New Delhi, May 30
Providing comfort to worried foreign investors, Finance Minister Pranab Mukherjee said Wednesday the income tax department will not reopen cases where assessment proceedings had been finalized before April 1, 2012.

"I gave a commitment in Parliament with regard to retrospective amendments that the Central Board of Direct Taxes will issue a policy circular to clarify that in cases where assessment proceedings have become final before first day of April 2012... such cases shall not be reopened. Now the CBDT has issued a circular in this regard", he said while inaugurating Pratyaksh Kar Bhawan here.

Mukherjee, in the 2012-13 budget, had proposed to amend the Income Tax Act, 1961 with retrospective effect to tax “Vodafone-type” merger and acquisition deals done overseas that involve domestic assets.

These amendments, which came into effect with the President giving assent to the Finance Bill, 2012, had raised concerns among investors about reopening of the old cases.

Referring to issues concerning transfer pricing, Mukherjee said he had constituted an advisory group to deal with international taxation, especially multi-level tax deduction at source on software companies.

"I have constituted an advisory group to resolve various issues in the area of transfer pricing and international taxation. The group has held its first meeting on May 25.

"On the advice of the group and Nasscom, I’ve approved issuance of a circular to avoid multilevel TDS on software under section 194 J (of the Income Tax Act). This will remove hardship in case of software distributors," Mukherjee added.

Section 194-J of the Income Tax Act deals with fees for professional and technical services and covers royalty and noncompetence fees.

Multinational companies resort to transfer pricing to shift profits from high-tax countries to low-tax jurisdictions with a view to reducing overall tax liability.

Talking about the economic issues, Mukherjee said India is also confronting the same problems as the world economy and underlined the need for fiscal consolidation.

“At the bottom of the global crisis is tendency to spend more than the capacity to spend”, he said. "As an individual is expected to live within its means, the state is also expected to live within its means... There comes the question of fiscal consolidation to maintain the fiscal discipline through proper revenue realization to disburse it judiciously and of course spend it judiciously," he added.

In the fiscal 2012-13 budget Mukherjee had proposed to bring down the fiscal deficit to 5.1 per cent of gross domestic product from 5.9 per cent during the previous fiscal. — PTI

Mumbai, May 30
Mahindra & Mahindra Ltd, India's biggest utility vehicles maker, reported a forecast-beating 44 percent jump in quarterly profit, helped by an exceptional gain and strong volume growth in the face of rising input costs.

Mahindra, which controls over 40% of India's tractor market, the world's largest, said slowing economic growth in Asia's third-largest economy and escalating global risks meant the near-term outlook for the company was challenging.

"The growth in the profits of the company, despite the relentless increase in material costs, is due to good volume performance by both vehicles and tractors and tight control on expenses," the company said in a statement.

Mahindra, the flagship company of the $14.4 billion Mahindra Group, and the owner of South Korean carmaker Ssangyong Motor, said it would continue to focus on cost controls to counter India's sluggish economic growth.

Mahindra's passenger car sales have defied a slowdown in India's car market that has hurt its local rivals such as Tata Motors and Maruti Suzuki, selling 27% more cars in the March quarter from a year previously.

Net profit for January-March was Rs 8.74 billion, against Rs 6.06 billion a year earlier. There was an exceptional gain of Rs 1.08 billion on a tax saving in Q4. Net sales rose 39% to Rs 92.4 billion. — Reuters

New York City, May 30
Convicted hedge fund founder Raj Rajaratnam wanted former Goldman Sachs director Rajat Gupta to ask Indian industrialist Mukesh Ambani if his company Reliance Industries was planning to "aggressively" get into the solar business, information federal prosecutors want to include as evidence in Gupta's ongoing insider trading trial.

In court documents submitted on Monday, prosecutors said they want to offer as evidence an April 3, 2008, email from former McKinsey executive Anil Kumar to Gupta to demonstrate the "close" relationship between Gupta and Rajaratnam, particularly the "mutual trust" between them.

In the April 2008 email, labelled "urgent", Kumar told Gupta that Rajaratnam wanted him to ask whether "Reliance Industries Limited would be getting into the solar business aggressively because, if so, there would be implications for supplier companies."

According to the email, Kumar said, "When with Mukesh on portfolio question... 2 things to explore: A) Raj wants to know if they will get into the solar biz aggressively and when [there are implications for supplier companies etc]." The email was sent to Gupta around the time he was scheduled to meet Ambani.

Ambani has not been accused of any wrongdoing in the case.

Kumar has pleaded guilty to insider trading and is cooperating with prosecutors. He is scheduled to take the witness stand in Gupta's trial, which began on May 21.

"The proffered testimony of Kumar is relevant to demonstrate the nature of the relationship between Gupta and Rajaratnam, particularly the mutual trust between them and that their relationship was so close that Rajaratnam was willing to confide in Gupta, the former worldwide head of McKinsey, about his illicit activities with Kumar in violation of McKinsey policies and US tax laws," the prosecutors said.

US District Judge Jed Rakoff, presiding over the case, has not yet decided whether to allow the email into evidence.

The government alleges Kumar received money from 2004 through 2006 in exchange for providing Rajaratnam with material, non-public information. Kumar received approximately $125,000 every 3 months in 2004 and 2005, as well as a bonus of one million dollars in late 2006 after providing Rajaratnam with material, nonpublic information.

During a July 29, 2008 call between Gupta and Rajaratnam, the Sri Lankan founder of the Galleon hedge fund told Gupta that he was "giving him [referring to Kumar] a million dollars a year for doing literally nothing." — PTI

Mumbai, May 30
The rupee fell for a second successive session on Wednesday to near a record low, as oil importers ramped up demand for the greenback ahead of the end of the month, while global risk assets were hit by worries about Spain.

Though global cues are providing the trigger, traders said the rupee was also being weighed down by deep concerns about India's fiscal and economic challenges, and doubts about slowing policy reforms. Traders are looking ahead at GDP data on Thursday, with India expected to say its economy grew at 6.1% in the January-March quarter, the slowest in almost three years.

"Unless the RBI keeps coming in with measures, the rupee will continue to remain under pressure. There are still a huge amount of open importer positions remaining," said Subramanian Sharma, director at Greenback Forex.

The partially convertible rupee settled at 56.23/24 per dollar, which marked a record closing low, and was not far the all-time low of 56.40 hit on Thursday.

The rupee had closed at 55.67/68 close on Tuesday. Traders said the central bank had not been spotted intervening, but believe that could change should the rupee fall towards its all-time lows.

The RBI was believed to have intervened in spot and forward markets when the rupee hit seven consecutive record lows over the previous two weeks. On Wednesday, traders cited strong dollar demand from oil importers looking to meet their commitments at the end of the month.

Global risk aversion also weighed as the euro hit a two-year low on Wednesday, hurt by worries about Spain's soaring borrowing costs and expectations that more spending may be needed to support its ailing banks. — Reuters

Mumbai, May 30
Tata Motors shares fell 11.9% on Wednesday, wiping more than $1.5 billion off the value of the carmaker, as a fall in operating margins at its Jaguar Land Rover unit gave investors a sobering reality check.

The automaker said Tuesday profitability at the luxury unit had fallen from the previous quarter, raising concerns that the company's key earnings driver was losing speed during a worrisome period for the global economy.

China, a crucial market for JLR, is expected to see growth ease this year to its weakest pace in 13 years, while economies throughout Europe are still struggling, with some such as Britain mired in recession.

Even India's economy is struggling, with growth expected to slow to around three-year lows, dampening car sales and further clouding the outlook for Tata models at home. These concerns dented some of the optimism about JLR that had helped make Tata one of the best performing Indian stocks so far this year, with a 54% surge as of Tuesday's close.

Much will depend on Jaguar Land Rover 's future sales growth in China. — Reuters