The Tribune, Chandigarh, India

	India safe from Dubai storm: World Bank New Delhi, December 5 World Bank group President Robert Zoellick today said the Dubai debt crisis was manageable and it would not affect India. "I personally think that the Dubai financial problem will be contained and is manageable. I don't think it to have an effect on Indian markets," Zoellick said. Zoellick was talking to reporters here after a meeting with policy makers, including Reserve Bank Governor D Subbarao and Planning Commission Deputy Chairman Montek Singh Ahluwalia. Though India would not be hurt, he said, events in Dubai, due to the nervousness in financial markets, might prompt a second or a third look at investments in emerging markets. About the meeting, to understand how India is coming out of the global financial crisis, he said the policy makers felt the stimulus had helped the economy. "I got a general sense that they feel that the fiscal expansion has played an important role," Zoellick said on the final day of his four-day visit to India. "And, overtime as they (India) return to growth, they are also going to try to get some fiscal consolidation," he added. Speaking on the priorities of the Indian policy makers, he said they were more interested in longer term investments like foreign direct investment rather than portfolio investment. "I think what I get as the principal interest of the Indian policy makers is for longer term investment, not portfolio investment, so much as foreign direct investment," he said. Foreign direct investments could help India connect to the international economy, Zoellick said, adding he was impressed at the rise in FDI in the country. "One of the interesting observations that was made at the meeting was that the FDI numbers have gone up and that's a good sign," he said. Zoellick said the critical things discussed at the meeting included looking ahead and seeing what kind of urban strategy, infrastructure or water strategy could be pursued. Finally, the World Bank chief said he was emboldened by the Indian recovery and the growing stature of the country helping global stability. "I have been encouraged how India has come back quickly in this crisis ... I think that it can play an important role not only for the people of India but in the international economy," he said. Department of Industrial Policy and Promotion secretary Ajay Shankar and India's Executive Director to the World Bank Pulok Chatterjee also attended the meeting. — PTI
	Aviation Notes Close Shave: Why DGCA, Jet shielding ‘check-pilot’? by K.R. Wadhwaney The serious incident endangering the lives of more than 100 persons in mid air on Jet flight 9W332 from Delhi to Mumbai occurred on October 20. The culprit was a ‘free-loader’ sitting in the cock-pit as check pilot. Why are the authorities - the DGCA and Jet Airways - protecting his name. Is he somebody very important? The Directorate-General of Civil Aviation (DGCA) was either unaware or deliberately kept the dangerous incident away from the public glare for 40 days when a national daily took the lid off on the unlawful happening on December 1. Had the newspaper not reported the matter, both Jet and the DGCA might have continued with their slumber. What a shocking state of affairs obtaining the sensitive civil aviation sector. In the sordid drama, the only defaulter was the passenger (check-pilot) for his unlawful exercise of tampering with the sophisticated equipment against laid-down procedure and rules of the world’s two famous manufacturing companies, Boeing and Airbus Industrie. His needless exuberance of pulling off circuit breaker affected the Boeing 737-900’s auto-pilot mechanism and also led to erratic functioning other parameters. The aircraft descended on an alarming speed and could have crashed but for the calmness and vigilance of the commander and co-pilot. Despite emergency, caused by the airline’s favourite employee, the Jet Airways has shocked the industry in derostering the commander and co-pilot who, in fact, succeeded in avoiding to make a heavy landing. Why have the DGCA and Jet de-rostered commander and co-pilot?. What was their fault? Why should they be penalised for their successful and serene landing? Had it been the US or Europre or Singapore, the two pilots would have been publicly applauded for saving lives of more than 100 passengers. While the DGCA’s action has been baffling, the Jet’s protest against the national daily has been shocking. The correspondent, who broke the news, showed an exemplary patience in withholding the exclusive news for three days, as pleaded by the airways’ spokesperson before eventually deciding to release it later. The defaulter has been a passenger sitting cosily behind commander on the jump seat. Why did he start fiddling with the sophisticated gears? His actions were totally unlawful. He deserves much more severe punishment than mere suspending his ‘rating’. The DGCA has now issued instructions cautioning pilots against fiddling with delicate equipment and gears. How could a ‘free-flyer be allowed to check proficieny of the commander and co-pilot when he was not assigned to under checks? The DGCA and Jet Airways owe explanation to travelling public and the aviation industry. The questions are: 1 Why the DGCA take seven weeks to wake up from its deep slumber? 2 When did the DGCA get information frm Jet Airways for an unlawful action taking place in the mid air of the flight? 3 Why have commander and co-pilots been derostered? Were the approach and landing heavy? 4 How could a passenger travelling free and sitting in cock-pit function as check pilot? There are several other questions, which the DGCA has to answer to clear the uncertainty existing in the civil aviation industry.
	Hind Sanitary to enter tiles business Ruchika M. Khanna Tribune News Service Chandigarh, December 5 Hindustan Sanitaryware and Industries (HSIL) will now diversify into a vitrified floor and wall tiles. With growth being the main focus, the company will also lay emphasis on kitchenware equipment. Talking to TNS here today, Sanjay Kalra, vice president, sales, said they were planning to launch the wall and floor tile business by February, 2010. “Initially, the manufacturing of these tiles will be outsourced to dedicated vendors. As and when the volumes of business increase, we will be setting up our own manufacturing plant. The target is to get 4 to 5 per cent of the market share in the organised tile market, within the next three years,” he said, adding that of the Rs 9,000-crore tile market in India, the share of the organised market is only Rs 4,000 crore. HSIL is targeting a turnover of Rs 1,000 crore by 2010 from its turnover of Rs 671 crore in 2008-09. “In order to increase the sanitaryware portfolio, we are looking at sizeable acquisition in India as well as overseas market. We have already identified retail as a key focus area for growth and will open exclusive Hindware boutiques and arcades, experience centres (by the name Lacasa) and shop in shops. We propose to open 50 large format stores under the brand name EVOk by 2015. At present, we have four stores in the NCR and will open four more stores in Ludhiana, Chandigarh, Lucknow and Jaipur this year,” he said. “Besides, we are also planning to expand the capacity of our sanitaryware plant at Bibinagar from 18,000 MT to 22,000 MT in the next one year, with an investment of Rs 50 crore”, he added. Kalra said they were also looking at strengthening their kitchen appliance business, which the company had started three years ago. Besides chimneys, hobs and cooking ranges that the company manufactures, it proposes to add other appliances. Most of these appliances will also be manufactured through dedicated vendors.
	Investor Guidance Change in MF unit’s face value draws no tax byA.N. Shanbhag Q : I understand that while filing tax return, one has to fill the AIR column related to mutual fund only when: “The amount of a single payment towards acquiring units of a mutual fund is Rs 2 lakh or more.” Is this accurate? 2. Recently a mutual fund company changed the face value of many of its debt mutual fund schemes from Rs 10 to 100. The account statement states clearly “change in face value-out” and “change in face value-in” but the amount involved is more than Rs 2 lakh. Does capital gain incur because of such transactions? And does this transaction need to reported in AIR? — A G Kulkarni A: U/s 285BA read with Rule 114E, the transactions of all persons, including NRIs undertaking any one of the following 7 specified financial transactions, equal to or over specified financial limits are required to be reported to the Department through Annual Information Return (AIR) - 1. Cash deposits in a year in any bank SB account Rs. 10 lakh 2. Payments in a year credit card 2 lakh 3. Purchase of units of a fund 2 lakh 4. Acquisition of bonds 5 lakh 5. Purchase of shares 1 lakh 6. Purchase or sale of immovable property 30 lakh 7. Purchase of RBI bonds in a year 5 lakh From a plain reading of the law, it would seem that the above is applicable to a single payment towards acquiring units of a mutual fund. However, if you find that you have purchased smaller amounts in a fund earlier and the last purchase takes your investment above Rs. 2 lakh, you may voluntarily disclose the same in the interest of full disclosure. If you are not evading tax, there is no harm in making such a disclosure. In the example mentioned by you, even though the face value changes, the total amount invested would remain the same. So there is no need for disclosing the same once again if it has already been disclosed. There is no capital gains tax incidence on account of the change in face value. Q : I am an NRI who has retained my Indian citizenship. I sold my agricultural land at Pune in November, 2007. Then after consulting with my CA., I kept the indexed capital gain amount in capital gain account with nationalized bank (as per Sec. 54B) to purchase agricultural land within two years from date of sale. i.e. till November-2009. But as of today, I am not in position to purchase agricultural land. So please clarify my following queries. 1. Is it possible to invest entire capital gain amount in non-agriculture assets? 2. Is it possible to purchase the agricultural land after November-2009 without paying the capital gain tax i.e. till which date can I purchase agricultural assets? 3. Is there any other way for capital gain tax exemption — Mahendra A : We do not have good news for you. Whenever a taxpayer acquired a new asset before the stipulated dates as required u/s 54, 54B, 54D, 54F or 54G it was necessary to reopen original assessments for rectification. These hardships have been eliminated through a special bank account called CGAS. The amount deposited in such an account before the last date of furnishing returns of income (or actual date, if earlier) along with the amount already utilized as required, is deemed to be the amount utilized for the purpose. If the amount is not utilized wholly or partly for the stipulated purpose, then, the amount of capital gains related with the unutilized portion of the deposit in CGAS shall be charged as the capital gains of the year in which the period expires. The period is 2 years as stipulated by Sec. 54B (agricultural land to agricultural land). You cannot buy an agricultural land after November 2009 for claiming the benefit. For Sec. 54F (asset other than a residential house to residential house) the period for constructing a house is 3 years. If you construct or buy a residential house under construction which will be ready before November 2010, you will save a part of the tax. Sec. 54F requires the entire net sale proceeds to be reinvested in purchasing a residential flat. You have invested only the capital gains arrived at after indexation, into CGAS. You will get proportional benefit. Moreover, if you were an owner of more than one residential house, on the date when you sold the agricultural land, the benefit of tax exemption is not available to you. Q : Recently, I have heard and read quite a lot about Exchange Traded Funds (ETFs). Where and how can one buy these ETFs? — Pardesi A : Exchange Traded Funds are mutual funds that can be bought and sold on the stock exchange. The units will be held in the demat form. For this you will need a demat account and registration with a broker / sub-broker. Then, just the way one buys stocks, one can buy an ETF. ETFs are of various kinds where the underlying could be the stock market index or the banking index or even an asset like gold. Q : I am working in the US and am holding continuous NRI status since 2003 onward. During last FY 2008-09, I ended up being in India for 194 days. Will I lose my NRI status? Do I have to pay income tax on my global income for the year? — Swanand A : For being an NRI, you have to spend less than 182 days in any year in India. This rule is applicable each year, notwithstanding the number of past years during which you have been an NRI. So, yes, you will lose your NRI status for 08-09. As far as payment of tax is concerned, note that there is a transitional status of RNOR between being an NRI and becoming a full-fledged Resident after returning to India permanently. Resident but not Ordinarily Resident (RNOR) is a person who satisfies one of the following conditions --- a) He has been a non-resident in India in nine out of the ten previous years preceding that year, or b) Has during the seven previous years preceding that year been in India for a period of, or periods amounting in all to, seven hundred and twenty-nine days or less. An RNOR is not required pay tax in India on his forex income. Most of the NRIs will be caught by the requirement of stay in India for 729 days or less during the last 7 financial years. Consequently, anyone who returns after 7 or more financial years of being an NRI will become RNOR for 2 years. Those returning after 6 years will become RNOR for 1 year only. This is subject to his stay in India during the previous 7 years for 729 days or less. Those returning after being NRIs for 5 continuous years or less will become Residents immediately. Yes, if you do not pass the test of being an RNOR and have become a full-fledged Resident, your global income is taxable in India and you will get the benefit of Double Taxation Avoidance Agreement between the USA and India. The authors may be contacted at wonderlandconsultants@yahoo.com
	EPFO defers investment decision New Delhi, December 5 The Employees' Provident Fund Organisation's (EPFO) apex decision-making body Central Board of Trustees today deferred a decision on investing 3-5 per cent of its Rs 2.57 lakh crore corpus in stock indices. The board also postponed till the next meeting a decision on increasing the minimum wage limit to Rs 15,000 per month for mandatory deduction in provident fund by employers. At present, the cap is set at Rs 6,500 a month. — PTI