The Tribune, Chandigarh, India

	FM, bankers differ on hike in interest rates New Delhi, August 14 Finance Minister Pranab Mukherjee today expressed hope that lenders will not raise their interest rates in response to the RBI's monetary tightening measures, but his optimism seems at variance with the stance taken by banks so far. "No, I don't think so. Banks are fully aware of it and they have taken note of it and they have adjusted their plans accordingly," Mukherjee told reporters when asked whether the RBI's move to tighten monetary policy will affect interest rates. Mukherjee was talking to reporters on the sidelines of a meeting with PSU banks' chairmen.Within hours of the Finance Minister's comments, Bank of India announced a hike in its benchmark prime lending rate (BPLR) by 50 basis points, which will increase the cost of existing housing, auto and education loans. "The bank has decided to raise BPLR by 50 basis points from the existing 12 per cent to 12.5 per cent with effect from August 16," the lender said in a filing to the BSE. From July this year, the BPLR system has been replaced by a base rate, which is a floor for lending rates. However, loans of existing borrowers are linked to BPLR, though they have the option to switch over to the base rate system. A number of other PSU banks had already hiked their deposit and lending rates for existing borrowers and a few lenders have indicated that they will be doing it soon.The country's second largest PSU lender, PNB, raised its BPLR by 75 basis points to 11.75 per cent, while Bank of Baroda, Corporation Bank and Oriental Bank of Commerce increased it by 50 basis points each to 12.50 per cent. In addition, Union Bank and IDBI upped their BPLR by 50 basis points each to 12.25 per cent and 13.25 per cent, respectively. However, the country's largest lender, SBI, has so far not hiked its BPLR. SBI chairman OP Bhatt told reporters today, "I think there is an upward bias (on interest rates) that will take place." He said most of the banks have so far raised interest rates in the range of 25-50 basis points. The highest has been in the case of PNB, to the extent of 75 basis points, Bhatt said. "So I would put it (hike in interest rates by PNB) at the extreme end. It cannot be more than that. It has to be less than that," Bhatt said. To a question on which loan segments will see a rise in interest rates, he said, "That would depend on bank to bank and their strategy." Earlier this week, Bhatt had said SBI will soon take a call on increasing deposit and lending rates by at least 25 basis points. He also directed PSU bankers to increase the issuance of Kisan credit cards by 20 per cent this fiscal. — PTI
	Investor Guidance Husband can contribute to wife’s PPF a/c and claim rebate by AN Shanbhag Q: I read with interest your replies to queries on income tax. Regarding PPF, you have said in one reply to a question in 4 July, 2010 issue of this paper that one can claim income tax saving benefit on deposit up to Rs 1 lakh in various PPF accounts of self, spouse and children (Rs. 70,000 in any individual account being upper limit and one cannot claim tax benefit in more than one PPF account of self.) Please clarify. — Baljeet Maini A: It is true that one cannot open an account in the name of his wife. It is she who herself will have to open the account. The husband can contribute to the account of the wife and claim the deduction. Rebate on arrears Q: I am a government employee and received 40 per cent arrears of my wage payment from 2005-2006 to 2008-09 in this calendar year. Due to arrears, my tax works out to Rs 3,360 whereas if I adjust arrears in respective years, I have to pay tax of Rs 1,670 for the year 2007-08 and I will get back Rs 230 deducted for this year. Sir, my question is while showing income from salary, in the tax return form, should I show the amount showed in Form 16A issued by the employer or shall I deduct the arrears received in this year? — Niteen Parab A: The various terminal benefits are bound to push the income onto a substantially higher tax slab. A similar situation arises when the salary is paid in arrears or in advance. To mitigate the hardships caused to the assessee by such situations, ITOs are empowered to grant appropriate relief u/s 89(1), on receipt of an application from the assessee. However, u/s 192(2A), government servants or employees in companies, co-operative societies, local authorities, universities, institutions, associations or bodies may furnish the particulars in Form-10E and get the relief directly from the employer. The relief on salary received in arrears or in advance is computed in the manner laid down in rules 21A and 21AA as follows : A) Calculate the difference between the taxes payable of the relevant previous year in which the additional salary is received on the total income, excluding the additional salary and including it. B) Calculate the difference between the taxes payable on the total income after excluding the additional salary and including it in the previous year to which such salary relates. C) The amount of relief admissible u/s 89 = A - B. No relief is admissible if ‘A - B’ is negative. If the additional salary relates to more than one previous year, salary would be spread over the previous years to which it pertains in the manner explained above. These computations have to take cognisance of the rebates, deductions, surcharge and cess available in respective years. Capital gains tax Q: I have sold shares of Rs 10 lakh. I have one residential house at present. I had invested the amount in capital gains account. Since then, I have withdrawn the said amount and purchased a plot for Rs 12 lakh. Now I do not have money to construct a house. Hence I have made development agreement with a builder that I will retain 50 per cent plot and the builder constructs a house of Rs 5 lakh which he will give to me and will be in turn owner of 50 per cent plot. As I have constructed house within 3 years on my owned plot of 50 per cent area — will it be in compliance u/s 54F? My tax consultant is of the opinion that as I have withdrawn the entire Rs 10 lakh and purchased a plot, now I cannot part 50 per cent amount of plot to developer. As per my knowledge I have utilised the amount within the stipulated time. The 50 per cent plot given to the developer is a separate transaction and should be treated as such. My investment of 50 per cent plot cost of Rs 5 lakh and construction cost of Rs 5 lakh should comply the condition u/s 54F. — S D Vaidya A: Whenever a taxpayer acquired a new asset before the stipulated dates as required u/ss 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 utilised as required, is deemed to be the amount utilised for the purpose. If the amount is not utilised wholly or partly for the stipulated purpose, then, the amount of capital gains related with the unutilised portion of the deposit in CGAS shall be charged as the capital gains of the year in which the period expires. This means that the money that you have deposited in CGAS has to be essentially utilised for the purpose of building a residential house to be eligible for the exemption. This money was utilised by you for purchasing a plot of land. You have sold half of the land to the builder and with the sale proceeds thereof, you will be building the superstructure on the remaining half the plot. There is a one-to-one relationship between the sale of half the plot to the builder and the money deposited in CGAS. Therefore, in our opinion, you are eligible for the benefit of Sec. 54F. The part of the land sold to the builder is at cost and hence there is no short term capital gains earned. The authors may be contacted at wonderlandconsultants@yahoo.com
	Aviation Notes Leh: Pvt operators fleeced travellers by KR Wadhwaney As unprecedented catastrophic cloudburst crises descended on Leh, the private airline officials lost their sanity. While national carrier, as always in calamitous conditions, started serving stranded people, the private operators jacked up fares out of the Ladakh capital. According to harassed passengers, the fares on the Leh-Delhi sector touched Rs 30,000. They further complained that there was actually no limit. “Whoever paid more was provided a ticket and allowed to board the flight”, said a passenger, adding: “one cannot be certain whether entire amount went into the coffers of the airline or officials pocketed part of the amount”. The consensus was that there was a ‘law of jungle in Leh’ bringing further disrepute to the country. The tourists, particularly foreigners, complained of shabby treatment by airline officials. “They issued tickets to those who paid them ‘extra money’ while off-loaded others”, complained passengers. On arrival in Delhi, some passengers did lodge complaints at the Indira Gandhi International Airport (IGIA) and also to the civil aviation ministry for the high-handedness of the officials in Leh during this calamity. The ministry, it is learnt, immediately issued ‘warning’ to airlines. But the ‘directive’ was the kind of an ‘advisory’. No action was taken against defaulting operators and individuals who brought disrepute to the country. This was not the first time private operators had made ‘hay while sun shone’. According to analysts, there is ‘poison in the pool’ and it is about time some chronic defaulting airlines are black-balled instead of issuing innocuous advisories which have no effect on the private operators. While national carrier’s performance in Leh was more than satisfactory, all is not well with the National Aviation Company Limited (NACL). It is facing ‘death by debt’, although politicians have been screaming that the company is ‘on a strong recovery path’. The chairman-cum-managing director, Arvind Jadhav, did make a presentation to the Board of Directors that ‘there was a strong rebound in revenue’ but the ‘insiders’ project a very ‘gloomy picture’. They maintain that debts are mounting as overhead expenses continue to mount. While predicting ‘a slow and silent decline’, they allege that a huge amount was being spent (rather mis-spent) on needless consultancy agencies. There are at least four agencies who are advising the beleaguered airline on ‘efficiency and effectiveness’. The underlying fact is that, regardless of passenger load, the turnaround of the airline is possible only when overhead expenses are reduced to one-third, if not half. “The top continues to be abnormally heavy”, the union officials say, adding: “the financial restructuring plans are not realistic and they lack vision.”
	Patent row: Oracle sues Google New York, August 14 Technology major Oracle Corp has filed a lawsuit against Google, alleging that its Java-related patents and copyrights were infringed in the development of the Internet search giant's Android operating system. Oracle filed the suit against Google in the US District Court of Northern California on Friday.The filing alleges that Google's Android operating system for smartphones infringes upon seven patents and related copyrights of Oracle's Java software platform. Oracle has sought unspecific damages and an action against the "continued acts of infringement" by Google. The Java platform is especially useful as it insulates applications from dependencies on particular processors or operating systems. — PTI