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Euphoria over penny stocks vanishes
Wipro gets 40 acres of land in Mohali
PNB ready to buy out banks, NBFCs
SC go-ahead to Tatas on steel plant
Sensex may slide down further
Successor to pay tax on KVP for period of inheritance
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Euphoria over penny stocks vanishes
Mumbai, October 30 “When the water level goes up, all ducks go up with it,” an analyst said referring to the rise in share prices of companies which had feeble financial position. With the rise in prices of blue-chip stocks’ prices, several T and Z group stocks had witnessed an astronomical rise in their prices despite the BSE reducing the upper circuit filter from time to time as a
surveillance measure. Though the blue-chip companies had strong financial results in the background, the penny stocks revealed an unusual movement that more than meets the eye. SEBI has so far detected rampant price rigging in about 11 penny stocks. Some brokers placed orders at the upper circuit filter to set the upward price trends, while the company directors and promoters created artificial volumes through cross-deals. The first warning bell came from the BSE, which put out ads in newspapers warning investors on penny stocks. On September 28, SEBI ordered a ban on directors and promoters of Minal Engineering and seven brokers from trading in the scrip. The share price of Gujarat-based Minal Engineering had galloped up by 10,466 per cent from Rs 4.33 as on February, 2005, to Rs 452 on September 15. Last Friday, the stock closed on BSE at Rs 119.90, down by more than 73 per cent. The shares of Prime Capital Market had gained over 1,900 per cent from Rs 14 to Rs 280.40 in five months and 28 days. Prime Broking shares showed a
phenomenal jump of about 900 per cent in just 60 trading days. Subh Laxmi shares jumped by 1,067 per cent from Rs 21.30 to Rs 248.50 in three months and 27 days. Others, namely Global Capital Investments (up 980 per cent in three months), Bankam Investments (702 per cent in three months and seven days), S T Services (698 per cent in five months and 28 days), Aumluckie Investment Company (214 per cent in four months and 22 days) posted exorbitant gains. SEBI found that most of the deals were cross-deals and the prices were artificially jacked up. Consequently, the order came on September 29, 2005 banning the directors and promoters of these companies and 11 stock brokers from trading. On the same day, SEBI banned promoters of Konkan Tyres and three Mumbai-based brokers from trading in the shares of the company.
— PTI
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Wipro gets 40 acres of land in Mohali
Chandigarh, October 30 The final agreement between the government and the company is expected within the next two weeks. Sources in the Punjab Government said the exact modalities are being worked out. The company has been allocated land lying surplus with the Punjab State Industries and Export Corporation. Sources in the IT sector confirmed that Wipro would be located adjacent to the upcoming Quark city Special Economic Zone located in Mohali. Initially, Wipro sought 100 acres. Their Bangalore based rival Infosys, has set up a 20-acre campus in Chandigarh, largest outside Bangalore. Wipro has reportedly told officials that they would like to enter Mohali and no other place in Punjab. However, no such consolidated chunk 100 acres of land was available. Wipro, under a reworked deal, would be offered land at Rs 40 lakh per acre. Officials admit that paucity of land is a handicap now for attracting IT sector bigwigs. Tata Consultancy Services (TCS), another IT company, needs 30 acres and is being accommodated. Meanwhile, Satyam is also looking for campus site in either Mohali or Chandigarh. It has sent a request for 80 to 100 acres of land in Mohali.
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PNB ready to buy out banks, NBFCs
New Delhi, October 30 “The bank is a legitimate candidate to acquire NBFCs, private or public sector banks,” PNB Chairman S.C. Gupta said. “We are looking for the right opportunity, right time and hope it will materialise, if not by March, 2006, in future,” he said, adding that the bank has plans for inorganic expansion. The bank posted a modest 6 per cent increase in the net profit at Rs 780 crore in the first six months this fiscal from Rs 735 crore during the same period last year.
Central Bank
Central Bank of India has registered a growth of 15.71 per cent on its total business. The business grew by Rs 13,096 crore over the corresponding half year ended September 2004. The deposits of the bank have increased to Rs 65,493 crore as on September 2005 registering an impressive growth of over 14.8 per cent over September 2004. The bank earned a profit of Rs 107.77 crore for half yearly ended September 2005.
— PTI, TNS
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SC go-ahead to Tatas on steel plant
New Delhi, October 30 While allowing the Tata Group company to construct the six-million-tonne plant, a Bench headed by Chief Justice R.C. Lahoti said the steel company could commence its project at its risk at the disputed site subject to the outcome of the petition pending before it. KPCL has filed a petition before it claiming right over the 1,000 acres of land allotted to TISCO, which was originally given to it in 1994 and was later cancelled arbitrarily by the Orissa Government. The power company had stated that it had already paid Rs 1 crore in instalments towards the payment of total land cost of Rs 10 crore. After cancellation of the allotment of land made to KPCL, Industrial Development Corporation Bank had signed a
contract with TISCO for setting up an integrated steel plant and the steel major had
already paid Rs 67 crore towards cost of land. — PTI
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by J.C. Anand Sensex may slide down further
Last week the Sensex closed at 7,685.64 points — a loss of 1,113 points from its top reading of 8,799 points in September. The market correction is already down by 12.64 per cent on the Sensex. It appears that the market is likely to slide down further by about 150-200 points this week. The market correction is a part of the global slide-down in all Asian and Latin American markets. The FIIs are in retreat, withdrawing funds from these markets. One reason is that the bank rate in the USA is likely to go up this week by about 0.25 points. The falling exchange rate of the Indian rupee is another disturbing factor with the FIIs. The stock market correction was not unexpected but the extent to which the market indices have fallen is unexpected.
Both traders and investors are in jitters. Traders have suffered heavy losses in speculation and forward trading. The banks are very hesitant to advance funds against shares and have already sold those stocks held by them as securities from the borrowers who could not pay margin money on the shares due to market crash in share prices. The corporate sector is also under pressure due to rise in cost inputs and receding profit margins. According to an analysis of financial results of 1,000 non-finance companies, both in sales and PAT, growth rates have dropped from 25 per cent in the second quarter of the financial year 2004 to 20 per cent now. The second quarter results also are not as good as the first quarter results. The steel industry is having bad time particularly due to lower selling prices, fall in operating margins and surging steel output in China. Tata Steels second quarterly results are discouraging. The company posted only 12.4 per cent growth in net profit. The banking sector has also reported mixed results and market prices of almost all banks have gone down in spite of a raise in the ‘reverse rapo’ rate by the Reserve Bank of India. The Prime Minister is, however, hopeful that the GDP growth rate would move up from 7 per cent to 8 per cent. The Reserve Bank of India has also indicated that the GDP growth rate would exceed 7 per cent during the current financial year. It is, however, not certain whether the FIIs would return to the stock market in a big way. According to SEBI, FIIs have sold shares amounting to Rs 3,476.20 crore in October alone. But the FII investments are still very large in the Indian stock market. Nahar Group companies have done well as the second quarter results indicate. Nahar Industrial Enterprises has doubled its net profit. Its half-yearly net profit stands at Rs 2,932.65 lakh against Rs 1,260.88 lakh. Nahar Spinning’s net profit for the second quarter stands at Rs 997.53 lakh against Rs 696.76 lakh for the corresponding period last year. Nahar Exports has reported net profit of Rs 859.72 lakh for the second quarter as against Rs 255.45 lakh last year. Some of the top companies have not done well. This applies to Ranbaxy, Century Textiles and Grasim. In general, however, the top companies have done quite well. Glaxo Pharma’s net profit for the third quarter is up by 79 per cent. Gujarat Alkalies’ net profit is up by 59 per cent. |
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by S.C. Vasudeva Successor to pay tax on KVP for period of inheritance
Q I am a housewife and not an IT payee. My mother-in-law was also housewife and expired recently. She had purchased KVP for Rs 1.5 lakh from post office out of her savings, few years back, with me as Joint B. About five months back, she had written a letter to my husband that on maturity of these KVPs, the whole amount will belong to her daughter-in-law. I will now receive a cheque of double amount, that is Rs 3 lakh in my name in October, 2005 from post office. My questions are as under:
(1) Whether the said amount will be considered as deemed to be inherited or as a gift amount to me? (2) Whether I am liable to pay income tax on accrued interest Rs 1.5 lakh after close of this financial year? — Meena Gupta, Karnal A. The answer to your queries is as under: 1. The amount would be received by you as a joint holder of the KVP on account of the death of the first holder. The inheritance is as per the will of the deceased. In case there is no will, the provisions of Section 15 of the Hindu Succession Act, 1956, would apply which provide that the property of a female Hindu dying intestate shall devolve according to the rules set out in Section 16 of the said Act. Briefly the relevant line of succession provided in Section 16 of the Act is as under: (a) Firstly, upon the sons and the daughters (including the children of any pre-deceased son or daughter) and also the husband. (b) Secondly, upon the heirs of the husband; (c) Thirdly, upon the mother and father; (d) Fourthly, upon the heirs of the father; and (e) Lastly, upon the heirs of the mother. 2. The tax on KVP is payable on the accrued amount for each year. If your mother-in-law was not an income tax payee for those years for which she held the KVPs, the tax would be payable by the persons inheriting the property only in respect of the year(s) in which the amount is received by them.
Cheques for return Q. I have the following questions related to Income Tax. (a) I have got a demand notice from IT office for payment of balance income tax for the assessment year 2004-05. At present, I am out of India with my mother. Can I send a cheque for the above amount to the Income Tax Office and if so, in whose favour should I draw the cheque? (b) I want to download the form to file IT return for the assessment year 2005-06. I am a pensioner from the state government and don’t have any other source of income. I may please be told the site from where I can download. — Narinder Singh Chawla A. (a) The IT office normally does not accept a cheque because the challan for the deposit of tax has been notified by the department. I would suggest that you may approach any of the foreign branches of the State Bank of India (SBI) which accepts the tax payment on behalf of the Government of India. I am sure such a branch would help you for the deposit of tax. (b) The relevant website is www.incometaxindia.gov.in and will have to refer to the option with regard to the return form.
ULIP dividend Q. I have contributed Rs 60,000 towards ULIP of UTI Mutual Fund in 10 years plan (Rs 6,000 yearly). Now on maturity, I shall be getting nearly Rs 1 lakh as maturity value of ULIP plus Rs 5,000 as maturity bonus after November 15, 2005. Kindly advise whether these amounts would be treated as long / short term capital gains and income tax shall be payable by me. If so, how much? — Anurag Gupta, Hamirpur A. In case of ULIP, the dividend received every year should have been tendered for taxation. Such dividend is reinvested for the acquisition of further units in accordance with the scheme. The indexed cost of such units for each year should be worked out so as to compute the indexed cost of units as on the date of maturity. The balance amount would be subject to capital gains tax. It is not possible to compute the tax liability in absence of the availability of the figures of dividend for each year.
On-job study Q. I am a Central Government employee and had gone for postgraduate studies for which I have spent more than Rs 1 lakh on fee and books etc. during 1999-2003. As per the government rules I have been reimbursed the restricted amount of Rs 50,000 only during August, 2005. Kindly advice whether income tax would be paid on Rs 50,000 which was for training. Moreover, I had paid the income tax from 1999-2003 on my gross income without taking any benefit on the amount spent on studies. — Vijay Devgan A. In my opinion, you should be able to claim exemption in respect of such reimbursement of expenditure under Section 10 (14)(i) of the Income Tax Act, 1961 (The Act). The relevant section provides for the exemption of any special allowance or benefit not being in the nature of a perquisite within the meaning of Clause (2) of the Section 17 specifically granted to meet the expenditure wholly necessarily and exclusively incurred in the performance of the duties of an office or employment of profit as may be prescribed to the extent to which such expenses are actually incurred for that purpose. One of the prescribed heads of exemption is “any allowance granted for encouraging academic research and training pursuits in educational and research institutions”. It is presumed that you are in an educational and research institute. If that be so, it should be possible to argue that the postgraduate studies was necessarily taken up so as to perform your duties of office in much more efficient manner. Further the above amount being less than the amount actually incurred by you is not taxable in view of the above specific provisions.
Readers are welcome to send questions for tax advice. These should be brief, to the point and not exceed 100-150 words. The letters should be sent to Tax Advice C/o The Tribune, Sector 29, Chandigarh-160020 or emailed to: |
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