tag:blogger.com,1999:blog-39975619410229768292024-02-20T20:06:39.516+05:30Business Finance IndiaBFI focuses on Banking, Finance, Income Tax, Other Tax Laws, DRT, SPV, Trust, Company Laws, FEMA, RBI matters with special focus on India.Finance Indiahttp://www.blogger.com/profile/16294498878371639651noreply@blogger.comBlogger73125tag:blogger.com,1999:blog-3997561941022976829.post-44436311231864781012010-03-27T18:15:00.000+05:302010-03-27T18:15:38.623+05:30RCoM to offer free talktime on March 28<img height="307" src="http://t0.gstatic.com/images?q=tbn:gUPEVWEP0tD3yM:http://www.indiaretailbiz.com/images/logos/adag1.jpg" width="320" /><br />
<br />
<b style="color: blue;">Source: PTI Mar 27 2010 , New Delhi</b><br />
<b style="color: blue;"><br />
Telecom major Reliance Communications (RCom) will offer free local and STD calling on its<br />
<br />
network on March 28 as it celebrates the 100-million subscriber base.</b> <br />
<br />
As part of the offer, RCom customers would be able to avail 24 hours of free local and STD calling across the Reliance network on March 28, RCom said in a statement today.<br />
<br />
The one-day offer will be available to all new and existing Reliance customers across CDMA, GSM and Hello (fixed wireless) services, it added.<br />
<br />
"We are truly humbled by the trust conferred on us by our customers. This is a small gesture to appreciate and express our gratitude to our 100 million customers -- the biggest such offering ever made available anywhere in the world," RCom President Mahesh Prasad said.<br />
<br />
Earlier this month, RCom became India's second operator and the fourth operator globally to serve over 100 million customers in a single country.<br />
<br />
The company has set a target to achieve the next 100 million customers on its wireless network in 1,000 days.Finance Indiahttp://www.blogger.com/profile/16294498878371639651noreply@blogger.com0tag:blogger.com,1999:blog-3997561941022976829.post-41924560289994512862010-03-22T17:53:00.001+05:302010-03-22T17:56:16.566+05:30RCom-Polycom launch wireless video conferencing<b style="color: red;"><br />
</b><img height="320" id="ipfnbwc9htZmi8BPM:" src="http://t0.gstatic.com/images?q=tbn:nbwc9htZmi8BPM:http://www.astroyogi.com/yahoo/Articles/Celebs/images/AnilAmbani.gif" style="border: 1px solid; vertical-align: bottom;" width="216" /><br />
<br />
<b style="color: red;">Source:BS Reporter / Mumbai March 18, 2010, 0:57 IST</b><br />
<b style="color: blue;">Reliance Communications announced today that it </b><br />
<div style="color: blue;"><b>was partnering with Polycom, a global leader in </b></div><div style="color: blue;"><b>tele-presence and video conferencing services. </b></div><div style="color: blue;"><b>This partnership would introduce high-resolution</b></div><div style="color: blue;"><b> wireless video-conferencing services, to be marketed </b></div><div style="color: blue;"><b>by Reliance Webstore, the retail arm of the </b></div><b style="color: blue;">Anil Dhirubhai Ambani Group.</b><br />
<br />
<br />
<img height="271" id="ipfE_0fznk2oOnU7M:" src="http://t3.gstatic.com/images?q=tbn:E_0fznk2oOnU7M:http://www.topnews.in/files/Reliance-Communications_1.jpg" style="border: 1px solid; vertical-align: bottom;" width="320" /><br />
The service would be commercially rolled out in over 40 cities<br />
immediately and reach 60 cities in four months.<br />
<br />
Reliance Webstore plans to expand it to 100 cities<br />
by the end of the year.<br />
<br />
Reliance Webstore already sells wired video conferencing<br />
services to over 1,500 companies. It does so through<br />
a network of 200 video conferencing suites.<br />
<img height="300" id="ipfWsgv5eWZWIDJNM:" src="http://t3.gstatic.com/images?q=tbn:Wsgv5eWZWIDJNM:http://www.education.pitt.edu/technology/mediaservices/polycom.jpg" style="border: 1px solid; vertical-align: bottom;" width="320" /><br />
Polycom’s technology, coupled with its broadband<br />
services, reduces the cost of their wireless service.<br />
<br />
Reliance plans to extend this service to small and<br />
medium-sized enterprises, as well as individual consumers.<br />
<br />
The new offering comes with Polycom’s QDX6000 video<br />
conferencing system, with dedicated virtual private network<br />
connectivity through the Reliance Netconnect Broadband,<br />
with a wireless broadband data card.<br />
<br />
The entire equipment comes for Rs 2 lakh and has a connectivity<br />
plan of Rs 1,500 per month for a usage of 10 GB.<br />
On a pay-per-use basis, a managed video conferencing service<br />
costs Rs 1,500 for every half-hour.<br />
<img height="256" id="ipfxnhumh0SbpbaZM:" src="http://t2.gstatic.com/images?q=tbn:xnhumh0SbpbaZM:http://telecomtalk.info/wp-content/uploads/2009/10/reliance-world-coolpad.jpg" style="border: 1px solid; vertical-align: bottom;" width="320" /><br />
“This service will serve small and medium-sized enterprises.<br />
We have brought it down to retail for walk-in customers who need<br />
it for social gatherings and education purposes,” said<br />
<b style="color: red;">Sarup Chowdhary, director and CEO, Reliance Webstore.</b><br />
<br />
Reliance services 200-300 video conferences a day and 20,000 video<br />
conferencing hours a month. It hopes this market would expand with<br />
their new service and expects a revenue upside of Rs 400 crore over five years for Reliance Webstore.<br />
<br />
Polycom’s system has been altered to meet the requirements of this low-cost<br />
offering to India. Their system enables CD-quality audio along with high-resolution<br />
video, even at a bandwidth of 256 kbps.<br />
<br />
“India ranks among the top eight markets for video conferencing,” says<br />
<b><span style="color: red;">Hansjoerg Wagner, MD, Polycom Asia Pacific.</span></b><br />
<br />
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<a href="http://www.blogger.com/%20http://businessfinanceindia.blogspot.com/"><b style="color: blue;"> http://businessfinanceindia.blogspot.com/</b></a>Finance Indiahttp://www.blogger.com/profile/16294498878371639651noreply@blogger.com1tag:blogger.com,1999:blog-3997561941022976829.post-44303234221421555912010-03-15T18:46:00.000+05:302010-03-15T18:46:51.747+05:30New Companies Bill will equate CS with CEO and CFO of Company<span class="Apple-style-span" style="border-collapse: separate; color: black; font-family: 'Times New Roman'; font-size: medium; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px;"><span class="Apple-style-span" style="font-family: arial,sans-serif; font-size: 10px;"><a href="http://businessfinanceindia.blogspot.com/" id="thumbnail" style="color: #0000cc;"><img alt="See full size image" height="243" src="http://t3.gstatic.com/images?q=tbn:Vn4bdkc7onqpSM:http://www.outlookindia.com/images/companies_act_20071224.jpg" style="border-style: solid; border-width: 1px; float: left; margin: 10px 10px 0px;" width="320" /></a><div id="details" style="float: left; font-size: 13px; margin-top: 10px;"><br class="Apple-interchange-newline" /></div></span></span><br />
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<br />
Mar 14, 2010 <br />
<b style="color: blue;"><br />
The new Companies Bill to be adopted by Parliament</b><br />
<div style="color: blue;"><b> would simplify the law and equate company secretary </b></div><div style="color: blue;"><b>(CS) with the chief executive (CEO) and chief financial </b></div><div style="color: blue;"><b>officer (CFO) of a company, said Vinayak S Khanvalkar,</b></div><div style="color: blue;"><b> president, Institute of Company Secretaries of India (ICSI),</b></div><div style="color: blue;"><b> here on Saturday. At least two out of the 10 secretarial standards</b></div><b style="color: blue;"> specified by ICSI would find place in the new legislation, he added.</b><br />
<br />
Against the backdrop of the Satyam Computer Services<br />
episode, Khanvalkar said ICSI had constituted a core<br />
group to examine the aspect of corporate governance<br />
and made 25 recommendations to the Ministry of Corporate<br />
Affairs. According to him, the institute investigated the role<br />
of the CS in the Satyam fraud case and found that “there was<br />
nothing against him”. He said the same CS, G Jayaraman, was<br />
continuing with the new management of Satyam.<br />
<br />
ICSI would introduce two more Post Membership<br />
Qualification (PMQ) courses in competition law and,<br />
corporate insolvency and restructuring as a part of its<br />
efforts for capacity building of company secretaries in new<br />
and emerging areas, said Khanvalkar.<br />
<br />
The courses, already approved by the institute’s council,<br />
would be launched within a year, he added. ICSI has<br />
already a PMQ course on corporate governance.<br />
<br />
Apart from these two courses, he said, ICSI would<br />
organise short-term courses and collaborative programme<br />
to provide exposure to its members in diversified areas.<br />
<br />
ICSI also conducted four training programmes for the<br />
independent directors of Life Insurance Corporation<br />
of India (LIC), Punjab National Bank (PNB) and Bank of India<br />
(BoI). The institute would conduct more such programmes to<br />
make independent directors aware of their liabilities and responsibilities, he said.<br />
<br />
Khanvalkar said a core group of experts was<br />
working on ICSI’s Vision 2020 plan. The institute’s<br />
future plan includes strengthening of regional councils,<br />
going in for foreign collaborations and attracting more<br />
students into the CS professional fold.<br />
<br />
ICSI past president Datla Hanumantha Raju said the<br />
institute was setting up an education research centre in<br />
Hyderabad over an area 1.26 acres. The project was<br />
estimated to cost about Rs 5 crore. ICSI<br />
also constituted a student welfare fund for which the institute’s<br />
annual contribution was Rs 25 lakh.<br />
<b><a href="http://businessfinanceindia.blogspot.com/"><span style="color: blue;">http://businessfinanceindia.blogspot.com/</span></a></b>Finance Indiahttp://www.blogger.com/profile/16294498878371639651noreply@blogger.com0tag:blogger.com,1999:blog-3997561941022976829.post-51590706301429107082010-03-15T18:37:00.000+05:302010-03-15T18:37:43.342+05:30Power of the commissioner to revise under section 263 when the Assessing Officer took a possible view, while passing an order of assessment<span class="Apple-style-span" style="border-collapse: separate; color: black; font-family: arial,sans-serif; font-size: small; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px;"><span class="Apple-style-span" style="border-collapse: collapse; font-size: medium; white-space: nowrap;"><a href="http://businessfinanceindia.blogspot.com/" id="apf8" style="color: #2200cc;"><img height="281" id="ipftcaUwd0WJmHbcM:" src="http://t0.gstatic.com/images?q=tbn:tcaUwd0WJmHbcM:http://mullingarauctions.com/wp-content/themes/mullingarauctions/images/hammer.gif" style="border-style: solid; border-width: 1px; vertical-align: bottom;" width="320" /></a></span></span><br />
<br />
Mar 14, 2010<br />
<br />
<b style="color: blue;">CIT revised the order u/s 263 to include the sum of Rs.1,75,32,600/- </b><br />
<span id="goog_1268657443426"></span><b style="color: blue;">in the total income of the assessee under Sec.41(1) of the Income Tax Act on the ground that there had been a complete cessation of liability in regard to this amount in the previous year relevant to the assessment year 1982-83 – ITAT confirmed the order – held that – when the Assessing Officer took a possible view, while passing an order of assessment, the Commissioner exceeded his jurisdiction in seeking recourse to his power under Section 263. At the least, it must be held that the question as to whether the liability of the assessee had ceased in the previous year relevant to the Assessment Year 1982-83, was an issue on which a possible view was that there was no final or irrevocable remission or cessation of liability, within the meaning of Section 41(1) of the Act, during Assessment Year 1982-83 – order of CIT and ITAT reversed.</b><br />
<span class="Apple-style-span" style="border-collapse: separate; color: black; font-family: arial,sans-serif; font-size: small; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px;"><span class="Apple-style-span" style="border-collapse: collapse; font-size: medium; white-space: nowrap;"><a href="http://www.blogger.com/imgres?imgurl=http://cordis.europa.eu/cost/icons/cost263.jpg&imgrefurl=http://cordis.europa.eu/cost/src/263_indivpage.htm&usg=__U9Dj3rBH2jjkIkR7CrrGUC8pyYU=&h=719&w=959&sz=38&hl=en&start=1&sig2=pnd7ApPjIljQgqfNOFqdRg&um=1&itbs=1&tbnid=ZmBVibHKrmAtQM:&tbnh=111&tbnw=148&prev=/images%3Fq%3D263%26um%3D1%26hl%3Den%26sa%3DG%26rlz%3D1C1CHMB_enIN355IN355%26tbs%3Disch:1&ei=Jy-eS8r8Is-wrAfLl8yOBA" id="apf0" style="color: #2200cc;"><img height="111" id="ipfZmBVibHKrmAtQM:" src="http://t1.gstatic.com/images?q=tbn:ZmBVibHKrmAtQM:http://cordis.europa.eu/cost/icons/cost263.jpg" style="border-style: solid; border-width: 1px; vertical-align: bottom;" width="148" /></a></span></span><br />
<b style="color: red;">CASE LAW DETAILS</b><br />
<b style="color: red;"><br />
Decided by:, HIGH COURT OF BOMBAY, </b><br />
<span id="goog_1268657443427"></span><b style="color: red;">In The case of: Grasim Industries Ltd. v. CIT, </b><br />
<b style="color: red;">Appeal No.:, ITR No. 113 of 1990,</b><br />
<b style="color: red;"> Decided on: February 1, 2010,</b><br />
<b style="color: red;"><br />
RELEVANT PARAGRAPH</b><br />
<br />
11. Section 263 of the Income Tax Act, 1961 empowers the Commissioner to call for and examine the record of any proceedings under the Act and, if he considers that any order passed therein, by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the Revenue, to pass an order upon hearing the assessee and after an enquiry as is necessary, enhancing or modifying theassessment or cancelling the assessment and directing a fresh assessment.<br />
<br />
The key words that are used by Section 263 are that the order must be considered by the Commissioner to be “erroneous in so far as it is prejudicial to the interests of the Revenue “.<br />
<br />
This provision has been interpreted by the Supreme Court in several judgments to which it is now necessary to turn. In Malabar Industrial Co. Ltd. vs. CIT, 1 the Supreme Court held that the provision “cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer ” and “it is only when an order is erroneous that the Section will be attracted” The Supreme Court held that an incorrect assumption of fact or an incorrect application of law, will satisfy the requirement of the order being erroneous. An order passed in violation of the principles of natural justice or without application of mind, would be an order falling in that category. The expression “prejudicial to the interests<br />
of the Revenue “, the Supreme Court held, it is of wide import and is not confined to a loss of tax. What is prejudicial to the interest of the Revenue is explained in the judgment of theSupreme Court:<br />
<br />
“The phrase “prejudicial to the interests of the Revenue ” has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the Revenue. For example, when an Income tax Officer adopted one of the courses permissible and the Income tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue, unless the view taken by the Income taxOfficer is unsustainable in law.”<br />
<br />
The principle which has been laid down in Malabar Industrial Co. Ltd. (supra) has been followed and explained in a subsequent judgment of theSupreme Court in Commissioner of Income Tax vs Max India Ltd . 2 While interpreting the provisions of Section 80HHC(3), the Supreme Court noted that the statutory provision had been amended eleven times and different views existed on the<br />
day when the Commissioner passed his order under Section 263.<br />
<br />
The Court observed that “the mechanics of the section have become so complicated over the years that two views were inherently possible.” Consequently, the subsequent amendment to the statutory provision, even though it was retrospective, would not attract the provisions of Section 263 particularly when the provision of law, as it stood, on the date when the Commissioner passedthe order under Section 263, would have to be taken into account.<br />
<br />
12. In Commissioner of Income Tax vs. Gabriel India Ltd.,3 a Division Bench of this Court observed that Section 263 does not confer an arbitrary or uncharted power on the Commissioner. In considering as to whether an order is erroneous in so far as it is prejudicial to the interests of the Revenue, the Commissioner must be guided by the material on the record.<br />
<br />
The power of suo motu revision under Section 263(1), is in the nature of supervisory jurisdiction. Two circumstances must exist in order to enable the Commissioner to exercise the power, namely, (i)the order must be erroneous; and (ii) by virtue of the order being erroneous, prejudice must have been caused to the interests of the Revenue.<br />
<br />
Section 263 does not empower the Commissioner to substitute his judgment for that of the Assessing Officer, unless the decision is held to be erroneous. Both the conditions for the exercise of the power must be fulfilled. The order, in other words, sought to be revised, must be erroneous and must be prejudicial to the interests of the Revenue.<br />
<br />
13 .The question as to whether the Commissioner has acted within the fold of his jurisdiction under Section 263 or outside it, in the present case, must be decided with reference to the principles which have been laid down by theSupreme Court and by this Court. Section 41(1) provides that where an allowance or deduction has been made in the assessment for any year in respect of a loss, expenditure or trading liability incurred by the assessee and subsequently during any previous year, the assessee obtained whether in cash or in any other manner, any amount in respect of such loss or expenditure or some benefit in respect of such tradingliability by way of remission or cessation thereof, the amount obtains or the value of the benefit accruing shall be deemed to be profits and gains of business or profession and would accordingly be chargeable to income as the income of that previous year.<br />
<br />
<br />
The State Legislature enacted the Kerala Forest Produce (Fixation of Selling Price) Act, 1978. Section 3(1) empowers the Government to fix the selling price of forest produce for the following financial year. Section 5 stipulated that after the publication of the notification under Section 3, no forest produce shall be sold by the Government at a price which is less than the notified selling price.<br />
<br />
On 9th March 1979, the Government of Kerala issued notifications in exercise of its power underthe Act of 1978 for the period ending 31st March 1981 and also for the period commencing from 1st April 1981, being the previous year relevant to Assessment Year 1982 83. The assessee had been allowed a deduction of an amount of Rs.1.75 crores during the Assessment Years 1980 81, 1981 82 and 1982 83.<br />
<br />
The notifications that were issued by the State Government were challenged by the assessee before the KeralaHigh Court. By its judgment dated 15th April 1981, the High Court struck down the notifications in so far as they related to eucalyptus, on the ground that in fixing the prices for eucalyptus, the State Government had not followed the procedure prescribed bythe Act.<br />
<br />
The Kerala High Court held that matters which were required to be considered had not been placed before the Committee which was statutorily to be constituted under the provisions ofthe Act and the Committee had failed to consider relevant material before making its recommendations, in regard to the price of eucalyptus.<br />
<br />
The judgment of the Kerala High Court, therefore, set aside the notifications on the ground that the mandate of the Act in fixing the price of forest produce had not been followed and that relevant consideration had not been borne in mind by the Committee. The liability of the assessee to pay arose by virtue of the provisions of Section 5 of the Act , under which, no forest produce could be sold by the Government at a price, which was less than the selling price; the selling price being de1` 1fined to mean that the price of forest produce fixed by the Government under Section 3.<br />
<br />
The judgment of the KeralaHigh Court did not prohibit the government from issuing a fresh notification. After the decision of the Kerala High Court , the Expert Committee constituted under the provisions of Section 4, convened for the purposes of deciding afresh, the selling price of eucalyptus upto 31st March 1982.<br />
<br />
The Committee held its meeting on 25th March 1982, which was six days before the end of therelevant period here, and recommended the fixation of the selling price of eucalyptus between Rs.328/ to Rs.384/ per metric ton between 1978 and 1981. The Special Secretary to the State Government in the Forest and Minor Irrigation Department recorded in a note dated 27th March 1982 that the Kerala Forest Produce (Fixation of Selling Price) Rules, 1978 had been amended on 28th May 1981.<br />
<br />
Some doubt was expressed as to whether these Rules could fasten aliability with retrospective effect in the absence of an amendment to the parent legislation. The State Government, in pursuance of the judgment of the KeralaHigh Court proceeded to issue fresh notifications on 31st March 1981, 29th April 1981 and 29th May 1981.<br />
<br />
By the notification dated 29th May 1981, the Government refixed the selling price in the year 1981 82 with effect from 1st June 1981. On 31st March 1982, selling prices were notified for the period from 1st April 1982.<br />
<br />
These notifications were once again challenged by the assessee in a Writ Petition before the KeralaHigh Court. The Petition was allowed by the Division Bench of the Kerala High Court on 28th May 1994 and the notifications were set aside with a declaration that the prices fixed of bamboo, reed and eucalyptus were not payable by the Petitioner. The judgment of the KeralaHigh Court did not conclude the proceedings.<br />
<br />
Special Leave Petitions were filed before the Supreme Court in which, while granting leave, interim orders were passed by the Supreme Court , directing the assessee to pay the price of forest produce at 60% of the rate fixed in the notification issued by the State Government under Section 3(e) ofthe Act , less the price already paid.<br />
<br />
The Bank Guarantees furnished by the assessee were allowed to be encashed to the aforesaid extent.<br />
<br />
TheSupreme Court expressed the hope that the parties would be able to arrive at a settlement which may be “beneficial to all concerned, having regard to the checkered history of the litigation with its attendant uncertainties, and to avoid further long drawn out litigation.”<br />
<br />
Eventually, a settlement was arrived at between the Government of Kerala and the assessee on 27th October 1988. By the settlement, a series of matters set out in the schedule, came to be settled and parties agreed that no payment will be due by either party to the other in respect of any of the matters mentioned in the schedule.<br />
<br />
14. The narration of facts would thus show that the liability of the assessee in respect of the payment due for the supply of forest produce, under the Kerala Forest Produce (Fixation of Selling Price) Act, 1978, was not concluded by the judgment of the Kerala High Court dated 15th April 1981.<br />
<br />
The notifications fixing the price of eucalyptus were set aside by the Kerala High Court, on the ground that the Committee statutorily constituted under the Act, had not applied its mind to the relevant material.<br />
<br />
The liability of the assessee to pay at the price notified, arose under the Act, for the supplies of forest produce effected by the State Government to the assessee .<br />
<br />
The liability arose as a result of the supply of forest produce the quantification of liability was liable to be made by the instrument of the notifications issued in accordance with the provisions of the Act. The view that there was no remission or cessation of the liability during the previous year, relevant to Assessment Year 1982- 83, was a possible view having regard to the circumstances, which transpired after the judgment of the Kerala High Court.<br />
<div style="color: red;"><br />
</div><b><span style="color: red;">These circumstances included the following:</span></b><br />
<br />
(i) The recommendations made by the Expert Committee on 25th March 1982 for the refixation of prices of forest produce six days before the end of the financial year;<br />
<br />
(ii) The issuance of fresh notifications by the State Government; (iii) The challenge by the assessee to the fresh notifications;<br />
<br />
(iv) The judgment of the Kerala High Court dated 28th May 1984, setting aside the second set of notifications;<br />
<br />
(v) The filing of Special Leave Petitions before the Supreme Court challenging the judgment of the Kerala High Court in the second round; and<br />
<br />
(vi) The interim order passed by the Supreme Court requiring the assessee to pay at the rate of 60% of the prices/notification s and allowing encashment of Bank Guarantees for that purpose;<br />
<br />
and (vii) The eventual resolution of the dispute by a settlement of 27th October 1988.<br />
<br />
15. In these circumstances, when the Assessing Officer took a possible view, while passing an order of assessment, the Commissioner exceeded his jurisdiction in seeking recourse to his power under Section 263. At the least, it must be held that the question as to whether the liability of the assessee had ceased in the previous year relevant to the Assessment Year 1982 83, was an<br />
<br />
issue on which a possible view was that there was no final or irrevocable remission or cessation of liability, within the meaning of Section 41(1) of the Act, during Assessment Year 1982 83.<br />
<br />
This view could not, by any stretch of logic, be regarded as being insustainable in law. The condition precedent to the exercise of jurisdiction under Section 263, is that the order sought to be revised must be erroneous in so far as it is prejudicial to the interests of the Revenue.<br />
<br />
Following the judgments of the Supreme Court in Malabar Industrial Co. and Max India Ltd. (supra), it is now a settled principle that where the Assessing Officer has adopted one of the courses permissible in law or where two views are possible and the Assessing Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the Assessing Officer is unsustainable in law. In the present case, two views were inherently possible and the assessee therefore, cannot be subjected to the exercise of the jurisdiction under Section 263.<br />
<br />
The Tribunal, with respect, has adopted a rather simplistic view of the matter, in coming to the conclusion that the liability had ceased to exist, consequent upon the judgment of the Kerala High Court, dated 15th Apri1981.<br />
<br />
This clearly overlooks the checkered history of the litigation. The fact that the litigation had a checkered history was noted in the interim order of the Supreme Court, which also referred to the “attendant uncertainties ” and to the possibility of a “further long drawn out litigation “.<br />
<br />
<br />
<br />
=Finance Indiahttp://www.blogger.com/profile/16294498878371639651noreply@blogger.com1tag:blogger.com,1999:blog-3997561941022976829.post-63130012957747958572010-03-12T14:16:00.000+05:302010-03-12T14:16:54.235+05:30Passports under the Tatkal <img height="320" id="ipfhORXttKynsieOM:" src="http://t3.gstatic.com/images?q=tbn:hORXttKynsieOM:http://www.istockphoto.com/file_thumbview_approve/5705797/2/istockphoto_5705797-indian-passport.jpg" style="border: 1px solid; vertical-align: bottom;" width="223" /><br />
<br />
Mar 12, 2010 <br />
<br />
<b style="color: blue;">Applications for issue of passports under the</b><br />
<b style="color: blue;"> Tatkal scheme are accepted if a verification </b><br />
<b style="color: blue;">certificate is submitted in the prescribed performa,</b><br />
<b style="color: blue;"> duly signed by a designated officer of the Central/State</b><br />
<b style="color: blue;"> Governments, or on submission of three prescribed documents. </b><br />
<br />
<b style="color: blue;">Two lists containing designated officers and prescribed </b><br />
<b style="color: blue;">documents are enclosed at Annexure A and B.</b><br />
<br />
Generally, Passport Offices have adhered to the time-target of issuing passports under the Tatkal scheme. Under the scheme, fresh passports are issued within the time-target of 1-7 days and re-issued passports within three working days, subject to no adverse information being found in the system during the processing of the applications. The Government has elaborated a public grievances redressal mechanism to attend to all grievances, including those under the Tatkal scheme, at every passport office as well as at Consular, Passport, and Visa Division of the Ministry.<br />
<br />
ANNEXURE-A<br />
<br />
List of 14 documents:<br />
<br />
a) Electors Photo Identity Card (EPIC)<br />
<br />
b) Service Identity Cards issued by State/Central Government, Public Sector Undertakings, Local bodies or Public Limited Companies<br />
<br />
c ) SC/ST/OBC Certificates<br />
<br />
d) Freedom Fighter Identity Cards<br />
<br />
e) Arms Licenses<br />
<br />
f) Property Documents such as Pattas, Registered Deeds etc<br />
<br />
g) Ration Cards<br />
<br />
h) Pension Documents such as Ex-Servicemen’s Pension book/Pension Payment Order, Ex- Servicemen’s Widow/Dependent Certificates, Old Age Pension Order, Widow Pension Order<br />
<br />
i) Railway Identification Cards<br />
<br />
j) Income Tax Identity(PAN) cards<br />
<br />
k) Bank/Kisan/Post Office Passbooks<br />
<br />
l) Student Identity Cards issued by recognized educational institutions<br />
<br />
m) Driving Licenses<br />
<br />
n) Birth Certificates issued under the Registrar of Births & Deaths (RBD) Act<br />
<br />
Note: At least one of the three documents submitted should be a photo identity document and at least one should be, out of those listed at ‘a’ to ‘i’ above.<br />
<br />
ANNEXURE-B<br />
<br />
The List of authorities competent to issue Verification Certificates (VCs)<br />
<br />
a) An Under Secretary /Deputy Secretary/Director/Joint Secretary/Special Secretary/Secretary/Cabinet Secretary in the Government of India;<br />
<br />
b) A Director/Joint Secretary/Additional Secretary/Special Secretary/Chief Secretary in a State Government<br />
<br />
c) A Sub-Divisional Magistrate/First Class Judicial Magistrate/Additional DM/District Magistrate of the District of residence of the applicant<br />
<br />
d) A District Superintendent of Police, DIG/IG/DGP of District of residence of the applicant<br />
<br />
e) A Major and above in the army, Lt. Commander and above in the Navy and Sq. Leader and above in the Air Force<br />
<br />
f) General Manger of a Public Sector Undertaking<br />
<br />
g) A member of an All India Service or Central Service, who is equivalent to or above the rank of an Under Secretary to the Government i.e. in the pay scale of Rs. 10,000-15,200 or above<br />
<br />
h) Resident Commissioners/Additional Residential Commissioners of all State Governments based in Delhi<br />
<br />
i) Concerned Tehsildars or concerned SHO for an applicant staying in the area under his/her jurisdiction.<br />
<br />
j) Chairman/Chairperson of Apex Business Organizations such as Federation of Indian Chambers of Commerce and Industry (FICCI), Confederation of Indian Industries (CII) and Associated Chambers of Commerce and Industry (ASSOCHAM) in respect of owners,, partners or directors of the companies that are members of the concerned Chamber.<br />
<br />
This information was given by Dr. Shashi Tharoor, Minister of State of External Affairs in reply to a question by Shri Gireesh Kumar Sanghi in Rajya Sabha today.<br />
<br />
<br />
<a href="http://businessfinanceindia.blogspot.com/"><b style="color: blue;">http://businessfinanceindia.blogspot.com/</b></a>Finance Indiahttp://www.blogger.com/profile/16294498878371639651noreply@blogger.com0tag:blogger.com,1999:blog-3997561941022976829.post-47994714222128722682010-03-12T14:10:00.001+05:302010-03-12T14:11:19.432+05:30Budget 2010: Deemed gifts under the Income Tax Act <span class="Apple-style-span" style="border-collapse: separate; color: black; font-family: arial,sans-serif; font-size: small; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px;"><span class="Apple-style-span" style="border-collapse: collapse; font-size: medium; white-space: nowrap;"><a href="http://businessfinanceindia.blogspot.com/" id="apf0" style="color: #2200cc;"><img height="240" id="ipfyaXCp8LhOOrwCM:" src="http://t2.gstatic.com/images?q=tbn:yaXCp8LhOOrwCM:http://www.thenutgraph.com/user_uploads/images/2009/10/23/Budget2010_NEW_400.jpg" style="border-style: solid; border-width: 1px; vertical-align: bottom;" width="320" /></a></span></span><br />
Mar 12, 2010 <br />
<br />
<b style="color: blue;">1. Existing Provision</b><br />
<br />
Clause (vii) has been inserted in section 56(2) by the Finance (No. 2) Act, 2009. Under this clause if an individual or a HUF receives on or after October 1, 2009 a gift (which falls in any of the following five categories), it is chargeable to tax in the hands of the recipients under the head “Income from other sources”.<br />
<br />
A gift is chargeable to tax under section 56(2)(vii) if it satisfies the following conditions —<br />
<br />
• It is received by an individual or a HUF.<br />
<br />
• It is received on or after October 1, 2009.<br />
<br />
• The gift falls in any of the following five categories.<br />
<br />
• The gift does not fall in the exempted category. The five categories are as under:<br />
<br />
• Any sum of money (gift in cash or by cheque or draft).<br />
<br />
• Immovable property without consideration<br />
<br />
• Immovable property for a consideration which is less than the stamp duty value<br />
<br />
• Movable property without consideration<br />
<br />
• Movable property for a consideration which is less than fair market value<br />
<br />
While calculating the above monetary limit of Rs. 50,000 in any of the five categories, any sum of money or property received from the following shall not be considered—<br />
<br />
• Money/property received from a relative.<br />
<br />
• Money/property received on the occasion of the marriage of the individual.<br />
<br />
• Money/property received by way of will/inheritance.<br />
<br />
• Money/property received in contemplation of death of the payer.<br />
<br />
• Money/property received from a local authority.<br />
<br />
• Money/property received from any fund, foundation, university, other educational institution, hospital, medical institution, any trust or institution referred to in section 10(23C ).<br />
<br />
• Money received from a charitable institute registered under section 12AA<br />
<br />
<b style="color: blue;">2. Proposed amendments</b><br />
<br />
<br />
(i) Amendment of section 2<br />
<br />
<b style="color: blue;">3. In section 2 of the Income-tax Act,—</b><br />
<br />
(b) in clause (24), in sub-clause (xv), after the words, brackets and figures “value of property referred to in clause (vii)”, the words, brackets, figures and letter “or clause (viia)” shall be inserted with effect from the 1st day of June, 2010.<br />
<br />
From Notes on Clauses:<br />
<br />
The existing provision contained in sub-clause (xv) of clause (24) of the aforesaid section provides that any sum of money or value of property referred to in clause (vii) of sub-section (2) of section 56 will fall within the definition of “income”.<br />
<br />
Sub-clause (b) proposes to amend sub-clause (xv) to also make a reference therein to value of property referred to in the proposed clause (viia) to sub-section (2) of section 56. This amendment is consequential to the amendment made vide sub-clause (b) of clause 21 of the Bill.<br />
<br />
This amendment will take effect from 1st June, 2010 and will, accordingly, apply in relation to the assessment year 2011-2012 and subsequent years.<br />
<br />
(ii) Amendment of section 49<br />
<br />
In section 49 of the Income-tax Act,—<br />
<br />
(b) in sub-section (4), after the word, brackets and figures “clause (vii)”, at both the places where they occur, the words, brackets, figures and letter “or clause (viia)” shall be inserted with effect from the 1st day of June, 2010.<br />
<span class="Apple-style-span" style="border-collapse: separate; color: black; font-family: arial,sans-serif; font-size: small; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px;"><span class="Apple-style-span" style="border-collapse: collapse; font-size: medium; white-space: nowrap;"><a href="http://businessfinanceindia.blogspot.com/" id="apf0" style="color: #2200cc;"><img height="169" id="ipfYnFGqM41ti9dwM:" src="http://t2.gstatic.com/images?q=tbn:YnFGqM41ti9dwM:http://www.neon-signs.com/neon-shop/420-income-tax-border.jpg" style="border-style: solid; border-width: 1px; vertical-align: bottom;" width="320" /> </a></span></span><br />
From Notes on Clauses:<br />
<br />
Under the existing provision contained in sub-section (4) of section 49, where the capital gain arises from the transfer of a property, the value of which has been subject to income-tax under clause (vii) of sub-section (2) of section 56, the cost of acquisition of such property shall be deemed to be the value which has been taken into account for the purposes of the saidclause (vii).<br />
<br />
Sub-clause (b) proposes to amend the aforesaid sub-section so as to provide that the cost of acquisition of such property shall be deemed to be the value which has been taken into account for the purpose ofclause (viia) of sub-section (2) of section 56 also.<br />
<span class="Apple-style-span" style="border-collapse: separate; color: black; font-family: arial,sans-serif; font-size: small; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px;"><span class="Apple-style-span" style="border-collapse: collapse; font-size: medium; white-space: nowrap;"><a href="http://businessfinanceindia.blogspot.com/" id="apf0" style="color: #2200cc;"><img height="320" id="ipfwzvyM0ME2P2r8M:" src="http://t2.gstatic.com/images?q=tbn:wzvyM0ME2P2r8M:http://www.thinkplaninvest.com/wp-content/uploads/2009/11/gift_surprise-300x300.jpg" style="border-style: solid; border-width: 1px; vertical-align: bottom;" width="320" /> </a></span></span><br />
This amendment is consequential to the amendment made vide sub-clause (b) of clause 21 of the Bill and will take effect from 1st June, 2010 and will, accordingly, apply to the assessment year 2011-2012 and subsequent years.<br />
<br />
(iii) Amendment of section 56<br />
<br />
In section 56 of the Income-tax Act, in sub-section (2),—<br />
<br />
(a) in clause (vii),—<br />
<br />
(i) for sub-clause (b), the following sub-clause shall be substituted and shall be deemed to have been substituted with effect from the 1st day of October, 2009, namely:—<br />
<br />
(b) any immovable property, without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property;”;<br />
<br />
(ii) in the Explanation, in clause (d),—<br />
<br />
(a) in the opening portion, for the word “means—”, the words “means the following capital asset of the assessee, namely:—” shall be substituted and shall be deemed to have been substituted with effect from the 1st day of October, 2009;<br />
<br />
(b) in sub-clause (vii), the word “or” shall be omitted with effect from the 1st day of June, 2010;<br />
<br />
(c) in sub-clause (viii), the word “or” shall be inserted at the end with effect from the 1st day of June, 2010;<br />
<br />
(d) after sub-clause (viii), the following sub-clause shall be inserted with effect from the 1st day of June, 2010, namely:—<br />
<br />
“(ix) bullion;”;<br />
<br />
(b) after clause (vii), the following shall be inserted with effect from the 1st day of June, 2010, namely:—<br />
<br />
(viia) where a firm or a company not being a company in which the public are substantially interested, receives, in any previous year, from any person or persons, on or after the 1st day of June, 2010, any property, being shares of a company not being a company in which the public are substantially interested,—<br />
<br />
(i) without consideration, the aggregate fair market value of which exceeds fifty thousand rupees, the whole of the aggregate fair market value of such property;<br />
<br />
(ii) for a consideration which is less than the aggregate fair market value of the property by an amount exceeding fifty thousand rupees, the aggregate fair market value of such property as exceeds such consideration:<br />
<br />
Provided that this clause shall not apply to any such property received by way of a transaction not regarded as transfer under clause (via) or clause (vic) or clause (vicb) or clause (vid) or clause (vii) of section 47.<br />
<br />
Explanation.—For the purposes of this clause, “fair market value” of a property, being shares of a company not being a company in which the public are substantially interested, shall have the meaning assigned to it in theExplanationtoclause (vii)<br />
<br />
From Notes on Clauses:<br />
<br />
Clause 21 of the Bill seeks to amend section 56 of the Income-tax Act relating to income from other sources.<br />
<br />
Under the existing provisions contained in sub-clause (b) of clause (vii) of sub-section (2) of the aforesaid section, if an assessee being an individual or a Hindu undivided family receives any immovable property without consideration or for inadequate consideration, the value of the said property shall be treated as income in the hands of assessee and shall be liable to tax.<br />
<br />
It is proposed to substitute the aforesaid sub-clause (b) of clause (vii) of sub-section (2) of the aforesaid section so as to provide that clause (vii) of sub-section (2) of section 56 would apply only if the immovable property is received without any consideration and to remove the stipulation as regards inadequate consideration.<br />
<br />
This amendment will take effect retrospectively from 1st October, 2009, and will, accordingly, apply in relation to the assessment year 2010-2011 and subsequent years.<br />
<br />
Under the existing provisions contained in clause (d) of the Explanation to clause (vii) of sub-section (2) of the aforesaid section, certain properties have been enumerated within the definition of “property”.<br />
<br />
It is proposed to amend the aforesaid clause (d) of the Explanation to clause (vii) of sub-section (2) so as to specify that clause (vii) of sub-section (2) of the aforesaid section will have application to “property” which is in the nature of capital asset of the assessee.<br />
<br />
This amendment will take effect retrospectively from 1st October, 2009, and will, accordingly, apply in relation to the assessment year 2010-2011 and subsequent years.<br />
<br />
It is also proposed to amend clause (d) of the said Explanation to insert a new sub-clause (ix) so as to include “bullion” within the specified categories of property.<br />
<br />
This amendment will take effect from 1st June, 2010, and will, accordingly, apply in relation to the assessment year 2011-2012 and subsequent years.<br />
<br />
Under the existing provisions contained in clause (vii) of sub-section (2) of the aforesaid section, if an assessee who is an individual or a Hindu undivided family receives specified property without consideration or for inadequate consideration from persons other than relatives defined in the said section, the value of the said property shall be treated as income in the hand of assessee and shall be taxed.<br />
<br />
It is proposed to insert a new clause (viia) in sub-section (2) of the aforesaid section so as to include the transactions undertaken in shares of a company not being a company in which the public are substantially interested where the recipient is a firm or a company not being a company in which the public are substantially interested.<br />
<br />
This amendment will take effect from 1st June, 2010, and will, accordingly, apply in relation to the assessment year 2011-2012 and subsequent years.<br />
<br />
(iv) Amendment of section 142A<br />
<br />
In section 142A of the Income-tax Act, in sub-section (1), for the words, figures and letter “section 69B is required to be made”, the words, figures, letter and brackets “section 69B or fair market value of any property referred to in sub-section (2) of section 56 is required to be made” shall be substituted with effect from the 1st day of July, 2010.<br />
<br />
From Notes on Clauses:<br />
<br />
Clause 33 of the Bill seeks to amend section 142A of the Income-tax Act relating to estimate by Valuation Officer in certain cases.<br />
<br />
The existing provisions contained in sub-section (1) of the aforesaid section provide that where an estimate of the value of any investment referred to in section 69 or section 69B or the value of any bullion, jewellery or other valuable article referred to in section 69A or section 69B is required for the purpose of making an assessment or re-assessment under the Act, the Assessing Officer may require the Valuation Officer to make an estimate of such value and report the same to him.<br />
<br />
It is proposed to amend the said sub-section (1) so as to also enable the Assessing Officer to make reference to the Valuation Officer for making an estimate of fair market value of any property referred to in sub-section (2) of section 56 of the Act.<br />
<br />
This amendment will take effect from 1st July, 2010.<br />
<br />
3. From Explanatory Memorandum<br />
<br />
Taxation of certain transactions without consideration or for inadequate consideration<br />
<br />
Under the existing provisions of section 56(2)(vii), any sum of money or any property in kind which is received without consideration or for inadequate consideration (in excess of the prescribed limit of Rs. 5 0,000/-) by an individual or an HUF is chargeable to income tax in the hands of recipient under the head ‘income from other sources’. However, receipts from relatives or on the occasion of marriage or under a will are outside the scope of this provision.<br />
<br />
The existing definition of property for the purposes of section 56(2)(vii) includes immovable property being land or building or both, shares and securities, jewellery, archeological collection, drawings, paintings, sculpture or any work of art.<br />
<b><br />
A. These are anti-abuse provisions </b>which are currently applicable only if an individual or an HUF is the recipient. Therefore, transfer of shares of a company to a firm or a company, instead of an individual or an HUF, without consideration or at a price lower than the fair market value does not attract the anti-abuse provision<br />
<br />
In order to prevent the practice of transferring unlisted shares at prices much below their fair market value, it is proposed to amend section 56 to also include within its ambit transactions undertaken in shares of a company (not being a company in which public are substantially interested) either for inadequate consideration or without consideration where the recipient is a firm or a company (not being a company in which public are substantially interested). Section 2(18) provides the definition of a company in which the public are substantially interested.<br />
<br />
It is also proposed to exclude the transactions undertaken for business reorganization, amalgamation and demerger which are not regarded as transfer under clauses (via), (vic), (vicb), (vid) and (vii) of section 47 of the Act.<br />
<br />
Consequential amendments are proposed in—<br />
<br />
(i) section 2(24), to include the value of such shares in the definition of income;<br />
<br />
(ii) section 49, to provide that the cost of acquisition of such shares will be the value which has been taken into account and has been subjected to tax under the provisions of section 56 (2).<br />
<br />
These amendments are proposed to take effect from 1st June 2010 and will, accordingly, apply in relation to the assessment year 2011-12 and subsequent years.<br />
<b><br />
B. The provisions of section 56(2)(vii) </b>were introduced as a counter evasion mechanism to prevent laundering of unaccounted income under the garb of gifts, particularly after abolition of the Gift Tax Act. The provisions were intended to extend the tax net to such transactions in kind. The intent is not to tax the transactions entered into in the normal course of business or trade, the profits of which are taxable under specific head of income. It is, therefore, proposed to amend the definition of property so as to provide that section 56(2)(vii) will have application to the ‘property’ which is in the nature of a capital asset of the recipient and therefore would not apply to stock-in-trade, raw material and consumable stores of any business of such recipient.<br />
<b><br />
C. In several cases of immovable property </b>transactions, there is a time gap between the booking of a property and the receipt of such property on registration, which results in a taxable differential. It is, therefore, proposed to amend clause (vii) of section 56(2) so as to provide that it would apply only if the immovable property is received without any consideration and to remove the stipulation regarding transactions involving cases of inadequate consideration in respect of immovable property.<br />
<b style="color: red;"><br />
These amendments are proposed to take effect retrospectively from 1st October, 2009 and will, accordingly, apply in relation to the assessment year 2010-11 and subsequent years.</b><br />
<br />
<b>D. It is proposed to amend the definition of ‘property’</b> as provided under section 56 so as to include transactions in respect of ‘bullion’.<br />
<br />
This amendment is proposed to take effect from 1st June, 2010 and will, accordingly, apply in relation to the assessment year 2011-12 and subsequent years.<br />
<b><br />
E. It is proposed to amend section 142A(1) </b>to allow the Assessing Officer to make a reference to the Valuation Officer for an estimate of the value of property for the purposes of section 5 6(2).<br />
<br />
This amendment is proposed to take effect from 1st July, 2010.<br />
<br />
<b style="color: blue;">4. Highlights of the amendment</b><br />
<br />
• A new clause (viia) is inserted in Section 5 6(2) to include within its ambit transactions undertaken in shares of a closely held company either for inadequate consideration or without consideration where the recipient is a firm or a closely held company.<br />
<br />
• If the property received by way of gift constitutes stock in trade of the recipient, it shall not be liable to tax. (w.r.e.f. 01.10.09)<br />
<br />
• The deemed gift concept introduced by the Finance (No.2) Act, 2009 in case of immovable<br />
<br />
properties purchased at less than the stamp duty value has been removed w.r.e.f. 01.10.09.<br />
<br />
• W.e.f. 01.06.10, even gift of bullion is liable to tax as income u/s. 56(2)(vii).<br />
<br />
• Assessing Officer has been conferred with the power to make reference to the Valuation Officer u/s. 142A for the purpose of ascertaining fair market value for taxability of gifts u/s. 56(2)(vii).<br />
<br />
<br />
<b style="color: red;"><a href="http://businessfinanceindia.blogspot.com/">http://businessfinanceindia.blogspot.com/ </a></b>Finance Indiahttp://www.blogger.com/profile/16294498878371639651noreply@blogger.com1tag:blogger.com,1999:blog-3997561941022976829.post-24202938662648064892010-03-12T13:53:00.000+05:302010-03-12T13:53:22.206+05:30Procedure for Conversion of partnership firm into company <span class="Apple-style-span" style="border-collapse: separate; color: black; font-family: arial,sans-serif; font-size: small; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px;"><span class="Apple-style-span" style="border-collapse: collapse; font-size: medium; white-space: nowrap;"><img height="320" id="ipfGE2xeC8NFCOTGM:" src="http://t1.gstatic.com/images?q=tbn:GE2xeC8NFCOTGM:http://www.thehindubusinessline.com/2009/09/26/images/2009092650210901.jpg" style="border-style: solid; border-width: 1px; vertical-align: bottom;" width="206" /></span></span><br />
<br />
<br />
<div style="color: blue;"><b>Procedure for Conversion of partnership firm into</b></div><div style="color: blue;"><b> company and provision of Companies Act, </b></div><b style="color: blue;">1956 and the Income Tax Act, 1961</b><br />
Mar 12, 2010 Company Law<br />
<b style="color: blue;"><br />
REORGANISATION OF A FIRM INTO A COMPANY:</b><br />
<br />
Corporatisation is the need of the hour. The entire world is<br />
gradually drifting towards one global market without any<br />
trade barriers between the countries. A small organisation<br />
led by few partners cannot think of growth on large scale<br />
without corporatising itself. Corporatisation have their own<br />
advantages such as Limited Liability, Perpetual Succession,<br />
Transferability of shares, Expansion etc.<br />
<br />
Conversion of a partnership firm to a company shall be<br />
studied under the provisions of the Companies Act, 1956 and the Income Tax Act, 1961.<br />
<b style="color: blue;"><br />
COMPANIES ACT, 1956:</b><br />
<br />
There would be 2 options available to a partnership firm for<br />
continuing the business in the form of a company:<br />
<br />
* To dissolve the firm and incorporate a new company<br />
under the Companies Act, 1956; or<br />
* Incorporate a company which can legally take over<br />
the business of the firm and continue the same business under<br />
Part IX of the Companies Act, 1956<br />
<br />
The firm may be converted into a company by following the<br />
provisions of Part IX of the Companies Act, 1956 since<br />
there are many benefits which both the company and the firm stand to enjoy.<br />
<br />
Sections 565 to 581 prescribes the law and procedure for<br />
Companies authorised to register under Part IX of the Companies Act, 1956.<br />
<br />
Section 565 of the Companies Act, 1956 provides<br />
that any company formed in pursuance of any Act of<br />
Parliament or any other Indian Law other than the Companies<br />
Act, 1956; consisting of seven or more members may at any<br />
time register itself under this Act, either as an unlimited company<br />
or as a company limited by shares or limited by guarantee.<br />
<br />
Circular No. 5/99 dated 19-5 -99 and Press Release dated<br />
5/8/99, clarified that, the Registrar of Companies will<br />
continue to register Partnership Firms under Part IX of the<br />
Companies Act as Joint Stock Companies on satisfying the<br />
procedure and conditions. Accordingly, an existing Partnership<br />
Firm can be registered under the Companies Act.<br />
<br />
Joint Stock Companies has been specifically defined for the purposes<br />
of Part IX under section 566 of the Companies Act, 1956.<br />
<b style="color: blue;"><br />
STEPS FOR INCORPORATION OF COMPANY UNDER PART IX:</b><br />
<br />
Step 1: Hold a meeting of the partners to transact the following:<br />
<br />
- Assent of majority of its members as are present in person or<br />
where proxies are allowed, by proxy, at a general meeting summoned<br />
for the purpose of registeringthe firm under Part IX of the Companies Act,<br />
1956. The majority required to assent as aforesaid shall consist of not less<br />
than 3/4 of the members as are present in person or where proxies are<br />
allowed, by proxy.<br />
<br />
- To authorize one or more partners to take all steps necessary<br />
and to execute all papers, deeds, documents etc. pursuant to<br />
egistration ofthe firm as a Company.<br />
<br />
- To execute a supplementary Partnership Deed to align it<br />
with the requirements as under:<br />
<br />
* There must be atleast 7 partners in the partnership firm;<br />
* The firm may be registered with the Registrar of Firms;<br />
* There must be a fixed capital divided into units;<br />
* There must be provision of converting a firm into company;<br />
* There must be an agreement by the partners to convert<br />
the partnership to a company. This can be done by a contrac<br />
t in writing to this effect to which the partner’s resolution for<br />
conversion can be attached as annexure.<br />
<br />
- Execute a settlement deed.<br />
<br />
Step 2 : Application for Director’s Identification Number<br />
And Digital Signaturers Certificate<br />
<br />
Step 3 : Name approval:<br />
<br />
Under the Part IX route, one of the major advantages is that the<br />
business can be run under the same name as that of the firm<br />
except that in addition to the name of the firm the words<br />
‘limited’ or ‘private limited’ has to be added. However<br />
, if there is a company already in existence, the name<br />
would not be available. In that case, the following steps need to be taken.<br />
<br />
Ø An application in Form No. 1A needs to be filed with the Registrar of<br />
Companies (ROC) with the following details stating the fact that<br />
the partnership firm proposed to be converted under part IX of the Companies Act.<br />
<br />
* Certified true copy of Partnership Deed.<br />
* Certified true copy of the latest balance sheet of the partnership firm.<br />
* Certified true copy of the latest income tax assessment order/return.<br />
o Consent of all the partners stating that they have agreed to register<br />
the partnership firm as a Company .<br />
o Certified True Copy of the resolution passed by the firm in this regard .<br />
<br />
Ø The application is required to be digitally signed by one of the promoters.<br />
<br />
Ø The details to be stated in the said application are as follows :<br />
<br />
1. Maximum Six alternative names for the proposed company. (in order of preference)<br />
2. Names , Father’s/ Husband’s Name, Permanent<br />
Residential Addresses, Present Residential Address,<br />
Occupation, Name of the Companies in which the<br />
Promoter is Director/Promoter , Date of Birth , DIN of the Promoters.<br />
3. Authorised Capital of the proposed Company.<br />
4. Main objects of the proposed company.<br />
5. State of Registered Office of Company<br />
<br />
Note:<br />
<br />
1. As per the Companies Act, 1956, a Private Company should<br />
have a minimum Paid up Capital of Rupees One Lac.<br />
2. As per the Companies Act, 1956 there should be at least two<br />
promoters in a Private Limited Company.<br />
3. The Registrar of Companies will ordinarily inform within a period<br />
of seven days from the date of submission of the application whether any of the names applied for<br />
is available.<br />
4. If the name is not made available, the Registrar of Companies<br />
may reject the application and if it happens, new names to be provided for approval.<br />
<br />
Step 4 : Registration of Company:<br />
<br />
• On obtaining the approval of name , file the following documents<br />
with the registrar of Companies within 60 days from the date<br />
of name approval:<br />
<br />
a. Two sets of Memorandum and Articles of Association<br />
of the Company. One set shall be duly stamped. These will be<br />
similar in all respects to a normal Memorandum and Articles of<br />
Association except that it incorporates therein terms of the settlement deed<br />
<br />
b. The Memorandum and Articles of Association is to be<br />
stamped as per the Indian Stamp Act.<br />
<br />
c. Thereafter these documents are required to be executed<br />
by the promoters in their own hand after the date of Stamping<br />
of Memorandum & Article of Association in duplicate stating<br />
their full name, father’s name, residential address, occupation,<br />
number of shares subscribed for & Signature etc.<br />
<br />
d. However, if any director is foreigner and not present in India,<br />
his signature should be attested in Indian Embassy located<br />
in his home country.<br />
<br />
e. Form No. 1 - This is a declaration to be executed on a<br />
non-judicial stamp paper by one of the directors of the<br />
proposed company or other specified persons such as<br />
Chartered Accountants, Company Secretaries, Advocates,<br />
etc. stating that all the requirements of the incorporation have<br />
been complied with.<br />
<br />
f. Form No. 18 - This is a form to be filed by one of the directors<br />
of the company informing the ROC the registered office of the proposed company.<br />
<br />
g. Form No. 32 - This is a form stating the fact of appointment of<br />
the proposed directors on the board of directors from the date<br />
of incorporation of the proposed company and is signed by one<br />
of the proposed directors.<br />
<br />
h. Power of Attorney signed by all the subscribers to MOA<br />
authorizing 2` 1one of the subscribers or any other person to<br />
act on their behalf for the purpose of incorporation and<br />
accepting the certificate of incorporation.<br />
<br />
i. Form No. 37 – This form is an application by an existing<br />
Joint Stock Company for registration as a limited / an unlimited company.<br />
<br />
j. Declaration by two partners verifying the particulars<br />
set forth in the above mentioned documents.<br />
<br />
k. Consent letters from Directors<br />
<br />
l. Filing fees as may be applicable.<br />
<br />
m. Other information to be submitted:<br />
<br />
i) A list showing the names, addresses and occupations of<br />
all persons who on a day named in the list, not being more<br />
than 6 clear days before the date of registration were members<br />
of the company, with the addition of the shares or stock held by<br />
them respectively, distinguishing, in cases where the shares are<br />
numbered, each share by its number.<br />
<br />
ii) If the company is intended to be registered as a<br />
limited company, a statement specifying the following particulars :-<br />
<br />
a) the nominal share capital of the company and the<br />
number of shares into which it is divided or the amount<br />
of stock of which it consists<br />
<br />
b) the number of shares taken and the amount paid<br />
of each share c) the name of the company, with the addition<br />
of the word “Limited” or “Private Limited” as the case may<br />
be, as the last word / words, in case the company is being<br />
registered with limited liability.<br />
<br />
Step 5 : On completion of the formalities, the registrar<br />
shall register the Company under Part IX of the Act and issue<br />
a certificate of incorporation.<br />
<br />
Steps for Incorporation of a public limited company:<br />
<br />
First Five stages are almost same for incorporation of<br />
a public limited company except there should be at least<br />
seven subscribers, three directors and the minimum paid up capital of Rs. 5 lacs.<br />
<br />
After completion of first three stages a private limited<br />
company may commence its business but a public limited<br />
company is required to obtain certificate for commencement<br />
of business from Registrar of Companies.<br />
<br />
For obtaining the Certificate for commencement of its business,<br />
the Company is required to<b style="color: blue;"> </b><br />
<b style="color: blue;">submit following documents with Registrar of Companies:</b><br />
<br />
* Form 20 to be executed on a non-judicial stamp paper<br />
<br />
* Statement in lieu of Prospectus<br />
<br />
* Affidavit from each directors stating that the Company<br />
has not commenced its Business<br />
<br />
* Details of Preliminary expenses<br />
<br />
* Board Resolution for approval of preliminary expenses.<br />
<br />
* Board resolution for appointment of first Auditors<br />
<br />
* Consent letter from the Auditors for acting as Statutory Auditors.<br />
<br />
Registrar of Companies thereafter shall process the documents<br />
and if all the documents are in order then he will issue a Certificate<br />
for commencement of Business.<br />
<br />
<b style="color: blue;">Steps after incorporation of private company:</b><br />
<br />
* Once the new company is formed, the takeover agreement<br />
would be entered between the Partnership Firm and the newly<br />
incorporated company.<br />
* Convene a Board Meeting after giving notice to all the<br />
directors of the newly incorporated company immediately after<br />
incorporation as per section 286 of the Companies Act, 1956 to<br />
adopt the agreement entered into by the company and the partner<br />
of the firm for the acquisition of business of the firm.<br />
* In such a situation, the entire business of the firm along with<br />
all its assets and liabilities is transferred to the company.<br />
* The company may issue shares or other securities to the<br />
Partner of the firm.<br />
<b style="color: blue;"><br />
Steps after incorporation of public company:</b><br />
<br />
* Once the new company is formed, the takeover<br />
agreement would be entered between the Partnership<br />
firm and the newly incorporated company<br />
* Convene a Board Meeting after giving notice to all<br />
the directors of the newly incorporated company immediately<br />
after incorporation as per section 286 of the Companies Act,<br />
1956 to adopt the agreement entered into by the company.<br />
* In the above Board Meeting also fix up the date, time , place<br />
and agenda for calling a General Meeting to pass a Special<br />
Resolution under section 81(1A) of the Companies Act,<br />
1956 giving powers to the Board of Directors to issue<br />
and allot equity shares to Partners of the firm.<br />
<br />
Effect of Registration under part IX:<br />
<br />
* Vesting of Property : All property, movable as well as<br />
immovable, including actionable claims belonging to or vested<br />
in the firm at the time of registration shall, on such registration<br />
pass to and vest in the company as incorporated under Part IX. [Section 575].<br />
* The registration of a company under Part IX shall not<br />
in any manner affect its rights or liabilities in respect of any<br />
debt or obligation incurred or any contract entered into, by, to,<br />
with or on behalf of the firm before registration. [Section 576].<br />
* All suits and other legal proceedings taken by or against<br />
the company or any public officer or member thereof which<br />
where pending at the time of registration may be continued in<br />
the same manner as if registration had not taken place.<br />
<br />
However, no execution can be done against the property<br />
or person of any individual member of the company on any<br />
decree or order obtained in such suit or proceeding. If the property<br />
of the company is inadequate to satisfy the decree or order, an<br />
order for winding up the company may be obtained. [Section 577].<br />
* All provisions of any Indian law or other instrument<br />
constituting or regulating the company shall apply to the<br />
registered company in the same manner as if the company had<br />
been formed under the Companies Act, 1956 and those conditions<br />
were required to be contained and were contained in its<br />
Memorandum and Articles of Association. [Section 578].<br />
* As per section 383A of the Companies Act, if the paid up<br />
capital of the Company is Rs. 200 lacs or more than the company<br />
is required to appoint a full time Company Secretary.<br />
* As per section 269 of the Companies Act, 1956 if the paid up<br />
capital of the company is Rs. 500 lacs or more than the<br />
Company is required to appoint either Managing<br />
Director or Whole Time Director or Manager.<br />
* Debts and liabilities are not automatically transferred to the<br />
new company and therefore a novation agreement will have to be<br />
entered into by the company with its debtors and creditors.<br />
* It is advisable for the firm to obtain an indemnity from the<br />
company to the partnership firm for all acts, deeds and things<br />
done after the registration under Part IX and also vice versa.<br />
This is required as the liability of the firm is unlimited and extends to<br />
the personal assets of the partners.<br />
* It is also to be noted that the rights, liabilities, debts and obligations<br />
or any contracts entered into by the firm shall remain unaffected as it<br />
existed prior to the registration of the company under Part IX of the Companies Act, 1956.<br />
* Comply with all the relevant provisions of the Companies Act, 1956 i.e. call<br />
requisite meetings, register charges, comply with section 5 8A if necessary, etc<br />
<br />
<br />
INCOME TAX ACT 1961:<br />
<br />
Chapter IV E of the Act contains provisions relating to<br />
“Capital Gains”. Under section 45(1) of the Act, profits<br />
and gains arising from the transfer of a capital asset effected<br />
in the previous year is chargeable to tax under the head<br />
“Capital gains”. The terms “transfer” and “capital asset” have<br />
been defined in section 2(47) and section 2(14) respectively.<br />
<br />
Section 2(47) of the Act, defines the term “transfer” as follows.<br />
<br />
“transfer, in relation to a capital asset, includes,—<br />
<br />
(i) the sale, exchange or relinquishment of the asset ; or<br />
<br />
(ii) the extinguishment of any rights therein ; or<br />
<br />
(iii) the compulsory acquisition thereof under any law ; or<br />
<br />
(iv) in a case where the asset is converted by the owner<br />
thereof into, or is treated by him as, stock-in-trade of a<br />
business carried on by him, such conversion or treatment ; or<br />
<br />
(iva) the maturity or redemption of a zero coupon bond; or<br />
<br />
(v) any transaction involving the allowing of the possession<br />
of any immovable property to be taken or retained in part<br />
performance of a contract of the nature referred to in section<br />
53A of the Transfer of Property Act, 1882 (4 of 1882) ; or<br />
<br />
(vi) any transaction (whether by way of becoming a member<br />
of, or acquiring shares in, a co-operative society, company<br />
or other association of persons or by way of any agreement<br />
or any arrangement or in any other manner whatsoever) which<br />
has the effect of transferring, or enabling the enjoyment of, any<br />
immovable property.<br />
<br />
Explanation.—For the purposes of sub-clauses (v) and (vi),<br />
“immovable property” shall have the same meaning as in clause<br />
(d) of section 269UA;”<br />
<br />
Under section 2(14) of the Act, the term “Capital asset” is<br />
defined as follows:<br />
<br />
“ “capital asset” means property of any kind held by<br />
an assessee,<br />
whether or not connected with his business or<br />
profession, but does not include …………”<br />
<br />
As per section 45(1), profits and gains arising from the<br />
transfer of a capital asset effected in the previous year is<br />
chargeable to tax. The term “effected” as used in<br />
section 45(1) has a special meaning.<br />
<br />
Existence of the party (transferor) and the Counter<br />
party (transferee) is necessary for the applicability of section 45(1).<br />
<br />
A recent decision of the Bombay High Court in CIT v Texspin Engineering<br />
and Manufacturing Co. (2003) 263 ITR 345 (Bom)<br />
has held that such conversion of firm into company<br />
by following the route under Part-IX of the Companies<br />
Act, 1956, does not occasion capital gains, since there is<br />
no transfer involved in such a case.<br />
<br />
The High Court after considering the provisions of<br />
Companies Act, provisions of income tax relating to<br />
capital gains and relying on the ratio of Malbar Fisheries<br />
Company v CIT (1979) 120 ITR 49 (SC),<br />
CIT Vs. George Henderson & Co Ltd (1967) 66 ITR 622 (SC),<br />
CIT Vs. Gillanders Arbuthnot & Co (1973) 87 ITR 407 (SC),<br />
held that, when a firm is registered as a company, as per<br />
the procedure prescribed under Part IX of the<br />
Companies Act, no capital gains arise to the firm.<br />
When a partnership firm is treated as limited company,<br />
under Part IX of the Companies Act, the properties of the<br />
erstwhile firm vests in the limited company as they exist.<br />
There is no dissolution of the firm. Hence section 45 (1)<br />
of the Income Tax Act is not applicable. When shares<br />
of the Company are allotted to partners in consideration<br />
of capital standing in their accounts in the firm, there is<br />
no transfer of capital assets as contemplated under<br />
section 2(47)(iii) of the Income Tax Act<br />
(i.e. compulsory acquisition, thereof under any law),<br />
as partners are getting their own right to share Capital.<br />
<br />
In Well Pack Packaging Vs. Dy. CIT (2003) 78 TTJ (Ahd.) 448,<br />
also the same view was taken that, corporatisation of the firm<br />
under the part IX route did not attract liability to Capital Gains<br />
in the hands of the firm.<br />
<br />
In Vali Pattabhiram Roa v Shri Ramanuja Ginnning &Rice Factory (P) Ltd.<br />
(1986) 60 Comp cas 568 (AP), the Court has held<br />
that there is no transfer under general law if the constitution<br />
of the firm is changed to that of a company by registering<br />
it under Part IX of the Companies Act, as there shall be<br />
statutory vesting of title of all the properties of the firm in<br />
the newly incorporated company without any need for a<br />
separate conveyance.<br />
<br />
A partnership firm consisting of at least seven partners<br />
may be registered as an unlimited Company or as a<br />
company limited by shares or as a company limited by<br />
guarantee under Part IX of the companies Act.<br />
<br />
On conversion and registration of the partnership firm<br />
into a Company under Part IX, all the properties movable<br />
and immovable (including actionable claim), of the partnership<br />
firm would pass to and vest in the company as incorporated<br />
under the provisions of the Companies Act, 1956.<br />
<br />
The registration of the partnership firm as a company under the<br />
provisions of Part IX of the Companies Act would be an<br />
unilateral act of the firm de hors the existence of the other<br />
person. On such registration, the partnership firm existed<br />
before such registration would now be considered as<br />
a Company. The erstwhile entity would shed its garb of a<br />
firm and assume the mantle of a company. All the property<br />
hitherto owned by the partnership firm would be statutorily<br />
vested in the company on such registration without the act<br />
of any agency. Thus, the requirement of a transfer being<br />
effected would not be satisfied. As a consequence,<br />
conversion into and registration of the partnership firm as<br />
a Company under Part IX would not be considered as a<br />
transfer under section 45(1) of the Income Tax Act, 1961.<br />
<br />
For the sake of argument if it is considered that the Part IX conversion<br />
of the firm into a Company should be regarded as a transfer under<br />
section 45(1), even then there would be no liability to tax under<br />
the head “Capital gains”. This is because, the<br />
existence of “full value of the consideration”<br />
is indispensable for the computation of capital gains.<br />
There would no full value of consideration when the<br />
partnership firm gets converted and registered as a Company<br />
under Part IX of the Act. As stated earlier, the market value<br />
of the assets vested in the Company cannot be considered<br />
as the full value of the consideration.<br />
<br />
The value at which the shares are allotted to the partners<br />
who become shareholders on conversion, also cannot be<br />
construed as the full value of the consideration.<br />
Such allotment of shares would not be in connection<br />
with the vesting of the property.<br />
<br />
The allotment of shares would be in pursuance of the<br />
requirement of the provisions of Part IX of the Act.<br />
Thus, even if it is considered that the conversion of the<br />
firm under Part IX amounts to a transfer, in the absence<br />
of the full value of the consideration, the method of<br />
computation of capital gains as provided in section 48 cannot<br />
be given effect as a result, no income would be chargeable to<br />
tax in the hands of the Partnership firm under the head “Capital Gains”.<br />
<br />
The next question for our consideration is whether conversion<br />
of a partnership firm into a Company under Part IX of the<br />
Companies Act, 1956 attracts section 45(4) of the Income Tax Act, 1961?<br />
<br />
<b style="color: blue;">Section 45(4) is as follows:</b><br />
<br />
“The profits or gains arising from the transfer of a capital<br />
asset by way of distribution of capital assets on the dissolution<br />
of a firm or other association of persons or body of individuals<br />
(not being a company or a co-operative society) or otherwise,<br />
shall be chargeable to tax as the income of the firm, association<br />
or body, of the previous year in which the said transfer takes<br />
place and, for the purposes of section 48, the fair market value<br />
of the asset on the date of such transfer shall be deemed to be<br />
the full value of the consideration received or accruing as a result of the transfer.”<br />
<br />
On conversion of the firm into a Company under Part IX,<br />
all the property of the firm would vest in the Company.<br />
The vesting would be buy operation of the law. There<br />
would be no distribution of the assets. There would be no<br />
choice for the erstwhile firm not to vest the property into the<br />
Company. The vesting of the property would not be at the<br />
sweet will of the Partnership firm. Thus, there would be no<br />
distribution of the capital assets by the firm in Part IX conversion of the firm.<br />
<br />
The Bombay High Court in CIT v Texspin Engineering and<br />
Manufacturing Co. (supra) pointed out that for the deeming<br />
provision of section 45(4) to be attracted treating gains on<br />
transfer of dissolution to be capital gains, two conditions are<br />
to satisfied. There has to be transfer by way of distribution of<br />
capital assets. Secondly, such transfer should be on dissolution of the firm or otherwise.<br />
<br />
If these conditions are complied with, the market value<br />
of such assets on the date of transfer is deemed to be<br />
the full value of consideration for the transfer. The Court held<br />
that these conditions were not attracted. The assets merely<br />
vested in the company without there being any distribution at all,<br />
as legally understood. The Court pointed out that vesting of<br />
property in the company is different from distribution which<br />
was necessary to attract section 45(4). Distribution is<br />
something totally different. Since the first condition itself was<br />
not attracted, section 45(4) was not applicable.<br />
<br />
The Court also negated another argument.<br />
<br />
It was contended that there was extinguishment of right,<br />
title and interest in the capital asset qua the firm and hence<br />
this was a transfer since the definition of transfer included<br />
such extinguishment. The Court held that for a transfer,<br />
there had to be two parties. Also, there had to be<br />
consideration flowing to the transferor.<br />
<br />
The Court stated that there was no transfer at all<br />
from one party to other. To quote the Honourable Court,<br />
“There is a difference between vesting of the property,<br />
in this case, in the limited company and distribution of the property.<br />
<br />
On vesting in the limited company under Part IX of the<br />
Companies Act, the properties vest in the company as<br />
they exist. On the other hand, distribution on dissolution<br />
presupposes division, realization, encashment of assets and<br />
appropriation of the realized amount as per the priority like<br />
payment of taxes to the government, BMC, etc.,<br />
payment to unsecured creditors, etc.<br />
<br />
This difference is very important.<br />
In the present case, therefore,<br />
section 45(4) is not attracted as the very first condition of transfer by<br />
way of distribution of capital assets is not<br />
satisfied. In the circumstances, the later part of section 45(4),<br />
which refers to computation of capital gains under<br />
section 48 by treating fair market value of the asset on the date of transfer, does not arise”<br />
<br />
In the present case, when the partnership firm gets converted<br />
into and registered as a Company under Part IX of the Act,<br />
all the property of the firm would statutorily vest in the Company.<br />
The entity hitherto known as “Partnership firm” would now become<br />
a “Company”. There would be no distribution of capital assets to<br />
the partners or any other person on registration of a firm as a<br />
Company under Part IX of the Act. Thus, section 45(4) would<br />
not be applicable in such circumstances.<br />
<br />
In the following cases, it has been held that Conversion<br />
of a firm into a Company under Part IX of the Companies<br />
Act, 1956 does not attract section 45(1) / 45(4) and fall<br />
outside the scope of section 45 of the Act.<br />
<br />
* CIT v. Texspin Engineering & Manufacturing Works (2003) 263 ITR 345 (Bom);<br />
* Well Pack Packaging v. Dy. CIT (2003) 078 TTJ (AHD-) 0448;<br />
* Krishna Electrical Industries v. Dy. CIT (2004) 082 TTJ (DEL) 0575;<br />
* Sachdeva & Sons (E. O. U) v. Dy. CIT (2004) 082 TTJ (ASR) 0847;<br />
* Chetak Enterprises (P) Ltd v. Asstt. CIT (2005) 092 TTJ (JOD) 0611;<br />
* Tech Books Electronics Services (P) Ltd. v. Additional Commissioner of Income-tax (2006) 100 ITD 0125 (DEL);<br />
* ACIT vs Unity Care and Health Services (2007) 106 TTJ (BANGALORE) 1086.<br />
<b style="color: blue;"><br />
EXEMPTION UNDER SECTION 47(xiii):</b><br />
<br />
The Expert group, in the draft Income Tax Bill,<br />
has recognised the need to encourage business<br />
reorganisation when they are in consonance with the<br />
objective of economic development and are not merely<br />
devices to secure tax advantage.<br />
The Bill proposed to allow tax benefits in case<br />
of business reorganisations.<br />
<br />
To give effect to the above the Finance (No 2) Act, 1998,<br />
inserted section 47(xiii) with effect from assessment year 1999-2000.<br />
<br />
Clause (xiii) of section 47 provides that section 45 of the<br />
Income Tax Act would not apply to transfer of any building,<br />
machinery, plant, furniture or intangible asset (ie capital assets)<br />
to the company where a firm is succeeded by the company<br />
in the business carried on by it subject to certain conditions.<br />
<br />
<b style="color: blue;">These conditions are:</b><br />
<br />
(i) that the transfer should be of business as<br />
a going concern with all assets and liabilities,<br />
<br />
(ii) that the consideration for the transfer should<br />
be solely by issue of shares to the extent of partners’ capital in the firm,<br />
<br />
(iii) the partners of the firm do not receive any<br />
consideration or benefit, directly or indirectly, in any form<br />
or manner, other than by way of allotment of shares in the company and<br />
<br />
(iv) the interest of the partners in the paid-up<br />
capital of the company should continue and be retained<br />
at least to a minimum extent of 50 percent for the next five years.<br />
<br />
Section 47(xiii) confers an exemption to encourage<br />
business reorganisation and, therefore, should be<br />
interpreted in a manner that promotes the objective<br />
to be achieved and not frustrated. (Bajaj Tempo Ltd. v CIT, 196 ITR 188).<br />
<br />
Even prior to the conditional relief under section. 47(xiii) of the Act,<br />
as detailed above, it has been considered<br />
possible to avoid capital gains by registering<br />
the firm itself as a company. Since the firm in<br />
law is treated as an unincorporated company<br />
entitled to registration, it has been considered<br />
possible to register the same under section 565 of the Companies<br />
Act by bringing the firm’s constitution in line with the basic<br />
principles of company law by having fixed capital and<br />
proportionate interest with reference to such capital.<br />
It is also possible to register the firm without meeting<br />
such requirement, but as a company with unlimited liability<br />
and thereafter convert itself into a company with limited<br />
liability by following the procedure under section 32 of the<br />
Companies Act, 1956.<br />
<br />
In either case, it has been considered that there is no transfer<br />
because Sec. 575 of the Companies Act provides that all<br />
properties, movable and immovable (including actionable claims),<br />
belonging to the firm at the time of registration will be vested<br />
in the company. It was in this context, even with reference to<br />
the provisions under the Transfer of Property Act, it has<br />
been held that such conversion does not amount to a<br />
conveyance when the assets of the firm are recognised<br />
by operation of law as the assets of the company as<br />
held in Ramasundari Ray v Syamendra Lal Ray 1 LR<br />
(1974) 2 Cal 1 and in<br />
Vali Pattabirama Rao v Sri Ramanuja Ginning and Rice Factory<br />
(1966) 60 Comp.Cas. 568 (AP).<br />
<br />
The decision of the Bombay High Court, regarding<br />
conversion of a firm to a company through the Part IX route,<br />
rendered in favour of the assessee was prior to the insertion<br />
of the exemption under section 47(xiii). This means that<br />
even after the introduction of clause (xiii), there<br />
would be no liability as regards capital gains even if the<br />
conditions specified in the above mentioned clause are<br />
not adhered to. It is, therefore, advisable that Part IX route<br />
is followed, wherever feasible, while taking care to adhere<br />
to the conditions under section 47(xiii) of the Income-tax Act,<br />
as a matter of abundant caution and additional shelter.<br />
<br />
Section 47 (xiii) provides for exemption for capital gains<br />
tax on transfer of capital assets from the firm to the company<br />
subject to the conditions listed in the proviso.<br />
<br />
But the threshold condition is that, the transfer<br />
should have arisen as a result of succession of the firm by a company.<br />
<br />
Succession ordinarily means, that the business passes<br />
as a going concern. It, however, does not mean that all<br />
the assets of the firm should be transferred, because it<br />
is possible, that succession of the firm is in respect of<br />
business alone and where there is more than one<br />
business in respect of any one of the businesses.<br />
<br />
<b style="color: blue;">Section 47A: Withdrawal of Exemption:</b><br />
<br />
The conditions to be satisfied to claim exemption from<br />
capital gains is laid down in the proviso to<br />
clause (xiii) of section 47.<br />
<br />
<b style="color: blue;">The conditions inter alia are:</b><br />
<br />
1. all the assets and liabilities of the firm<br />
relating to the business immediately before the<br />
succession become the assets and liabilities<br />
of the company;<br />
2. all the partners of the firm immediately before<br />
the succession become the shareholders of the company<br />
in the same proportion in which their capital accounts<br />
stood in the books of the firm on the date of succession;<br />
3. the partners of the firm did not receive any consideration<br />
or benefit, directly or indirectly, in any form or manner,<br />
other than by way of allotment of shares in the company; and<br />
4. the aggregate of the shareholding in the company<br />
of the partners of the firm is not less than fifty percent<br />
of the total voting power in the company and their<br />
shareholding continues to be as such for a period<br />
of five years from the date of succession.<br />
<br />
Where any of the conditions laid down in the aforesaid<br />
proviso are not complied with, the amount of profits or<br />
gains arising from the transfer of such capital asset or<br />
intangible asset not charged under section 45 shall be<br />
deemed to be the profits and gains chargeable to tax of<br />
the successor company for the year in which infringement<br />
takes place. The benefit availed by the firm shall be taxed<br />
in the hands of the successor company.<br />
<br />
<b style="background-color: white; color: blue;">Section 72A(6): Set Off and Carry Forward:</b><br />
<br />
Where there has been reorganisation of business<br />
and a firm is succeeded to by a company fulfilling<br />
the conditions laid down in the proviso to clause (xiii)<br />
of section 47, then, the accumulated loss and the unabsorbed<br />
depreciation of the predecessor firm, shall be deemed to<br />
be the loss or allowance for depreciation of the successor<br />
company for the purpose of previous year in which<br />
business reorganisation was effected.<br />
<br />
If any of the conditions laid down in the proviso to<br />
clause (xiii) to section 47 are not complied with,<br />
the set-off of loss or allowance of depreciation<br />
made in any previous year in the hands of the successor<br />
company, shall be deemed to be the income of the company<br />
chargeable to tax in the year in which such conditions are not complied with.<br />
<br />
<b style="color: blue;">Conclusion :</b><br />
There are various ways of converting a firm to a company,<br />
viz; slump sale, itemized sale, admitting the company as<br />
a partner, dissolution thereof and on dissolution, business<br />
being taken over by the company etc.,. Being a topic with<br />
a very vast ambit an attempt has been made hereinabove<br />
to briefly discuss two alternatives.<br />
In view of the choices available.<br />
Conversion should be made in a manner<br />
appropriate to a particular situation and in a<br />
way which is most beneficial.<br />
<b><a href="http://businessfinanceindia.blogspot.com/">http://businessfinanceindia.blogspot.com/</a></b>Finance Indiahttp://www.blogger.com/profile/16294498878371639651noreply@blogger.com0tag:blogger.com,1999:blog-3997561941022976829.post-33230049669050064892010-03-12T13:27:00.000+05:302010-03-12T13:27:09.120+05:30Drug patents worth $60bn to expire in 4 years<img alt="http://www.premierpatents.com/images/patents.jpg" src="http://www.premierpatents.com/images/patents.jpg" /><br />
T K Rohit, , Mar 12, 2010, 12.23am IST<br />
<b style="color: blue;"><br />
CHENNAI: Nearly $60 billion worth of patents <br />
for drugs is set to expire in the next four years<br />
across the world and Indian pharmaceutical companies<br />
are now in a position to take a major share of this pie, <br />
industry members said. </b><br />
<br />
Already, India is the No. 1 exporter of generic<br />
drugs in the world with exports to the tune of $8 billion <br />
in 2008-09. <br />
<br />
"The Indian pharma industry is the third largest in<br />
the world with strength in the value chain and constitutes 40% of<br />
the world's exports of bulk drugs," said S V Veerramani,<br />
vice-president, Indian Drug Manufacturers' Association. <br />
<br />
Veerramani said the Indian pharma industry was expected <br />
to reach $30 billion by 2020. <br />
<br />
"Out of every fifth generic drug produced in the world, <br />
three are from Indian companies. While we are not too much <br />
into new drug inventions, we are quite strong in manufacturing <br />
formulations and bulk drugs. When the $60 billion worth of patents<br />
expire in the next three to four years, Indian companies will <br />
be able to capture a major chunk of the market with our strength <br />
in generic drug manufacturing," said J Jayaseelan, honarary secretary, <br />
Indian Pharmaceutical Association (IPA). <br />
The IPA is organising a three-day convention<br />
in Chennai between March 12 and 14 that will <br />
discuss India's 'surge forward as <br />
the global pharma destination'. <br />
<br />
"Many Indian companies are concentrating on manufacturing generic drugs. <br />
The US, Europe and Japan continue to be lucrative markets as they are the<br />
largest spenders in healthcare. Any company with good integration, can surely<br />
move up the chain," Raghavendra Rao, chairman and managing director, <br />
Orchid Chemicals, told TOI. <br />
<br />
There are over 9,000 formulations companies in India in the small,<br />
medium and large sectors, and they export to over 200 <br />
countries. "Companies like Pfizer, AstraZeneca have set up operations<br />
in India as the cost is low. New drug development <br />
is also happening along with a growing focus on R&D," Jayaseelan said.<br />
<b><a href="http://businessfinanceindia.blogspot.com/">http://businessfinanceindia.blogspot.com/</a></b>Finance Indiahttp://www.blogger.com/profile/16294498878371639651noreply@blogger.com0tag:blogger.com,1999:blog-3997561941022976829.post-77027547848132467612010-03-12T13:05:00.000+05:302010-03-12T13:05:21.001+05:30Mukesh Ambani, Lakshmi Mittal among world's 5 wealthiest<b><span class="Apple-style-span" style="color: red;">12 Mar 2010, 0710 hrs IST, Sruthijith KK, ET Bureau</span></b><br />
<b><span class="Apple-style-span" style="color: red;"><br />
</span></b><br />
<b><span class="Apple-style-span" style="color: blue;">NEW DELHI: Indians are doing rather well in that most envied</span></b><br />
<b><span class="Apple-style-span" style="color: blue;"> league of individuals who are spectacularly successful</span></b><br />
<b><span class="Apple-style-span" style="color: blue;"> in the pursuit, preservation </span></b><br />
<b><span class="Apple-style-span" style="color: blue;">and perpetuation of wealth. Two Indians — Mukesh Ambani </span></b><br />
<b><span class="Apple-style-span" style="color: blue;">and Lakshmi Mittal — rank among the five wealthiest individuals</span></b><br />
<b><span class="Apple-style-span" style="color: blue;"> in the world in the annual billionaire rankings by Forbes magazine. </span></b><br />
<b><br />
</b><br />
<b>Fifty two-year-old Ambani, with an estimated fortune of $29 billion,</b><br />
<b> and 59-year-old Mittal, with a net worth of $28.7 billion, rank four </b><br />
<b>and five, respectively, in a list of 1,011 billionaires with an average net </b><br />
<b>worth of $3.5 billion. A net worth of at least $1 billion, or Rs 4,561 crore</b><br />
<b> at current exchange rates, gains you entry into the ‘rich list’. </b><br />
<b><span class="Apple-style-span" style="color: red;"><br />
</span></b><br />
<b>Ambani and Mittal have made a habit of making it to the rich list, and most Indians have been there before. But the ones fielding the most congratulatory calls this morning will be the new entrants such as the Mehtas of Torrent and the Piramals. There are college dropouts in the rankings, too. </b><br />
<b><span class="Apple-style-span" style="color: red;"><br />
</span></b><br />
<b><span class="Apple-style-span" style="color: red;"><br />
</span></b><br />
<b><span class="Apple-style-span" style="color: red;"><img height="216" id="ipfJsIr5l8zO7FopM:" src="http://t3.gstatic.com/images?q=tbn:JsIr5l8zO7FopM:http://ezineinhindi.files.wordpress.com/2009/11/mukesh-ambani.jpg" style="border-bottom-style: solid; border-bottom-width: 1px; border-color: initial; border-left-style: solid; border-left-width: 1px; border-right-style: solid; border-right-width: 1px; border-top-style: solid; border-top-width: 1px; vertical-align: bottom;" width="320" /></span></b><br />
<b><br />
</b><br />
<b>Fourth is the highest Mukesh Ambani has ranked on the Forbes list, </b><br />
<b>even though for a brief period in 2007, he was estimated to be the</b><br />
<b> world’s wealthiest individual. Ambani and Mittal have both added </b><br />
<b>nearly $10 billion over their fortunes last year, when they were</b><br />
<b> estimated to be worth $19.5 billion and $19.3 billion.</b><br />
<b><span class="Apple-style-span" style="color: red;"><img height="320" id="ipf-fDQnnYutWvrKM:" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj8OKu0bY1RL4w0Lnh3SqTzdzZCjHwp1Gp3GpDtaCTqw3OxchJTv9-td5teyD8IoNblYbUfZ0VuxdmEG6LFnFl8hl-9ozprYho7tEZoXwG_w1dOCJNdmnplCnJSqFfI6kMW35rHJhhtCSw/s320/lakshmi_mittal.jpg" style="border-bottom-style: solid; border-bottom-width: 1px; border-color: initial; border-left-style: solid; border-left-width: 1px; border-right-style: solid; border-right-width: 1px; border-top-style: solid; border-top-width: 1px; vertical-align: bottom;" width="260" /></span></b><br />
<b><span class="Apple-style-span" style="color: red;"> </span>Neither are still close to the 2008 peak, when Mittal </b><br />
<b>was ranked fourth with a fortune of $45 billion and </b><br />
<b>Ambani fifth with $43 billion. </b><br />
<b><span class="Apple-style-span" style="color: red;"><img height="320" id="ipftRLG6IsxpzZe_M:" src="http://t2.gstatic.com/images?q=tbn:tRLG6IsxpzZe_M:http://top-people.starmedia.com/tmp/swotti/cacheY2FYBG9ZIHNSAW0%3D/imgcarlos%2520slim2.jpg" style="border-bottom-style: solid; border-bottom-width: 1px; border-color: initial; border-left-style: solid; border-left-width: 1px; border-right-style: solid; border-right-width: 1px; border-top-style: solid; border-top-width: 1px; vertical-align: bottom;" width="219" /></span></b><br />
<b><span class="Apple-style-span" style="color: red;">Mexican telecom tycoon Carlos Slim Helu, whose interests are</span></b><br />
<b><span class="Apple-style-span" style="color: red;"> gradually crossing Latin American boundaries, is the world’s</span></b><br />
<b><span class="Apple-style-span" style="color: red;"> richest man with a net worth of $53.5 billion.</span></b><br />
He upstages the American domination of the top spot,<br />
where Microsoft founder Bill Gates stayed uninterrupted for<br />
13 years before his friend and investor Warren Buffet took<br />
it in 2008. Gates was back on top in 2009 and Helu,<br />
who has ranked second and third in recent years,<br />
won the musical chairs this year.<br />
<br />
This year, India is home to 49 billionaires, up from 24 last year,<br />
but a few shy of the 53 billionaires the year before.<br />
The swings in fortune are aligned with that of the markets.<br />
Last year, there were only 793 billionaires, while in 2008,<br />
there were 1,125, the highest ever. India's billionaires come<br />
from a myriad of sectors, and while the usual suspects and legacy<br />
billionaires feature prominently, there are many names that you probably<br />
haven't heard of.<br />
<br />
<b><span class="Apple-style-span" style="color: red;">Take India's youngest billionaire, for instance: Shahid Balwa. </span></b><br />
<b><span class="Apple-style-span" style="color: red;">Just 36 years old. And a college dropout. </span></b><br />
<br />
“India still remains a good manufacturing economy and that reflects in the<br />
presence of billionaires from the core sectors in the list,” said Gita Piramal,<br />
business historian and author of Business Maharajas.<br />
“This notion that India is good only at services needs to<br />
be revisited. Like the phoenix, the old sectors such as<br />
cement and infrastructure are back. There are quite a few<br />
first generation entrepreneurs and that is heartening.<br />
Next year, we are going to see more billionaires from the core sectors.”<br />
<br />
India has the most number of billionaires after the US, China, Russia<br />
and Germany. The US is home to 40% of the world's billionaires,<br />
but it is declining. Last year, it was 45%. China has 89 billionaires.<br />
Pakistan just got its first billionaire — Mian Muhammad Mansha<br />
of the Nishat Group, who has interests in textiles and banking<br />
<br />
Mukesh Ambani, Lakshmi Mittal among world's 5 wealthiest<br />
Apart from Ambani and Mittal, only four Indians rank in the top 50.<br />
With a fortune of $17 billion, Wipro’s Azim Premji, who on Wednesday said his<br />
<br />
Ambani’s estranged younger brother Anil Ambani, who is<br />
locked in a bitter fued over gas prices with his richer sibling,<br />
ranks 36 with a fortune of $13.7 billion. Essar Group's Shashi<br />
and Ravi Ruia, who are preparing for an $8 billion listing on the<br />
London Stock Exchange, are worth $13 billion, while OP Jindal’s<br />
widow and non-executive chairman of Jindal Steel, Savitri Jindal,<br />
ranks 44 with a fortune of $12.2 billion.<br />
<br />
Three more Indians figure in the top 100. DLF Ltd’s Kushal Pal Singh,<br />
who ranked 8th in 2008, slumped to 74 with a fortune of $9 billion,<br />
partly reflecting the state of the real estate industry. Aditya Birla Group’s<br />
Kumar Mangalam Birla ranks 86 with a fortune of $7.9 billion and Bharti Airtel's<br />
Sunil Bharti Mittal, who is busy convincing shareholders that an African alliance<br />
with Zain will be good for it, ranks 87 with $7.8 billion.<br />
<br />
India’s 49 billionaires have a combined wealth of $222.1 billion-about<br />
17% of India’s GDP. They have an average net worth of $4.5 billion.<br />
<br />
India’s per capita GDP is about Rs 46,000. Mukesh Ambani and<br />
Lakshmi Mittal account for 25% of the total Indian<br />
billionaire wealth of $222.1 billion.<br />
<br />
In India, like in politics, your chances of success at wealth<br />
creation seem to rise with age. There are only 3 billionaires<br />
in their 30s and four in their 40s. The average age is 58.6 years.<br />
<br />
It must say something about India's pharma industry<br />
that six of the 10 new billionaires made their fortune<br />
in making drugs. Sudhir and Samir Mehta of Torrent<br />
(who also have interests in power), Cipla’s Yusuf Hamied,<br />
Zydus Cadila's Pankaj Patel, Lupin's Desh Bandhu Gupta,<br />
Dr Reddy’s K Anji Reddy and Piramal Healthcare’s Ajay<br />
Piramal are the new entrants into the rich list from the pharma<br />
world. Shree Cement’s Benu Gopal Bangur debuts on the rich<br />
list at 78 years. Only two Indian billionaires are<br />
older — Jaypee Group’s Jaiprakash Gaur (79) and<br />
RPG Group’s RP Goenka (80).<br />
<br />
IRB Infrastructure's Virendra Mhaiskar, who joined<br />
the family business at 19, is among the youngest Indian<br />
billionaires at 38 and is a first timer on the list.<br />
<br />
DB Realty’s Vinod Goenka and Shahid Balwa, both c<br />
ollege dropouts, make the list for the first time.<br />
They have partnered UAE's Etisalat for a telecom business.<br />
<div><b><span class="Apple-style-span" style="color: blue;"><a href="http://businessfinanceindia.blogspot.com/">http://businessfinanceindia.blogspot.com/</a></span></b></div>Finance Indiahttp://www.blogger.com/profile/16294498878371639651noreply@blogger.com0tag:blogger.com,1999:blog-3997561941022976829.post-61277421174724949382010-03-10T14:58:00.000+05:302010-03-10T14:58:15.926+05:30Wipro Infotech got turn key project from MOF <span class="Apple-style-span" style="border-collapse: separate; color: black; font-family: arial,sans-serif; font-size: small; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px;"><span class="Apple-style-span" style="font-size: medium;"><table class="ts" id="imgtb" style="border-collapse: collapse; width: 981px;"><tbody>
<tr><td align="left" id="tDataImage1" nowrap="nowrap" style="padding: 0px 0px 0px 18px;" valign="bottom" width="20%"><br class="Apple-interchange-newline" /><img height="320" id="ipfJYrBR9SyAD4xQM:" src="http://t1.gstatic.com/images?q=tbn:JYrBR9SyAD4xQM:http://www.techgadgets.in/images/wipro.jpg" style="border-style: solid; border-width: 1px; vertical-align: bottom;" width="273" /></td></tr>
</tbody></table></span></span><br />
March 10,2010<br />
<br />
BANGALORE:<br />
<br />
<b style="color: blue;">IT services provider Wipro Infotech today announced</b><br />
<b style="color: blue;"> that it has won a turnkey project from theMinistry of Finance, </b><br />
<b style="color: blue;">Government of India.</b><br />
<br />
As part of the project, Wipro would implement FINnet (Financial Intelligence Network) for FIU-IND. The scope of services includes development of Portal, Datawarehousing, Deduplication, Analytical Application and ERP implementation at the Data Centre and Disaster Recovery site.<br />
<br />
The project is scheduled to be completed in 24 months in different phases with a further service period of 36 months, said a press release.<br />
<br />
Project FINnet would greatly enhance the efficiency and effectiveness in the FIU-IND’s core function of collection, analysis and dissemination of financial information. IT enablement of key processes would ensure substantially higher productivity, faster turn-around-time and effective monitoring in all areas of FIU-IND’s work.<br />
<br />
The project assumes significance in the light of growing economic crimes within the country and the government’s efforts to arrest it. with this project, the government intends to use technology for bringing efficiency into analysis of data.<br />
<br />
Arun Goyal, director FIU India, said “Wipro has been selected through an open and stringent bidding process. We are keen on timely implementation of the Project as it will significantly enhance FIU-IND’s capabilities to collect financial information from various reporting entities, analyse it and disseminate actionable information to various law enforcement and intelligence agencies.”<br />
<br />
Ranbir Singh, Head, Government Vertical, Wipro Infotech said, “This is a very prestigious project for us and we are delighted to have been selected for it. Wipro understands the unique requirements of the government sector, having been part of several big projects in the government space over the past two decades. Further, our vast technology expertise, process excellence and global delivery model puts us in a unique position to offer the best possible solution.”<br />
<br />
He added that they are confident that this implementation would bring in more effective governance from both the economic and security point of view.<br />
<div style="color: blue;"><br />
</div><div style="color: blue;"><b><a href="http://businessfinanceindia.blogspot.com/"> http://businessfinanceindia.blogspot.com/</a></b></div>Finance Indiahttp://www.blogger.com/profile/16294498878371639651noreply@blogger.com0tag:blogger.com,1999:blog-3997561941022976829.post-84740753053358368472010-03-10T14:48:00.001+05:302010-03-10T14:49:08.931+05:30TCS’ Ramadorai is BSE chairman<span class="Apple-style-span" style="border-collapse: separate; color: black; font-family: arial,sans-serif; font-size: small; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px;"><span class="Apple-style-span" style="border-collapse: collapse; font-size: medium; white-space: nowrap;"><img height="320" id="ipfNVPKqbcfXtcXMM:" src="http://t2.gstatic.com/images?q=tbn:NVPKqbcfXtcXMM:http://ukinindia.fco.gov.uk/resources/en/jpg/4633065/SRamadorai" style="border-style: solid; border-width: 1px; vertical-align: bottom;" width="320" /></span></span><br />
9 Mar, 2010, 1017 hrs <br />
<br />
<div style="color: blue;"><b>MUMBAI: The Bombay Stock Exchange has appointed </b></div><b style="color: blue;">TCS vice-chairman S Ramadorai as the chairman of the bourse.</b><br />
<br />
<br />
The decision to appoint Ramadorai as chairman was taken at a BSE board meeting held here. Currently, the BSE board has 10 members, including managing director Madhu Kannan.<br />
<br />
Serving as the vice-chairman of Tata Consultancy Services (TCS), Ramadorai has been associated with the IT major for the past 37 years.<br />
<br />
Last week, Jagdish Capoor resigned from the post of non-executive chairman as well as from the board of BSE on health grounds.<br />
<br />
Ramadorai took over as the CEO of TCS in 1996 and has been instrumental in building TCS to a $6-billion company.<br />
<a href="http://businessfinanceindia.blogspot.com/"><b style="color: blue;">http://businessfinanceindia.blogspot.com/</b></a>Finance Indiahttp://www.blogger.com/profile/16294498878371639651noreply@blogger.com0tag:blogger.com,1999:blog-3997561941022976829.post-34332620011212277542010-03-10T14:41:00.000+05:302010-03-10T14:41:33.472+05:30Double the compensationfor GST- Claim States<span style="color: black;"><a href="http://businessfinanceindia.blogspot.com/"><img alt="" class="alignleft size-full wp-image-8822" height="246" src="http://www.forum4finance.com/wp-content/uploads/2009/12/GST-22.jpg" style="border: 2px solid black; margin: 10px;" title="GST (2)" width="244" /></a></span> <br />
<div style="color: blue; text-align: justify;"><b>States are demanding that Central government double </b></div><div style="color: blue; text-align: justify;"><b>the compensation proposed by the Finance Commission </b></div><div style="color: blue; text-align: justify;"><b>to implement the already delayed Goods and Services </b></div><div style="color: blue; text-align: justify;"><b>Tax as the “Grand Bargain’’ is leading to stiffer demands.</b></div><div style="color: blue; text-align: justify;"><br />
</div><div style="text-align: justify;"><span style="color: black;">The Empowered Committee of State Finance Ministers is set to demand a compensation of Rs 1-lakh crore to adopt the GST, which is seen as the biggest ever tax reform in the nation which may also lead to a fall in revenues for some states.</span></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><span style="color: black;">The committee will take up the issue with the Finance Minister Mr Pranab Mukherjee in early April, one of the members of the committee said.</span></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><span style="color: black;">The government has been negotiating with the states to implement the GST as it attempts to do away with the anomalies prevailing in the current structure where goods and various services are taxed more than once by state and central government agencies. To avoid the “tax-on-tax’’, states are seeking more funds from the central government as the implementation may lead to lower tax revenues for them. The tax which was supposed to take effect April, 2010, is delayed by a year due to disagreements.</span></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><span style="color: black;">The central government had accepted the 13th Finance Commission recommendations on revenue sharing with states, which the states said “ignored’’ their demands. It suggested paying of Rs 50,000 crores to states to agree for GST. The implementation of the tax requires co-operation from states as it involves amending laws.</span></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><span style="color: black;">The Committee will also ask the finance minister to change the amortisation schedule of the compensation, the person said. The April-meeting will also be the first one with Mr Mukherjee after the commission report.</span></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><span style="color: black;">“Some states have raised fresh demands for a higher compensation. Accordingly, we are planning to make a case for that,” Asim Dasgupta, the chairman of the Empowered Committee of the State Finance Ministers told recently. The Committee had earlier sought Rs 80,000 crores.</span></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><span style="color: black;">He had said the Commission’s suggestion to peg compensation at Rs 50,000 crore “was largely insufficient”.</span></div><div style="text-align: justify;"><span style="color: black;">Mr Dasgupta, who is also West Bengal’s finance minister, believes that bulk of the compensation should be available to the state governments in the first two years of the proposed GST regime instead of equated annual payment over five years.</span></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><span style="color: black;">“We are requesting disbursement of a significant chunk of the compensation in the first couple of years since that is the time when the impact is felt the most,’’ he had said.</span></div><div style="text-align: justify;"><br />
</div><a href="http://businessfinanceindia.blogspot.com/"><b><span style="color: blue;">http://businessfinanceindia.blogspot.com/</span></b></a>Finance Indiahttp://www.blogger.com/profile/16294498878371639651noreply@blogger.com0tag:blogger.com,1999:blog-3997561941022976829.post-48616287504822248652010-03-10T14:36:00.001+05:302010-03-10T14:37:30.609+05:30Tremendous relief to the Indian service exporters.<div style="color: blue; text-align: justify;"><b> </b><span style="color: black;"><a href="http://businessfinanceindia.blogspot.com/"><img alt="" class="alignleft size-full wp-image-18514" height="275" src="http://www.forum4finance.com/wp-content/uploads/2010/03/exports.jpg" style="border: 2px solid black; margin: 10px;" title="exports" width="271" /></a> </span><br />
<br />
<b>Budget 2010 has brought tremendous relief to <span class="IL_AD" id="IL_AD6">the Indian</span> service exporters. Various positive amendments have been introduced in <span class="IL_AD" id="IL_AD4">the Budget</span> 2010, which should make exporters’ lives a lot easier, at least on the <span class="IL_AD" id="IL_AD2">service tax</span> front.</b></div><div style="text-align: justify;"><span style="color: black;"><a href="http://businessfinanceindia.blogspot.com/"><br />
</a></span></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><span style="color: black;">The primary reason is the simplification of the <span class="IL_AD" id="IL_AD7">Export</span> of Service <span class="IL_AD" id="IL_AD9">Rules</span> (Export Rules). The Export Rules prescribe the <span class="IL_AD" id="IL_AD8">conditions</span> to determine when a service qualifies as exports. When the Export Rules were initially introduced in March 2005, they provided for two conditions to determine whether a service qualifies as exports.</span></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><span style="color: black;">The first condition was that <span class="IL_AD" id="IL_AD3">the service</span> should be in relation to an immovable property located outside India; or the service should be performed fully or partly outside India; or the service recipient should be located outside India. Of these, the condition which applied to a particular service was specified in the Export Rules. The second condition was that the consideration for the service should be received in convertible <span class="IL_AD" id="IL_AD1">foreign currency</span>.</span></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><span style="color: black;">However, in April 2006, the Export Rules were amended to provide an additional condition for a service to qualify as exports — that the service should be ‘delivered and used outside India’. What constituted ‘delivered and used outside India’ has been a matter of considerable litigation. In the context of services, which are inherently intangible in nature there was complete lack of clarity on the meaning of these terms.</span></div><div style="text-align: justify;"><span style="color: black;">In order to simplify the Export Rules, the condition of ‘service delivered outside India’ was replaced with the condition of ‘service provided from India’ in March 2007. While this partially reduced the confusion, litigation regarding the term ‘use of service outside India’ continued. In order to resolve this, the Central Board of Excise and Customs (CBEC) by a circular issued in February 2009, clarified that the meaning of the term ‘used outside India’ should be understood in the context of the characteristic of the particular category under theExport Rules in which that service falls. </span></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><span style="color: black;">By this interpretation, given that the term ‘use’ has to be interpreted in light of the other conditions prescribed for a service to qualify as ‘exports’, the condition of ‘use outside India’ became redundant. Though, it seemed that theexport circular would bring some hope to the Indian service exporter, it did not last long, since the Delhi High Court rejected a stay application filed by Microsoft in this regard.</span></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><span style="color: black;">With the deletion of the conditions of ‘provided from India’ and ‘used outside India’ from the Export Rules, the finance minister has sought to address all controversy arising in this regard. This amendment in the Export Rules is expected to minimise litigation on the aspect whether a service qualifies as exports. Hence, this is an extremely welcome move for service exporters from India.</span></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><span style="color: black;">The second reason for the cheer is that Budget 2010 has also sought to simplify the procedure for verification and grant of export refunds. The service tax legislation provides for refund of service tax paid on input services used in relation to export of services.</span></div><div style="text-align: justify;"><span style="color: black;">However, till date minimal service tax refunds have been granted by the service tax authorities and typically refund claims are rejected on the basis of a very technical interpretation that the input services are not ‘used in’ export of services.</span></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><span style="color: black;">This basis of rejection has been sought to be addressed with the Budget 2010, which provides that in order to qualify for a refund, it is not essential that the input service should be ‘used in’ export of service, but it is sufficient if the input service is ‘used for’ export of service. This technical amendment has been made on a retrospective basis and is a welcome step in resolving past disputes and in minimising disputes for future refund claims.</span></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><span style="color: black;">The third reason is that Budget 2010 has sought to amend the procedure to expedite processing of refund claims, which has been a significant pain area forthe service exporters. In the past, for processing of the refund claims the service tax authorities seek to verify all input services, that have been included in the refund claim. In most cases such verification can take weeks for a single monthly refund claim of a large service exporter. In order to expedite the processing of refund claims and avoid the detailed verification of the refund claims, it has been provided that a declaration is required to be filed by the assessee with the jurisdictional authorities, duly certified by the statutory/ tax auditor of the exporter. By this amendment a recent clarification issued by the CBEC, has been introduced in the legislation itself.</span></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><span style="color: black;">This step should aid in processing of future refund claims on an expedited basis.</span></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><span style="color: black;">Overall the Budget 2010 has provided enough reasons for the Indian service exporter to cheer. The only hope is that these will be implemented in spirit by the authorities at the ground level.</span></div><div style="text-align: justify;"><br />
</div><a href="http://businessfinanceindia.blogspot.com/"><b style="color: blue;">http://businessfinanceindia.blogspot.com/</b></a>Finance Indiahttp://www.blogger.com/profile/16294498878371639651noreply@blogger.com0tag:blogger.com,1999:blog-3997561941022976829.post-92076938673766197132010-03-10T14:28:00.002+05:302010-03-10T14:32:07.887+05:30GST - No clear picture till dadate<img alt="http://www.forum4finance.com/wp-content/uploads/2009/12/GST-Small-61.JPG" src="http://www.forum4finance.com/wp-content/uploads/2009/12/GST-Small-61.JPG" /> <br />
<div class="entry clearfloat"><div style="background-color: white; color: blue; text-align: justify;"><b>For everyone who expected Budget 2010 to lay out the roadmap for <span class="IL_AD" id="IL_AD2">goods and services tax</span> (GST) rollout, there was much disappointment. Not only did the <span class="IL_AD" id="IL_AD8">Finance</span> Minister Pranab Mukherjee sound cautiously optimistic about April 2011 rollout, there was very little in form of explicit steps in that direction other than alignment of rates for goods and ces as well as expansion of the ambit of <span class="IL_AD" id="IL_AD5">service tax</span>.</b></div><div style="background-color: white; text-align: justify;"><br />
</div><div style="text-align: justify;"><span style="color: black;">It can be argued that if <span class="IL_AD" id="IL_AD4">the government</span> was serious about April 2011 rollout of GST, it should have introduced a comprehensive list of services for taxation, rather than continuing with a piece-meal approach of adding a few more services to the list like the previous years.</span></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><span style="color: black;">A comprehensive list of services is critical for implementation of GST. It can also be argued that when GST is at the <span class="IL_AD" id="IL_AD9">threshold</span>, government should not have tinkered with the rate or given more exemptions. The changes to levy of central excise are seen reminiscent of the pre-liberalisation era by some economists — when government acceded to demands of various business lobbies.</span></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><span style="color: black;">But everything is not as simple as it appears. <span class="IL_AD" id="IL_AD7">Revenue</span> was a major consideration this year, and so it was necessary to raise rates. The increase in excise rate and expansion of service tax list, together with improved buoyancy, will yield the government additional revenues of Rs 40,000 crore over revised estimates.</span></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><span style="color: black;">A major criticism of the budget is the number of exemption that has been given — leading many to believe that distortions have increased. But therevenue department had its reason for this: exemptions in many of these cases will actually be revenue positive for the government for it would serve to curb fake claims by manufacturers. </span></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><span style="color: black;">A case in example is mentha products, where the Central Board of Excise and Customs (CBEC) found manufacturers in National Capital Region claiming refund of taxes for goods supposedly sent to tax free zones such as Jammu & Kashmir. In reality, there would be no such transfers or it may be far too small.</span></div><div style="text-align: justify;"><span style="color: black;">Revenue department’s objective of expanding the list of taxable services was to prepare people for a scenario when most services would be taxable. For instance, if India were to adopt international definition, then all economic activity that is not supply of goods would amount to supply of service, and most of them should be taxable.</span></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><span style="color: black;">The question that arises then is why did the government not opt for a comprehensive list of services for taxation. Finance minister stopped short of explaining why he did not exercise that option. The reason, it emerges, is that there is no consensus within therevenue department on whether it should opt for a negative or a positive comprehensive list. </span></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><span style="color: black;">Many countries prefer a negative list for ease of administration but both kind of lists have their merits and problems. Opting for positive list would require the tax authorities to create an exhaustive list to ensure all services that need to be taxed are included in a code with appropriate description akin to harmonised system of nomenclature for goods. The trouble with positive lists is that they can give rise to disputes between tax authorities and service providers.</span></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><span style="color: black;">In the case of a negative list, the revenue department can say all services other than the exempt ones would be subject to tax. The trouble with a negative list is that governments may overlook some sensitive services that need to be exempted. In any case, both kind of lists need to be updated on a regular basis, the positive list more frequently as new services emerge.</span></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><span style="color: black;">Extending the scope of service tax on real estate and renting, CBEC insists, was again a measured move towards GST — in the medium-term the government expects to replace most taxes on <span class="IL_AD" id="IL_AD6">real estate transactions</span> with GST, as recommended by the Thirteenth Finance Commission. Such move is also necessary to enable builders can claim credit on taxes paid on inputs such as <span class="IL_AD" id="IL_AD3">cement</span> and steel.</span></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><span style="color: black;">So where does the plan to migrate to GST stand? The Centre and the empowered committee of state finance ministers continue to be at loggerheads over several issues particularly the threshold for Central and State GST.</span></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><span style="color: black;">The empowered committee wants the threshold at the Centre for goods to continue at Rs 1.5 crore and for services at a suitable high level (meaning higher than the prevalent Rs 10 lakh), while thethreshold at the states is to be Rs 10 lakh. This is unacceptable to the Centre. It wants a common threshold of Rs 10 lakh for both goods and services at both the central and state level to enable a suitable low revenue neutral rate of tax. It argues that <span class="IL_AD" id="IL_AD1">small businesses</span> will prefer to pay GST rather than opt for compounding schemes to allow their customers (B2B transactions) to claim for taxes paid on inputs.</span></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><span style="color: black;">What is however reassuring is that there is a sense of urgency at the Centre to rollout GST by April 2011 — its primary concern being to ensure the deal is sewn up before West Bengal Assembly elections. This is because Asim Dasgupta is seen as the man who can bring states on board for GST rollout. There is now no certainty that the Left will formthe government once again, and no other state finance minister inspires the same level of confidence as Mr Dasgupta. </span><br />
<br />
<b><a href="http://businessfinanceindia.blogspot.com/" style="color: blue;">http://businessfinanceindia.blogspot.com/</a></b></div></div>Finance Indiahttp://www.blogger.com/profile/16294498878371639651noreply@blogger.com0tag:blogger.com,1999:blog-3997561941022976829.post-34992475024371418132010-03-10T14:22:00.000+05:302010-03-10T14:22:44.384+05:30Committee for Vanishing Companies<span style="color: black;"><img alt="" class="alignleft size-thumbnail wp-image-18466" height="251" src="http://www.forum4finance.com/wp-content/uploads/2010/03/vanishing-cos.1JPG-377x400.jpg" style="border: 2px solid black; margin: 10px;" title="vanishing cos.1JPG" width="226" /></span> <br />
<div style="text-align: justify;"><span style="color: black;">The Government has informed Lok Sabha that a </span></div><div style="text-align: justify;"><span style="color: black;">Coordination and Monitoring Committee (CMC), </span></div><div style="text-align: justify;"><span style="color: black;">co- chaired by Secretary, Ministry of Corporate </span></div><div style="text-align: justify;"><span style="color: black;">Affairs and Chairman, Securities and Exchange Board of India (SEBI) </span></div><div style="text-align: justify;"><span style="color: black;">has been set up to look into issues relating to companies that had come </span></div><div style="text-align: justify;"><span style="color: black;">out with public issues and vanished and to monitor the progress </span></div><div style="text-align: justify;"><span style="color: black;">of action taken against such vanishing companies and their promoters. </span></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><span style="color: black;">Specific criteria have been adopted by CMC for </span></div><div style="text-align: justify;"><span style="color: black;">identification of such vanishing companies.</span></div><div style="text-align: justify;"><span style="color: black;">In reply to a question Shri Salman Khirshid, Minister for</span></div><div style="text-align: justify;"><span style="color: black;"> Corporate Affairs, informed the House that out of the </span></div><div style="color: red; text-align: justify;"><b>companies that came out with Initial Public Offer (IPO) d</b></div><div style="color: red; text-align: justify;"><b>uring 1992 to 2005, a total of 238 companies were identified </b></div><div style="color: red; text-align: justify;"><b>as vanishing companies.</b></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><span style="color: black;">With the continuous efforts of the Ministry/ CMC, </span></div><div style="text-align: justify;"><span style="color: black;">117 companies have been traced back, resulting in the</span></div><div style="text-align: justify;"><span style="color: black;"> number of vanishing companies being reduced to 121. </span></div><div style="text-align: justify;"><span style="color: black;">Prosecutions have been filed against 112 vanishing </span></div><div style="text-align: justify;"><span style="color: black;">companies and their promoters/directors under </span></div><div style="text-align: justify;"><span style="color: black;">various provisions of the Companies Act, 1956 and </span></div><div style="text-align: justify;"><span style="color: black;">First Information Reports (FIRs) have also been filed </span></div><div style="text-align: justify;"><span style="color: black;">against Promoters/ Directors of 112 vanishing companies </span></div><div style="text-align: justify;"><span style="color: black;">under Indian Penal Code (IPC). 35 directors were </span></div><div style="text-align: justify;"><span style="color: black;">arrested and later released on bail. </span></div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"><span style="color: black;">The House was informed that the field offices are pursuing</span></div><div style="text-align: justify;"><span style="color: black;"> the prosecution cases in the respective courts.</span></div>Finance Indiahttp://www.blogger.com/profile/16294498878371639651noreply@blogger.com0tag:blogger.com,1999:blog-3997561941022976829.post-1014187921809778682010-03-10T14:17:00.000+05:302010-03-10T14:17:26.945+05:30IT-Refund-49lakhs pending<span class="Apple-style-span" style="border-collapse: separate; color: black; font-family: arial,sans-serif; font-size: small; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px;"><span class="Apple-style-span" style="border-collapse: collapse; font-size: medium; white-space: nowrap;"><img height="320" id="ipfgYLQAvcqVhPxuM:" src="http://t0.gstatic.com/images?q=tbn:gYLQAvcqVhPxuM:http://www.moneylife.in/site/userimage/image/thumbnail/tax-refund.jpg" style="border-style: solid; border-width: 1px; vertical-align: bottom;" width="320" /></span></span><br />
Mar 10, 2010<br />
<b style="color: purple;"><br />
The government today said around </b><br />
<div style="color: purple;"><b>49 lakh cases of income tax refunds are</b></div><b style="color: purple;"> pending with the revenue department.</b><br />
<br />
<span class="Apple-style-span" style="border-collapse: separate; color: black; font-family: arial,sans-serif; font-size: small; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px;"><span class="Apple-style-span" style="border-collapse: collapse; font-size: medium; white-space: nowrap;"><img height="163" id="ipfVQz3Z-xUorHtjM:" src="http://t3.gstatic.com/images?q=tbn:VQz3Z-xUorHtjM:http://wongwaymedicalmethod.com/images/pendingQ192.jpg" style="border-style: solid; border-width: 1px; vertical-align: bottom;" width="320" /></span></span><br />
<br />
“Total number of pending refund returns (up to<br />
January 2010 is 49 lakh. The statutory time limit<br />
to process the return and issue refund in financial<br />
year 2009-10 is March, 31, 2011,” minister of state<br />
for finance SS Palanimanickam informed the<br />
Rajya Sabha in a written reply.<br />
<br />
Normally after receipt of returns, processing of returns<br />
and issuance of refund is completed in due course,<br />
he said, addding however, difficulties are encountered in<br />
some cases due to various reasons like wrong PAN,<br />
illegible recording of address, incorrect particulars about<br />
bank account etc.<br />
<br />
Pointing out that processing of refund is a continuous<br />
process, he said, the returns received during 2008-09<br />
would be processed by March 31, 2010.Finance Indiahttp://www.blogger.com/profile/16294498878371639651noreply@blogger.com0tag:blogger.com,1999:blog-3997561941022976829.post-3523767946605257272009-12-04T14:08:00.000+05:302009-12-04T14:08:46.321+05:30Dubai: A High Rise, Then a Steep Fall<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif; font-size: 10px; line-height: 10px;"></span><br />
<h3 class="byline" style="color: #666666; font-family: helvetica; font-size: 1.2em; font-weight: normal; line-height: 1.3em; margin-bottom: 0.583em; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 8px; padding-right: 0px; padding-top: 0px;">By CHIP CUMMINS, STEFANIA BIANCHI and MIRNA SLEIMAN</h3><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">DUBAI -- As financial crisis roiled much of the world in October 2008, the head of Dubai's biggest state-owned developer unveiled his latest megaproject: a $38 billion development that would include a tower nearly two-thirds of a mile tall.<br />
</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">"I'm sure most of you are asking why we're launching this, and you'd be mad not to question it," said the executive, Chris O'Donnell, at a news conference. Though there would be economic ups and downs in the years needed to build the tower, he told listeners, demand would continue to outstrip supply.<br />
</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">"The fundamentals in the market are too strong," he said. "There won't be a crash."<br />
</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">Since then, residential real-estate prices in Dubai have slumped by almost 50%. Developers have slashed jobs and scrapped projects. Groundbreaking on the tower was long ago put on hold. The yearlong retrenchment culminated in last week's surprise announcement that Dubai would seek to restructure $26 billion of debts owed by Dubai World, the holding company for many of the government's port, infrastructure and real-estate businesses.<br />
</div><div class="insetContent insetCol3wide embedType-image imageFormat-D" style="border-bottom-width: 0px; border-color: initial; border-left-width: 0px; border-right-width: 0px; border-style: initial; border-top-color: rgb(176, 202, 218); border-top-style: solid; border-top-width: 0px; clear: left; float: left; font-size: 1em; margin-bottom: 10px; margin-left: 0px; margin-right: 19px; margin-top: 0px; padding-bottom: 0px; padding-left: 8px; padding-right: 8px; padding-top: 0px; width: 264px; zoom: 1;"><div class="insetTree" style="float: left; font-size: 1em; margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px; position: relative;"><div class="insettipUnit insetZoomTarget" id="articleThumbnail_1" style="float: left; font-size: 1em; margin-bottom: 8px; margin-left: 0px; margin-right: 0px; margin-top: 6px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px; top: 0px;"><div class="insetZoomTargetBox" style="font-size: 1em; margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px; position: relative;"><div class="insettipBox" style="bottom: -5px; font-size: 1em; left: -5px; margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px; position: absolute;"><div class="insettip" style="background-position: 0% 100%; background-repeat: no-repeat; cursor: pointer; font-size: 1em; left: 0px; margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px; position: relative;"><div style="color: #333333; display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1em; line-height: normal; margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;"><a href="" style="background-color: #eff4f8; border-bottom-color: rgb(153, 153, 153); border-bottom-style: solid; border-bottom-width: 1px; border-left-color: rgb(153, 153, 153); border-left-style: solid; border-left-width: 1px; border-right-color: rgb(153, 153, 153); border-right-style: solid; border-right-width: 1px; border-top-color: rgb(153, 153, 153); border-top-style: solid; border-top-width: 1px; cursor: pointer; display: block; padding-bottom: 5px; padding-left: 10px; padding-right: 10px; padding-top: 5px;">View Full Image</a><br />
</div></div></div><a href="" style="cursor: pointer; display: block;"><img alt="Dubai" border="0" height="174" hspace="0" src="http://s.wsj.net/public/resources/images/P1-AS762_Dubai_D_20091203181725.jpg" style="border-bottom-width: 0px; border-color: initial; border-color: initial; border-color: initial; border-left-width: 0px; border-right-width: 0px; border-style: initial; border-style: initial; border-top-width: 0px; border-width: initial; float: none; margin-bottom: 0px; margin-left: auto; margin-right: auto; margin-top: 0px;" vspace="0" width="262" /></a></div><cite style="color: #666666; display: block; font-style: normal; font-weight: normal; margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 3px; text-align: right;">Getty Images</cite><div class="targetCaption" style="color: #333333; display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.1em; line-height: 1.2em; margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 6px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">A woman and child ride past the Burj Dubai skyscraper.<br />
</div></div><div class="insetFullBracket" id="articleImage_1" style="font-size: 1em; left: 0px; margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px; position: absolute; top: -100%; visibility: hidden; z-index: 100;"><div class="insetFullBox" style="background-image: url(http://s.wsj.net/img/BGD_insetBracket.png); border-bottom-color: rgb(51, 51, 51); border-bottom-style: solid; border-bottom-width: 1px; border-left-color: rgb(51, 51, 51); border-left-style: solid; border-left-width: 1px; border-right-color: rgb(51, 51, 51); border-right-style: solid; border-right-width: 1px; border-top-color: rgb(51, 51, 51); border-top-style: solid; border-top-width: 1px; font-size: 1em; margin-bottom: -10px; margin-left: 0px; margin-right: 0px; margin-top: -30px; padding-bottom: 10px; padding-left: 0px; padding-right: 0px; padding-top: 30px; position: absolute;"><div class="insetButton" style="font-size: 1em; margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px; position: absolute; right: 8px; top: 5px;"><a class="insetClose" href="" style="background-image: url(http://s.wsj.net/img/BTN_insetClose.gif); cursor: pointer; display: block; height: 19px; text-indent: -9999px; width: 19px;"><img alt="Dubai" border="0" height="19" hspace="0" src="http://s.wsj.net/img/BTN_insetClose.gif" style="border-bottom-width: 0px; border-color: initial; border-color: initial; border-color: initial; border-left-width: 0px; border-right-width: 0px; border-style: initial; border-style: initial; border-top-width: 0px; border-width: initial; float: none; margin-bottom: 0px; margin-left: auto; margin-right: auto; margin-top: 0px;" vspace="0" width="19" /></a></div><img alt="Dubai" border="0" height="369" hspace="0" src="http://s.wsj.net/public/resources/images/P1-AS762_Dubai_G_20091203181725.jpg" style="border-bottom-width: 0px; border-color: initial; border-color: initial; border-color: initial; border-left-width: 0px; border-right-width: 0px; border-style: initial; border-style: initial; border-top-width: 0px; border-width: initial; float: none; margin-bottom: 0px; margin-left: auto; margin-right: auto; margin-top: 0px;" vspace="0" width="553" /></div></div></div></div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">Behind this jolt was one of the world's most concentrated property bubbles. Some $430 billion worth of construction projects have been scrapped across the United Arab Emirates, a desert country with a population of just 4.5 million and an area smaller than South Carolina. The majority were slated for the emirate of Dubai, according to estimates by the Middle East Economic Digest, a regional projects tracker.<br />
</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">The boom was fueled by easy credit, a poorly regulated market overrun by speculators, and cheerleading from Dubai officials -- including the hereditary ruler, Sheik Mohammed bin Rashid Al Maktoum.<br />
</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">His vision for the city -- a tolerant, modern metropolis open to the world, its many faiths and some of its excesses -- has long rankled conservative Arab neighbors, including some officials in Abu Dhabi, the buttoned-down capital of the U.A.E. But for others, Dubai became a symbol of what a modern Arab state might achieve if it embraced the West and its financial system. President Barack Obama, in a June speech to the Muslim world in Cairo, singled out Dubai as a place where economic development worked.<br />
</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">Dubai's soaring skyline is a symbol of pride here. At a National Day parade this week, men dressed in traditional Arab garb pushed floats consisting of scale models of the city's iconic buildings. There were models of the Burj Dubai -- the world's tallest skyscraper, due to open next month -- as well as the sail-shaped Burj Al Arab hotel and the Mall of the Emirates, which houses an indoor ski slope.<br />
</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">"Our leaders have been able to achieve all of this," said Ahmed Al Hammadi, watching the parade. As for the current debt crisis, "we will come out of it stronger," he said.<br />
</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">Officials and developers justified the breakneck pace at which these were built by touting Dubai's proximity to both Asia and Europe, its tax-free and tolerant way of life and its position as the region's business hub. Foreign executives, architects and real-estate brokers flocked here for the seemingly limitless scope to pursue big projects. International debt and property investors bought into the dream, too, until global financial markets seized up and much of the world plunged into recession. Then, buyers began to bail out, employers shed staff and companies put expansion on hold.<br />
</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">The result is a jaw-dropping real-estate overhang. "To Let" signboards adorn the facades of dozens of recently finished buildings along Sheikh Zayed Road, the superhighway that cuts through the city's canyon of skyscrapers. Office vacancies in new buildings run at 41%, according to international property agency Colliers International.<br />
</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">After taking markets by surprise last week with a request to delay debt payments at Dubai World by six months or more, the government here said early Tuesday it would begin a multiphase restructuring effort aimed at the company's debt, including $6 billion related to lending by the state-owned property developer, Nakheel. It said the restructuring would include the assessment of "deleveraging options," including asset sales. Dubai World said it had started discussions with its banks and these were proceeding on a "constructive basis."<br />
</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">International securities markets recovered their poise after a scare, but the effects aren't just financial. The debt announcement appeared to open a fresh rift between Dubai and U.A.E. capital Abu Dhabi. Federal officials there were livid at being left in the dark by Dubai's decision to seek a debt standstill, say people familiar with the situation. The rift has the potential to unsettle an important U.S. ally in the Persian Gulf, because Dubai, as a re-export hub and offshore financial center for Iranian businesses, is seen as key to U.S. efforts to isolate Iran.<br />
</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">Dubai and Abu Dhabi officials have underscored unity in recent days. But while the U.A.E. federal government orchestrated a $10 billion bailout earlier this year for Dubai companies, it hasn't stepped in to offer assistance to Dubai World.<br />
</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">Dubai's growth began in the early 1980s when Sheik Mohammed and his father pushed to diversify the economy in the face of dwindling oil. Dubai built luxury beachside hotels to lure wealthy visitors from India, Asia and the Middle East, plus package tours from Europe and Russia. In 2002, Sheik Mohammed opened the door to foreign ownership of property in certain developments. With little more than a brochure and a floor plan, buyers began to slap down deposits on townhouses, apartments and villas that wouldn't be ready for years.<br />
</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">Aarti Chana was living in the U.K. in 2004 when Nakheel pitched a project called Palm Jebel Ali to prospective buyers. As the second piece of a spectacular development jutting out in the sea in the shape of a palm tree, Palm Jebel Ali would include homes built on stilts, forming a 7.5-mile chain spelling out an Arabic poem written by Sheik Mohammed. "It takes a man of great vision to write on water," the poem reads in part.<br />
</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">Many units would be ready for occupancy by December 2009, Nakheel said. Ms. Chana, now 38 years old, put 10% down on a $780,000 five-bedroom beachfront villa and, making plans to settle here, sold her house near London. "I believed in the Dubai story," she says.<br />
</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">In 2006, Sheik Mohammed consolidated a handful of government businesses into the Dubai World holding company, with Sultan Ahmed bin Sulayem as its leader. To head Nakheel, Mr. Sulayem, in turn, plucked Mr. O'Donnell from Australia, where he headed a fast-growing property fund.<br />
</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">Messrs. Sulayem and O'Donnell declined to comment for this article. A spokesman for Nakheel didn't respond to emailed questions, nor did a spokesman for Dubai's ruler.<br />
</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">Nakheel was on a roll, preparing to open the first of the palm developments, Palm Jumeirah, and planning the next two. In September 2006, at a separate, 914-acre residential community called Jumeirah Park, villas starting at $654,000 sold out in a day. International banks and local lenders offered loans for up to 97% of the purchase price.<br />
</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">To help finance all this construction, Mr. O'Donnell turned to the bond markets. An investor presentation in November 2006 called Dubai a "vantage access point" that would draw in businessmen from a wide swath of the greater Middle East, from India to Egypt. It projected that Dubai's population, then just under 1.2 million, would grow by two million in 14 years.<br />
</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">Investors rushed to buy a piece of Nakheel's Islamic bond, known as a sukuk. Swamped by demand, the borrower increased the issue's size to $3.5 billion.<br />
</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">That year, Dubai's real-estate sector raised $4.9 billion through bonds and syndicated loans, according to data provided by Thomson Reuters. Real-estate borrowing soared in 2008 to $30.4 billion.<br />
</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">In 2007, a Dubai World affiliate bought the Queen Elizabeth 2, unveiling plans to moor the ocean liner at the Palm Jumeirah and turn it into a luxury hotel.<br />
</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">By then, cracks in the real-estate market were forming. Officials had put few regulations on development that might limit the speculation. Now, concerned that the market had grown overheated, they did so. And in early 2008, authorities embarked on a series of high-profile corruption investigations at some big real-estate and finance firms.<br />
</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">But police, courts and the companies themselves disclosed little about the probes. As a result of the lack of transparency, the crackdown on corruption, instead of comforting investors, spooked them.<br />
</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">"There is a complete distrust by investors in the system," said Michael Diaz, a Miami-based attorney with offices in Dubai. Dubai and U.A.E. officials say they have made efforts to improve the legal system.<br />
</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">In April 2008, police detained the Lebanese-American chief executive of one of Dubai's top developers. The company didn't disclose the arrest until after it was reported in the press. He denied wrongdoing<br />
</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">A string of other detentions followed at some of Dubai's biggest companies, including Nakheel. A Nakheel spokesman didn't answer emailed questions about the probe.<br />
</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">Typical was the case of British developer Arthur Fitzwilliam, an affable 58-year-old polo fan from London. He had lived in Dubai for two decades, dabbling in real estate and other ventures. In 2004, he inked a deal to develop a 14.5 million-square-foot plot of desert acquired from a government-controlled company.<br />
</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">The Plantation Equestrian and Polo Club would have air-conditioned stables for 800 horses, four polo fields, facilities to host horse shows and a five-star hotel. Mr. Fitzwilliam sought partners to help finance the project. A British banker agreed to provide financing, in exchange for a 30% stake, Mr. Fitzwilliam said in an interview.<br />
</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">But in June 2008, authorities detained Mr. Fitzwilliam, the banker and one other. Then in September, Dubai Islamic Bank, or DIB, foreclosed on the land for the project. It also seized more than 100 polo ponies, Mr. Fitzwilliam said. For almost a year, he sat in jail before charges were filed. In March 2009, authorities charged seven men with scheming to defraud DIB, according to a bill of indictment filed by Dubai's public prosecutors. Mr. Fitzwilliam was accused of aiding the scheme.<br />
</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">Last month, he was transferred to a Dubai hospital to undergo tests for cancer. Four Dubai police officers stood guard outside his room.<br />
</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">Mr. Fitzwilliam denied any wrongdoing, as did the British banker he was working with. "I want a fair trial, and I'm prepared to go with the system," he says, shackled to his hospital bed. "Anyone who knows the case knows I'm not guilty."<br />
</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">A spokesman for the Dubai prosecutor's office didn't respond to requests for comment.<br />
</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">Amid the uncertainty surrounding the arrests, the crisis roiling the rest of the world was catching up with Dubai. When global credit markets froze up in late 2008, international investors stopped buying Dubai property. Some who had already bought stopped making installment payments. Nakheel and others shed staff and scrapped or delayed dozens of projects.<br />
</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">Last February, the troubles touched Ms. Chana's plan for a new home in Dubai. Nakheel halted work on the Palm Jebel Ali. Though dredging had been done, little construction had.<br />
</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">Ms. Chana says she has sunk about $550,000 into her still-unfinished home. Earlier this year, she flew to Dubai to try to salvage the investment. She is living in a hotel-apartment with her daughter, helping to organize other investors and petition Nakheel for rebates. "I just won't let this drop," she says. "It's become my obsession."<br />
</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">In October, Nakheel proposed that Jebel Ali investors transfer their contracts to property elsewhere that is already finished or close to it.<br />
</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">Simon Murphy bought a $240,000 ground-floor apartment in the Palm Jumeirah in 2002 and moved in five years later. He is now a "resident representative" to Nakheel, like being part of a homeowners board. He says that in recent weeks, Nakheel has cut back on maintenance, including tree trimming.<br />
</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">Since Dubai's debt-standstill announcement, Mr. Murphy says, many apartment residents have stopped paying management fees, typically around $700 a month. Nakheel declined to comment. "Most people fear that their money will go into the bottomless pit of Nakheel debt," Mr. Murphy says.<br />
</div><cite class="tagline" style="color: #333333; display: block; font-size: 1.3em; font-style: normal; font-weight: normal; margin-bottom: 1em; margin-left: 8px;">—Andrew Harrison and Maria Abi Habib contributed to this article.</cite><cite class="tagline" style="color: #333333; display: block; font-size: 1.3em; font-style: normal; font-weight: normal; margin-bottom: 1em; margin-left: 8px;"><br />
</cite><cite class="tagline" style="color: #333333; display: block; font-size: 1.3em; font-style: normal; font-weight: normal; margin-bottom: 1em; margin-left: 8px;">Source:WSJ<span class="Apple-style-span" style="color: black; font-size: 18px; line-height: normal;"></span></cite>Finance Indiahttp://www.blogger.com/profile/16294498878371639651noreply@blogger.com0tag:blogger.com,1999:blog-3997561941022976829.post-90645607485967395252009-11-17T19:05:00.000+05:302009-11-17T19:05:16.935+05:30Amendments in Taxability of Non-resident by CBDT15 November 2009 <br />
<br />
Lately, the Central Board of Direct Taxes or CBDT<br />
(which is the highest ranking executive authority for<br />
income taxes in India) has<b> withdrawn several of <br />
its circulars / instructions, which NRI4were relied<br />
upon by foreign companies and non resident taxpayers</b>.<br />
<br />
In July this year, the<b> CBDT withdrew its Instruction <br />
No. 1829 dt. 21 September 1989,</b> which relaxed <br />
the taxability of consortium of foreign companies<br />
engaged in execution of turnkey power projects. <br />
n yet another such instance, the CBDT has recently <br />
issued<b> Circular No. 7/2009 on 22 October 2009, <br />
withdrawing its following circulars:</b><br />
<br />
• Circular No. 23 dt. 23 July 1969,<br />
<br />
• Circular No. 163 dt. 29 May 1975; and<br />
<br />
• Circular No. 786 dt. 7 February 2000.<br />
<br />
The CBDT has cited that such <b>withdrawal is on account <br />
of their interpretation by some taxpayers, seeking to<br />
claim relief, which was not in accordance with the<br />
provisions of the Indian Income Tax Act (Act) or the<br />
intention behind these circulars. Circular No. 23 <br />
was issued by the CBDT to provide clarifications<br />
regarding taxability of foreign companies and <br />
non-residents, engaged in specified business activities.<br />
</b><br />
It provided that no tax shall be payable by non-residents<br />
in India, where they are engaged only in <br />
<b>principal-to-principal (P2P) sale of goods from <br />
abroad to Indian importer(s)</b>, or to their Indian <br />
subsidiary on an arm’s length basis, or in case of similar <br />
P2P sale of plant and machinery to Indian importers on<br />
installment basis. It also provided for non-taxability of <br />
certain other incomes such as commission received by <br />
<b>foreign agents (of Indian exporters)</b> operating in their<br />
own country, where the same is remitted directly <br />
outside India. Another important aspect clarified by<br />
this circular <b>(and subsequently, by Circular No. 163)</b><br />
was as regards the exemption of foreign companies<br />
having a procurement office or agency in India, <br />
where their operations were limited to purchase <br />
of goods in India for the purpose of export. <br />
<br />
<b>Circular 23</b> emphasized that the Act does not seek to tax <br />
the entire profits of a non-resident, where it carried out<br />
only a part of its business activities in India – and only<br />
that portion of the profits of a non resident is liable to<br />
tax in India, which can be reasonably attributed to the<br />
Indian operations of its business.<br />
<br />
<b>Yet another clarification was issued vide Circular No. 786, <br />
regarding taxability of export commission earned by non-resident agents.</b><br />
<br />
It was explained that where the services of such <br />
an agent are rendered outside India, its commission<br />
income (in respect of export of goods from India) cannot <br />
be taxed in India.<br />
<br />
Over the last 40 years, various judicial<br />
authorities and courts placed reliance on these circulars <br />
while pronouncing their judgments. One such landmark <br />
decision was passed by the<b> Supreme Court in the case <br />
of Morgan Stanley and Co. Inc. (292 ITR 416),</b> where it <br />
was held that if an Indian enterprise is remunerated on<br />
an arm’s length basis, no further income would be left <br />
to be attributed to the foreign enterprise and, therefore, <br />
such enterprise would not be liable to tax in India. <br />
<br />
Similarly, in the case of<b> SET Satellite (Singapore) Pte Ltd. <br />
(307 ITR 205) the Mumbai High Court, relying on the decision<br />
of Morgan Stanley and Co. Inc. and Circular No. 23, </b><br />
affirmed the aforesaid proposition.<br />
<br />
As a principle, circulars issued by<b> CBDT are binding on<br />
the income tax authorities. But in the aforesaid cases <br />
(and various others which are still pending for adjudication),<br />
the tax department challenged the applicability <br />
of the CBDT circulars before the courts. </b><br />
<br />
<b>Circular No. 7/2009 </b>also states that even when<b> Circular 23 was in force,</b><br />
the revenue authorities have argued that it does not actually apply <br />
to a particular case, or it cannot be interpreted to allow such a relief, <br />
which is not in accordance with the provisions of the Act or the <br />
intention behind the issue of the Circular. <br />
<br />
<b>Withdrawal of Circular 23 </b>is likely to boost and complement <br />
the case of revenue authorities in such other matters which <br />
are pending adjudication. With the <b>withdrawal of the <br />
Circular No. 23, taxpayers will be unable to place direct <br />
reliance on it.</b> It is important to note that such withdrawal <br />
does not necessarily mean that non-residents would be<br />
liable to tax in India, in situations described in these <br />
circulars. Even so, in the absence of these circulars, <br />
taxability of non-resident taxpayer needs to be evaluated <br />
independently having regard to the provisions of the Act, <br />
provisions of tax treaties and relevant judicial precedents.<br />
<br />
<b>Taxpayers may, therefore, need to evaluate and assess the<br />
impact of the withdrawal of the above circulars on their <br />
transactions.</b> It will be worthwhile to examine whether the <br />
judicial interpretation on this subject materially different <br />
from the interpretation adopted in the CBDT circular, and <br />
will the principles set out in the CBDT circular continue to <br />
apply in appropriate cases? The question is still open, <br />
whether such withdrawal is in line with the principle of <br />
justice, equity and good conscience, particularly when a <br />
number of cases are pending adjudication on the subject matter.<br />
<br />
It would <b>also be interesting to witness further developments <br />
on this issue, especially considering that a similar circular <br />
issued in 2004 (dealing with taxability of non-residents which <br />
outsource services to BPO units in India) continues to be in force <br />
and is not sought to be withdrawn.</b> Nonetheless such changes in <br />
domestic tax laws may cause doubt about Indian tax regime <br />
among non-resident tax payers. Considering the current <br />
economic scenario, the Government must try to build <br />
confidence in the stability of Indian tax regime and economic<br />
climate, particularly for foreign investors.Finance Indiahttp://www.blogger.com/profile/16294498878371639651noreply@blogger.com0tag:blogger.com,1999:blog-3997561941022976829.post-58404710901527576342009-11-17T18:50:00.000+05:302009-11-17T18:50:07.579+05:30US banks failure toll reaches 123 so far in 2009 <br />
15 November 2009, <br />
<br />
<br />
NEW YORK: The number of bank failures in the US has continued <br />
to increase with<b> a staggering 123 entities going out of business so far this year</b>,<br />
despite the economy witnessing some signs of recovery.<br />
<br />
The authorities shut down three banks -- <b>Orion Bank based<br />
in Naples, Pacific Coast National Bank in San Clemente <br />
and Century Bank F.S.B of Sarasota on November 13,<br />
taking the count of failed banks to 123 this year.</b><br />
<br />
The Federal Deposit Insurance Corp (FDIC), which was<br />
named the receiver of the failed banks, took over <br />
Orion Bank, with about USD 2.7 billion in assets and<br />
USD 2.1 billion in deposits and Century Bank with <br />
USD 728 million in assets and USD 631 million in deposits.<br />
<br />
Meanwhile, Pacific Coast National Bank was also<br />
shut down. It had USD 134.4 million in assets and<br />
USD 130.9 million in deposits.<br />
<br />
In addition, FDIC had entered into a purchase and <br />
assumption agreement with Iberia Bank of Lafayette, <br />
Louisiana, to assume all of the deposits of Century Bank, FSB.<br />
<br />
However, the maximum number of <b>collapses this year<br />
took place in July, when 24 banks were closed down,<br />
while 20 entities bite the dust last month.</b><br />
<br />
Despite the slowly improving economic situation, <br />
soaring unemployment rate have resulted in rising<br />
defaults, primarily impacting the small and medium banks.Finance Indiahttp://www.blogger.com/profile/16294498878371639651noreply@blogger.com0tag:blogger.com,1999:blog-3997561941022976829.post-18770959899815538332009-11-17T18:41:00.000+05:302009-11-17T18:41:01.187+05:30Frequently asked question on Annual Tax Statement (ATS)<b>What is the annual tax statement?</b><br />
<br />
The annual tax statement is a list that contains<br />
details about all the tax deducted at source (TDS) <br />
or tax collected at source (TCS) for a particular <br />
permanent account number. This amount may<br />
be deducted either by an employer in case of<br />
salaried individuals or by bank for fixed deposits, etc.<br />
<br />
The ATS will tell you the amount deducted as tax for <br />
your PAN in a particular year. So, if tax has been <br />
deducted by someone in 2008-09, the letter from<br />
TIN will state ATS for Assessment Year 2009-10<br />
(when you pay taxes for income earned between<br />
April 1, 2008 and March 31, 2009).<br />
<br />
TIN creates the statement based on the information <br />
submitted by the organisations who have deducted <br />
tax from the money paid to you. The information <br />
contained there has to be verified by you.<br />
<br />
<b>When do I get the statement?</b><br />
<br />
You would have received a similar mail from TIN <br />
of National Securities Depository Ltd (NSDL) earlier,<br />
when your company or bank filed its returns. <br />
Companies usually file returns beforeindividuals . <br />
So, if a company, your employer or your bank cuts tax<br />
before paying you ther amount due, the same would be<br />
mentioned in the company’s returns. The first ATS would <br />
have landed in your account during March-April 2009.<br />
<br />
The second one would be sent to you after you file <br />
your income-tax return, the deadline for which was July 31.<br />
This second statement would also containthe tax that you paid in excess to the one deducted by banks or employers.<br />
<br />
<b>What to do with the ATS?</b><br />
<br />
You need to check this document thoroughly and <br />
ensure that all the tax paid by you is reflected with<br />
an ‘F’ (meaning final) mentioned in the ’status’ column. <br />
The ATS has three parts — the tax deducted at source <br />
(TDS) in Part A and the tax collected at source (TCS) in<br />
Part B. When you deposit tax in a bank as self-assessment <br />
or advance tax via a challan, the same would be reflected in Part C. <br />
<br />
The status of the tax credit too would be mentioned besides<br />
the tax entry, using three letters — P for provisional, <br />
U for unmatched and F for final. <br />
<br />
A provisional status means the tax paid has been shown<br />
because the organisation that deducted your tax mentioned<br />
it in its returns. This would turn to final on verification. <br />
<br />
Thedetails you submit in your returns need to match with <br />
the ones submitted by your tax deductor or collector. <br />
<br />
Unmatched would mean the deductor has not yet deposited <br />
the taxes or has provided incorrect details of tax payment. <br />
Sometimes, a final status will not appear if the payment<br />
details in the bank don’t match the details of deposit in<br />
the TDS or TCS return, or if your employer has not yet <br />
submitted the tax cut from your salary.<br />
<b><br />
When and why was this exercise started?</b><br />
<br />
This mailer is being sent to most tax-payers since the <br />
past two years, when the income-tax department moved <br />
to a separate system of filing and submitting returns without<br />
any attachments such as Form 16, TDS certificates, etc. <br />
<br />
As there was no proof of tax deducted or collected,<br />
with the income-tax department, they were finding<br />
it difficult to process the returns. <br />
<br />
Hence,<b> the ATS was initiated to tell individuals about <br />
the tax credited under their permanent account number.</b><br />
It is claimed that the process would help the I-T department<br />
process returns faster like in the US, where refunds are given<br />
to theindividuals within two months’ time.<br />
<br />
This year, the income-tax department claims that between <br />
April 2009 and July 2009, they have given out refunds worth <br />
Rs 20,768 crore, which is 53% more than Rs 13,542 crore<br />
given out during the same period last year.<br />
<br />
<b>Why should you check the ATS?</b><br />
<br />
The statement will be referred to by the income-tax <br />
department while processing your income tax return. <br />
So, if the data provided by you doesn’t match that <br />
provided by deductors, then your return won’t be <br />
accepted until it is corrected. Only the deductor has <br />
the right to correct the ATS data, not the individual <br />
on whom the data has been entered. <br />
The ATS sent for this assessment year notes<br />
“The statement is being sent to enable you to<br />
take up the matter pertaining to any deficiencies<br />
in your statement with your deductor at the time <br />
of taking the TDS certificate( s) at the end of the <br />
financial year. This would also ensure that complete <br />
and correct tax credit is available to you at the time of<br />
filing of the income-tax return for the assessment year 2009-10.”<br />
<br />
<b>Why could there be discrepancies in the ATS?</b><br />
<br />
Your tax credit could be erroneous if the deductor<br />
or collector has not filed its quarterly TDS/TCS return,<br />
or has either not quoted or wrongly quoted your PAN <br />
in its return. It may also happen if the deductor has not<br />
paid the required TDS to the government account. <br />
If you have not provided your PANdetails, the <br />
employer or bank may not be able to submit your <br />
tax details as PAN is mandatory for submission.<br />
In case of any such errors, you must persuade the<br />
deductor to rectify the mistake.<br />
<br />
<b>If you don’t correct it…</b><br />
<br />
Tax credits would be given to you only <br />
on the basis of the tax statement. <br />
The income-tax department has stated: <br />
“The same (tax credit) should be verified before <br />
claiming tax credit and only the amount which<br />
pertains to you should be claimed.” NSDL <br />
will send you a fresh tax statement after the <br />
deductor corrects the data provided earlier.<br />
<b><br />
Whom to contact in case of queries?</b><br />
<br />
In case you are still have queries on the ATS, <br />
you can call 020-2721 8080 or contact NSDL <br />
via fax at 91-20-2721 8081 or email them at <br />
reply@nsdl.co. in or tininfo@nsdl. co.in<br />
<b><br />
Do you have to register to get ATS?</b><br />
<br />
If you have not been getting ATS and want register<br />
or see the tax credits given to you, you can register<br />
for the same. <br />
<br />
Details are available at www.incometaxindia.gov.in and www.tin-nsdl.com .Finance Indiahttp://www.blogger.com/profile/16294498878371639651noreply@blogger.com0tag:blogger.com,1999:blog-3997561941022976829.post-65106288270324000882009-11-15T18:02:00.000+05:302009-11-15T18:02:50.706+05:30Proposal to give FM power to approve foreign investments of up to Rs 1,200 croreNov 10, 2009 <br />
<br />
<br />
<b>The finance minister could approve foreign investments of up <br />
to Rs 1,200 crore (Rs 12 billion),</b> without going to the Cabinet, <br />
if a proposal of the Department of Industrial Policy and<br />
Promotion to fast-track clearance of foreign direct investment is accepted.<br />
<br />
At present, a project with investment of more than<br />
Rs 600 crore (6 billion) in sectors routed through <br />
the Foreign Investment Promotion Board has to<br />
be referred to the Cabinet Committee on Economic Affairs.<br />
<br />
“With the depreciation of the monetary value, it is<br />
considered appropriate to review the limit, which<br />
may <b>be revised to Rs 1,200 crore (12 billion),” <br />
according to a Cabinet note circulated by DIPP. <br />
The Rs 600-crore limit was set in 1996.</b><br />
<br />
DIPP has argued that the proposal would “enable<br />
FIPB to function more efficiently and reduce<br />
regulatory burden on foreign companies, leading <br />
to enhanced level of foreign investments”.<br />
<br />
<b>India received $15.3-billion FDI in the first half <br />
of this financial year. It is lower than <br />
the $17.2 billion received in the first half<br />
of 2008-09, </b>but the inflow is seen as healthy,<br />
given the global liquidity crunch.<br />
<br />
There is also a proposal that the threshold for <br />
CCEA approval be fixed for only the ‘foreign investment’ <br />
part of the project and not the total investment involved<br />
and its total cost.<br />
<br />
The committee of secretaries is meeting on<b> November 17 <br />
to review the country’s FDI policy, </b>and the DIPP proposal<br />
to enhance the finance minister’s power is likely to be<br />
discussed there.<br />
<b><br />
Under the present dispensation, the proposals relating to<br />
the sectors not under the automatic route go to the FIPB,</b><br />
which gives its recommendation to the finance ministerFinance Indiahttp://www.blogger.com/profile/16294498878371639651noreply@blogger.com0tag:blogger.com,1999:blog-3997561941022976829.post-64498025822789354582009-11-15T17:52:00.000+05:302009-11-15T17:52:38.060+05:30FM circulate discussion paper on Goods and Services Tax<table cellpadding="0" class="cf gJ"><tbody>
<tr><td class="gH"><div class="gK"><span alt="Wed, Nov 11, 2009 at 2:33 PM" class="g3" id=":w7" title="Wed, Nov 11, 2009 at 2:33 PM"></span> <span></span></div></td><td class="gH"><br />
</td></tr>
</tbody></table><div class="ii gt" id=":vp"><br />
By : Y.Prakash on 10 November 2009 <br />
<br />
<br />
With barely over four months left for the rollout of the goods and services tax, <br />
states on Tuesday proposed that the new tax regime should subsume most <br />
central indirect levies like excise and service tax as well as state taxes <br />
like VAT, making it easier for business and industry.<br />
<br />
<br />
The states released a discussion paper prepared by the Empowered<br />
Committee of their finance ministers in New Delhiwhich said the <br />
GST should also replace cesses and surcharges at both the central <br />
and state levels.<br />
<br />
The much-talked about discussion paper did not give any idea <br />
about rates and the items to be included in it.<br />
<br />
However, it made some specific suggestions such as alcohol <br />
and petroleum tax should be out of GST, while tobacco be<br />
included in it.<br />
<br />
<br />
The committee would take a final view on whether natural gas <br />
would be included in the GST after further deliberations, it said.<br />
<br />
Finance Minister Pranab Mukherjee, present on the occasion, <br />
made it clear that the discussion paper is by the states.<br />
<br />
<br />
"These are the views of the empowered committee of state <br />
finance ministers. We will also look into it," he said.<br />
<br />
Mukherjee evaded a direct reply to a query on whether GST <br />
would be introduced as scheduled. Some states like Madhya <br />
Pradesh, Gujarat and Haryana have asked for a delay in the<br />
GST introduction.<br />
<br />
"So far as dates are concerned, we are working on it," <br />
Mukherjee said, when asked about whether GST would <br />
be rolled out from April one, 2010.<br />
<br />
Doubts over the GST introduction has lingered for sometime<br />
now, and Haryana on Tuesday came out with an official <br />
statement saying the Centre should defer the rollout by a year.<br />
<br />
The state also asked for compensation for the loss of revenue<br />
of Rs 600 crore on account of the purchase tax levied on <br />
foodgrains like wheat and paddy.<br />
<br />
Gujarat has said that time available to introduce GST from<br />
the proposed date is not adquate and the time frame need to be recast.<br />
<br />
<br />
The discussion paper suggests that among central taxes, <br />
additional excise duty, additional customs duty, and special<br />
additional duty be replaced by the GST.<br />
<br />
State taxes like entertainment tax, except for the one levied <br />
by local bodies, luxury tax, taxes on lottery, entry tax except <br />
octroi are proposed to be out once the new tax regime is introduced.<br />
<br />
It proposed that exports from SEZs would not attract GST, <br />
but sales from SEZ to domestic markets will draw the tax.<br />
<br />
It also suggests that industrial incentives in the form of tax<br />
exemptions should be converted into cash refund schemes. </div>Finance Indiahttp://www.blogger.com/profile/16294498878371639651noreply@blogger.com3tag:blogger.com,1999:blog-3997561941022976829.post-61443331167484127642009-11-15T17:20:00.002+05:302009-11-15T17:20:39.364+05:30Insurance against Tax Liability in near Future12 November 2009 <br />
<br />
In a bid to avoid unpleasant surprises, private equity players and<br />
companies are demanding covers against changing tax rules. <br />
This has forced insurers in India to file for products like a tax <br />
liability cover, along with warranty and indemnity covers.<br />
<br />
insurance-2Insurers say the demand for such a cover shot up<br />
after the Vodafone tax case where the telecom major <br />
was subjected to a capital gains tax of $2 billion for<br />
buying $11.2 billion worth shares of Hutchison.<br />
<br />
“There is a huge demand from private equity players<br />
and companies going global. In another three-six months, <br />
we expect to see these products in India,” said Marsh <br />
Managing Director and country head Sanjay Kedia.<br />
<br />
He expects deal sizes to be in the range of $4-150 million.<br />
<br />
Since these will be mega-risk policies, they will be mostly <br />
driven by reinsurance. In such cases, Indian insurance <br />
companies place 10 per cent of the risk with the national <br />
reinsurer, passing off the rest to international reinsurers. <br />
The premium will vary from 1 per cent to 5 per cent of the sum assured.<br />
<br />
“Underwriting risks arising from changes in the tax structure <br />
of a particular country is not easy. We have to see if the<br />
insurance regulator allows these products,” said a senior <br />
executive of a large private insurance company.Finance Indiahttp://www.blogger.com/profile/16294498878371639651noreply@blogger.com0tag:blogger.com,1999:blog-3997561941022976829.post-27541773250016872462009-11-14T18:16:00.000+05:302009-11-14T18:16:04.991+05:30Outsourcing jobs arrive in India’s rural areasNovember 13th, 2009<br />
<br />
BAGEPALLI - Seventy percent of Indians live in rural areas like<br />
<b> Bagepalli in Karnataka's Chikballapur district,</b> and everyone<br />
knows that India has been struggling unsuccessfully with the <br />
question of how to lift this vast underclass out of poverty.<br />
<br />
While some economists argue that India still needs rapid<br />
urbanization if it is ever to become a major economic power,<br />
the founders of Rural Shores, have taken the bull by the horns<br />
and set up outsourcing offices in rural areas, believing it makes <br />
more sense to take jobs to where the people are.<br />
<br />
The New York Times quotes said<b> G. Srinivasan, the company's <br />
director, as saying: "We thought, 'Why not take the jobs to the<br />
village? There is a lot of talent there, and we can train them to do the job.</b>"<br />
<br />
Rural India has been often seen as a dead weight on the Indian <br />
economy, a bastion of backwardness embodied by the frequent <br />
suicides of farmers eking out livings from arid fields, dependent<br />
upon fickle monsoons, but now according to the <b>NYT, Indian and <br />
foreign companies have come to see India's backwaters as an<br />
untapped market </b>for relatively inexpensive goods like low-tech <br />
cell phones, kitchen gadgets and cheap motorcycles.<br />
<br />
Some businesses have begun looking to rural India for an<br />
untapped pool of eager and motivated office workers.<br />
<br />
For instance, Rural Shores has hired about 100 young people, <br />
most of them high school graduates who have completed some <br />
college, all of them from rural areas around this small town. <br />
<b>The company has three centres now, but it aims to open<br />
500 centres across India in the next five years.</b><br />
<br />
Most of the center's employees are the first members of their <br />
families to have office jobs. They speak halting English at best,<br />
but have enough skill with the language to do basic data entry, <br />
read forms and even write simple e-mail messages, says the NYT.<br />
<br />
With much lower rent and wages than other similar centers in <br />
cities, the company says it can do the same jobs as many outsourcing <br />
companies at half the price.<br />
<br />
<b>A Bangalore office worker with skills similar to those <br />
of workers here commands about 7,000 rupees a month <br />
(150 dollars), Srinivasan says.</b><br />
<br />
In small towns and villages, <b>a minimum-wage salary of <br />
about 60 dollars a month is considered excellent.</b><br />
<br />
<b>Twenty-four-year-old R. Saicharan, a business school<br />
graduate from Chennai, described the work that he<br />
does as frenetic at best.</b><br />
<br />
He says that he and other employees at<b> Rural Shores <br />
process 13,000 time sheets by 7 p.m. every day.</b><br />
<br />
<b>The time sheets belong to American truck drivers, <br />
and Rural Shores has been hired as a subcontractor <br />
for a larger outsourcing company in Bangalore to do <br />
the data entry portion of the work.</b><br />
<br />
The race is almost always on to earn bonuses for <br />
being the fastest typist.<br />
<br />
A majority of the workers are the children of farmers <br />
and often the first generation to finish high school. <br />
For many, <b>a job at an outsourcing center is an <br />
unimaginable opportunity</b>, says NYT.Finance Indiahttp://www.blogger.com/profile/16294498878371639651noreply@blogger.com0tag:blogger.com,1999:blog-3997561941022976829.post-1751797264718933342009-11-14T18:06:00.000+05:302009-11-14T18:06:49.450+05:30Jersey returns to India to promote finance industryMumbai, Nov 13 : A Jersey Finance delegation, is heading to India <br />
later this month to build on the contacts established during previous<br />
visits and to promote the benefits of doing business with Jersey.<br />
<br />
<b>Jersey Finance is organising the visit and will host a range of formal<br />
meetings in both Mumbai and New Delhi, seeking to develop <br />
growing governmental, regulatory and commercial ties with India. </b><br />
Senator Philip Ozouf, Treasury Minister, and John Harris, Director<br />
General of the JFSC, will be among the delegation as well as many <br />
leading Jersey practitioners.<br />
<br />
During the <b>five day visit</b>, Jersey Finance will highlight the many <br />
benefits Jersey has to offer and, in particular, attention will be <br />
drawn to the recent series of international endorsements that<br />
Jersey has received from bodies such as the OECD and IMF <br />
regarding its high standards of regulation and assessment as <br />
a leading cooperative and transparent international finance centre.<br />
<br />
<b>A number of leading finance professionals from Jersey will present <br />
a series of subjects</b> including: how the new Foundations Law <br />
is attractive to high net worth families and non-resident Indians; <br />
how the use of Jersey investment vehicles can assist both with inward<br />
investment and with Indian businesses seeking to expand internationally; <br />
and how <b>Jersey’s expertise, regulatory and legal framework can support<br />
international investors seeking to buy overseas property, <br />
particularly in London.</b><br />
<br />
<b>Geoff Cook, Chief Executive, Jersey Finance </b>commented:<br />
“I am delighted that we have representatives from Jersey’s<br />
Government and the financial services regulator, alongside<br />
many finance professionals from Jersey keen to develop their <br />
business links with colleagues in India. The formal presentations<br />
provide us with an opportunity to meet and network with a diverse<br />
range of industry leaders and senior practitioners. <br />
<br />
We intend to advise on the recent independent endorsement <br />
Jersey has obtained regarding the high standards of our <br />
regulatory regime and offer a technical summary of the<br />
jurisdiction’s breadth of expertise and how this is relevant <br />
to the Indian market.”<br />
<br />
In addition to the presentations and receptions, there will be <br />
meetings between Government officials, regulators and <br />
important trade organisations. Members of the delegation <br />
will also<b> explore trading opportunities and regulatory co-operation <br />
and alignment with the Indian Government and regulatory officials.</b><br />
<br />
There will be an opportunity to progress business opportunities<br />
in one-to-one meetings between Jersey representatives and <br />
Indian business leaders and private clients.Finance Indiahttp://www.blogger.com/profile/16294498878371639651noreply@blogger.com0