The Tribune, Chandigarh, India

	Gas Row How the Ambani saga unfolded Bhagyashree Pande Tribune News Service New Delhi, August 15 The Ambani brothers are engaged in a battle over the supply of gas from RIL-operated KG block to Anil Ambani company RNRL. RNRL first approached Company Court against RIL as it was not getting gas at the pre-determined price. Differing with the judgment of the Company Court, both parties moved to Division Bench of the Bombay High court. The main reason of the litigation is that the Anil Ambani group believes that government approval is not required by RIL to give natural gas to RNRL whereas RIL says it is a contractor and can not allocate gas to Anil Ambani group without government approval. In April 2006, RIL approached the government for price approval of $2.34 per mmbtu - the price at which it decided to sell gas to RNRL - but the matter went in for litigation when the government rejected the price saying the price and tenure was not as per the production sharing contract (PSC). After the death of family patriarch Dhirubhai Ambani, the question was how family members would divide natural gas owned by the government? The matter reached the Bombay High court. The court held that supply of gas to RNRL is a class of its own and not subject to any allocation by the government. The judgement in June 2009 asked RIL to supply 28 mmscmd of gas for a period of 17 years at $2.34 per mmbtu on the terms of the MoU between Ambani brothers. However, the judgment raises some questions: What will happen to existing allocation to the fertiliser sector, power and steel plants? Will the family MoU supersede the gas utilisation policy and gas being produced will be transferred to ADA group companies? All agreements in private and public domain are subject to laws, government policy and regulations. From the Bombay High Court judgment it does not appear to be the case as it allows supply of gas at a fixed price for 17 years without taking into account the government policy. The government’s Gas Utilisation Policy means that existing fertiliser units, LPG, petrochemicals plants, power plants, city gas distribution projects and refineries should be the first recipient in gas allocation. New fertiliser units, power plant and city gas projects are the next recipients. Gas allocation to fertiliser sector will result in reduced fertiliser subsidy. As refinery does not figure in the list of priority sector, no allocation has been done to RIL for its own captive use. It has to purchase expensive naptha or LNG at prevalent market prices that are higher than $4.2 per mmbtu. Timeline April 2000: A consortium of RIL and Niko bid for KG D6 field Oct 2002: Discovery of natural gas reserves announced June 2004: RIL selected as preferred bidder for gas supply to NTPC June 2005: MoU signed between members of RIL family April 2006: RIL seeks approval for price of $2.34 mmbtu for RNRL July 2006: The Oil Ministry declines April 2007: RIL invites bids for KG D6 gas to discover market price Sept 2007: EGoM approves gas price formula Oct 2007: Company judge delivers judgment in RNRL-RIL dispute Jan 2008: RIL and RNRL file appeals against the judgment May 2008: EGoM approve gas utilisation policy Jan 2009: Interim order allows RIL to execute gas pricing pact June 2009: Division Bench delivers judgment in RIL-RNRL case
	ONGC rings DoT for spectrum New Delhi, August 15 Oil and Natural Gas Corporation (ONGC) has approached the Department of Telecom for allocation of spectrum to set up a captive communication network for its Western Offshore site. The oil PSU has sought permission to build a captive communication network based on broadband wireless access system for the Western Offshore location in the 3.3 GHz frequency band. According to sources, the DoT is considering ONGC's proposal and has asked the wireless department to give status on the availability of spectrum in the required band. Earlier, such request of ONGC has been considered for BWA system in the 3.3 Ghz band for on shore locations in Gujarat. Since, the requirement is for off shore, that is over 60 km from sea shore, perhaps the same assignment can be considered for the proposed network. The DoT may now ask ONGC to sign a licence agreement with the Telecom Department. As of now Tatanet, a division of Nelco, a connectivity solutions provider, provides communication infrastructure solutions to ONGC's Western Offshore site. The Western Offshore oil and gas field bears large producing assets of ONGC. — PTI
	PM: AI issue to be resolved soon Tribune News Service New Delhi, August 15 The government today said it would take steps to solve soon problems faced by ailing national carrier Air India. “We are giving careful attention to the problems of Air India and will resolve them soon,” Prime Minister Manmohan Singh said in his Independence Day address.He also said “Schemes relating to civil aviation being implemented in Jammu and Kashmir and the North East will be especially monitored”. Welcoming the statement, Civil Aviation Minister Praful Patel said the mention of Air India in the speech reflected the high priority being given by the government to help Air India come out of its financial losses. “I am happy that Air India has found mention in the Prime Minister’s Independence Day address, which shows the priority being accorded to Air India by the government," Patel said. The Civil Aviation Ministry had recently made a presentation before the Cabinet on the plight of the sector and need for equity infusion in the national carrier.
	Biggest US bank failure of the year Colonial goes under Washington, August 15 Colonial became the largest US bank to fail this year after it was declared bankrupt and had the bulk of its assets taken over by rival BB&T, the government banking insurer has said. All of Alabama-based Colonial's 346 branches will reopen today “and operate as branches of BB&T,” the Federal Deposit Insurance Corporation (FDIC) said in a statement. “Deposits will continue to be insured by the FDIC,” the agency said. After suffering no bank failures at all in 2005 and 2006, the US banking system saw three banks going under in 2007, followed by 25 in 2008. With its bankruptcy yesterday, Colonial became the 74th FDIC-insured institution to fail in the US so far in 2009 - highlighting the extreme stress that the global financial crisis has placed on US banks. As of the end of June, Colonial Bank's total assets were $25 billion and its total deposits were some $20 billion. While BB&T will obtain around $22 billion in assets, the FDIC said it would keep the rest "for later disposition." FDIC Chairman Sheila Bair assured that while the last 18 months had put unprecedented strain on the financial system, the agency was performing as intended. “Today, after protecting almost $300 billion in deposits since the current financial crisis began, the FDIC's guarantee is as certain as ever,” she said. — AFP
	Aviation Notes Air India’s fleet extension plan lopsided by K.R. Wadhwaney Actions, it is said, speak louder than words. Whatever National Aviation Company's (NAC) new CMD Arvind Jadhav may claim, the company's recent doings are not “arresting” terminal tumour but are hastening the “maharajah’s” death. Sample 1 Recently, a 15-seater Beachcraft has been taken on lease to operate between Cochin and Agati (Lakshadweep). Lease rental every month is Rs 56 lakh. Even if every flight from Cochin to Agati and back is fully occupied, then also revenue per month will be Rs 32 lakh. To add to other expenses like fuel, salaries and maintenance, the national carrier is sustaining loss of Rs 35 lakh - amounting to more than Rs 4 crore a year. Beachcraft is reported to have been bought on lease from a a close friend of powers that-be while ATR (a 44-seater) is lying unutilised. Sample 2 Boeing 737-800 needs over-hauling, repair and servicing. An India-based firm’s bid was the lowest after a global tender was floated. Instead of utilising that firm, the airline management sent the aircraft to China for checks at a much higher price. Sample 3 Air India's original requirement for new aircraft was 24. Suddenly it was increased to 68. This increase, according to aviation analysts, has been uncalled for keeping in mind capacity to pay and adequate utilisation of aircraft. According to information, 45 aircraft have arrived but 12 of them are lying unutilised. While analysts hold the view that politicians and bureaucrats have been responsible for the systematic slide of the national carrier, once one of the most sought airlines in the world, Jadhav berates staff for Air India's financial ruination. The facts are that apart from disproportionate increase in fleet acquisition plan, the airline's lease of B-777 aircraft, creation of Air India Express, the act of robbing the two national airlines of ground handling and commercial agreement revenues, the disastrous merger, sale and lease back deal of the two airlines, injudicious capacity expansion in the domestic market, and unwarranted liberalisation of the bilateral agreements have been the vital factors that have led to the airline's unexpected fall. While there is a talk of Delhi’s Airline House to be leased to an influential private, Jadhav has been selling the idea of “Air India Towers” at Mumbai and Delhi airports that, apart from being expensive, will involve huge recurring charges to be paid to Delhi International Airport Ltd and Mumbai International Airport Ltd. There is also a proposal of selling several other properties. All these actions have spread uncertainty and unrest among staff.
	Investor Guidance As long as you are in service, you can contribute to PF by A.N. Shanbhag Q I turned 60 on June 1, 2009. My employer has extended my services for another year i.e till June 2010. Will I get EPF benefits like contribution from my side and employer side? Is it mandatory to withdraw PF balance after retirement? Since PF is paying 8.5% tax-free interest, can I continue to keep balance with EPFO and, if so, for how long? — Murli Mamtani A You can contribute to your PF as long as you are in service. You age has nothing to do with your right for contribution. Does the interest continue to remain tax-free after the employee retires and does not claim his provident fund for say 2-3 years? If one goes strictly according to the drafted provisions, it appears that this interest is tax-free since the amount becomes payable only when the ex-employee asks for it. However, in the case of ONGC Ltd. 2005 4 SOT 333, 98 TTJ 1111 it was held that the company was liable to deduct tax at source under Section 194A in respect of credits that it had made to the provident fund accounts of members who had ceased to be employees of ONGC. Section 80U Q I am physically handicapped with post polio on both limbs. I am working in a paper mill and have 80% disability. I want to know which deduction to claim u/s 80U of Rs 50,000 or Rs 75,000? — Neeraj Kumar Singhal A The disability is classified into two parts as defined under the Persons with Disability (Equal Opportunities, Protection of Rights and Full Participation) Act, 1996. Disability of over 40% is non-severe and the one equal to or over 80% is severe. Since your disability is 80%, you are suffering from severe disability and, therefore, you are entitled to a deduction of Rs 75,000 u/s 80U. Incidentally, a similar benefit is offered by Section 80DD for a resident individual or an HUF having a dependent relative/member suffering from a permanent physical disability (including blindness) or mental retardation is entitled to a deduction for medical treatment, training or rehabilitation of the dependent. The amount was Rs 75,000, which has been hiked to Rs 1,00,000 by the recent Budget. It appears that similar hike has not been affected in Section 80U. I hope that the correction will be added at the time of passing of the Budget by Parliament. IT return Q I am a senior citizen and my son is settled in the US. He has built a house in Bangalore, which is given on rent. Besides this, he does not have any income in India. Since my son is not in India, I filed his return as his representative. At the ITO's office I was told that return would not be accepted without giving the name of the auditor. Is it mandatory to provide this information? — GT Jadeja. A Since your son is not in India, you can file a tax return on his behalf as his representative assessee. There is a specific space in the form where the information regarding representative assessee can be provided. As an individual, your son does not require an auditor for any purpose and there seems to have been some misunderstanding on the behalf of the tax authorities regarding this. NRE account Q I am an NRI and recently bought a flat in Mumbai. I took loan from LIC Housing Finance Limited and pay EMI through an NRE account in India. I am still an Indian citizen and hold an Indian passport. I wanted to know if I give that flat on rent, could the rent be deposited back into the NRE account as the finance of the flat is through NRE account? — Srinivas Moghe A The rent cannot be credited to your NRE account but most certainly may be credited to your NRO account. Note that such rent would be subject to Indian income tax. Income tax return needs to be filed if your Indian income, including the rent, is more than Rs 1,60,000. *The authors may be contacted at wonderlandconsultants@yahoo.com*