The Tribune, Chandigarh, India

	Rajat Gupta sues US regulator Washington, March 19 Former Goldman Sachs Indian American director Rajat Gupta has sued the Securities and Exchange Commission (SEC), accusing the US regulator of 'unfairly and unconstitutionally' connecting him to the biggest insider trading case in the US. Earlier this month, the SEC filed charges against Gupta, former head of consultancy McKinsey & Co. accusing him of giving inside information about Goldman Sachs to his friend and business partner Raj Rajaratnam. Sri Lankan -born Rajaratnam, former head of the Galleon hedge funds, is on trial in a Manhattan federal court on 14 counts of insider trading. He has denied any wrongdoing. The SEC alleges that when he was a Goldman Sachs director, Gupta tipped Rajaratnam on Goldman earnings and the $5 billion Berkshire Hathaway investment, as well as other material, non-public information about the bank, which Rajaratnam then allegedly traded on. In a suit filed Friday in the same federal court where Rajaratnam is being tried, Gupta, 62, said the regulator should have filed a lawsuit instead. 'Gupta denies all allegations of wrongdoing and stands ready to mount a defence against each and every one of the commission's charges,' his lawyer, Gary Naftalis, said in the complaint. Under SEC rules, Gupta isn't allowed a jury trial in an administrative action, or the right to use federal court rules on discovery, which require the exchange of evidence with the government, Naftalis said. The suit argues that the SEC proceeding will deny Gupta a number of legal protections he would have in federal court, including a trial by jury. Gupta's lawyer has said Gupta did nothing wrong, and the new suit says 'there is no plausible reason why Gupta would have deviated from a lifetime of probity and a career dedicated to safeguarding corporate confidences in favour of engaging in the significant and aberrational wrongdoing alleged.' In addition to the complaints about the SEC's methods, the new suit reviews Gupta's background as the child of a teacher and a 'prominent freedom fighter' in India, and notes that 'he has devoted approximately half of his time to a number of significant public service commitments.' — IANS
	IBM to pay $10 million to settle bribery complaint New York, March 19 IBM has agreed to pay $10 million to settle a complaint its employees bribed South Korean and Chinese officials with cash, gifts and entertainment in return for business for more than a decade between 1998 and 2009. IBM did not admit or deny the allegations, the US regulator said. The US Securities and Exchange Commission (SEC) alleged employees of IBM Korea and a local joint venture with LG Electronics paid bribes to South Korean government officials, according to a court document. One manager in Korea twice handed over shopping bags full of cash, totaling 40 million Korean won ($38,186), in parking lots, while another paid into the bank account of a "hostess in a drink shop" to win business, the SEC said. The misconduct involved over 100 local employees, including some key IBM-China employees. Local employees created slush funds to pay for improper gifts such as cameras and laptop computers to Chinese government officials, the SEC said. These violations of the Foreign Corrupt Practices Act (FCPA), which bans payments of bribes to foreign officials, took place between 1998 through 2009, it said. The two sides, however, settled with International Business Machines Corp paying a civil penalty of $2 million plus $8 million in other payments, according to a separate court document. The case comes as the US ramps up its enforcement of the FCPA. — Reuters
	ASSOCHAM proposes setting up of 14 new clusters in Haryana Tribune News Service Chandigarh, March 19 The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has proposed setting up of 14 new clusters in Haryana, each accommodating about 1,000 industrial units and providing employment opportunities to four lakh people. While releasing a ASSOCHAM study on “Cluster Development for Inclusive Growth in Haryana”, the national secretary general of the chamber, DS Rawat said that the total funds required to provide basic and essential infrastructure to these clusters will be about Rs 450 crore. This money can be mobilised through Public-Private Partnership (PPP). Once operational, these will contribute an additional 10 per cent revenue per annum and would lead to upgrade of existing clusters for enhancing productivity and competitiveness. “Since the MSME sector contributes around 40 per cent to the GDP, with an estimated value of goods and services around Rs. 20 lakh crore (year 09-10). These clusters play major role in creation of jobs, cost competitiveness, better quality, enhanced productivity,” he added.
	Voltas to form JV with Germany firm New Delhi, March 19 Air conditioner maker Voltas today said it has signed an agreement with Germany-based Kion Group to establish a joint venture in India for developing and servicing industrial trucks and warehousing equipments. "Voltas' material handling operations will be integrated into a new joint venture company, where Kion Group will hold a majority share," Voltas said. The new firm will be named Voltas Materials Handling and is expected to start operations from April, 2011. "Kion has know-how and technological leadership in the forklift truck business, so the partnership will help VMH further consolidate its leading position in India," Voltas Ltd Managing Director Sanjay Johri said. The Tata-group firm said the joint venture will focus on the Indian market with a a product range that includes diesel/LPG and electric trucks. — PTI
	Investor Guidance Liquid funds attract higher distribution tax of 25% by AN Shanbhag Q: In the case of a liquid fund, what is the current rate of dividend distribution tax? My CA tells me it is higher than that applicable to other debt-based schemes. Would the tax be different in case I invest in MIP of any mutual fund and opt for regular monthly dividends? — Manoj A : Your CA is correct. The distribution tax in the case of liquid funds is higher at 25% as compared to other debt-based funds. Other debt-based funds such as income funds or MIP have a lower distribution tax of 12.5%. Nowadays, mutual funds have introduced liquid plus funds that are for all practical purposes like liquid funds, however, the distribution tax rate on these funds is the lower rate of 12.5%. You may choose to invest in liquid-plus funds, instead of MIPs as MIPs have an element of equity component that increases their risk. PMS tax Q: My query is regarding the tax rules applicable on gains from PMS (Portfolio Management Schemes). Does the amount of tax be decided when we redeem the PMS? Or do we pay STCG / LTCG tax based on the churning of portfolio by the PMS Manager? Is the tax rate as applicable to equity oriented mutual funds? — Ravindra A: In the case of a Portfolio Management Scheme, the company that manages the portfolios (referred to hereinafter as the Portfolio Manager) undertakes transactions on behalf of its clients. Consequently, the Portfolio Manager merely acts in a fiduciary capacity with regard to the client's funds and all rights, liabilities and obligations relating to securities transactions are essentially that of the client. For this service, the Portfolio Manager charges an agreed fee to the clients for rendering portfolio management services. The rates of tax depend upon the view taken by the authorities as to whether this is a business or investment activity of the investor. We strongly feel that this should be construed to be investment and hence be liable to the capital gains tax system. However, the ITO may in view of the frequent number of transactions that typically arise from portfolio management, classify this activity as trading activity and classify the income from as trading income.
	Aviation Notes DGCA needs to be overhauled by KR Wadhwaney Yet another pilot - fifth to be precise - in the national carrier has been apprehended for fudging documents. Senior civil aviation officials say the Directorate General of Civil Aviation (DGCA) needs to be cleaned up, as it is the root cause of trouble. Investigations state that at least 100 pilots and co-pilots, flying on different aircraft in Indian skies, have secured lucrative jobs in national and other carriers by submitting wrong certificates and documents. It is worth probing how the DGCA has granted them licence to fly without proper verification of papers and without subjecting these pilots to rigorous tests Years ago, American Flight Academy, A-52, State Street, Waycross, Georgia 31501 had sought recognition from the DGCA. A letter from the Academy says: “……students from India (recruited by the Delhi Flying Club) taking training at AFA will simply walk through DGCA holding FAA (CPL) and get it converted into Indian CPL without wasting too much time in formalities which they have to go through at present. "More specifically, the students will not have to take any flight test, rather only written test too will be conducted by the Delhi Flying Club (DFC)…." Several such academies are mushrooming. Arjun Giare, a AI pilot, for example, was rejected by the US Federal Aviation Administration (FAA) on similar charges in November 2000. But then how did he get a flying licence from the DGCA? Many technical problems will be automatically sorted out if the DGCA strengthens Flight Inspection Directorate (FID) - initially floated by the then Prime Minister Rajiv Gandhi.