New Delhi, February 17
The government on Friday filed a petition in the Supreme Court, seeking a review of its judgment holding that Vodafone International Holding need not pay Rs 11,000 crore (about $2.2 billion) towards income tax/capital gains tax for the buyout of Hutchison Whampoa Ltd’s Indian cellular business in 2007.

In the January 20 verdict, a three-member bench headed by chief justice S.H. Kapadia had ruled that the Indian income tax department did not have jurisdiction to levy tax on the deal struck overseas.

In its appeal, the government is learnt to have contended that the deal was nothing but an artificial avoidance scheme. The IT department had the right to decide whether capital gains had been factually and legally assigned to a Mauritian entity or to a third party and whether the Mauritian company was a façade.

“We hold that the offshore transaction herein is a bona fide structured FDI investment into India which fell outside India’s territorial tax jurisdiction, hence not taxable,” Kapadia and justice Swatanter Kumar had held, pointing out the deal had taken place in the Cayman Islands.

In a separate but concurring verdict, justice K.S. Radhakrishnan said the capital gains tax slapped on the company amounted to “imposing capital punishment for capital investment since it lacks authority of law and, therefore, stands quashed.”

In a press note issued today, Vodafone said the Supreme Court ruling was unanimous, clear and unambiguous. “The review of this judgment would be done by the same bench”, the company clarified, adding it had “no further comment to make at this stage.”

Mumbai, February 17
Indian exporters will be able to receive payments in the restricted rupee currency for sales to Iran within two weeks, the chief of India's top exporters' body said on Friday, as New Delhi puts a mechanism in place to maintain trade despite US sanctions.

About $3 billion in Iranian import arrears have accumulated since December 2010, M Rafeeque Ahmed said, when a previous payment conduit was closed under pressure from Washington, which is using sanctions to try to stop Tehran's suspected nuclear programme.

"The government has told us the mechanism for payment in rupee (to Indian exporters) will be in place in two weeks' time," Ahmed, president of the Federation of Indian Export Organisations, told Reuters in an interview.

"Between December 2010 and January 2012 we have sent goods worth about $3 billion and almost all of it is stuck."

Ahmed is taking part in government negotiations to find a solution to the payment problems that have hit trade between the two countries after US sanctions on dollar deals. His organisation is a quasi-government body set up by the trade ministry.

Indian oil importers have been paying for around $11 billion a year of crude since the middle of 2011 through Turkey's Halkbank, but this route would have been expensive for Iranian importers given sharp falls in the rial. India was Tehran's second-biggest crude customer last year after China and Iranian oil accounts for about 12% of its needs.

Most of the Iranian arrears are for imports of iron and steel ($623 million), chemicals ($453 million) and cereals ($419 million), machinery ($143 million) and pharmaceuticals ($87 million) , Ahmed said. Indian rice suppliers have also reported defaults by Iranian buyers and have said they are owed at least $144 million.

With payments for oil through Halkbank now looking vulnerable to fresh sanctions, India and Iran have agreed to settle 45% of this trade in rupees and boost exports to narrow their trade gap. Oil buyers are waiting for tax issues to be cleared up before they use the mechanism. Iran's central bank has already deposited with India's UCO bank about $1 billion which had been used in the Asian Clearing Union (ACU), the longstanding mechanism that ended in 2010.

This will be used to kick off rupee payments to India's exporters — allowing Tehran a way to use the restricted currency it would otherwise find hard to spend. India has pushed back the visit of a delegation to Iran to March 10 to 14 from this month to explore boosting exports. — Reuters

Mumbai, February 17
Lenders of cash-strapped carrier Air India on Friday approved its corporate debt restructuring plan worth Rs 18,000 crore and decided to provide a fresh cash credit of Rs 2,200 crore.

Of the Rs 18,000 crore debt restructuring plan, Rs 7,400 crore worth of nonconvertible debentures, guaranteed by the government, would be issued, banking sources said in Mumbai.

They said the 13-bank consortium, led by State Bank of India, has also agreed to give Rs 2,200 crore worth of fresh working capital loan to the ailing national carrier.

The approval by the banks came ten days after a group of ministers, headed by Finance Minister Pranab Mukherjee, decided to allow Air India to raise Rs 7,400 crore by issuing sovereign guaranteed nonconvertible debentures.

The debentures are likely to carry a coupon rate of 8.5-9% and financial institutions may subscribe to these bonds, official sources said. This would be part of the national carrier's financial restructuring plan that was also approved by the GoM on February 7. However, the bonds issue would have to be cleared by the cabinet, they said.

Official figures show the debt-ridden carrier has outstanding loans and dues worth Rs 67,520 crore, of which Rs 21,200 crore is working capital loan, Rs 22,000 crore is long-term loan on fleet acquisition, Rs 4,600 crore is vendor dues besides an accumulated loss of Rs 20,320 crore.

Banks and financial institutions had proposed several measures to beef up Air India's net worth and these were among the measures approved by the group of ministers, the sources said.

Air India's debt restructuring plan had hit a hurdle after the banks had refused to convert a part of the short-term debt into equity. — PTI

Washington, D.C., Feb 17
Voicing concern over increasing rates of denial of H-1B and L1 work visas, that are popular among Indian professionals, top US lawmakers and corporate bigwigs have questioned the Obama administration over the issue, warning this would hurt American business interests.

Officials at a Congressional hearing cited last year's figure of 26% denial to H1B visa applicants, that was the highest in recent years, and also pointed out instances where the visas were denied for flimsy reasons.

Elton Gallegly, chair of the Immigration Policy and Enforcement Subcommittee of the House Judiciary Committee, said figures obtained from the US Citizenship and Immigration Services show a rise in denial in certain categories of visas between the years of 2008 and 2010.

Gallegly said many in the business community are concerned that their petitions for foreign workers are being denied and they are being required to answer excessive requests for additional evidence, known as RFEs.

"But why did denial and free rates go up? And it very well could be because of the statutory changes that were implemented and major decisions that were issued," he said.

Ranking member, Zoe Lofgren said latest figures show there has been a sizable increase in denial rates for key businesses visas and in some categories, the denial on RFE rates has increased by 300 to 500 per cent during the Obama administration.

The Congresswoman said in many cases the denial was not justified. Lofgren also cited instances when an applicant was denied a visa due to a bureaucratic mistake. "If you take a look at the H-1B denial rates...in 2004 the denial rate was 11% on H-1Bs. In 2011 was 17%. When you take a look at the request for evidence rates, in 2004 it was 4%. In 2011 it was 26%. I mean that's a big jump. In the L-1B request for evidence rates it was 2% in 2004; 63% in 2011. So you're really ramping up the evidentiary standards in the inquiry. Certainly we don't want fraud, but there’s a price to pay as well if it's a legitimate effort and it's delayed unduly," she said.

While H-1B visa is to allow American employers to temporarily employ high skilled foreign workers, L1 visa is another nonimmigrant visa, that allows foreign employees of a US firm to relocate to its US headquarters temporarily after having worked abroad for the company. — PTI

Chandigarh, February 17
With the Haryana government keeping payment of various social security pensions through electronic benefit transfer (EBT) in abeyance, banks in the state have begun efforts to make the scheme work in rural areas.

When the issue came up at the state level bankers committee meeting held here on Feb 15, it was revealed for the past month the for Haryana government had kept the decision to disburse all social security pensions in rural areas on hold. Though the government said it was forced to revert back to the old system of manual disbursal through urban local bodies and panchayats, bankers in private said the move was a “political one’, meant to “appease” sarpanches.

However, for the time being all pensions in rural areas will be paid through the sarpanches with the assistance of certain other officials. This system was earlier discredited due to massive irregularities in pension accounts, following which the social justice & empowerment department opted for electronic transfer of pensions through banks.

On their part, banks have agreed to spruce up their infrastructure and remove anomalies in disbursal of pensions. Banks have also decided only one account per beneficiary would be opened and agreed to carry biometric based deduplication to remove duplicate identities.

Banks have also agreed to provide transaction data containing location code on a regular basis to the social welfare department; besides uploading the balance in each pension account with the social welfare department’s pensioners’ record to evaluate transactions.