New Delhi, January 25
To avoid disputes like the Vodafone tax case in future, government is contemplating incorporation of provisions on taxation of overseas deals from the stalled Direct Taxes Code (DTC) Bill in the budget for fiscal 2012-13.

"The Direct Taxes Code Bill contains a proposal to tax similar transactions... We are planning to include that provision in the Finance Bill so that in future, such issues do not arise," a top finance ministry official said.

In a judgement that will have revenue implications of about Rs 11,000 crore, the Supreme Court last week set aside the Bombay High Court's decision in favour of the income tax department on the Rs 11,000 crore tax demand on Vodafone International Holdings following its overseas acquisition of interest in Hutchinson-Essar Ltd in 2007.

The apex court had also asked the IT department to return Rs 2,500 crore deposited by Vodafone International Holdings within two months, along with 4% interest.

In view of the judgement, the Essar Group is reportedly contemplating a refund of the $883 million deducted as withholding tax by the IT department on the 22% stake sale by its Mauritius entities in Vodafone Essar.

The Supreme Court decision will have implications on similar crossborder deals where companies have not paid capital gains tax and will also impact future transactions.

Chapter XI of the draft DTC Bill, which is currently under consideration of a Parliamentary Standing Committee, provides for general anti-avoidance rules.

"According to the (DTC) provision, if there is an overseas transfer of shares with an underlying value in India of more than 50%, it is liable to be taxed," KPMG deputy CEO Dinesh Kanabar said.

Sources said the chances of the code coming into effect from next fiscal also appear unlikely as the parliamentary committee is yet to submit its report. — PTI

San Francisco, January 25
Apple Inc's quarterly results blew past Wall Street's expectations after US consumers snapped up near-unprecedented numbers of iPhones and iPads, sending its shares up 8% into record territory.

The world's most valuable technology corporation returned to form after a rare miss in the previous quarter, assuaging investors' worries that its sheer size meant it was headed into a period of slower growth. It sold 37.04 million iPhones — its flagship product — and 15.43 million iPad tablets, doubling from a year earlier and easily outpacing already heightened expectations for a strong holiday season. That helped swell its warchest of cash and securities to almost $100 billion - more than enough to plug December's US budget deficit and level with California's 2012/13 spending plan.

The company founded by late Silicon Valley titan Steve Jobs — who died in October after a years-long battle with cancer - smashed estimates on all its results including gross margin, which came in at 44.7% during the quarter.

Apple reported a net profit of $13.06 billion, or $13.87 a share, handily outstripping an average Street forecast of $10.16 per share. The beat alone — by more than $3 a share, or $3.5 bn —would be a respectable sales figure for many smaller tech companies.

"Going into 2012, I expect strength of iPhone, iPod Touch and iPad should carry on into the year. Apple still has some tailwind, including opening up new retail stores and expanding its distribution channels," said Hendi Susanto at Gabelli & Co.

The results allayed lingering doubts about the ability of new chief executive Tim Cook to lead the company that Jobs built from a garage project into a global leader. This was the first full quarter for Apple without its legendary cofounder. — Reuters

New Delhi, January 25
With the diesel car segment on the overdrive and the fiscal 2012-13 budget around the corner, environmentalists’ demand for higher taxes on diesel cars is growing. While the green lobby’s buildup for higher taxes on diesel cars is a common occurrence around this time of the year, the demand seems to be finding good support from important sections of the government this time.

Environmental NGO CSE trashed the Society for Indian Automobile’s contention that diesel use by cars was very low. Criticizing SIAM’s estimates that suggest that diesel cars, SUVs and taxis use only five per cent of total diesel consumed in the country, it demanded implementation of the Kirit Parikh committee proposal of Rs 81,000 additional excise duty on diesel cars as an “equalizer”.

“While this amount should be imposed on cars with engines less than 1400cc the amount should be doubled for the large sections (the luxury cars which use up more fuel) for more equitable sharing of burden,” CSE’s Anumita Roychowdhury said.

“Underpriced and undertaxed diesel has encouraged the luxury segment,” Roychowdhury added, terming SIAM’s findings a “ploy to avoid higher taxation on diesel cars”.

Anxious over the spurt in diesel demand following an unprecedented increase in sales of cars driven by the low priced fuel, ministries like Oil and Environment are understood to be gunning for increase in tax on diesel-fired generators and vehicles.

The oil ministry has also recommended raising the price of diesel meant for personal vehicles. “They may consider increasing the customs duty. However, this is completely the finance ministry’s pledge,” Oil Minister Jaipal Reddy was quoted as saying on Wednesday.

But what the petroleum ministry really wants is a revision of diesel prices. But a decision on this highly politically sensitive issue is not likely soon because of assembly elections in five states, including the all-important Uttar Pradesh. Incidentally, Reddy admits that practical and political compulsions are deterring the government from freeing diesel prices from its control.

Meanwhile, according to the CSE research, diesel cars will account for over 40% of the total car sales in the country.

Also for the first time bigger diesel cars, SUVs that is, are selling more. About 40% of total diesel cars sold in India are above the 1500cc range.

New Delhi, January 25
In a far reaching move aimed at promoting bilateral ties, India today proposed to export petrol and petroleum products to Pakistan. The proposal was made at a meeting Petroleum & Natural Gas Minister S. Jaipal Reddy had with visiting Pakistan Petroleum & Natural Resources Minister Asim Husain here on Wednesday on energy cooperation between the two neighbours.

Addressing a joint press conference after the talks, Reddy said Pakistan has shown interest in the Indian proposal. In the next few weeks, the two countries would work out details on the proposal.

The Pakistani minister said the working groups of the two countries would meet soon to carry forward the proposal. Asked if Pakistan was willing to give payment guarantees to India for the purchase of petroleum products, Husain asserted Islamabad had been fulfilling all its international commitments on imports.

Pakistan's existing refining capacity meets only half of its total domestic requirement. On the other hand, India now exports almost one-fourth of its 185 million tonne capacity. While Pakistan allowed import of diesel from India, it still bans import of petrol and other petroleum products. None of the Indian refiners has, however, been able to export diesel to Pakistan as it gets the fuel at a discounted price from Gulf nations like Kuwait. By allowing India to dock petrol and petroleum products, Pakistan's could save freight costs since several refineries in India are located close to the India-Pak border.

The two ministers also reviewed the progress on the much talked about Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline, which is aided by the ADB and enjoys the full backing of the United States. Both also said their countries were close to agreeing on a transit fee and a joint strategy to develop gas fields and import the hydrocarbon via pipeline from Turkmenistan. “The issue of transit fee is being discussed with Afghanistan. A joint strategy is being evolved between India and Pakistan on this issue," Husain said.

Tokyo, January 25
Japan’s first annual trade deficit in more than 30 years calls into question how much longer the country can rely on exports to help finance a huge public debt without having to turn to fickle foreign investors. The aftermath of the March earthquake raised fuel import costs while slowing global growth and the yen's strength hit exports, data released on Wednesday showed, swinging the 2011 trade balance into deficit.

Few analysts expect Japan to immediately run a deficit in the current account, which includes trade and returns on the contry's huge portfolio of investments abroad. A steady inflow of profits and capital gains from overseas still outweighs the trade deficit.

But the trade figures underscore a broader trend of Japan's declining global competitive edge and a rapidly ageing population, compounding the immediate problem of increased reliance on fuel imports due to the loss of nuclear power. Only four of the country's 54 nuclear power reactors are running due to public safety fears following the March disaster.

"What it means is that the time when Japan runs out of savings — 'Sayonara net creditor country' — that point is coming closer," said Jesper Koll, head of equities research at JPMorgan in Japan. "It means Japan becomes dependent on global savings to fund its deficit and either the currency weakens or interest rates rise." Japan logged a trade deficit of $32 billion for 2011, the first annual deficit since 1980.— Reuters

New Delhi, January 25
The government has approved disinvestment of 10% of its stake in Rashtriya Ispat Nigam Ltd (RINL) through an initial public offer, a move that could fetch about Rs 2,500 crore to the exchequer in the next fiscal.

"The Cabinet Committee on Economic Affairs on Tuesday approved 10% disinvestment in RINL," sources said. The share sale is likely to take place in the next financial year.

The company has already initiated the IPO process and has appointed four merchant bankers —UBS Securities, Deutsche Bank, Edelweiss Capital and IDBI Capital — as the book running lead managers to manage its issue.

Earlier the IPO was scheduled for January-March quarter of the current fiscal but had to be postponed because of poor stock market conditions.

The steel ministry may now come out with the IPO after completion of the Rs 12,500 crore first phase expansion plan by the end of next month as it would improve the valuation of company's share.

The second largest steel PSU has embarked upon a major capacity expansion drive to have a capacity of 11.5 million tonnes per annum by FY16 at an investment of Rs 45,000 crore. The expansion is to be completed in three phases.

State-run RINL has already inked a pact with the Andhra Pradesh government for Rs 42,000 crore investment at its Visakhapatanam facility, the steel ministry had said earlier this month.

Of this, phase-I is slated to be commissioned in February this year, taking the production capacity of RINL to 6.3 mtpa from existing 2.9 mtpa, at a cost of Rs 12,500 crore. — PTI