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THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS
B U S I N E S S

Nahar Group plans to list Oswal Woollens
New Delhi, April 9
After a major revamp of the group, Rs 2,300-crore Nahar Group is planning to list its only unlisted Oswal Woollens Ltd having pioneer brands like Monte Carlo. "We are seriously looking at listing the company and a decision on this is likely in six to seven months," Kamal Oswal, Vice-Chairman and Managing Director of Nahar Group, said.

Mittal richest Asian in UK
Lakshmi Mittal London, April 9
NRI steel tycoon Lakshmi Mittal has maintained his position as the richest Asian in Britain in 2006 with a fortune worth £14.8 billion. The total wealth of Asians in the UK has gone up from £24.9 billion in 2005 to £35.5 billion this year, according to Mr Philip Beresford, author of ‘The Sunday Times Rich List’.

NTPC to add 23,000 MW
New Delhi, April 9
The National Thermal Power Corporation, India’s largest power generating company, is planning to add around 23,000 MW of additional capacity during its Xth (2002-07) and XIth plan (2007-12) periods.

Market Update
Market surge continues
Sensex and Nifty gained 2.7 per cent at 11589 and 1.5 per cent at 3455, respectively last week. Sensex has thus gained 15 per cent in seven consecutive weeks, making new lifetime highs along the way.

Tax Advice
No TDS on withdrawals from GPF
Q. Kindly clarify me on the following queries:
1. A person who has no source of income can he apply for issuing of PAN.
2. As per new policy of tax deduction, in case an employee who withdraw non-refundable advance from his General Provident Fund, is that amount will be taxable or not?
  • Rebate on HBL

  • Tax on freight

  • FCNR account

  • Tax liability



Mandira Bedi displays a creation by Priya Awasthy on the last day of the Wills Lifestyle India Fashion Week in New Delhi
Mandira Bedi displays a creation by Priya Awasthy on the last day of the Wills Lifestyle India Fashion Week in New Delhi on Sunday.
— Tribune photo by Rajeev Tyagi


 

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Nahar Group plans to list Oswal Woollens

New Delhi, April 9
After a major revamp of the group, Rs 2,300-crore Nahar Group is planning to list its only unlisted Oswal Woollens Ltd having pioneer brands like Monte Carlo.

"We are seriously looking at listing the company and a decision on this is likely in six to seven months," Kamal Oswal, Vice-Chairman and Managing Director of Nahar Group, said.

He said the initial public offer size could be in the range of Rs 150-200 crore and the details would be finalised in next few months.

The company, which pioneered branding in the woollen wear market in India in both men and women categories, has diversified the umbrella brand to summer knitwear.

The Group carried out a massive restructuring and merged its companies Nahar Spinning and Nahar Exports, besides embarking on a Rs 800 crore expansion plan as part of which it is going aggresive in domestic market with its retail outlets.

The expansion plan is being implemented in two phases of Rs 400 crore each. The first phase will be completed in a couple of months while the second phase is expected to be over by March 2008.

"We are looking at textile in a big way. We are an integrated textile player engaged in the manufacture of yarn, greige fabric, processed fabric and also readymade garments under the 'cotton county' brand. The objective of the expansion is to position ourselves as one of the leading players in the industry," Oswal said.

To part finance the second phase of expansion, the company has already raised $45 million from the international markets through a Foreign Currency Convertible Bonds issue.

The company proposes to substantially increase the capacities of its yarn, greige fabric and processed fabrics units in a phased manner, besides setting up three new power plants of total capacity of 45 MW.

Identifying retail as the key focus, Nahar Group's flagship Nahar Industrial Enterprises is targeting 100 stores of its mid-market menswear chain 'cotton county' by year end and 250 stores by 2008 from current level of 65.

"Our focus is on tier II and tier III cities as that is where volumes are, and these are the cities where aspiration levels are growing rapidly," he said adding retail division may be hived off into a separate company few years later.

Nahar Spinning and Nahar Exports are being merged to focus on exports markets. The spinning company has been supplying fabric to the likes of GAP, Tommy Hilfiger, Timberland, Madura Garments and Raymond, claims a cost advantage in integrated manufacturing. — PTI

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Mittal richest Asian in UK

London, April 9
NRI steel tycoon Lakshmi Mittal has maintained his position as the richest Asian in Britain in 2006 with a fortune worth £14.8 billion.

The total wealth of Asians in the UK has gone up from £24.9 billion in 2005 to £35.5 billion this year, according to Mr Philip Beresford, author of ‘The Sunday Times Rich List’.

Mittal, Chairman of Mittal Steel, the world’s largest steel company, was worth £14.8 billion in 2005 and maintained his position as the richest Asian in Britain in 2006 as well, according to a report in ‘The Sunday Times’.

The wealth of the Sri Chand Hinduja (70) and Gopi Chand Hinduja (66) — Chairman and President, respectively, of the Hinduja Group — has more than doubled from £1.5 billion last year to £3.6 billion this year. They continue to be the second richest Asians in Britain.

The list, being published next week by Sunrise Radio, also showed that the number of billionaire entries had doubled to four.

Anurag Dikshit(34), the co-founder of PartyGaming, the online poker company, has emerged as the third richest Asian in the UK with a fortune of more than £1.7 billion. He lives in Gibraltar to take advantage of the favourable tax laws on gambling. — PTI

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NTPC to add 23,000 MW

New Delhi, April 9
The National Thermal Power Corporation (NTPC), India’s largest power generating company, is planning to add around 23,000 MW of additional capacity during its Xth (2002-07) and XIth plan (2007-12) periods.

NTPC also has substantial expansion plans, likely to be funded with a debt equity ratio of 70:30, compared to the present debt equity rate of 0.41 times, an ICRA report said.

With increasing energy deficit and limited capacity additions expected from State Electricity Boards (SEB) or Independent Power Projects (IPP), NTPC is not likely to face a demand risk.

Moreover, due to its strong presence and dominant position in the power sector and tariff competitiveness, the debt servicing ability would remain stable.

NTPC has also been invloved in undertaking significant capacity additions. During 2004-05, they commissioned two 500 MW units at Talcher in Orissa, a 500 units at Ramagundam in Andhra Pradesh and a 500MW unit at Rihand in Uttar Pradesh. — UNI

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Market Update
Market surge continues
by Lalit Batra

Sensex and Nifty gained 2.7 per cent at 11589 and 1.5 per cent at 3455, respectively last week. Sensex has thus gained 15 per cent in seven consecutive weeks, making new lifetime highs along the way.

Strong sales by auto and cement firms and expectation of strong fourth quarter results fuelled a solid Surge on the bourses last week.

A major bout of profit-taking, which pulled Sensex down by 157 points last Friday, is seen as a short-term bearish signal. Sensex is likely to face stiff short term resistance at 11,825 and at the all time high of 11,930. In the short term sensex could correct its recent advance from 10,750 to an all-time high of 11930. The index could decline towards the 10-day moving average (DMA) at 11,360 or its recent low of 11,265.

On a more fundamental note, the near term major tigger for the market is the fourth quarter March 2006 corportae results. The marketmen expect decent-to-string growth in earnings for the financial year 2006 by the India Inc. The market, which has already discounted 2006 and 2007 result, may correct sharply if any bellwether fails to meet the market expections. Cement major ACC kickstarts the earnings reporting season this Wednesday, to be followed by Infosys on Friday.

Rel Petroleum

Relience Petroleum Ltd (RPL) is a start-up company promoted by Reliance Industries Ltd (RIL). It has been formed to set up a greenfield petrolem refinery and polypropylene plant in a special economic zone (SEZ) at Jamnagar in Gujarat. The proposed refinery and the polypropylene plant will be located adjacent to the existing refinery and petrochemical complex of RIL. The objectives of the issue are to raise capital for financial the proposed greenfield project.

There is a demad-supply mismatch in petroleum products and Relience Petroleum will take advantage of this mismatch.

Second is that the propsed refinery’s configuration is such that if would use lower cost heavy/sour crude grapes, which will help RPL maximise its refining margins.

Thirdly, the proposed refinery will be located on the west coast of Indai, in close proximity to West Asia, which is the largest crude producting region in the world. This will result in lower both shipping turn-around time and crude freight costs.

Lastly, the project has a strong promoter group backing RIL, the promoter company of RPL, has a good experience of executing projects in the refining as well as petrochemical secors.

Investors may subscribe to the initial public offer (IPO) of RPL at the cut-off price for decent returns over a period of three to five years.

Indian Hotels

Indian Hotels Company limited (IHCL) was recommended for buying by me in November last year. At that point I had said that the growing disposable income and the higher purchasing power of Indians as well as the drop in the domestic airfares had kindled domestic travel. I believe the domestic travel industry is at a nascent stage but has the potential to turn into a huge market. The growth in the domestic travel would certainly outpace that in the foregin tourist inflow. IHCL, with its pan-India presence, will be a prime beneficiary of the buoyancy in the domestic travel industry.

While I continue to remain bullish on IHCL. I recommending partial profit booking as the stock has appreciated by 75 per cent since my recommendation in November, 2005. Investors can re-enter the scrip at lower levels as the fundamentals of the company remain strong.

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Tax Advice
No TDS on withdrawals from GPF
by S.C. Vasudeva

Q. Kindly clarify me on the following queries:

1. A person who has no source of income can he apply for issuing of PAN.

2. As per new policy of tax deduction, in case an employee who withdraw non-refundable advance from his General Provident Fund, is that amount will be taxable or not?

3. At present the house where I am residing is in the name of my father. My father/mother have since been expired. Can I claim house rent rebate from my wife or not. Secondly, family of my elder deceased brother is also residing in this house. The wife of my deceased brother is also an employee.

— Ramesh Kumar, Patiala

A. 1. In accordance with the provisions of Section 139A(3) of the Act, any person who is not a tax-payer may apply to the Assessing Officer for the allotment of a Permanent Account Number and the Assessing Officer shall allot the Permanent Account Number to such person forthwith.

2. The non-refundable advance from General Provident Fund is not covered within the term ‘salary’ and, therefore, the question of deduction of tax at source on such an amount would not arise.

3. The deduction in respect of house rent paid is allowed if the amount has actually been paid by an assessee. This position is applicable (a) where an employee is in receipt of house rent allowance from his employer and (b) where an assessee who is not in receipt such an allowance but has paid the rent out of his total income for the purposes of taking a house on rent. Accordingly, in case you are making a payment to the owner of the house towards rent you may be entitled to a deduction to the extent specified in the in the Rules and/or the Act.

Rebate on HBL

Q. I had drawn loan from my department for the construction of house (HBL) during 1990 which has been repaid, including interest and availed the benefit of income-tax rebate upto July 2005. Now let me know whether I am entitled for further rebate or not? As I am drawing house rent allowance from my department.

— S.S. Batra, Ludhiana

A. In accordance with the new provisions of the Act, an amount paid towards the repayment of loan taken for construction or acquisition of a house is allowed to be deducted from the total income under Section 80C of the Act. In case you have not paid any amount towards the repayment of loan, it would not be possible to claim any deduction on that account. The interest payable on such a loan is deductible from the income from house property and in case no such interest is payable, no deduction can be claimed against the income from house property.

The house rent allowance paid to an employee is not included in his total income in case the employee has paid rent for the house occupied by him for his residence. Such a deduction is allowable against the salary income of an assessee in accordance with the Rule 2A of the Income-tax Rules 1962 (the Rules). The computation for the deduction will have to be made in the following manner:

(a) the actual amount of such allowance received by the assessee in respect of the relevant period; or

(b) the amount by which the expenditure actually incurred by the assessee in payment of rent in respect of residential accommodation occupied by him exceeds one-tenth of the amount of salary due to the assessee in respect of the relevant period; or

(c) an amount equal to -

(i) where such accommodation is situated at Mumbai, Kolkata, Delhi or Chennai, one-half of the amount of salary due to the assessee in respect of the relevant period; and

(ii) where such accommodation is situated at any other place, two-fifths of the amount of salary due to the assessee in respect of the relevant period, whichever is the least of (a), (b) and (c).

The term ‘salary’ for above purpose shall have the meaning assigned to it in clause (h) of rule 2 of Part A of the Fourth Schedule and the term ‘relevant period’ means the period during which the said accommodation was occupied by the assessee during the previous year.

Tax on freight

Q. I am doing trading business. My firm is proprietorship. My query is regarding "TDS on freight". My monthly freight payment is around Rs 2 lakh on contract basis. I want to know whether I have to deduct the TDS on freight payment or not because transporter says due to proprietorship firm, you have no liability to deduct the TDS. Please tell me it is true or not. If true, then please tell me the section, clause or sub-clause under which this is mentioned.

— Kulish Goel

A. According to Section 194C(1) of the Act, any person responsible for paying any sum to any resident (herein after referred to as the contractor) for carrying out any work (including supply of labour) in pursuance of a contract between the contractor and:

(a) the Central Government or any state government; or

(b) any local authority; or

(c) any corporation established by or under a Central, state or Provincial Act; or

(d) any company; or

(e) any cooperative society; or

(f) any authority, constituted in India by or under any law, engaged either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both; or

(g) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any law corresponding to that Act in force in any part of India; or

(h) any trust; or

(i) any university established or incorporated by or under a Central, state or Provincial Act and an institution declared to be a university under Section 3 of the University Grants Commission Act, 1956 (3 of 1956); or

(j) any firm.

shall, at the time of credit of such sums to the account of the contractor or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode whichever is earlier, deduct an amount equal to 1 per cent in case of advertising and in any other case 2 per cent of such sum as the income tax on income comprised therein. The aforesaid section clarifies that for the purpose of this section, the term "work" shall include carriage of goods and passengers by any mode of transport otherwise then by railways.

It would evident from the above that the Section 194C(1) of the Act does not apply to a sole proprietorship firm. I may add that a proviso to sub Section (2) of Section 194C of the Act, which applies to sub-contractors, has been introduced by virtue of which a sole proprietor who is getting his tax audit done has to deduct TDS from payments made to a sub-contractor.

FCNR account

Q. I am an NRI. I want to open a FCNR account in India. My question is can I maintain the FCNR account in India if I permanently return to India. What is repatriable. And will I have to give Tax on my FCNR account.

— Tarun

A. A Foreign Currency Non-Resident (FCNR) account can be maintained by a person who is a non-resident in India. The banking authorities requires that a person who comes back to India for permanent settlement should inform his bankers so that such Foreign Currency Non Resident account can be converted into a resident account. The interest earned on the resident account would be taxable in India.

Tax liability

Q. I am a government employee. My total salary from all sources is Rs 1.90 lakh per annum, my total subscription towards GPF is Rs 30,000, house loan repayment instalment is Rs 2,500 per month Rs 3,228 deposited in LIC, Rs 360 in GIS and tuition fee of kids is Rs 7,000. Kindly let me know my tax liability as per the new slab and sections for the assessment year 2006-07. Please tell me that under Section 80C, If I save below 1 lakh, I can take rebate or not and which rebate comes u/s 80C. Whether LIC, GPF, PPF & NSC comes under rebate or not.

— Gurbachan Singh

A. On the basis of the figures given by you, the total tax liability in your case would be Rs 1,980. You can take a rebate on contributions to the extent of Rs 1 lakh made to the various saving schemes. The payments for insurance premium, General Provident Fund, Public Provident Fund and purchase of National Saving Certificate (NSC VIII) are covered within the provisions of Section 80C of the Act under which the deduction to the extent of Rs 1 lakh is allowable out of the total income.

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