You are on page 1of 18

Chartered Accountants’ Communiqué

A NEWSLETTER BY PRADIP KAPASI & CO.

TRUST SINCERITY
FEBRUARY, 2011 Vol. No. 99
EFFICIENCY

ACCURACY HONESTY
EDITORS’ DESK
CONTENTS Dear Readers,
A great beginning of a new year? Politics over onions; scams in succession; unprecedented
Corridors of the Court inflation; hot money plunder and to top it all incompetent and selfish leaders tainting the whole
nation with their perversity, failing to lead and as usual trying to mislead the country. A truly
bizarre first month of the Year. Monetary and fiscal policies have been accommodative and the
Query Counter real interest rates have remained low, but, despite some attempts at fiscal consolidation, the fiscal
deficit is alarmingly high. There are other near-time challenges; the all time high inflation being
North Block the most significant one.
The IMF continues to expect India's growth prospects to remain strong over the medium term.
Rapid growth is expected to be supported by high investment and productivity gains. Sustaining
Investments rapid growth over the medium term will depend, among others, on efforts to facilitate
infrastructure investment such as deepening the corporate bond market and lowering the cost of
Tax Beyond Borders doing business. Few will disagree with the IMF's view that improving social outcomes and
strengthening infrastructure are the two key pillars of a strategy to achieve rapid and inclusive
growth in India.
Money Matters The other positive for the first month of the year is that foreign direct investment commitments
totaling $450 billion, equaling nearly one-third of India’s GDP are signed alone in Gujarat. It is the
Around the World time to celebrate something that is fast becoming undeniable: the emergence of Gujarat as the
economic powerhouse of India. The reason Gujarat has registered the highest, double-digit GDP
growth in the past decade owes much to the targeted, business-friendly approach of its
Funny Bone government. Four features stand out; the first is quick decision-making what is dubbed as the “red
carpet, not red tape” approach, the second is the near-absence of political corruption at the top; the
Dates to remember third is social peace and finally, the “minimum government and maximum governance”. The state
government has concentrated on creating the infrastructure for growth and left it to the private
sector to get on with the job of actual wealth creation.
CAC Exclusive Focus on these and India will be ‘Mahan’.

Editorial Board: Nina Kapasi Sonam Sangoi Naju Shah

DISCLAIMER
Every effort has been made to ensure accuracy in the information. The publishers do not hold themselves
responsible for errors that may have arisen. Please take professional advice for further clarification.

STRICTLY FOR PRIVATE CIRCULATION
BY INVITATION

330 ITR 239 (SC) h .7. 288.57 crores.194C.58 crores and credited the said sum to the revaluation reserve. CIT vs.288.11 crores transferred from the reserves had to be excluded and the depreciation charge had to be considered at Rs. the assessee revalued its fixed assets by Rs. clause (i) of the Explanation to s.58 crores or Rs. the withdrawal from the reserve should be excluded from the P&L A/c in terms of clause (i) of the Explanation to s. the assessee debited Rs. The argument that creation of the reserve did not impact the profits of that year is also not acceptable because though the profit was not impacted. Tribunal & High Court rejected the claim of the assessee. 127. the book profits had been increased. the Supreme Court remanded matter back to the AO for examination by technical experts for determination whether such processes require human intervention or the same is fully automatic. 26. the amount of Rs.11 crores from revaluation reserve & set it off against the depreciation resulting in a net depreciation charge of Rs. Indo Rama Synthetics (I) Ltd.11 crores had not gone to increase the book profits there is no question of reducing the amount transferred from such revaluation reserves to the P & L Account. THE P&L ACCOUNT WAS NOT DEBITED In AY 2000-01. 330 ITR 363 (SC) h MATTERS REQUIRING EXAMINATION BY TECHNICAL EXPERTS: DEPARTMENT OUGHT TO EXAMINE TECHNICAL EXPERTS On the question whether interconnect/access/port charges paid by Bharti Cellular to BSNL are liable for TDS u/s. Further. The AO.26. the assessee credited the amount to the extent of the additional depreciation from the revaluation reserve to present a more healthy balance sheet to its shareholders enabling the assessee possibly to pay out a good dividend.. The Supreme Court said that the Department should not proceed only by the contracts placed before the officers. The Department should examine technical experts so that the matters could be disposed off expeditiously. In computing the book profits u/s 115JB. Bharti Cellular Ltd. As in the year of creation of the reserves (AY 2000-01). the assessee claimed that the amount of Rs.101.45 crores.18. v. Time limit of four months were granted to the tax department for obtaining technical experts’ report. Hutchisson Essar Telecom Ltd. 26.57 crores towards depreciation and in accordance with Accounting Standard AS-10 & AS-6 transferred Rs.Corridors of the Court AMOUNT WITHDRAWN FROM REVALUATION RESERVE & CREDITED TO P&L ACCOUNT CANNOT BE REDUCED FROM BOOK PROFIT EVEN IF IN THE YEAR OF CREATION OF RESERVE. CIT (A). depreciation was impacted and by the inter play of the balance sheet items with P&L A/c the assessee had projected a loss of Rs. 115JB(2) permits the net profit to be reduced by the amount withdrawn from reserves only if in the year of creation of the reserves.38 crores (before transfer from reserves) as profit of Rs. In AY 2001-02.127. CIT. On appeal to the Supreme Court it was held dismissing the appeal that the assessee’s argument that as the creation of the revaluation reserve was not debited to the P&L A/c. 115JB(2) read with the Proviso is not acceptable because had the assessee deducted the full depreciation from the profit before depreciation in AY 2001-02 it would have shown a loss and could not have paid the dividends. Therefore.73 crores.

Since no fresh facts had been brought to light. Promoters and Developers Pvt.Y.) h FINDING OF FACTS CANNOT BE SET ASIDE UNLESS PERVERSE The assessee had received rental income in respect of two properties which were assessed by the CIT(A) as business income. It was held dismissing the appeal that the assessee was the owner of one of the properties. CIT v. There was no reason to dislodge the concurrent findings of fact. It noted that the business of the assessee. The fact that the minimum guarantee amount was stipulated in the agreement to ensure the minimum returns of the investment made by the assessee could as well be a business decision as it could be a lease agreement. which was indubitably a plausible view. in respect of which it had invested a sum of Rs. was also running of restaurants. apart from dealing in properties. 10A. 330 ITR 291 (Del) h . contract or any other agreement or construct. The assessee is also entitled to exemption u/s. that the premises had been earlier utilized to run a store selling garments. It was also held that gain from fluctuation in foreign currency realized within the stipulated period forms a part of the sale proceeds and is directly related with the export activities and as such gain should be considered as income derived from export activities and is eligible for exemption under section 10A. Gem Plus Jewellery India Ltd 330 ITR 175 (Bom. The thinking of the Tribunal was largely influenced by the manner in which the entire building had been utilized. improve. the Tribunal had made an in-depth study of the agreements as also the use to which the entire building had been put. develop. 1997-98 to 2000-01 the receipts were accepted as business income. as there was no perversity in the conclusion arrived at. D. houses. farm houses. sell. In respect of the other property. 1. Ltd. that the assessee’s purpose was to commercially exploit the business asset. rent. the consistency rules had been applied.3 crores for renovations. 10A with reference to addition of disallowance of PF/ESIC payments as the plain consequence of the disallowance and add back made by the AO is an increase in business profits of the assessee.S. These concurrent findings of fact were not perverse and to the contrary were relevant. The CIT(A) as well as the Tribunal had taken note of the fact that the assessee had also been in the restaurant business. in the year in which export took place. The prominent object of the assessee was to purchase. The assessee had taken a decision to exploit its business asset by entering into an arrangement related to the restaurant business. take in exchange or on lease or otherwise acquire lands. There was no error in this conclusion. CIT v. etc and let them out on lease. exchange mortgage the above mentioned assets. Even after scrutiny carried out for A. 10A In this case it was held by the Bombay High Court that freight and insurance charges do not have an element of turnover and are to be excluded from the total turnover for the purpose of computing exemption under section .FREIGHT AND INSURANCE TO BE EXCLUDED FROM THE TOTAL TURNOVER FOR COMPUTING EXEMPTION U/S.

sales. The retrenchment compensation paid to the workmen was therefore an allowable deduction within the meaning of section 37(1) since there was no closure of the business. The Tribunal deleted the penalty on the ground that the explanation given by the assessee was bona fide and all material facts for computing the income were disclosed. Pfizer Ltd. During the year under consideration. On appeal it was held that there had been no closure of the business and the payments which were made to the workers were qualified for a deduction u/s. 330 ITR 173 (All. which had been confirmed up till the Tribunal. 37 CIT v. pulses and rice and also carried on business of purchase and sale of bhusi. Ganesh Rice Mills. The Tribunal observed that though the assessee carried out manufacturing activity at various locations. finance and human resources were centralized with the head office. 271(1)(c) of the Income Tax Act. 2000-01 the assessee made a payment to the employees which comprised of retrenchment compensation under section 25F of the Industrial Disputes Act. administration and fund. Penalty was imposed u/s. 1947 and payments on account of provident fund. the purchases from three parties were found to be bogus by the assessing officer. The purchases were added in the declared income. 271(1)(C) CANNOT BE IMPOSED IF ASSESSEE HAS EXPLAINED THE REASON FOR DISPARITY BETWEEN RETURNED INCOME AND ASSESSED INCOME The assessee-firm was engaged in milling of grams. On enquiry. marketing distribution. the assessee had shown purchases of chuni/bhusi of the value of Rs. all other support functions such as purchase.Y. 89. chuni.273 from five parties. It was held that the explanation given by the assessee was bona fide and the Tribunal had given reasons for deleting the penalty. 330 ITR 62 (Bom) h PENALTY U/S. CIT v. etc.) h  HOME . For the A. 1961. a common business organization.. The closure of one unit did not involve the closure of the business. amongst others. The Tribunal entered a finding of fact that there was inter-dependence and a unity of control between the three units established by the existence of common management.RETRENCHMENT BENEFIT PAID TO WORKERS ON CLOSURE OF UNIT IS ALLOWABLE AS EXPENSE The assessee was engaged in the manufacture of pharmaceuticals and animal health products. The Tribunal held that the bona fides were further established by the purchase rates in the case of the five parties in question. gratuity and leave encashment which was disallowed by the assessing officer.

3. Rs. Veeru without transferring the ownership of these debentures. h Question: Mr. 64(1)(viii). h Question: Mrs. Tendulkar posses technical skill and knowledge for his performance.000. an individual is assessable in respect of remuneration of spouse if the individual has substantial interest in a concern and the spouse of the individual is employed in the above mentioned concern. 64(1)(ii). Query Counter PROVISIONS RELATING TO CLUBBING OF INCOME Question: Jai owns 4000 9% Debentures of Jai-Veeru Ltd of Rs. Tendulkar shall be taxable in the hands of Mrs. although during 2009-10 interest of Rs. Tendulkar is a partner having 25% share in Knelogolf & Co. Mr. 60. as he has transferred income without transferring the ownership of the asset. 50. 2009 he transfers interest income to his friend. 50. In whose hands will the interest income be taxable. AB transfers a film studio to an association of persons subject to the condition that out of the annual income (i. such income shall not be clubbed but will be taxed in his hands.000 will be received by Veeru. Please let us know tax implications of remuneration earned by Mr. 50. it is taxable in the hands of Jai. 100 each which fetches annual interest is Rs.e. Rs. Tendulkar. if Mr. Answer: In accordance with the provisions of s. Answer: Under s.000 will be included in the income of Mr. However. 36.00. Please discuss the tax implications of Rs. Tendulkar is employed as an officer and paid remuneration for such work. an individual is assessable in respect of income from assets transferred to a person for the benefit of son’s wife. in this case salary income of Mr. On April 1.000 shall be utilized for the benefit of his daughter-in-law. AB. Applying the provisions in the said case.000).000? Answer: As per the provisions of s. a sum of Rs. h .36. Hence. Tendulkar.

500. 64(1)(iv) an individual is assessable in respect of income from assets transferred to spouse. B will be taxed in the hands of Mrs. h Question: A made a gift of Rs. As regards. During the year ending March 31. A after excluding exempted amount of Rs.500. She rents the same when not used by her for her holidays. her interest income. But. 50. Ambani on her birthday. the income will not be clubbed with her parent’s income but will be taxed as her individual income. A after excluding exempted amount of Rs. 1. Hence in the above case. Ambani gifts yatch to Mrs. She is also having regular interest income from post office.000 to the wife of his brother B for the purchase of a house by her and simultaneously B transferred certain debentures of the value of Rs. B and income arising to son of A will be taxable in the hands of A or Mrs. h  HOME .000 while the amount of interest paid on the debenture was Rs. Determine in whose hands such income shall be taxable? Answer: As Music concert fees have been received by Aishwarya by exercising her individual skill and talent. Who will be liable to tax in respect of such rental income? Answer: In accordance with the provisions of s. If the transfer is considered as cross transfer.Question: Mr. Where the marriage of the parents does not subsist. 50. h Question: Baby Aishwarya. a minor earns performance fees for conducting Music concert at Delhi.000 owned by him to A’s minor son. State in whose hands these two items of income will be taxed. 2010. if the above transfer is not considered as cross transfer. Answer: In the given case. Ambani. rental income from such yatch will be included in the income of Mr.000. 5. then income arising to Mrs. 3. The income from such asset shall be deemed to be the income of the taxpayer who has transferred the asset. there is no direct transfer of asset by A to his minor son and by B to his wife. the same will be included in the income of that parent whose total income [excluding such income ] is greater. 1. B will be taxed in the hands of B and income arising to son of A will be taxable in the hands of A or Mrs. the income of the minor will be includible in the income of that parent who maintains the minor child in the relevant previous year. then income arising to Mrs. the chargeable income from the house property was Rs.

203/27/2010/IT (A-II)]. 01. 35(1) (ii) NOTIFICATION NO. NOTIFICATION NO. North Block SECTION 80-IB OF THE INCOME-TAX ACT. With effect from 01st March. 1961 from Assessment Year 2009-10 onwards in the category of ‘Other Institution’ partly engaged in Research activities and the sums paid to the said institution shall be utilized for scientific research. 2011.03. 1961 . h CHANGES TO PAYPAL USER AGREEMENT FOR INDIA w. TPS-1893/973/CR-49/93A/UD-13. Centre for Power Metallurgy and New materials. and Export-related payments for goods and services into your PayPal account may not exceed US$500 per transaction. dated the 26-2-2004.2011. DATED 19-1-2011 The Government of India hereby notifies International Advanced Research. 2004 and before 31st day of March. 1966 and published vide notification No. Paypal Account holders in India are required to comply with requirements set out in the notification of the Reserve Bank of India governing the processing and settlement of export-related receipts facilitated by online payment gateways. 1961 (43 of 1961). the Board hereby notifies. 01/2011 [F.NO. Any balance in and all future payments into your Paypal Account may not be used to buy goods or services and must be transferred to your bank account in India within 7 days from the receipt of confirmation from the buyer in respect of the goods or services. This notification shall be deemed to apply to projects approved by a local authority under the aforesaid scheme on or after the 1st day of April. NO.e. as a scheme for the purposes of the said section subject to the condition that any amendment to the Scheme hereby notified shall be required to be re-notified by the Central Board of Direct Taxes. Hyderabad for the purpose of clause (ii) of sub-section (1) of Section 35 of the Income Tax Act. 04/2011 [F. 2008 thereby making the incomes arising from such projects eligible for deduction under sub-section (10) of section 80-IB from the assessment year 2005-06 onwards.f. h .SCHEME FOR SLUM REDEVELOPMENT. the Scheme for slum redevelopment prepared by the Maharashtra Government under sub-section (2) of section 37 of the Maharashtra Regional Town Planning Act. 178/35/2008-IT (A-I)] DATED 5-1-2011 In exercise of the powers conferred by clauses (a) and (b) of sub-section (10) of section 80-IB of the Income-tax Act. h SCIENTIFIC RESEARCH EXPENDITURE u/s.

Cenvat credit taken and other such parameters related to assessment. h  HOME .01. floated by various insurance companies as specified by State Governments. under varying terms of insurance. 14. 18. 2004 can be invoked against such errant assessees. 267/117/2010-CX8.01. to extend risk cover to certain specified target populations. are covered by the subject service tax exemption. Since a description of JPAP Policy is not available in the relevant notification. DT. It is hereby notified that a Scrutiny of returns is necessary and it includes identifying the assessees who have not submitted the prescribed returns on time. h SERVICE TAX CLARIFICATION REGARDING SERVICE TAX EXEMPTION FOR JANATA PERSONAL ACCIDENT POLICY (JPAP) – CIRCULAR NO.CENTRAL EXCISE DUTY ENFORCEMENT OF PENAL PROVISIONS FOR NON-SUBMISSIONS OF RETUNS DEPARTMENTAL INSTRUCTION F NO. In this regards.2011 In the context of customized group insurance policy schemes known as Janta Perasonal Accident Policy (JPAP). it is clarified that customized group JPAP insurance schemes floated by various insurance companies as per the specifications of State Governments concerned. that many assessees are not filing the returns at all and some others are submitting the same after long delays under the Central Excise Law which enable the department to verify the duty payment. JPAP offers a vehicle to fulfil the ‘rural or social sector’ obligation prescribed by the Insurance Regulatory Development Authority (IRDA). 2002 and Rule 15A of CENVAT Credit Rules. it is also pointed out that penalty under Rule 27 of Central Excise Rules. 133/2/2011-ST DT. to extend risk cover to target populations.2011 It has been brought to the notice of the Board. and taking follow-up action to ensure that these returns are filed at prescribed periodicity. and to fulfil the prescribed ‘rural or social sector’ obligation.

Employees of the government sector already get a pension. although contributions and returns are tax free. the amount would be taxed at the time of withdrawal. NEW PENSION SCHEME The NPS was introduced by the government last year to give people a way to get a pension during their old age. a Tier-II withdrawable savings account with no tax advantages (and subject to certain minimum contributions per year into the Tier-I account) Tier-I: Mandatory non-withdrawable Pension Account. a Tier-I non-withdrawable and tax deferred pension account 2. Mandatory for the central Government employees who have joined services on or after 1st January 2004.accounts created by individual members: 1. No contribution will be made by the Government under the Tier-II account for the employees who have joined NPS. their financial security for old age when they no longer work. Annual record keeping as well as fund management charges are lowest than any other investment options. All those who join up would get a Permanent Retirement Account (PRA). Tier–II : Voluntary withdrawable Savings Account. Tax Treatment: Money withdrawn from the scheme will continue to make it liable for tax. This is the lowest cost self financing Social Security tool. . This pension system will offer two types of sub. during their work life. Known as the exempt-exempt-taxed (EET) regime. Withdrawals from the Tier-I account will be permitted only at retirement. The Employees will Contribute 10% of salary & DA and matching 10% will be contributed by the Government to Tier-I Pension account of the employee. Wonderland of Investments In this section. NPS will not attract any Security Transaction Tax (STT) and Dividend Distribution Tax (DDT). It is a system where individuals fund. we have discussed the basic structure of New Pension Scheme (NPS). which can be accessed online and through so-called points of presence (PoPs). so this scheme was introduced as a social security measure that enables people from the unorganized sector to draw a pension as well. WORKING OF NPS Each individual who joins this new pension system will be allotted a unique personal retirement account (PRA) number. With this the yield can be increased to the extent STT and DDT.

He will be able to select a professional Pension Fund Manager (PFM) from a pool of competing pension fund managers registered with the PFRDA. The minimum amount to be contributed in a year is Rs 6. On retirement. IDFC. UTI Asset Management and Reliance Capital. A subscriber can shift his pension account from one PoP to another. ICICI. Kotak Mahindra. receiving account or system information and for obtaining retirement benefits. WHERE CAN PEOPLE SIGN UP FOR NPS? People can subscribe to the scheme from any of 285 PoPs across the country. NPS is available for people aged between 18 years and 55 years. This PRA will stay with the member regardless of where he stays or works including spells of unemployment. These are run by 17 banks — SBI and its associates. the member will be able to allocate his savings across multiple PFMs and schemes.000. Reliance Capital. h  HOME . consolidated statements of his PRA which will reflect his notional wealth in his PRA across various products and PFMs. Citibank. changes in jobs or location. LIC. Each member will receive periodic. This will be the sum total of his contributions at that point in time and the returns that these contributions have earned. Oriental Bank of Commerce. to be paid at least four times in a year. A member will have complete control on how his contributions to his PRA are managed. South Indian Bank. Kotak Mahindra. accreting new contributions. He will also be able to seamlessly switch his savings between fund managers and products. If he desires. SBI and UTI. Each PFM in this system will offer a choice of three simple and standard pension schemes with different risk and return profiles. The minimum amount per contribution is Rs 500. his savings will be directed to a 'Default' scheme. Union Bank of India — and four other financial entities. IDBI.In this system. a member will accrete savings towards his retirement into his PRA through his working life. He will be able to use a nation-wide network of competing pension service providers (POPs) to access this system or for opening a PRA. IL&FS. Allahabad Bank. Subscribers can choose from six fund managers — ICICI Prudential. the member will be able to use a part of the savings accumulated over the years in his Tier-I PRA to buy an annuity which will provide him and his spouse a pension for the rest of their lives. self-employment. If a member is unable to select a PFM. Axis.

there is a lurking doubt that they may also represent tainted and illicit funds obtained as a result of money laundering. these funds without any doubt represent hot money involving for sure the money laundering. dealing in arms and narcotics. Different views are expressed about possibility gathering such information by the Government of India with different objectives in mind. The issue of bringing it in public domain though important is surely secondary. This power is obtained by Article 26 of the India Switzerland DTAA which provides for Exchange of Information. smuggling. smuggling. This Swedish Banking system has been traditionally shrouded in secrecy and has been riding strongly on the guarantee of confidentiality. The real issue of the great National Importance in our opinion is about bringing back these funds to the Country of India where it really belongs. At the same time the Government of Switzerland has agreed with several countries including India to part with the requested information of account holders in cases involved in evasion of taxes by the residents of other countries. The present debate is mainly about the information from Swizz Banks directly or through the Government of Switzerland. The ministry of finance appears to be of the view that the information gathered cannot be made public while the Supreme Court and the other knowledgeable persons seem to be thinking otherwise. Let there not be any doubt in the minds of the Ministry of Finance and the other superior functionaries of the Government of India that there are no agreements or protocols with any Government executed by the Government of India which prevent them form accessing information about hot money. The confidentiality if any may at the most be restricted to tax evasion. h  HOME . dealing in arms and narcotics. Tax beyond borders The whole of India and perhaps a part of the Switzerland is engrossed in discussing the possibility of bringing the unaccounted money belonging to Indian citizens and stashed in the numbered accounts with numerous Swizz Banks. This is sought to be achieved by executing the Double Tax Avoidance Agreement (DTAA). There is no provision whatsoever in respect of the hot illicit money which can surely be brought in under the UN Charter and several International conventions. there is no doubt that the Government of India can collect information in places of tax evasion. They may also represent terrorist funding. Accordingly. bringing such money and making such information public. Let us not forget and overlook the important aspect of the whole episode. All efforts must be made to bring the funds to India without getting embroiled into unnecessary controversies. The issue that is unnecessarily being debated in India is about the right of the Government to make such information available to the public. The issue that is been examined by one and all is about collecting the information about the account holder and bringing the funds back to the people of India. While there is no doubt that this monies are unaccounted and untaxed deposits.

5% for FY-2011. but that turned out to be too little. where wholesale price index (WPI) in December rose to 8. Cash reserve ratio. In a bid to discourage premature withdrawal of money from fixed deposit accounts. h  HOME . Subbarao raised policy rates six times in 2010 by 25 basis points each. RBI also raised March inflation forecast to 7% from 5. Anil Ambani. his predecessor YV Reddy often shocked the markets. reverse repo. The government is being blamed by Opposition for failing to save the majority from price increases.5% and warned that higher food prices could become entrenched if steps to boost output are not taken.43% and October gains were raised to 9. REVERSE REPO RATES BY 25 BPS The Reserve Bank of India (RBI) resumed its rate hike cycle at its quarterly monetary policy review as soaring inflation stalks Asia's third-largest economy. are not allowed to invest in publicly-listed securities till Dec 2011. It has been the most aggressive major central bank in Asia this year. According to SEBI order. be ready to pay a penalty of as much as one per cent of the investment if money is withdrawn before completion of the maturity period.50%. the continuous rise in interest rates over recent months have pushed the cost of funds much higher for the banks and premature withdrawal from deposit accounts has put unnecessary pressure on the banks' liquidity position. RBI has left it to banks to decide whether they want to impose any penalty on premature closure of fixed deposits.12%. less 1 per cent penalty.7 percent. the proportion of deposits that banks have to keep aside. h RBI HIKES REPO. Industrial output fell to an 18-month low in November with production growing at a slow 2. the one at which RBI lends to banks will now be 6. the customers are given a return lower than the promised interest rate in case of early withdrawals. Interest payable on prematurely withdrawn deposits will be the contracted rate or the rate applicable for which the deposit remained with the Bank. In contrast. was left untouched at 6%. whichever is lower. However.50%. banks have decided to impose a penalty on such transactions to minimize any impact on their liquidity position at a time when rising interest rates are pushing up the cost of funds for them. Repo rate. As such. Money Matters SEBI SLAPS RECORD PENALTY ON ANIL FIRMS SEBI passed a consent order to settle a probe into alleged violation of regulations for foreign investment and unfair trade practices by Reliance Infra and RNRL. SC Gupta and JP Chalsani. Reliance Infra Vice Chairman Satish Seth and three board directors Lalit Jalan. Food prices are advancing at more than 15%. Also the R-Infra and RNRL cannot invest in secondary market till 2012. It was paid by the directors without any financial burden on the companies involved. the rate banks receive for depositing funds with the central bank will be at 5. RBI raised repo and reverse repo rates by 25 basis points each. The settlement came after paying Rs 50 crore as penalty. The central bank maintained that India's GDP will grow at 8. h BANKS TO IMPOSE PENALTY ON PREMATURE CLOSURE OF FDS Next time you wish to cash in your fixed deposits.

but inflation is now tipped to quicken to 4. The Supreme Court of India also recently questioned the government over the issue. In an interaction with journalists.7 percent. throttling back from double-digit growth in 2010. but it will still be a hearty 8. The matter has also assumed a political overtone with Opposition BJP demanding greater efforts to retrieve the money kept in these accounts. At the same time. China's economy is expected to expand by 9. Around the World SWISS BANK ACCOUNTS ALSO A PROBLEM FOR EUROPEAN UNION The secret bank accounts of Switzerland are a problem not only for India but are an issue of dispute for other European countries. Along with Switzerland. higher prices for food and fuel mean governments and central banks in the region will have to tighten monetary policy further or take other measures even if it risks curbing growth. a much faster build-up of price pressures.3 percent this year. she bracketed Iceland and Liecenstein as other dominions which have such secrecy clauses.3 percent. The secrecy maintained by Switzerland and the other two dominions is a matter of concern for India as several people are believed to have stashed thousands of crores of rupees in bank accounts there to evade taxes. Most of the 13 Asia-Pacific economies are expected to see growth cool in 2011 as economic recoveries in the United States and Europe remain uneven and China steps up its efforts to fight inflation and asset bubbles. the Ambassador said that there are elements in the banking sector where there is no convergence between Switzerland and the EU and discussions have been made but a solution totally so far which could eliminate the banking secrecy has not been found. This was made known by the European Union Ambassador to India when the issue was termed as “bone of contention" between the European Union and Switzerland. China will likely record its slowest annual growth of the year in the first quarter of 2011. The world's second-largest economy is expected to have grown around 10 percent in 2010. The prospect of further tightening is already spooking some foreign investors who flocked to the region last year. giving the government more confidence to tighten policy further to rein in racing inflation. h ASIA TO SEE SOARING PRICES IN THE FORTHCOMING YEAR Asia's rapid economic growth will moderate slightly in 2011 even as policymakers combat rising prices with higher interest rates and try to keep local currencies from appreciating too sharply. India has been trying to get to these people but has not been successful so far. h . drawn by its robust growth and higher returns.

2 Switzerland. The chairman of the committee of central bankers and bank supervisors that worked on the new rules. Together they have impressive global reach and an unrivalled portfolio of iconic brands. Cadbury. with tremendous growth potential. after winning support from shareholders representing 72 percent of the maker of Dairy Milk chocolates.NEW GLOBAL RULES AIM TO STRENGTHEN BANKS Global financial regulators agreed on new rules designed to strengthen bank finances and rein in excessive risk- taking to help prevent another crisis. called the agreement ‘a fundamental strengthening of global capital standards. which should make them more resistant to financial shocks such as those of the last several years. The shareholders' backing will allow Kraft. Representatives of major central banks agreed to the deal at a meeting in Basel. The deal still has to be presented to leaders of the G-20 forum of rich and developing countries at a meeting to be held in the upcoming year and ratified by national governments before it comes into force. ending a bruising takeover battle. h  HOME . Some banks have protested however that the new rules may hurt their profitability and cause them to reduce the lending that fuels economic growth. Banks will be forced to hold more and safer kinds of capital to offset the risks they take lending money and trading securities. The takeover will make Kraft one of the biggest global players in chocolate and confectionery. Kraft added that it would seek to cancel Cadbury's listing on the London Stock Exchange after it reaches the 75-percent level. h KRAFT FOODS TAKES OVER CADBURY US based Kraft Foods clinched a takeover deal for British confectioner Cadbury. The US giant also declared its bid "unconditional". which employs 5.’ U. The agreement. possibly dampening a global economic recovery. to gobble up Cadbury. is seen as a cornerstone of the global financial reforms proposed by governments following the credit crunch and subsequent economic downturn caused by risky banking practices. the world's second-biggest food company.S. When Kraft reaches 90-percent support it will be able to automatically snap up any remaining stock. known as Basel III.9 billion pounds or 850 pence per share. The news came after Cadbury's board agreed last month to Kraft's improved cash-and-shares bid worth 11. whose colourful history as an independent British company dates back to 1824. meaning all of its takeover conditions have been met. Federal Reserve chairman called the new standards a significant step forward in reducing the incidence and severity of future financial crises.600 staff at eight factories in Britain and Ireland called for "cast-iron guarantees" over the future of Cadbury workers.

“ Where else in New York can I park my car for 2 weeks in just $15. They get it to her by special courier the same morning. Funny Bone A Chartered Accountant walks into a bank and asks for a $5000 loan. The car was taken to the bank’s garage safely. He opens it and reads: "Dear God. the tax advisor gets your money." h  HOME . The worker organizes a collection amongst the other postal workers.41. The accountant answers. Thank you for the 100 dollars. h A Post Office worker at the main sorting office finds an unstamped. the bank agrees to grant him the loan.000 BMW as collateral against a loan of $5000. She will be cold and hungry for the rest of the month if she doesn't receive some divine intervention. Then why did you bother to borrow $5000?”. P. This month would have been so bleak otherwise. If you earn the short- term. A week later. The loan officer says. He opens it and discovers it is from an elderly lady. If you use the long-term. We checked out and found out that you are a multi-millionaire. uncomplicated and wrong. we are very happy with this transaction but we are a little puzzled. “Sir. the government gets your money. After all the necessary checks. who dig deep and come up with 96 dollars. h For every tax problem there is a solution which is straightforward. Two weeks later the chartered accountant returns and repays the $5000 and the interest which comes to $15. distressed because some thief robbed her of 100 dollars.41?” h The difference between the short-term and long-term income is simple.S. The bank asks for a  security and the accountant hands over the keys and documents of his BMW parked in the street in front of the bank. the same postal worker recognizes the same hand on another envelope. The bank president and all the officers enjoy a good laugh at the accountant for using a $100. It was four dollars short but that was probably those thieving workers at the Post Office. poorly hand-written envelope addressed to God.

 HOME . MVAT Monthly Return for January (Tax>1000000/-).I. Payment January 21st E.F.S. Don’t Forget FEBRUARY 2011 MONDAY TUESDAY WEDNESDAY THURSDAY FRIDAY SATURDAY SUNDAY 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5th Service tax payment by Companies for January 7th TDS payment for January 15th P. Payment for January.C.

car and bike owners would have to pay about 10 per cent more on new covers. 5. non-convertible debentures of the Company of face value of Rs. CAC Exclusive )/$6+ Motor Insurance cover is all set to cost more with the Insurance Regulatory and Development Authority (IRDA) proposing to increase the premium rates because of growing losses in the motor pool. h .21)257+(0217+ The IDFC Bank issued the second batch of the Long Term Infrastructure Bonds following its first on 12th November. h 68**(67. Investment in Infrastructure bonds is recommended if you fall under the highest tax slab. redeemable. Transche 2 Bond. namely. According to the proposed price structure. 2010. The issue opened on 17th January. with a maturity period of 10 years in the nature of secured. An investment in these bonds offer a Rebate of upto Rs 20.000 under section 80 CCF over and above investment limit of 1 lac under section 80C.000 each. while truck owners will have to shell out around 80 per cent extra. 2011. 2011 and will close on 04th February.

 EachoneofthemconvincedIthink.  Unabletocontainmyself. Atmyrelease. Ontheotherabrightblueshoe. Officepolicynowincludes Timeeverydaytolaugh!  h HOME .theyfollowedsuit Reliefconjoinedwithglee. Attheshockoneachandeveryface ‘ Themomenttheirbosswalkedin. Iwastotallyunaware.  Stressatworkwasatapeak. Steppedoutofcharactertoo. Mylaughterbubbledfree.  Ourmemorablemeetingfollowedwith Coffeeanddoughnutsforthestaff.  Eyesmovedslowlyfrommyfeet Tocapturemyinnocentstare. Putaredslipperononefoot. Icouldhardlycontainmygrin. TIT-BITS OfficePolicyChange Steppingintotheboardroommeeting.