B U S I N E S S

Jet Airways under ED scanner
New Delhi, July 31
The turbulent weather for Jet Airways seems far from over as the Enforcement Directorate has now begun probe into its overseas funding to ascertain whether the money was a proceed from any underworld organisation.

Ministry to approach Cabinet on PIO investment

Rain in Mumbai hits exports
Mumbai, July 31
All sea-borne cargo transactions have been totally disrupted creating huge losses for the industry after the heavy downpour continued to paralyse the Mumbai life for the past four days.

Reliance Capital acquires AMP Sanmar
New Delhi, July 31
Making a dramatic foray into life insurance business, Anil Ambani's ADA Enterprises today announced acquisition of Chennai-based AMP Sanmar for an undisclosed amount, a move that may involve investment of over Rs 400 crore.

Market Update

Liquidity driving force behind zooming Sensex
Dalal Street continues to remain inundated by the foreign fund flows. Last week, while the Mumbai rains pushed the general public sentiments down the drain, investor’s mood was as euphoric as ever on the back of unabated FII inflows.

Tax AdvicE

Register trust for IT exemption
Q. The Saini Charitable Education Trust (Regd.) Ropar, has been created with the aid given by some donors with the aim and object of giving scholarship/monetary aid to deserving and needy students out of the interest accrued from the said fund. I submit more questions for your advice for the stated trust:

Models display a creation by Malaysian designer Muhammad Hatta Dolmat, a finalist of the Piala Jarum Berlian fashion competition, during the Kuala Lumpur Fashion Week, 2005, in Malaysia on Sunday.
— AP/PTI

	CERC rejects Reliance Energy’s plea July 31, 2005
	IOC negotiates with Reliance for cheap cooking fuel July 30, 2005
	ONGC fire to hit oil output, refineries July 29, 2005
	Gurgaon an isolated case: Kamal Nath July 28, 2005
	RBI leaves bank rate, repo rate unchanged July 27, 2005
	ONGC bags 8 oil and gas blocks, Reliance gets five July 26, 2005
	Rs 21,000-crore ONGC project gets PM’s nod July 25, 2005
	ONGC, Mittal Group sign MoU July 24, 2005
	Too early to measure yuan revaluation impact: Govt July 23, 2005

Jet Airways under ED scanner

New Delhi, July 31
The turbulent weather for Jet Airways seems far from over as the Enforcement Directorate (ED) has now begun probe into its overseas funding to ascertain whether the money was a proceed from any underworld organisation.

Enforcement Directorate sources said some of the funding of the airline, received from abroad, had not been reflected in its account books, which needed to be probed.

The investigations were being carried out under the Foreign Exchange Management Act (FEMA) and the Prevention of Money Laundering Act (POMLA) by the sleuths of the Enforcement Directorate.

The issue was also brought up by Union Civil Aviation Minister Praful Patel in Lok Sabha while replying to a question from Congress MP Avtar Singh Bhadana.

Mr Patel said the Directorate of Enforcement had informed that an investigation relating to Jet Airways had been taken up by them. The airline, which has been witnessing turbulent weather and was probed for alleged underworld links, was also being scrutinised by the Ministry of Company Affairs after which eight cases had been initiated by the department.

The offences had been compounded by the competent authority and a fee of Rs 2.2 lakh levied on the company and its officers, Mr Patel said.

The Civil Aviation Minister informed the Parliament that the Ministry of Home Affairs had also conducted inquiries against the Jet Airways but it had not revealed anything. He said the Ministry of Finance, Department of Revenue had scrutinised the Income Tax assessment up to 2002-03.

Mr Patel said the Income Tax department had informed the Aviation Ministry that the funds received by the Jet Airways had come through various legal banking channels.

However, after the investigations by the ED, the Income Tax department would have to come back in action as the sleuths of the directorate had allegedly unearthered some transactions not listed in the account books, the sources said. — PTI

Ministry to approach Cabinet on PIO investment

Rain in Mumbai hits exports

Mumbai, July 31
All sea-borne cargo transactions have been totally disrupted creating huge losses for the industry after the heavy downpour continued to paralyse the Mumbai life for the past four days.

The authorities were not able to count the losses as the rains continue to hit the metropolis.

The export of items, including textiles, garments and jewellery, was affected as the transportation came to a standstill in the city since the last three days.

At the Mumbai port as many as eight vessels were stranded.

“There are total nine vessels and the port could handle just one. All sea-borne export movements have been affected and delayed,” a senior official said.

Meanwhile, the Jawaharlal Nehru Port Trust was working with half of its total manpower, handling just 50 per cent of its capacity. — UNI

Reliance Capital acquires AMP Sanmar

Market Update

Liquidity driving force behind zooming Sensex

This huge rally witnessed on the streets, which has now stretched to a record 13 successive weeks of gains for the Sensex, has started to make us nervous. Though the markets may gain some more ground, yet we recommend caution while buying into the markets for the time being.

Hyderabad Industries

Hyderabad Industries is the market leader in the asbestos-based roofing industry. The company sells its products under the brand name, “Charminar”, and has a strong marketing network across the country.

The industry, which was growing at the rate of 10 per cent, is likely to see an accelerated growth in the next couple of years due to the government’s thrust on the rural housing.

The company has also sold off its loss-making heavy engineering division to Titagarh wagons. HIL has announced excellent results for the quarter ended June 2005. On sales of Rs 118 crore, the company has announced a profit of Rs 15 crore. This on equity base of Rs 7 crore translates into an annualised earning per share of Rs 85. This gives the stock a discounting of less than 5. This is extremely low for this C.K. Birla Company which clearly has exciting times ahead.

PACL

PACL, a Punjab Government enterprise, has announced excellent results for the last quarter, wherein it has reported a profit of Rs 14.89 crore. The uptrend in caustic soda prices has changed the fortunes of the company, which was a sick company sometime back. The Punjab government is also in the process of divesting the stake held by the Punjab State Industrial Development Corporation (PSIDC). Since the caustic soda prices are expected to remain firm during the current financial year, the company may report bumper results for the full financial year.

On an equity base of Rs 20.54 crore, the stock which is trading at Rs 75, translates into a discounting of less than 3. This stock definitely needs to be re-rated in the light of the above results and the expected sale of PSIDC stake.

Tax Advice

by S.C. Vasudeva

Register trust for IT exemption

Q. The Saini Charitable Education Trust (Regd.) Ropar, has been created with the aid given by some donors with the aim and object of giving scholarship/monetary aid to deserving and needy students out of the interest accrued from the said fund. I submit more questions for your advice for the stated trust: -

— Balbir Singh Saini

A. The answer to your queries are as under: -

(i) A person can donate any amount to a trust so long as he is not interested in seeking a deduction under Section 80G of the Income Tax Act, 1961 (The Act). For getting a deduction under the aforesaid section, the limit provided for is 10 pc of the gross total income as reduced by any portion thereof on which income tax is not payable under any provisions of the Act or by any amount by which the assessee is entitled to a deduction under any other provisions of Chapter VI-A of the Act.

(ii) There is no maximum limit in respect of income of the trust. However, Section 11 of the Act requires a charitable trust to utilise at least 85 pc of its income in the same year. The balance 15 pc can be accumulated.

(iii) The pre-requisite is that the charitable trust must be registered with the tax authorities under Section 12A of the Act.

Tax liability

Q. Kindly work out my tax liability for the Financial Year 2004-05 (Assessment Year 2005-06) from the following particulars keeping in view Section 80 L, 88 and 88 D and standard deduction under Section 16 of The Income Tax Act.

i) Annual pension Rs 1,02,000

ii) Interest income from post office monthly income scheme/FDRs, bonds etc. for the year Rs 35,000

iii) Contribution to PPF during 2004-05 Rs 30,000

— P.D.S. Sharma

A. Your tax liability for the Assessment Year 2005-2006 would be NIL on the basis of the figures given by you in the query, the details whereof are: -

Total income being less than Rs 1,00,000, no tax is payable for the aforesaid assessment year.

Rebate on tuition fee

Q. My son has got admission in a particular institute for the preparation of PMT 2006. It is a regular study for a year. Please let me know that whether tuition fee/registration fee paid to the institute will be calculated under 80Cor not for the Financial Year 2005-06 because I am a government employee.

— Suresh Sharma

A. Section 80C of the Act does not make any distinction between a government or a non-government employee. You should thus be entitled to a deduction of tuition fee paid to any university, college, school or other educational institution situated within India.

Interest on KVPS

Q. Some time back interest rates to be adopted for KVPS purchased up to 28.02.2002 were brought out. But the interest rate for KVPS purchased on or after 01.03.2002 have not been given. The interest rates for National Saving Certificates with interest rate of 12pc, 11.5pc, 11pc, 10pc, 9.5pc and 8pc as it accrues on cumulative basis to be applied for calculation of income are also required for ready reference of so many readers. It may also be intimated whether interest income accruing from infrastructure bonds of ICICI and IDBI Banks are included in threshold exception limit of Rs 12,000 under Section 80 L or additional interest income of Rs 3,000 is exempted during financial year 2004-05. I shall feel obliged for early guidance/reply.

— K.J. Jain

A. The rate of interest in case of KVPS purchased after 01.03.2002 and those purchased from 01.03.2003 is as under: -

The interest on infrastructure bonds shall be covered for the purposes of allowing deduction of Rs 12,000 provided for under Section 80 L of the Act.

Senior citizen

Q. (i) I will attain the age of 65 years in September, 2005. Please confirm whether I shall get the benefit of senior citizen in income-tax for the Financial Year 2004-05 (Assessment Year 2005-06).

(ii) Is it correct that I can avail the exempted limit of income-tax of Rs 1,85,000 instead of Rs 50,000 in this Assessment Year 2005-06?

(iii) I retired from Punjab Government services during 1998. After receiving retirement benefit, I purchased a house with my retired benefit amount plus loan amount taken from a private finance company and am returning the EMI regularly. Kindly guide me about the benefit for interest paid on the loan and rebate on principal repayment every year applicable to me.

(iv) My wife is a 62-year-old housewife. She has her own house and have income from house property in the last year i.e. 2004-05 Rs 1,35,500. Please guide how to prepare her income tax return for the Assessment Year 2005-06.

— Hari Singh

A. The answer to your various queries are as under: -

(i) You will be entitled to the status of senior citizen for the assessment year 2006-2007 i.e. for financial year 2005-2006.

(ii) The limit of Rs 1,85,000 for senior citizens is applicable for assessment year 2006-07.

(iii) The interest paid towards loan raised for acquiring house property is allowable as a deduction from property income. The principle amount of loan repaid in a year would be allowed as deduction under Section 80C of the Act from the total income effective Assessment Year 2006-2007 subject to a limit of Rs 1,00,000. This limit is inclusive of all other deductions such as insurance premium, contribution to provident fund etc.

(iv) Your wife will a senior citizen after she attains the age of 65 years. The income from house property is required to be computed after deducting the amount of house tax actually paid during the year. Out of the balance, a deduction of 30pc of such balance income is allowed as a statutory deduction. The remaining amount would be subject to tax.