The Tribune, Chandigarh, India

	AI to lease out 7 planes Mumbai, October 3 Cash-strapped Air India, which is seeking a bailout package from the government, has decided to lease out seven of its aircraft to raise additional funds, airline sources said today. "We have plans to put seven of our aircraft on lease and sub-lease. Of these, three are Boeing 777-200 (long range) and four Airbus 310-304 freighters," the sources said. The company has floated global expressions of interest for the purpose, for which bids would be accepted till October 23, they said. The four Airbus A-310-304 were recently converted into freighters by the European consortium EADS, while the three Boeing-777-200 (LR) are passenger planes. The Boeings, manufactured in 2007, are to be leased for short and long durations, with a minimum period of two years, the Airbus freighters are to be dry-leased for a minimum 18 months. Under dry lease, an aircraft is leased by a company without the crew, while a wet-leased plane would have the crew, engineering facilities as well as insurance cover borne by the lessor. Sources said a brand new Boeing 777, at present, could fetch the national carrier over $1 million per month as lease rental, whereas an A-310 could bring around $150,000 per month. This would be a major source of revenue for Air India which is suffering an estimated loss of Rs 5,000 crore. The recent five-day stir by executive pilots of the flag carrier added to its losses. While the Boeings would be available for lease from the third quarter of next year, the Airbus planes are available with immediate effect. The four Airbus A 310-304 freighters were converted into cargo aircraft, which the airline initially wanted to deploy for its domestic cargo operations, that has been delayed. However, two of these aircraft will be offered on sub- lease, depending on the original lessors as they were sold and leased back by Air India. These aircraft were converted to freighter by EADS at Dresden in Germany at an estimated cost of $40 million. — PTI
	Security concerns put telecom proposals on hold Tribune News Service New Delhi, October 3 Rising security concerns have forced the Ministry of Home Affairs (MHA) to review investments being made in the country, especially in the fast expanding telecom sector. After seeking details of foreign nationals employed by telcos and the share holding pattern of foreign companies having interests in telecos and their source of funding, the MHA has now put on hold an investment proposal having doubts over its source of funding. The ministry has rejected Swiss company ByCell Telecommunication’s revised investment proposal as it is not very comfortable with the source of funding that is coming through the tax haven of Cayman Islands. ByCell was to hold 74 per cent take in an Indian telecom company set up in partnership with Hyderabad-based Jayalakshmi Group. The Revenue Department had also expressed concerns about the company’s shareholding structure, its source of funding and the lack of clarity. Some of its investors were found to be linked with terror funding and money laundering. The MHA shot down the revised proposal also where ByCell had given an assurance to change the shareholding structure so that Russian investors linked to terror funding and money laundering were not involved. However, MHA is not very comfortable with the idea.
	Aviation Notes Air India truce temporary by K.R. Wadhwaney The five-day public spat between executive pilots and Air India management has endeded at the behest of Prime Minister Manmohan Singh and the flights will be normalised in phased time-frame. The truce, according to analysts, is temporary as talks have not been conclusive and straight-forward, as they ought to have been. The contentious order of cutting down incentives of the executive pilots has been kept in abeyance. The analysts are asking as to why was this ill-timed order issued on September 24 when turbulence was visible and why was it withdrawn three days later? Where was the need for making messy situation messier? The fact of the matter is that the Maharaja has sunk deep in mud and slush because of political and bureaucratic uncertainty and wrong decisions. According to analysts, there is little hope of cheer returning in the corridors of the national carrier unless heavy changes in top political and bureaucratic set-up are brought about. The merger of Air India and Indian Airlines in May 2007 was uncalled for as both carriers were on the firm road to turnaround. Had this ill-timed decision not forced, the situation would not have turned so complex. Besieged with problems from within, the situation is unlikely to improve until full-body surgery of Air India is undertaken. The staff flab is indeed a concern, but the cause of worry is political two-edged strategy in which private players are subtle gainers. The need of the hour is to run the airline professionally and systematically and not on the basis of whims and fancies. There is a suggestion by vested interests that the national carrier should be done away with allowing private players to rule skies. This will be suicidal. In the conflict-turn world, India needs the national carrier, regardless of expenses, to serve the cause of people in emergencies, evacuations and political and ethnic ghastly events. During emergent situations, it has been only the national carrier that has been serving people and not private operators. If the management is serious about the Maharaja's, it should start the turnaround of the airline. The management must take all sections of employees into confidence and evolve plan of action instead of adhering to two sets of rules - one for commoners and another for favourites. The task of flying Air India out of turbulence is extremely difficult but achievable if the political and bureaucratic functioning is time-honoured and genuine.
	Investor Guidance PF encashment tax-free after 5 years of continuous service by A.N. Shanbhag Q I am working in the US and received my provident fund (PF) from the company in Delhi where I had earlier worked. This was credited to my NRO account by the EPFO. Currently, my India earnings are at 30% tax and I received this credit in February 2009. Will the amount be taxed at the same rate? If I do not live or work in India in 2009-2010, can I pay the tax on the PF amount in the next financial year wherein the tax rate might be 10%? — Joshi A Encashment of PF is tax-free only if the employee has rendered continuous service with the employer for five years. Else the receipt is taxable. Since you have received the credit in February 2009, it will be taxable for FY 08-09. You do not have the option of paying tax on this income in FY 09-10. Tax return Q I worked in Singapore from 1994-2007 and came to India in November 2007. I still have my investments in Singapore such as fixed deposits, mutual funds and stocks. a) Since I am resident of India now, is any income out of those investments taxable here? b) In my tax return in India, do I need to show the money I transferred from my Singapore bank to Indian account as income? c) For how long am I allowed to earn foreign money and transfer the same to my Indian account? — Chandra A For 2007-08, your status would have continued to be that of NRI. For 2008-09 and then for the current year (2009-10), your status will be RNOR. An RNOR does not have to pay tax on this foreign income. It is only in 2010-11 onwards that you would be a resident due to which your global income will be taxable in India. Therefore, for last year and the current one, your income from investments in Singapore would be tax-free in India. It will become taxable from next year onwards. The funds that you transfer from Singapore to India are capital receipts and hence not taxable. There is no limit/time frame within which you are expected to earn foreign money. You may continue to earn this as long as you like. However, tax incidence would be applicable as mentioned in the earlier point. Term deposit Q My daughter, after getting custody of her minor child, received some amount from her ex-husband to be kept in term deposit. It was for meeting upbringing expenditures out of the interest received on that term deposit in the name of the child under the guardianship of her mother. Kindly clarify whether this interest received on term deposit under the guardianship of her mother shall be included in her taxable income or not? — Ravinder A For arriving at the taxability of this amount, note that any diversion of income by overriding title is taxable in the hands of the ultimate beneficiary whereas application of income is taxable in the hands of the recipient. Income received from property charged under a court’s decree with maintenance allowance to a dependent and spent on maintenance is diversion of income at source and, therefore, taxed in the hands of the dependent - Raja Bejoy Singh Dudhuria v CIT [1933] 1ITR135 (PC). On the other hand, income from property, though paid as maintenance allowance under a decree of court (without maintenance being a charge upon the property yielding the income) is application of income and, therefore, chargeable to tax - CIT v Sitaldas Tirathdas [1961] 41ITR367 (SC). Form 15G Q A minor inherited Rs 15 lakh as gift, which is tax free. Now, if he were to invest this money, can he submit Form 15G to avoid tax deduction at source on the income accrued on investments? — Gopal A All the income earned by a minor child is taxed in the hands of the parent who has an Indian income more than that of the other, unless the child has a physical or mental handicap or the child earns an income by virtue of its special skills or knowledge. There is an exemption of Rs 1,500 per year per child. Once the child becomes a major, the amount, which was being clubbed when he was a minor, ceases to be clubbed. Since the interest will be clubbed in the hands of the guardian, the guardian can file Form 15G if the tax payable by the guardian on his or her total income, including the clubbed income from the child, is nil and his/her income from interest is less than the threshold applicable to him/her. Long-term capital gain Q a) I purchased shares worth of Rs 10,000 in 1992. Now, their valuation is around Rs 80,000. As per the existing tax laws, long-term capital gain is zero. What I understand is that if I sell these shares now, the amount receiving against sale proceeds is not taxable. Is this income to be shown in the IT return? b) Do we get any certificate from NSDL for capital gains exemption? c) I have been given to understand that if we receive long-term capital gains in any FY for more than Rs 5 lakh, we need to show in IT return. Is this right? — Srinivasulu A a) If you sell the shares now, capital gains will be exempt. This amount has to be shown in the IT return in the space provided to disclose exempt income under Section 10. b) The exemption is as per the Income Tax Act. There is no requirement for a certificate from NSDL. c) There is no such stipulation. If you are filing a tax return, the exempt amount has to be shown in the relevant space irrespective of the amount. The authors may be contacted at wonderlandconsultants@yahoo.com