The Tribune, Chandigarh, India

	Hosiery business diversifies to cotton, blended knitwear Annual production of goods is estimated at about Rs 10,000 crore KS Chawla Ludhiana, January 2 Punjab’s hosiery industry, a traditionally seasonal business, has transformed into an all-season industry due to diversification. From woollen knitwear, the business has moved on to cotton and blended knitwear. Hosiery makers are bringing automation in the industry to meet labour shortage. The knitwear hosiery industry has struggled to make an impact on exports due to the lack of modernisation. The total export of woollen and cotton knitwear from Ludhiana is stated to be less than Rs 1,000 crore. Gian Chand Dhawan, former chairman, Hosiery Exporters Association, said that the former Soviet Union started purchase of hosiery goods from Ludhiana in 1964-65 and by 1990, export to the Soviet Union touched Rs 500 crore. With the disintegration of Soviet Union, state buying stopped. Now, there is an open market for goods and local manufacturers could not compete with rivals from other countries. Currently, woollen and cotton knitwear is exported to West Asia and Europe. China, Sri Lanka and Bangladesh give a tough time to India in hosiery goods export. About 15,000 micro and small scale units make goods, providing employment to 4 lakh persons directly and indirectly. Local units manufacture all items from woollen pullovers to pure cotton and blended goods for all categories - men, women and children. With second generation owners taking charge, the industry is looking for sophisticated and designer goods. Machinery is being from Italy, Germany and Japan. Vinod Thapar, President, Knitwear Club said the club has set up a paid website to help the industry keep up with modern designs. The website is known as WGSN and provides forecast of colours, trends, and advance information on designs. Ten leading units have also setup a consortium to help the industry. A private company of Delhi has also been hired to provide information on designing. Ludhiana hosiery industry is also making products for Nike, Rebook, Colour Plus, which is a boost. The Centre has sanctioned a textile park at Sahnewal (Ludhiana) and 60 acres has been acquired . An apparel park at Doraha, spread over 85 acres, has also been sanctioned. Sanjeev Gupta, President, Apparel Exporters Association of Ludhiana, said the Doraha park will have 50 small industries. Ashok Jaidka, Chairman, Wool and Woollen Export Promotion Council, said that export of woollen goods has not picked up as desired. The council is organising exhibitions in Brazil, Italy and Mexico. A warehousing facility is being set up in Moscow. The expansion of the industry to round-the-year has brought in a huge spinning industry (cotton and man-made fibres) and led to the development of dyeing industry. The dyeing industry has added to the city’s pollution.
	Small borrowers in big trouble in Andhra State passes law to curb activities of MFIs Suresh Dharur/TNS Hyderabad, January 2 Rural Andhra Pradesh is in severe distress due to dubious practices of Micro Finance Institutions (MFIs) like imposing exorbitant interest rates and coercive loan recovery methods. The functioning of MFIs came under scanner following a spate of suicides by rural borrowers. The state is the hub of microfinance in the country, accounting for almost 33% of the total lending. There are over 65 lakh borrowers in Andhra Pradesh. Of the 44 leading MFIs in the country, 23 companies, including the largest firm SKS Microfinance, are based in the state. They have a cumulative annual turnover of more than Rs 10,000 crore. Over 75 people, mostly members of women self-help groups, have committed suicide in the last four months due to alleged harassment by MFI agents and unbearable debt burden. MFIs allegedly charge an interest rate of 30-40 per cent. Several experts including C Rangarajan, Chairman of the Prime Minister’s Economic Advisory Council, have suggested a cap on interest rate charged by MFIs. Currently, MFIs are free to fix their own interest rates on micro credit. The MFIs borrow loans from commercial banks at low interest rate and in turn lend them to villagers at high interest rate. Typically, for every Rs 10,000 loan, to be repaid in weekly installments, the MFI collects Rs 300 as processing charges and another Rs 300 towards premium for insuring the loan. This means the insurance company would pay the entire loan to the MFI in the event of death of borrower. The premium is collected from the borrower as part of the loan. Andhra Pradesh became the first state in the country to pass a legislation to regulate the functioning of MFIs. According to the resolution, total interest payments should not exceed the principal loan amount. The registration of MFIs has been made compulsory and annual renewal will depend on track record. “Due to restrictions, collections have fallen to 20 per cent from 95 per cent earlier. We could not disburse loans worth Rs 1,200 crore to an estimated 12 lakh rural women. The legislation will have a devastating impact on access to finance for the poor,” said Vijay Mahajan, President of Microfinance Institutions Network (MFIN), a self-regulatory body.
	India seeks coal mines in Africa New Delhi, January 2 Coal Minister Sriprakash Jaiswal will talk with his counterparts in South Africa and Mozambique during his visit from January 5 to secure coal assets, aimed at bridging the growing domestic demand-supply gap. “We will ask for more coal blocks as our requirement is increasing continuously. We will discuss the issue with both the governments - South Africa and Mozambique,” Jaiswal told PTI. South Africa and Mozambique are two major destinations for coal-hungry firms across the globe, since the resource, used for steel-making and power generation, is scarce. India, which largely depends upon state-owned Coal India Ltd for meeting its domestic need, is likely to see as much as 83 million tonnes of short supply in the current fiscal. All deficits are met through imports. “Acquiring assets abroad will be one of our main priorities this year,” Jaiswal said. The minister will be accompanied by Coal Secretary, C Balakrishnan and Coal India Chairman, Partha Bhattacharya among other officials for the government-to-government level talks. Coal India has two coal blocks in Mozambique, where it plans to begin its exploration in the next fiscal, while the production is expected to begin from 2014-15. Coal India Chairman, Partha Bhattacharya had earlier said that both the blocks are estimated to have combined coal reserves of about one billion tonnes. — PTI
	Tax Advice Section 44AD of I-T Act applicable to Ultrasound business by SC Vasudeva Q In a previous query, you have said that a person, not qualified as a doctor running an Ultrasound centre falls under the category of business. (Ultrasounds are done by a doctor employed on salary basis), no treatment is given to patients. I want to know whether this kind of business can avail Section 44AD of Income-Tax act. — Sham Lal Bansal A. Section 44AD of the Income-tax Act, 1961 (The Act) provides that in case of an eligible assessee, engaged in an eligible business, a sum equal to 8% of the total of turnover or gross receipts of the assessee in the previous year on account of such eligible business or as the case may be, a sum higher than the said 8% claimed have been earned by the eligible assessee, shall be deemed to be profits and gains of such eligible business. The term eligible business has been defined as any business except business of plying, hiring or leasing of goods carriages. The term eligible assessee means an individual, Hindu Undivided Family or a partnership firm. In view of the provisions contained in the aforesaid section, a diagnostic centre owned by a person who is not a doctor, can be assessed under Section 44AD of the Act. Section 35AD Q. Whether irregular Income like dividend income, interest income, short term or long term capital gains etc earned by Companies covered by Section 35AD of Income-Tax Act, on investments made in other companies will also be exempt under the Act or will be liable to tax under the head Income from other sources? — SC Aggarwal A. Section 35AD of the Act provides for deduction in respect of whole of any expenditure of capital nature incurred, wholly and exclusively, for the purposes of any specified business carried on by an assessee during the previous year in which such expenditure is incurred by him. The aforesaid section also provides various conditions for the allowance of such expenditure as deduction from profits and gains of business. This Section does not deal with exemption from tax liability of any income. Any claim for exemption of dividend income etc under the aforesaid Section is therefore cannot arise. Salaried employee Q. Kindly advise as to how the following perquisites would be valued in case of a salaried employee. (a) Fixed Education allowance (b) Payment of school fee to Employee’s children (c ) Reimbursement of school fee to Employee’s children. — Devinder A. (a) Fixed Education allowance given in cash by employer to the employee towards the cost of education of employee’s children is exempt to the extent of Rs 100 a per month per child (subject to a maximum of two children). (b) Fee paid by the employer for the employee’s children education directly to a school is taxable as perquisite in its entirety. (c ) Reimbursement of school fee is taxable in all cases even if it is paid to Central government employees or private sector employees. PPF accounts Q. I had opened an account under PPF Scheme in my HUF’s name while I was in India. I migrated to the US about 10 years back. My son, who is also in Non-Resident Indian, and draws separate income in USA would like to open a PPF account in India. Can he do so? Can I continue to maintain PPF account of my HUF? — RK Jain A. A Non-resident Indian is not allowed to open a Public Provident Fund account. Your son would therefore, not be able to open such an account in India. According to the notification issued by the government on December 7, 2010 a PPF account opened in the name of HUF prior to May 13, 2005 shall have to be closed after 15 years from the end of the year, in which the initial subscription was made and entire amount standing to the credit of the subscriber shall be refunded, after making adjustment, if any, in respect of interest due from the subscriber on the loans taken by him. In case the aforesaid period has expired, it shall be closed at the end of March 31, 2011 and the entire amount shall be refunded after making any adjustment as aforesaid. You can therefore, continue to maintain PPF account of HUF for 15 years from the end of the year in which initial subscription was made. Form for rebates Q. I am a government employee and want to avail rebate of Rs 1 lakh saving & Rs 22,000/- Interest rebate against House Building Loan of Rs 8 lakh from ICICI Bank sanctioned in this year. Please let me know which ITR-I or ITR-2 to be filled for Assessment Year 2011-12. Under which column of ITR-2/ITR-1 interest rebate is to be claimed. — Gagan A. The deduction allowable in respect of the repayment towards House Building Loan is covered within the overall limit of Rs 1 lakh specified in Section 80C of the Income-tax Act 1961 (the Act). The total deduction allowable to you towards the various specified payments/deposits and repayment of House Building Loan would therefore be Rs 1 lakh. In your case Form ITR-1 can be used for declaring the salary income. The deduction under section 80C of the Act can be claimed in such return. The interest received on Fixed Deposit Receipts with bank can also be declared in ITR-1. The interest paid on the amount borrowed for construction/ acquisition of a house is allowable as deduction against the income from house property. In case, you have an income from salary as well as income from house property, the applicable Form would be ITR-2.