did not give details of the rate at which the funding was being arranged, Jagannatha Kumar, the head of project financing of Infocomm, said: “This deal provides the company extremely attractive long tenor funding.” Mr Kumar said the deal demonstrates US and Canadian supplier support to the company and the strong relationship RIC has built with export credit agencies like US Exim Bank and EDC. “The deal is an endorsement of our business plan and a recognition by international agencies of the company’s achievements,” he said. Sanjay Nayyar, the country head, Citigroup India, said, “This represents a landmark transaction in India’s fast growing telecom network in terms of both size and structure. It provided financial flexibilities to Reliance Infocomm by adding a new dimension to their debt financing alternatives. With this, RIC has tied up a total debt of $ 2.2 billion (close to Rs 10,000 crore) comprising international debt of $ 1.05 billion from Export Credit Agencies and various offshore credit banks and balance from domestic banks (about Rs 5000 crore) to meet the debt requirements of RIC’s project.
— PTI
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Refineries not ready to meet April 1 deadline
New Delhi, December 25 The target will have to be deferred as the public sector and private refineries have failed to invest to upgrade themselves for the supply of the specified category of petrol and diesel. Except for refineries at Mangalore, Chennai and North-East, all other refineries would not be ready to start producing the fuels with ultra-low sulphur and benzene content, a top government official said. “We may need to push the deadline by at least six months,” he said. IOC’s Mathura, Panipat and Haldia refineries, which are supposed to supply Euro III fuels to Delhi and Kolkata, would be ready for producing diesel with 0.035 per cent sulphur and octane number 51 and petrol with 1 per cent benzene and octane number 91 only by March 2005. The Mumbai refineries of BPCL and HPCL would be ready by February 2005 and June-July 2005.
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Playing games to widen mobile user base
Chandigarh, December 25 Currently, the Indian mobile gaming business represents approximately 5 per cent of the world mobile gaming market. According to In-Stat/MDR, a US-based tech industry research firm, the Indian mobile gaming market will generate $ 336 million annual revenue by 2009. The target group is the under-25 age bracket. With cellular operators to game developers working in conjunction, service providers in the region like Spice, Hutch, Reliance and Airtel are adding exciting games to their value added services every now and then. Spice Telecom introduced Mobile Tambola yesterday. It also offers a host of other such games like Khelo number 902, Sawaal ek lakh ka, besides other quiz and cricket-based games like Spicy 7 and Howzzat to its subscribers. Reliance offers its subscribers multiplayer online gaming wherein two subscribers sitting in different parts of the country can play a game of their choice against each other live. Various categories in which games are available are action, puzzles, casino, sports and mixed bag. “Currently, there are a number of games available to our subscribers on the mobile phone and we add new games on regular basis to cash in on this boom,” says Mr Himanshu Kapania, CEO, Punjab, Reliance Infocomm. Airtel, too, has 250 of them on its portal. Some of the popular ones, which were specially created for the movies are Lakshya, Day After Tomorrow and Spiderman are a big hit even today, says a company spokesperson. The latest entrant in the region, Hutch, offers 400 Java-based games for its subscribers. “We already have a 75 per cent share in the mobile gaming market and on an average, two new games are added every single day to provide our subscribers a new fare,” says Chief Marketing Officer, Hutch, Mr Harit Nagpal. Explains Mr Mukul Khanna, DGM (Marketing), Spice: “Since the industry is slated to explode, all service providers are trying to outdo each other to capture the mindspace of the youth, the segment which is hooked on to it.”
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Bajaj plans gearless scooter
Ludhiana, December 25 Mr Dheeraj
Mullick, Regional Manager, Punjab, Bajaj Autos, said at a press conference here today that the company while retaining its focus on the motor cycle market also plans to come out with a gearless scooter. “Though the market for these scooters currently forms a very small share in comparison to motor cycles, it is a growing market and we plan to have our presence in this area as well,” he said.
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by K.R. Wadhwaney Boeing, Airbus gear up for big battle
New fleet of aircraft, experienced pilots and efficient cabin-crew are important pre-requisites for any airlines. If the airline possesses them and if the carrier has been awarded air-worthiness certificate by the Directorate-General of Civil Aviation, it is entitled to operate flights on any sector. Why then prevent Air Deccan and Kingfisher (Mallya’s carrier yet to start operations) from operating on international routes just because they do not possess three years of experience in flying on domestic network.
If the skies are being opened, they should be opened fully and there should be equal playfield for all. Any road-blocks or hinderances created for some is a clear case of
depriving them of equal playfield. Why have ‘dog in the manger’ attitude for some? All carriers flying on domestic and international routes pay equal amount of taxes and are entitled to equal facilities. Why have two sets of rules —one for favourite operators and another for the rest. It is said that the government’s thinking is based on the recommendations of the Naresh Chandra committee. This is far from true because many committee recommendations have been ignored. The Indian civil aviation has been lagging behind because of ad-hocism. It is time the government and civil aviation ministry promote this segment earnestly so that tourism picks up in the country. The much delayed aviation policy is yet to be tabled. It is expected to be announced in January. For years, it has not been announced causing concern and worry to operators and users. It is only when the policy is announced, the skies would be cleared of uncertainty. While the Jet Airways is planning a Rs 1500-crore public float in April 2005, Kingfisher is planning to buy 30 new Airbus 320 aircraft in addition to four already taken on lease. The competition is hotting up. Regardless of the competition from the private sector, Indian Airlines continues to remain unfazed. The national carrier’s slogan is — the more, the merrier. Kingfisher, in the meantime, has
announced that its aircraft will have one huge compartment — economy class. There will be no business class. The airlines’s market bigwis are optimistic but many experienced officials do not share this optimism. They feel the road ahead is bumpy and would be a nightmare for the new carrier to secure sufficient passenger load. Maybe, the airline will cash on the concept of ‘fly now and pay later’. As Airbus industry has already won the first round of selling $2 billion worth aircraft, to Indian Airlines Boeing has stepped up its bid to win. Air-India order. This means another battle royale between two world’s leading manufacturers is in the offing. It is believed that the government has decided to stay away from this deal. If this happens, there is every hope of the deal materialising soon. Most of the troubles obtaining in this industry are because of over- indulgence of politicians.
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by A.N. Shanbhag
Thin line exists between tax planning and evasion
Q: I have received dividend from mutual fund for the period April 1, 2000 to March 31, 2001 (AY 2001-02). Subsequently there has been a loss arising from the sale of the units. This loss has been disallowed by the assessing officer on the grounds that intention was tax avoidance and tax evasion.
The amendment in the Section 94(7) came only in effect from AY 2002-2003 and this provision is being used retrospectively. Can you kindly give me some reports, which can help me in the hearing for the appeal? I am appearing myself and have no advocate to appear. — Bina A: Some of my friends also face the same difficulty. I am sorry; I do not think that I shall be of much assistance to you, though I would very much like to do so. The circular in question is F.No. 175/32/2003-IT Act dated. February 23, 2004, where the Director ITA-I states that for cases prior to AY 02-03, disallowance should be made only after in depth investigation and proper recording and marshalling of all relevant facts so as to establish the motive of tax avoidance. The way the circular is worded, it allows the IT officer to retrospectively apply the disallowance. The following is an extract from one of my articles on the subject though I am not sure how helpful it would be. In case I find anything more on the subject, I shall let you know. “Now a recent CBDT circular, dated February 23, 2004, seeks to empower the Assessing Officers (AOs) to carry out an in-depth investigation to ascertain whether the motive for any transaction was to avoid payment of taxes, before disallowing any claim for tax deduction. The moot point is whether any tax planning exercise undertaken using dividend stripping as a tool prior to the introduction of Section 94 (7) is in the nature of tax evasion. For, as per press reports, some AOs have been using Section 94 (7), retrospectively, disallowing claims in assessments prior to AY 02-03, when the new provision becomes operational. Strictly speaking, they have not been using Sec. 94(7) retrospectively, though the effect would be the same. The disallowance is being done taking the view that it was the investor’s intention to evade tax. Reportedly, the Commissioner (Appeals), the first appellate authority on tax matters, has held the view that shorter the period, the greater the probability that the intention was not investment. Also, investments in funds or shares out of borrowed funds would generally support the presumption that they are not investments. In our opinion, this is blatantly unfair on investors. As mentioned earlier, there is a thin line between tax planning and tax evasion. However, tax planning remains a right of the assessee. Yes, at all times it would indeed be the intention of the tax payer to minimise the tax payable and towards this end, he/she would be justified in using any legal means available to him. As long as any law is not being contravened, the investor is well within his rights to use the existing framework to minimize tax. It looks like this is a case of sour grapes. For, everyone involved in a dividend stripping transaction benefits except the exchequer. The lender lending money to the investor to buy units makes money as does the mutual fund because of the increased demand for its units. The agent who arranges the deal also gets a commission. Finally, the taxpayer who can set off his gains against the artificial loss also benefits. The only one left out of the party is the government. The papers had reported that the Appellate Tribunal has decided that Section 94(7) is not to be made applicable with retrospective effect and the tax evasion charges against those assessees should be dropped.
HRA exemption
Q: Is it possible to claim HRA exemption as well as house loan interest and principal amounts from income tax by a single person? If so, what are the conditions? Kindly guide and advise. — Arul Raj A: Under Section 10 (13A), an employee living in his own house or where he does not pay any rent is not eligible for this exemption. If you do not live in your own house and are paying the rent for the premises you stay in, you can claim the benefit of the HRA exemption, irrespective of the fact that you own a residential house and are paying loan instalments against housing finance taken for purchasing the property. You may claim deductions against the income from house property for interest payable and rebate u/s 88 for loan principal amount repaid. I sincerely hope that I am right.
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