Hyderabad, September 18
After Vedanta, it is now the turn of the Jindal Group to face the red flag from the Central Government.

The Mines Ministry has rejected a proposal to allot bauxite mining leases to Jindal South West Limited, which is part of the OP Jindal Group, and ANRAK, a state-owned company of the United Arab Emirates (UAE), in the tribal-dominated areas of Visakhapatnam and Vizianagaram districts of Andhra Pradesh.

The Centre’s decision was communicated by Mines Minister BK Handique to a delegation of the Samata, a voluntary organisation fighting against bauxite mining in the region in violation of tribal and environmental laws.

The minister told the delegation that his ministry had rejected the application of the AP Mineral Development Corporation (APMDC) for 13 mining leases for bauxite spread over a total area of 1876 hectares.

A representative of the NGO said the minister had assured them that no fresh licences would be given now. The matter would be dealt afresh after the Mines Minerals Development Regulation (Amendment) Act comes into force.

This will mean that the government will have to hold fresh public hearings before granting mining leases. The Mines Ministry’s decision follows the visit of an experts’ team set up by the Ministry of Environment and Forests (MoEF) to the tribal areas in the two coastal districts in July to study the impact of mining on the environment.

The team comprising K Sudhakar Reddy, Chief Conservator of Forests, Dr. C Kaliyaperumal, Scientist 'E' and N.S. Murali, Deputy Conservator of Forests, submitted its report to the ministry recently.

The APMDC had entered into agreements with the ANRAK and Jindal South West Limited in 2007 for bauxite mining and setting up of refineries. While the ANRAK has got bauxite mining franchise in Chintapalli and Alumina Refinery project at Makavaripalem in Narasipatnam Division of Visakhapatnam district, Jindal South-West Limited has bagged an Alumina Refinery near Srungavarapukota in Vizianagaram district and has the franchise to mine bauxite from Araku area. 

It is universally accepted: “Man proposes; God disposes”. In National Aviation Company Limited (NACL), it is altogether different routing. Air India (AI) proposes, Civil Aviation Ministry disposes. The result: All Air India plans go haywire and its woes continue to multiply instead of reducing.

After undertaking a detailed survey and also after doing paper-work, Air India had decided that the time was ripe for starting flights between Delhi and Melbourne. There is a sizable population of Indians staying in Melbourne. There is a very healthy traffic of students to and back. It is considered a lucrative route and sufficient profit is guaranteed. CMD Arvind Jadav has also made an on-the-spot study of the route after visiting Melbourne twice. Now, suddenly, the ministry has scuttled the plan-II of the national carrier without assigning satisfactory reasons.

According to AI’s plans, the daily flights between Delhi and Melbourne were scheduled to start from November 1. The CMD had also signed some contracts with the Australian firms. Now, this cancellation, the national carrier not only loses its reputation in Australia, but it also loses a lot of money in signing certain contracts.

Worldwide, all operational decisions are left entirely to the management, which has experts to assess and evaluate profitability and otherwise. But the ministry has not approved the plan on the recommendation of a three-member committee’s report.

The management and the board of directors are said to have written a detailed letter to the ministry that the feasibility report is favourable and it will be in the fitness of things if the proposal is approved. According to the report, there is a heavy traffic on the route and it is considered a ‘golden route’. If the national carrier officially walks out of the operations on this lucrative route, maybe, one of the private airlines start operating flights to Melbourne and back.

This is exactly what has been happening since the merger more than two years ago. Air India does the research and a private airlines makes hay while sun shines.

Even after receiving initial subsidy from the government, Air India’s massive fleet is not being fully utilized. The ministry and politicians are blissfully unaware that an aircraft on ground costs more money than when in sky. The national carrier’s marketshare is very low. All nimble work of the officials of the airline is nullified by the thoughtless functioning of the powers that-be. This is happening as the management and the ministry are not functioning as homogenous unit. This is a sad state of affairs obtaining in the national carrier.

Soon after taking over as CMD in mid 2009, Jadhav had made a presentation that Air India’s happy days would start in 2013. This appears to be a wishful thinking as things in the national carrier have gone from bad to worse. Two arms -AI and Indian Airlines-- are still pulling in different direction. Nothing can be sadder than this after two years’ of merger. 

Q: My father had purchased a plot in year 2004 through a draw for a total cost of Rs. 5.50 lakh. He sold this plot by sale deed in May 2010 for Rs. 19.50 lakh. He deposited the sale proceeds in his account. What is his position regarding long term capital gains? What is the total amount of long term capital gains from the sale of this plot?

What is the best way to invest the sale proceeds of the plot to save tax? What is the time limit of investing?

What is the stipulated period within which one has to buy another plot or to buy or construct a residential house out of the sale proceeds of the plot? (to claim exemption u/s - 54)

Can the amount of sale proceeds of plot remain in the account till this stipulated period of time?

How will this transaction be shown in the Income Tax Return? — Mohinder Singh

A : We assume that the plot of land was not agricultural in nature.

1. Your father has earned long-term capital gains tax. It is not clear from your query as to exactly which financial year it was that the plot was actually bought. If it had been purchased prior to April 2004, the purchase will fall in 2003-04 and if it has been acquired in or after April 2004, the financial year to be considered would be 2004-05. In any case, for 03-04 purchase, the long-term capital gain would be Rs. 11,05,400 whereas for a 04-05 purchase, it would work out to Rs. 11,35,313.

2. The tax on all long-term capital gains which are chargeable to tax can be saved by investing within 6 months the amount of capital gains in infrastructure-related bonds of NHAI or REC u/s 54EC. The lock-in period is 3 years. The current interest rate is around 5.5% and this is fully taxable. The ceiling on this investment is Rs. 50 lakh per financial year.

The taxpayer may also claim exemption u/s 54F (and not 54) by purchasing a residential house within 1 year before or 2 years after the date of sale of the old house. Alternatively, he may construct a residential house within 3 years after the date. Sec. 54F requires the net sale proceeds (after the related expenses) to be reinvested. The assessee should not own more than one house on the date of earning the capital gains. The new house has a lock-in of 3 years. If sold within the lock-in period, the exempted capital gains is treated as taxable LTCG during the year of sale. The assessee should not purchase within 1 year or construct within 3 years another residential house.

The amount which is not invested before the filing of returns for the year or the statutory last date for filing the returns, whichever is earlier, is required to be parked in ‘Capital Gains Account Scheme’ (CGAS) with a bank in India.