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Category: News And Views

Tax records of politicians under scrutiny

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Tax records of politicians under scrutiny


The Finance Ministry and the Central Board of Direct Taxes (CBDT)
have initiated a process of verification of the income-tax returns of all MPs
whose records are not available with the income-tax department, and to help them
verify whether they have paid appropriate taxes or not.

The decision has been taken by the Finance Ministry after
they found that many of them have paid partly or no taxes at all; and many of
their PAN details are not available with the department. So, it becomes really
tough for the department to ascertain their actual income. Those who are found
to be purposely involved in tax evasion will invite a heavy penalty and
scrutiny.

(Source: Internet & Media Reports, dated 05.01.2010)

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Govt to match netas’ I-T returns

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Govt to match netas’ I-T returns


The finance ministry has quietly initiated a process of
opening up the income-tax files of politicians belonging to all parties and
tallying their income statements with the affidavits filed by them with the
Election Commission during the 2009 parliamentary polls.

Verification of the assets declared by the Lok Sabha
candidates, many of whom have now become MPs and even ministers, will help the
department to assess if they had paid appropriate taxes as declared in their
statements with the two different authorities.

The finance ministry initiated the exercise after it found
that many of the candidates had made astounding declarations in their affidavits
to the EC, while initial scrutiny revealed that some of them had paid paltry or
no taxes. However, as many as 50% of the candidates in the 2009 LS polls had not
furnished their Permanent Account Numbers, making it difficult for the
department to ascertain the actual income of these people.

The department will be scrutinizing the I-T returns of all
Lok Sabha candidates irrespective of whether they ended up winning or not. A
letter from the Central Board of Direct Taxes (CBDT) has been circulated to all
those MPs whose records are not available with the I-T department or whose PAN
have not matched with the department’s records.

The details sought pertain to assessment years 2006-07 and
2007-08. The letter said: A verification exercise is being carried out by the
I-T Department, Ministry of Finance, in respect of affidavits filled by you at
the time of filing nomination for the general elections 2009.

For fear of being disqualified if statements made in the
affidavits were found to be untrue when elected, candidates had made some
astounding declarations. One candidate declared assets worth more than Rs 600
crores, while those having assets between Rs 100 crores and Rs 200 crores were
found in dozens during the 2009 polls.

(Source: Internet & Media Reports, dated 04.01.2010)

(Note: One sincerely hopes that vested interests are
not successful in sabotaging the whole exercise.)

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Foreign arms of Indian cos under tax net likely – Introduction of CFC Rules

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Foreign arms of Indian cos under tax net likely – Introduction of CFC Rules


The forthcoming budget may contain provisions for taxing the
undistributed dividends of foreign corporations that are controlled or owned by
Indian companies. Controlled Foreign Corporations (CFCs) laws enable the
authorities to tax the income of a resident derived from a foreign corporation.
This is irrespective of whether the profit/dividend of the foreign entity is
transferred to India or not.

Countries adopt CFC laws mainly for checking the probable
loss of revenue arising from the transfer of profit of foreign corporations to
offshore havens, such as the Isle of Man and Cayman Islands.

CFC laws are in force in at least 25 countries with varying
rules and regulations. In the US, for instance, 50 per cent of the voting rights
or 50 per cent of the value of shares constitutes a CFC.

The Indian tax authorities think it is time India had a law
that will tax the profits of foreign corporations that are controlled by Indian
companies. Since cross-border acquisitions by Indian companies have been on the
rise in the recent past, the government may find it difficult to ignore the
demand of the tax authorities.

(Source: The Economic Times, dated 05.01.2010)

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Finmin opposes FDI maths, wants review

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Finmin opposes FDI maths, wants review


Under the new rules for indirect foreign investments, issued
through Press Notes 2 and 3 last year, all investments by an Indian-owned and
controlled company will be classified as domestic investments, even if the
company has significant foreign stakes. The earlier norms counted only the
proportionate amount as FDI in the downstream subsidiary.

For example, if a 51 per cent Indian-owned company floats a
subsidiary with a 50 per cent stake, and the balance 50 per cent is held by
foreign investors, its entire 50 per cent investment in the subsidiary would be
counted as local investment under the new norm. This will allow the company to
invest in any sector, even those closed to foreign investment.

In telecom, for instance, which has a foreign investment
limit of 74 per cent, companies can now get foreign investment above the allowed
cap through a multilayered subsidiary structure. The flip side for companies is
that the total investments of those with more than 50 per cent foreign holding
in a subsidiary would be counted as foreign investment.

Leading Indian banks such as ICICI Bank, HDFC Bank and
Development Credit Bank would be considered foreign for the same reason.
Investments of these banks in a subsidiary would also be classified foreign.
This is not only a check on their investments in sectors with limits on foreign
investments, but also branch expansion.

Though the finance ministry had written to the DIPP earlier,
the communications were largely centred around the impact of the new FDI norms
on the banking sector. The ministry’s missives came after the RBI highlighted
the implications of the new norms on the banking sector.

(Source: The Economic Times, dated 05.01.2010)

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Inquiries mount after PwC ‘failed to notice’ mistakes

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67 Inquiries mount after PwC ‘failed to notice’ mistakes

PricewaterhouseCoopers is facing an inquiry by accounting
regulators into its failure to notice that JP Morgan was paying up to £ 16
billion of clients’ money into the wrong bank accounts.

Last week the Financial Services Authority fined the
investment bank £ 33.3 million — the largest penalty that the City regulator has
imposed — for breaches of client money rules under which customers’ funds became
mixed with the bank’s own cash over a seven-year period.

PwC, JP Morgan’s auditor, is now likely to be drawn into
another inquiry by the two professional bodies that oversee accountants, the
Financial Reporting Council and the Institute of Chartered Accountants in
England and Wales.

In addition to serving as principal auditor, PwC was retained
by JP Morgan to produce an annual client asset returns report — a yearly
certification to prove that customers’ funds were being effectively ring-fenced
and therefore protected in the event of the bank’s collapse. But PwC signed off
the client report even though JP Morgan was in breach of the rules.

It is understood that the FSA plans to pass on the details of
its own investigation to both the FRC and ICAEW, which will then determine
whether any further action is necessary.

The money at risk in this case consisted of funds held by
customers of JP Morgan’s futures and options business — a sum that varied from
£1.3 billion

to £15.7 billion between 2002 and July 2009, when the breach
came to light. PwC did not comment.

(Source : The Times, UK, 7-6-2010)

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HC ruling on bounced cheques rattles traders

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66 HC ruling on bounced cheques rattles traders

The Bombay High Court judgment that the drawer of a bounced
cheque cannot be prosecuted if the instrument was issued only as a security has
thrown traders into a tizzy.

Suppliers who were used to granting credit for series of
transactions against a single cheque are now unsure of how good this security
is. Debtors on their part while issuing the cheque are making it in the covering
letter that the cheque is being issued as a security and not to meet any debt
obligation.

In the past, lenders have used this Act to initiate criminal
prosecution against borrowers who have found it difficult to pay their
instalments. Now debtors are taking shelter under the judgment on cheques issued
as security.

The Bombay High Court held that the debtor cannot be
prosecuted under the Negotiable Instruments Act if cheques, issued only as
collateral security for loan, bounces. According to news reports, the judgment
was issued by Justice P. R. Borkar on a petition filed by Ahmednagar-based
Ramkrishna Urban Co-operative Credit Society against a debtor.

(Source : The Economic Times, dated 13-3-2010)

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CAs, CSs told to report all suspicious fund transfers

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65 CAs, CSs told to report all suspicious fund transfers

The Government has asked chartered accountants, cost
accountants and company secretaries to directly report to the Home Ministry
cases of suspicious fund movements in and out of companies, as it looks to crack
down on money laundering and terror funding.

The Home Ministry, through the Ministry of Corporate Affairs,
has asked the Institute of Chartered Accountants of India (ICAI), Institute of
Company Secretaries of India (ICSI) and the Institute of Cost and Works
Accountants of India (ICWAI) to ensure that their members report any instances
of diversion of funds directly without any procedural formalities.

Incidences should be reported directly to a designated e-mail
as also be conveyed through fax to the Home Ministry. Such cases will be handled
by a senior Home Ministry official, whose telephone number has also been shared.

The move is aimed at sensitising professionals of their
responsibilities u/s.51A of the Unlawful Activities (Prevention) Act, which aims
at preventing routing of terror funds through domestic firms.

Suspicious activities include cases where a dubious
individual or entity approaching them for investing into financial instruments
or immovable property or arrange for incorporating a company as a director,
shareholder or partner.

(Source : The Economic Times, dated 24-4-2010)


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HC squashes ICAI verdict

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64 HC squashes ICAI verdict

The Delhi High Court has quashed the Institute of Chartered
Accountants of India (ICAI) decision against auditor P. Ramakrishna in the
Global Trust Bank (GTB) case. The decision comes as a relief for Mr. P.
Ramakrishna, who is a partner in Lovelock & Lewes, a network affiliate of
Price-Waterhouse. ICAI held Ramakrishna guilty of professional misconduct in the
Global Trust Bank probe.

Sources said ICAI proceeded under old disciplinary norms in
the case. The minutes of the case hearing by ICAI was not ready before the Delhi
High Court. Seth Dua & Associates represented P. Ramakrishna in this case. The
Delhi High Court said ICAI’s decision on P. Ramakrishna is not legally tenable.
It wants the case to be handled by Director (Discipline), ICAI.

The High Court wants ICAI to now proceed under amended S. 21
of the CA Act. ICAI had allegedly proceeded under the unamended CA Act. The
Court has asked ICAI to pay costs of Rs.10,000 to Ramakrishna within four weeks.

When contacted Amarjit Chopra, President, ICAI said they will
appeal against today’s decision in the High Court.

(Source : www.moneycontrol.com, dated 20-4-2010)

(Note : Does it tell a tale of the state of affairs in ICAI —
of lack of due diligence and application of mind by our elected representatives
in Central Council ?)

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CAs turn preferred financial whizkids

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63 CAs turn preferred financial whizkids


While MBAs are being hired for select functions, CAs are
being looked upon as decision-makers. Chartered Accountants, the nuts and bolts
professionals in the world of finance, are scoring brownie points over suave MBA
finance graduates as India Inc gets increasingly risk-averse in a post-slowdown
environment.

Companies are focussing more on risk-compliance than pursuing
ambitious targets as they recover from an 18-month economic downturn, paving the
way for recruitment of more CAs, perceived to have core competence in financial
matters.

Thus, CAs are currently being accepted as business leaders
who could take up roles beyond auditing and financial management. While MBAs are
being hired for purely sales, marketing or international trade functions, CAs
are increasingly being looked upon as decision-makers.

Due to complexities of accountings and prospective taxation
regime like GST and IFRS (International Financial Reporting Standards),
companies need CAs as MBAs don’t study these subjects. CAs are now assuming
advisory roles as well. If CAs have to take a decision about an M&A deal, their
skills are useful during the due diligence process. The CA curriculum too has
seen some specialisation over the past decade with the development of the
financial services sector. However, CAs need to acquire skills in management
planning and strategic thinking.

(Source : The Economic Times, dated 12-4-2010)

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On road to GST, states okay single truck permit

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62 On road to GST, states okay single truck permit

Transport Ministers agree to national permit of
Rs.15,000/annum per truck. Inter-State transport of goods is set to become
hassle-free and cheaper with the state governments agreeing to give up their
powers to issue separate transport permits.

Transporters would now have to pay an annual fee of Rs.15,000
per truck for moving across the country, according to the new rule agreed to by
the states’ transport ministers. The new national permit regime will strengthen
the efforts to obtain a national market for goods and services through the
proposed goods and services tax or GST that seeks to create a seamless pan-India
market.

(Source : The Economic Times, dated 17-4-2010)

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CBDT wants jail term for tax evaders

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61 CBDT wants jail term for tax evaders

Tax evasion could land you behind bars if the country’s
direct taxes authority has its way. The CBDT wants to prosecute tax evaders
under the tough anti-terror financing law, even as it looks to adopt a more
friendly approach towards honest taxpayers. It has proposed to the Department of
Revenue to bring offences such as concealment of income, not filing income-tax
returns, failure to deposit tax deducted at source and giving false evidence
under the ambit of the Prevention of Money Laundering Act or PMLA. If these
offences become scheduled offences under the anti-money laundering law, they
will invite rigorous imprisonment of three to seven years and a fine of up to
Rs.5 lakh. The trial will be faster in the case of offences under PMLA as these
are tried in special courts and the accused has to prove that he is not guilty.
“The Board has written to the Department of Revenue to include these as
predicate offence under the PMLA,” a Finance Ministry official said.

(Source : The Economic Times, dated 5-4-2010)

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Trip to tax havens in govt crosshairs

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60 Trip to tax havens in govt crosshairs

The Income-tax Department is keeping a tight vigil on
Indians, notably the ones suspected of owning bank accounts, visiting tax
paradises, such as Switzerland, Cayman Islands, Mauritius and the Bahamas, as it
amplifies efforts to trace tax evasion and slush funds tucked away abroad.

India is part of a long lineup of countries, including the
US, pursuing tax transparency across the globe. The Government is in talks with
20 tax havens including the Bahamas, Monaco, Panama, Seychelles, St. Kitts &
Nevis and the Maldives for new treaties that promise to exchange information
more openly.

The Government also recently posted two senior Indian Revenue
Service officers as first secretaries at its missions in Singapore and
Mauritius, which are hotbeds of investments into India.

Agents and officials of foreign banks that offer services and
facilitated the opening of bank accounts are also on the Government’s radar.

The Tax Department also plans to create divisions and post
officers at the Indian missions in the US, the UK, the Netherlands, Japan,
Cyprus, Germany, France and the UAE for raising the vigil on evaders and greater
exchange of information.

(Source : The Economic Times, dated 28-4-2010)

(Note : Those who hold black money abroad of such large
magnitude, are smarter than our Revenue officials. They also have friends in
high places who are hand in glove with such persons and accord them full
protection from any action ! ! !)

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State of Marathi Manoos when Maharashtra turns fifty

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58 State of Marathi Manoos when Maharashtra turns fifty

Before 1960, a bulk of commercial activity was in the hands
of non-Maharashtrians : Gujaratis, Marwaris, Khojas, Bohras, Sindhis, Parsis and
Punjabis. That is true today as well.

With the exception of the Kirloskars, no Marathi-owned
company figures prominently in the country’s corporate world. The Marathas, who
dominate politics and therefore hold the bureaucracy in a tight grip, have done
pretty well for themselves. Political clout has enabled them to operate in areas
where the resources of the state can be manipulated for personal gain: real
estate, agricultural cooperatives and educational institutions.

In national politics, too, there is no Maharashtrian with an
all-India appeal. That requires a reputation for intellectual rigour, personal
integrity and a steadfast commitment to a set of ideas and principles. The last
politician with such a reputation was Y. B. Chavan. Much the same conspicuous
absence can be found in areas of scientific and artistic endeavour. How many
Marathi-speakers have emerged as national, let alone international, icons? In
some fields notably classical music and cricket you can cite three or four
names. Add to that a couple of scientists and writers. In the upper echelons of
the armed forces and civil services, in think tanks and prestigious
universities, in the national media and in the entertainment business too,
Maharashtrians are few and far between.

Unable or unwilling to accept why things have come to this
pass above all, an aversion to risk and adventure most Maharashtrians prefer to
rail against the world. Those who exploit Marathi grievances for short-term
political gains are content to promote vada-pao, force shop-owners to put up
signs in Marathi and compel taxi drivers from outside the state to speak the
language. Such swagger in an urban, increasingly cosmopolitan India invites
ridicule.

(Source:Extracts from an article by
Shri Dilip Padgaonkar in The Times of India, dated 30-4-2010)

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201 Technical and Management Institutes are illegal

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59 201 Technical and Management Institutes are illegal

Many private institutions have been imparting technical and
management courses without the mandatory approval from the All India Council for
Technical Education, HRD Minister Kapil Sibal informed Lok Sabha. There are in
all 201 such institutions across the country.

The big names include Indian School of Business, Hyderabad;
ICFAI Business School, Delhi, Gurgaon and Chandigarh; Ansal Institute of
Technology, Gurgaon; Indian Institute of Planning and Management, Delhi; K. R.
Mangalam Global Institute of Management, New Delhi; J. K. Business School,
Gurgaon; M. B. Birla Institute of Management Bharatiya Vidya Bhavan, Bangalore;
and Sikkim Manipal University, Bangalore.

Maharashtra tops the list with 74 such institutions followed
by 24 in Delhi, 22 in Karnataka, 19 in Tamil Nadu and 13 each in UP and Bengal.
Besides, the UGC has identified 21 fake universities running in violation of
provisions of the UGC Act, he said. The 21 fake universities include eight in UP
and seven in Delhi, Sibal said.

(Source : The Times of India, dated 29-4-2010)

(Note : What penal action has the Govt. taken ? What about
documented rampant corruption in AICTE ?)

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Changes in Indian Visa Regulations for expats

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57 Changes in Indian Visa Regulations for expats

India has changed the rules concerning work visas for
foreigners to remove the ceiling on the number of foreigners a company can hire
as well as the minimum stipulated salary.

Though the new rules are designed to favour skilled workers
and have an ‘Indians first’ bias, they should please expats who are willing to
work here but were hindered by the cap on the number of foreigners who could
have been hired, as well as the minimum salary requirement. Indian companies had
to limit their foreign recruitments to 1% of their total workforce and pay them
annual salaries of $ 25,000.

The rules are sure to be welcomed by the non-governmental
organisations (NGOs) in India who have been allowed to hire, just like a private
concern, ‘skilled’ foreigners.

In the old regime, NGOs were not allowed to hire foreigners
forcing those who were still willing to work for such organisations to come to
India on tourist visa to work as volunteers for a limited period.

(Source : The Times of India, dated 8-7-2010)

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Won’t dump US Treasuries : China

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56 Won’t dump US Treasuries : China

China ruled out the ‘nuclear’ option of dumping its vast
holdings of US Treasury securities but called on Washington to be a responsible
guardian of the dollar.

In the third in a series of statements explaining its work to
the Chinese public, the State Administration of Foreign Exchange (SAFE) sought
to allay concerns in the outside world that arise whenever Beijing shifts its
holdings of US government debt.

In a series of questions and answers posted on its website,
www.safe.gov.cn, SAFE asked rhetorically whether China would use its $ 2.45
trillion stockpile of reserves, the world’s largest, as a ‘nuclear weapon’. SAFE
said such concerns were completely unwarranted.

(Source : The Times of India, dated 8-7-2010)

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Hard-up Italy to sell treasures

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55 Hard-up Italy to sell treasures

Italy is preparing to sell thousands of national treasures,
including islands in the Venice lagoon and on the Emerald coast of Sardinia, to
pay back spiralling debts.

The islands and other landmark properties on a provisional
‘for sale’ list are worth more than £ 2.5 billion. They include palaces and
castles, former convents, lighthouses and aqueducts, as well as leases on
beaches, rivers, lakes and Alpine summits.

(Source : The Times of India, dated 5-7-2010)

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Why can’t Indian politicians retire if work gets tiring ?

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54 Why can’t Indian politicians retire if work gets tiring ?

The Union Minister for Food, Civil Supplies and Agriculture,
Sharad Pawar, who also doubled as President of the Board of Control for Cricket
in India (BCCI) and has now become President of the International Cricket
Council (ICC), has reportedly pleaded with Prime Minister Manmohan Singh that
his ministerial burdens be reduced so that he can devote more of his time to his
cricketing responsibilities. The Prime Minister should request Mr. Pawar to
choose between Government and cricket. Mr. Pawar will not be any less popular in
his home state of Maharashtra, or any less respected as an elder statesman or
any less influential in Indian politics if he ceased to be a Union Minister.
Indeed, his popularity may shoot up if he prefers to give up his ministerial
perks and devotes the rest of his life to promoting cricket in India and around
the world. He could make cricket an Olympian sport ! He could get a bigger
audience for Indian Premier League matches compared to World Cup soccer. There
are so many new frontiers to be crossed and Mr. Pawar could become a global
mentor for cricket. Why should he seek to keep his Cabinet berth if he does not
have the time and energy for it ? Mr. Pawar says he needs more hands in his
ministry. There are already too many ministers in India and most junior
ministers complain that they have no work. Indeed, even senior ministers
complain these days of not having much work ! Mr. Pawar has been widely
criticised for keeping one foot in cricket and one eye on Maharashtra even as he
had his other foot in the Union Government and the other eye on the top job in
Delhi. No one can grudge a politician such political ambition. But when a
minister says he wants less work in Government to be able to devote more time to
cricket, then one must ask whether it is not time to force a choice on him. With
just nine members in the Parliament, and some of them willing to return to the
parent Congress party, Mr. Pawar demands too much generosity from the Prime
Minister, who, in fact, has been among his limited circle of well-wishers in the
Congress party. Rather than push the Prime Minister into being even more
generous, Mr. Pawar should think of retiring from Government, asking someone
younger, perhaps his daughter, to take his place. When Mr. Pawar took charge of
agriculture in 2004, the Prime Minister asked him to repeat in the rest of India
the developmental miracle he had wrought in his home constituency of Baramati.
Regretfully, he has failed on that score and Indian agriculture has suffered due
to neglect. The so-called Second Green Revolution is yet to take off, and food
price inflation has hurt. Perhaps a change of hands at the Food and Agriculture
Ministry can help.

(Source : Business Standard, dated 7-7-2010)

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Quota seats go abegging at IITs

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53 Quota seats go abegging at IITs

Nearly 700 seats reserved for scheduled castes (SCs),
scheduled tribes (STs) and other backward classes (OBCs) are lying vacant at the
Indian Institutes of Technology (IITs) this year after the first allotment of
seats.

The IITs had set aside 2,570 seats for OBCs, but only 2,023
were filled, according to T. S. Natarajan, Chairman of the Joint Entrance
Examination (JEE) at IIT Madras — the institute which conducted the JEE this
year. Of the 2,570 seats under the OBC category, 78 (around 3%) are reserved for
students with physical disabilities. Of the remaining 2,492 seats, only 2,023
have been filled.

(Source : Business Standard, dated 5-7-2010)

[Will meritocracy ever flourish in our country ? There are no
statistics available as to how many quota candidates fail or drop out of IITs ?
All at the cost of deserving students belonging to so-called upper castes ?]

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Media companies oppose service tax on copyright services

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52 Media companies oppose service tax on copyright services

PVR Pictures, Balaji Telefilms, Yash Raj Films and UTV Motion
Pictures have moved the Delhi High Court against the Government’s recent
decision to levy service tax on copyright services.

The Finance Ministry introduced the tax for the first time on
July 1, 2010. PVR Pictures, in its petition, alleged that copyrights are treated
as goods and the transfer of copyrights are treated as sale of goods, which
falls within the domain of taxation by States under Article 246, and not the
Union.

The company said treating copyright as goods as well as a
service is ultra vires (beyond the powers of) the Constitution of India and
contravenes Articles 14, 19(1)(g), 265 and 300A of the Constitution.

(Source : Business Standard, dated 8-7-2010)


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Centre forms task force to curb misuse of subsidies

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The existentialist dilemma before Indian democracy is stark :
it cannot co-exist with financial honesty. It does not matter if you are
personally incorruptible; you have to be institutionally corrupt in order to
engage in the business of democracy. The moral code of elections is
uncomplicated : Don’t ask. Don’t tell. And for God’s sake don’t get caught.


— M. J. Akbar
in India Today, dated 10-1-2011

51 Centre forms task force to curb misuse of subsidies

To curb the misuse of subsidised kerosene, cooking gas (LPG)
and fertilisers, the Centre has constituted an inter-ministerial task force
under Unique Identification Authority of India (UIDAI) Chairman Nandan Nilekani.

The team of experts will work to evolve a mechanism for
direct subsidy transfer and give its interim report within four months. Several
Government committees in the past, including the Kirit Parikh committee, had
recommended direct transfer of subsidies. States such as Haryana and Madhya
Pradesh are close to implementing a direct subsidy transfer for grains.

The Government had formed the task force in light of the
‘overwhelming evidence’ that the present policy of giving subsidy on kerosene
was resulting in ‘waste, leakage, adulteration and inefficiency’, the statement
said. The Government provides kerosene at subsidised prices to below-poverty
line families under the Public Distribution System. “Therefore, it is imperative
that the system of delivering the subsidised kerosene be reformed urgently,” it
added.

“Similarly, the system of provision and delivery of
subsidised LPG to intended beneficiaries needs to be reformed. The current
subsidy on kerosene is Rs.20.56 per litre while the same on domestic LPG is
Rs.356 per cylinder. This leaves a massive scope for black marketing in these
essential commodities,” the statement said.

(Source : Business Standard, dated 15-2-2011)

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ICSI told to suggest changes in LLP Structure:

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74 ICSI told to suggest
changes in LLP Structure:


The
Ministry of Corporate Affairs has asked the Institute of Company Secretaries of
India (ICSI) to suggest changes to make the limited liability partnership (LLP)
model more suitable for the small and medium sector enterprises in the country.


Converting to an LLP structure will also help SME units get easier access to
credit from banks, the official said. LLP’s registrations were opened in April
last year but the response has been very poor, with only 677 entities being
registered till date. The official further points out that the present number
mainly comprises big consulting groups and law firms, with a relatively small
portion of small-sized entities and new entrants showing interest. “This (LLP
form of business) is a fantastic new opportunity and will inevitably give a
whole new profile to the MSME sector.

It will
be possible for the sector to reach out to venture capital. This can be the
stepping stone for partners becoming much larger industrialists and logging
bigger growth,” Minister for Corporate Affairs Salman Khurshid had earlier said,
on the advantages for SMEs to leverage out from the LLP model. The report of the
task force on SMEs, which was recently presented to Prime Minister Manmohan
Singh, had highlighted the need for giving wide publicity to the LLP model,
which it said will provide SMEs an interim solution to move from the informal to
the formal economy.

(Source:
The Economic
Times dated 06.02.2009)

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Top-level vacancies frustrating tax targets: CBDT

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73 Top-level vacancies frustrating tax targets: CBDT


Three
weeks to go before presentation of India’s national budget and the finance
ministry called for urgent steps to fill top-level vacancies in the direct tax
administration as delays were affecting the realisation of targets.

Central
Board of Direct Taxes (CBDT) Chairman S.S.N. Moorthy has even written to the
chairman of Union Public Service Commission requesting an urgent meeting of what
is called the departmental promotion committee for filling up the vacancies.

In the
letter, Moorthy says after the recent promotion of some officials to the grade
of chief commissioners, the vacancies in the posts of commissioners of income
tax had gone up to as high as 71.

Some of
these vacancies are in key circles of the tax administration in large metros
such as Mumbai, New Delhi and Chennai, which account for the bulk of the
country’s direct tax collections.


“Needless to say, this is adversely affecting the efforts of the department in
meeting the revenue collection targets,” the tax board chief says in the letter
to Union Public Service Commission Chairman D.P. Agarwal.

The
letter also comes against the backdrop of Finance Minister Pranab Mukherjee
directing the Income Tax Department to make all efforts to achieve the revised
collection target of Rs.4,000 billion by the end of this fiscal.

India’s
direct tax collections have been just Rs.2,500 billion in the first nine months
of this fiscal, growing at 8.5 per cent over the corresponding period of the
previous year. In fact, personal income tax has actually seen a decline of 0.41
per cent. This has obviously made the tax administration jittery.

Senior
officials said one of the main ways to enhance tax collections would be by
regular sharing of information among the commissionerates and developing a
common database. But vacancies at the top slots are frustrating such efforts.

Revenue
Secretary Sunil Mitra is also holding an urgent meeting with 18 chief
commissioners of income tax here to review the shortfall in tax collections and
find ways to make it up.

(Source:
www.topnews.in dated 05.02.2010)

(Compiler’s
Note:
Revenue collection will increase when taxpayers are treated with respect and
trust due to a worthy customer. Today, an honest tax payer is the most harassed
lot as he finds himself unable to deal with the corrupt officials and has to
face time consuming and costly litigation. A dishonest taxpayer has the money to
smoothen his way. The FM should inculcate the habit amongst his officers to
treat the taxpayer with trust and respect. Otherwise, he will be killing the
goose which lays the golden egg!!!)

 

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S&P threatens to downgrade Japan’s rating:

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New Page 171 S&P threatens to
downgrade Japan’s rating:

S&P
threatened to downgrade Japan’s rating unless the world’s second-largest economy
took more steps to rein in its mounting public debt.

The
warning by Standard & Poor’s, which cut its outlook for Japan’s sovereign rating
for the first time since 2002, reflected concerns that the government’s efforts
to trim its mounting public debt were proceeding too slowly.

S&P
retained its long-term credit rating for Japan of AA, defined by the agency as a
very strong capacity to meet financial commitments, but said it had revised the
outlook associated with that rating from stable to negative. The AA rating puts
Japan in the same category as Slovenia, Chile and Ireland, according to S&P’s
website.

(Source:
The Times of India dated 28.01.2010)

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Learn technology in your language:

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72 Learn technology in your
language:


Spoken
Tutorials, a technology that explains software applications in your mother
tongue, will be launched by the Indian Institute of Technology – Bombay.


Nowadays, software applications find use in everyday living. For example, to
book a train ticket online one can log on to www.spoken-tutorial.org and get a
demonstration on steps to book an e-ticket with a commentary in a language of
one’s choice.

The
technology developed by IIT-B will now allow non-English speakers to negotiate
the information highway.

The
technology will soon be introduced in educational institutions across the
country by the National Mission on Education through Information and
Communication Technology (NMEICT), an initiative of the Human Resource
Development Ministry.

(Source:
Hindustan Times dated 26.01.2010)

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SMEs to be exempt from IFRS:

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70 SMEs to be exempt from IFRS:


Small
and medium enterprises (SMEs) in the country will not have to prepare their
accounts as per the International Financial Reporting Standards (IFRS) from
April 1, 2011, saving them significant cost of switching to the more rigorous
accounting standards. A government-constituted core panel on IFRS has decided to
exempt SMEs from the first phase of convergence falling due in 2011.


Convergence to IFRS is a costly exercise which includes an overhaul of
operational and IT processes apart from training costs. A small enterprise, for
this exemption, is likely to be one where the investment in plant and machinery
is more than Rs 25,00,000 but does not exceed Rs 5 crore.

A medium
enterprise is one where investment in plant and machinery is more than Rs 5
crore but does not exceed Rs 10 crore.


Recently, a core committee of the government finalised the road map for IFRS
convergence in India. The ICAI has said that all entities having net worth in
excess of Rs 1,000 crore will have to follow IFRS. The list also includes all
NSE and BSE listed companies, entities having foreign borrowings of more than Rs
500 crore, insurance entities, mutual funds, venture capital funds and all
scheduled banks having operations outside India.

(Source:
The Economic
Times dated 25.01.2010)

 

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CBDT seeks report on Mumbai I-T refund scam:

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69 CBDT seeks report on Mumbai
I-T refund scam:


The
Central Board of Direct Taxes (CBDT) has sought a detailed report from the field
formation in Mumbai over the reported “income- tax refund scam” in that
jurisdiction. No insider of the Income-Tax Department has been identified in any
wrong doing. “It looks as if some external people were involved, but we have to
wait for the complete information,” official sources said. Indications are that
the findings of the report, once obtained, will be placed before the Finance
Minister. CBDT also maintained that the amount involved was not as high as Rs 41
crore as reported in certain sections of the media. Meanwhile, a CBI spokesman
said that the matter has come to the notice of the investigation agency.
However, no case has been registered as yet. “Only if a case is registered can
an investigation begin. More details can be shared only if a case is
registered,” the spokesman added.

(Source:
The Hindu Business Line Newspaper dated 25.01.2010)

(Compiler’s
Note: The issue
arises: Can we trust the safety and security of confidential financial data
which assessees upload on the Department’s website, if the Department cannot
protect its own interest?)

 

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RCom wants action against its special auditor:

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68 RCom wants action against
its special auditor:


Reliance
Communications (RCom) has asked the Department of Telecommunications (DoT) to
take action against its special auditor, Parakh & Co, for alleged breach of
confidentiality and misconduct. It has also asked DoT to scrap Parakh’s report,
saying the conclusions are incorrect, unilateral and biased.

The
audit report, commissioned by the DoT, had alleged that RCom had hidden revenues
of Rs 2,799 crore for the financial years 2006-07 and 2007-08, costing the
government Rs 315 crore in licence and spectrum fees that are charged as a
percentage of revenue.

The
auditor also said RCom inflated wireless revenue by 23 per cent or Rs 2,915
crore, to Rs 15,213 crore in the report to shareholders in 2007-08.

The
terms of reference did not require the auditor to make observations on
consolidated financial statements. Moreover, they have finalised the report
without any discussion or communication with us, the company said.

(Source:
Internet & Media Reports dated 25.01.2010)

 

 

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Licences of Entities Would Be Revoked If TheyzSource Funds From India –Mauritius:

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67 Licences of Entities Would
Be Revoked If TheyzSource Funds From India –Mauritius:


The Financial Services Commission of Mauritius has imposed a
stringent set of conditions on Mauritius-based companies investing in India in a
bid to allay fears about round-tripping of funds. The Mauritian government has
also warned that licences of entities investing in India would be revoked if
they source funds from India. The move provides a new turn to the lingering
debate over allegations of Indian corporates using the Mauritius route to escape
capital gains tax. Mauritius is the top source of foreign direct investment (FDI)
flowing into India. During the first seven months of the current financial year,
nearly $8 billion of the $18 billion FDI flowing into India came from Mauritius.
An annual audit of Mauritius-based entities investing in India has been made
mandatory, said Milan J N Meetrabhan, chief executive of the Financial Services
Commission of Mauritius. The Indian side has been apprised of the steps taken to
check round-tripping, and Mauritius hopes that this will take care of the
concerns about tax evasion.

The move is significant since it comes at a time when the
government is planning to review all double taxation avoidance treaties to plug
loopholes. Also, the direct taxes code which is to replace the I-T Act next year
proposes a number of changes in the country’s tax laws, including some that will
nix the capital gains tax exemption enjoyed by investing through havens.

A Mauritian team headed by Dr Rama Sithanen, Vice Prime
Minister and Minister of Finance and Economic Empowerment, met FM Pranab
Mukherjee. Mr. Sithanen said that FDI was flowing into India through Mauritius
not because of the tax benefit only. There are a number of other countries with
more attractive tax treaties with India, but so much investment is not flowing
through them. Mauritius is preferred because we have a transparent regulatory
system and a sound financial sector, he emphasised.


(Source:
Economic Times, dated 20.01.2010)

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Get up, sitting for long can kill you – Even Exercising Won’t Help If You Spend Hrs At Office Desk Or Watching TV:

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65 Get up, sitting for long
can kill you – Even Exercising Won’t Help If You Spend Hrs At Office Desk Or
Watching TV:


Here’s a
new warning from health experts: Sitting is deadly. Scientists are increasingly
warning that sitting for prolonged periods — even if you exercise regularly —
could be bad for your health. And it doesn’t matter where the sitting takes
place — at office, at school, in the car or before a computer or TV — just the
number of hours it occurs.

In an
editorial published this week in the
British Journal of
Sports Medicine,
Elin Ekblom-Bak of the Swedish School of Sport and Health Sciences suggested
that authorities rethink how they
define physical activity to highlight the dangers of
sitting.

“After
four hours of sitting, the body starts to send harmful signals,” Ekblom-Bak
said. She explained that genes regulating the amount of glucose and fat in the
body start to shut down.

(Source: The Times of India dated 22.10.2010)

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ICAI finds Haribhakti & Co guilty of negligence – As Karvy auditor:

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66 ICAI finds Haribhakti & Co
guilty of negligence – As Karvy auditor:


The accounting regulator is finally swinging into action in
the multiple demat account scam that was detected over three years ago.

The disciplinary committee of the Institute of Chartered
Accountants of India (ICAI) has found the internal auditors — Haribhakti & Co —
guilty of negligence, while checking the books of Karvy Depository Participant.

ICAI’s disciplinary committee has found one audit partner and
an audit manager of Haribhakti guilty.

But sources said of the three charges that were framed,
Haribhakti has been found guilty on only one charge.

Shailesh Haribhakti, a senior partner of the chartered
accountancy firm, refused to comment, saying “it would be premature”. The
central council of ICAI, which is the highest decision-making body of ICAI, will
now either ratify or overrule the report of the disciplinary committee. The
central council is likely to decide the fate of the two auditors next month. To
give a brief background of the case, the Securities and Exchange Board of India
had unearthed a multiple demat accounts scam in the year 2006.

A person named Roopalben Panchal opened thousands of demat
accounts and illegally cornered shares in various IPOs.

Sebi, in its April 2006 order, among others, faulted the
internal auditors of Karvy – Haribhakti, for failing to detect thousands of
demat accounts being opened with the same address.


(Source:
www.taguru.in & www.bloombergtv.com
dated 19.01.2010)

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Politicos, money bags own ‘doomed varsities’

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New Page 164 Politicos, money bags
own ‘doomed varsities’


Politicians, property dealers and industrialists-turned-politicians dominate the
list of those who owned the 44 deemed universities that are set to lose ‘deemed’
status in the coming days.

D Y
Patil, Governor of Tripura, is an old Congress hand and runs an education empire
in Maharashtra. Only one of his institutes — D Y Patil Medical
College, Kolhapur — will lose deemed status.

Then,
there is S Jagatharakshakan of DMK, Minister of State, Information &
Broadcasting, whose Bharath Institute of Higher Education & Research will lose
deemed status. BIHER has six constituent institutions involved in teaching
medical and dental science, nursing, physiotherapy and engineering.

Another
one from DMK stable is former Union minister M Thambidurai who runs St Peter’s
Institute of Higher Education and Research in Chennai. It has 1,051 students
enrolled in engineering, computer science, electronics and IT at
undergraduate/postgraduate level and also research. AIADMK leader A C Shanmugham
runs Dr MGR Educational and Research Institute and has dental and engineering
colleges affiliated to it with more than 6,000 students on its rolls.

Santosh
University in Ghaziabad is run by P Mahalingam, personal physician to BSP
founder Kanshi Ram. It has 800 students on its rolls and claims to have three
colleges teaching medical, dental and paramedical sciences. BLDE University,
Bijapur, Karnataka is run by Congress MLA M V Patil. It has a medical college
named after Patil’s father late B M Patil and has nearly 400 students on its
rolls. Former Congress MP R L Jalappa is at the helm of Sri Devraj Urs Academy
of Higher Education & Research, Kolar in Karnataka. Industrialist M A M
Ramaswamy, a member of Rajya Sabha and belonging to JD(S), runs Chettinad
Academy of Research and Education. It has two constituent institutes, a hospital
and research institute and a nursing college.

If it’s
Haryana, it has to be a property dealer. No wonder Maharishi Markendeshwar
University, Mullana, with a host of engineering and medical colleges as its
constituents, is run by Tarsem Garg who started as a property dealer and
graduated to become education entrepreneur.


(Source: The
Times of India dated 20.01.2010)


(Compiler’s Note:
The above is an incomplete
list. The remaining must also be owned/controlled/managed by vested interests.
In such a situation, is policy reform or corrective action possible?)

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Deemed Below Par: India’s university education system needs an overhaul

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63 Deemed Below Par: India’s
university education system needs an overhaul


We have an acute paucity of quality colleges and universities
in this country. Those already established can barely meet the growing demand
for higher education. Given this situation, government must welcome private
investors who could lend muscle to efforts to scale up the higher education
sector. But such a move would not suit many of our politicians who have a
substantial stake in perpetuating the licence raj in this sector. They often use
their clout to flout norms and unfairly profit from the business of higher
education, arm twisting governing bodies that are meant to be unbiased and independent to do
their bidding. Competition from genuinely interested parties is thus viewed as a
threat by our netas.

The concept of a deemed university itself is a questionable
category and must be done away with. Either a university is autonomous or is
state-run – there is no need for a nebulous in-between category. The
inconsistencies marking deemed universities are there for all to see: They have
the freedom to make profits but are also given huge central government and UGC
grants. Universities and colleges must be given the freedom to run their own
affairs if they are not funded by the union or state exchequers. Instead of
doling out large sums of money, which may go unaccounted for, the government
would do well to make it easier for those seeking to enter the education sector
establish themselves. This could be done by, for instance, allocating land
speedily and eliminating red tape.


(Source: The
Times of India dated 21.01.2010)

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Disgruntled Junior Ministers open their heart to the PM: Complain of Lack of Work, Powerful Babus

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New Page 162 Disgruntled Junior
Ministers open their heart to the PM: Complain of Lack of Work, Powerful Babus

PM
Manmohan Singh called junior ministers for a rare interaction. Within minutes,
however, he realised he was face to face with a band of unemployed workers. By
the end of the 45-minute session, he had promised to take up their case with the
Cabinet ministers who were in the line of fire.

The
interaction was a long sob story with MoS after MoS lamenting that their seniors
were not giving them enough work, that ‘babus’ were more powerful and that they
wanted more. The PM called junior ministers the energy pool, asking them to
focus on flagship schemes and use technology to improve governance.

The
juniors have been a perennially disgruntled lot, saddled with insufficient work
or unacceptable quality of it. This was true of both the NDA rule and UPA-1. The
story does not appear to have changed in UPA-2. The aggrieved ministers said
that as they do not go to the Planning Commission or attend Cabinet meetings,
they be allowed to give inputs in policy-making and, at least, be informed about
decisions.

The PM
looked grim when told that many ministers don’t even get to see official files.
Panabaka Lakshmi, it is learnt, said she had seen just one solitary file in
eight months. An exasperated MoS asked why could he not be trusted with a file.
The case of the Trinamool underlined an irony. E Ahmed and K H Muniappa, both
deputy to party chief Mamata Banerjee in the Rail Ministry expressed their
unhappiness.


(Source: The
Times of India dated 20.01.2010)


(Compiler’s Note:
The situation in various
States is no better. No wonder the pace of reforms and implementation is so
slow!)

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Bar councils under RTI Act purview: CIC

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61 Bar councils under RTI Act
purview: CIC


The bar councils are open to public scrutiny under the Right
To Information (RTI) Act and should set-up a mechanism to facilitate processing
of applications directed to them under the transparency law, the Central
Information Commission has held.

The Bar Council of India and Bar Council of Punjab and
Haryana had rejected several RTI applications saying though they were set-up
under the Advocates Act, 1961 they did not get direct or indirect funding from
the government, hence are out of the purview of the RTI Act.

However, the commission in a recent order held that the
councils might not have been financed by the central or state governments but
they were setup under an Act passed by Parliament and hence they are covered by
the RTI act.


(Source:
www.dnaindia.com, dated 19.01.2010)

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RBI notifies relaxation in remittance norms

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60 RBI notifies
relaxation in remittance norms


The Reserve Bank of India has notified relaxation
in remittance norms regarding salary earned by foreign nationals employed in
India by a foreign company or an Indian citizen employed by a foreign company
outside India. These individuals, according to the RBI, may open, hold and
maintain a foreign currency account with a bank outside India and receive the
whole salary payable to him for the services rendered to the
office/branch/subsidiary/joint venture in India of such foreign company, by
credit to such account, provided that income-tax chargeable under the Income-tax
Act, 1961, is paid on the entire salary as accrued in India. Hitherto, the
amount that could be credited to the foreign currency account with a bank
outside India could not exceed 75 per cent of the salary accrued to or received
by the expatriate or Indian national from the foreign company. Further, the RBI
said that a citizen of a foreign State resident in India employed with a company
incorporated in India may open, hold and maintain a foreign currency account
with a bank outside India and remit the whole salary received in India in Indian
rupees, to such account, for the services rendered to the Indian company,
provided that income-tax chargeable under the Income-tax Act, 1961 is paid on
the entire salary accrued in India. The relaxation in the remittance norm by the
RBI follows the Government notifying the same through a Gazette notification.

(Source:
The Hindu Business Line
Paper
dated 19.01.2010)

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Another law, more trouble

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59 Another law, more trouble


When governments say they want to protect wages, they often
end up killing employment. They, of course, deny that, but that is what minimum
wages and legalized job security imply. The Union Labour Ministry plans to amend
the Contract Labour (Regulation and Abolition) Act, 1970. This amendment will
allow Labour Commissioners and other officials to fix minimum wages for seasonal
workers. You may say that a law that prescribes minimum wages will only make
people get their due. Instead, it leads to incentives that are detrimental to
the workers.

It will permit appointed officials to harass employers.
Worse, it will permit collusion between firms and officials. If you take the law
and the officials out of the equation, then wages are set by the market. A firm
requiring labourers will have to pay market wages if it wants to get workers.
But with officials in the picture, as the new amendment will ensure, chances are
that they will pay much less. Official collusion and loopholes will ensure that.


(Source:
Mint Newspaper
dated 19.01.2010)

 

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Perceptives

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54 Perceptives



“Start by listening, because all too often the United States
starts by dictating.”



— U.S. President Barack Obama, speaking to Al Arabiya news
channel in his first interview with a foreign news outlet, on his instructions
to his new Middle-East envoy.

 


“That’s cheap for what I do . . . . You’ve got to whet my
appetite to get me onboard.”



— Thomas Taylor, a member of Britain’s House of Lords,
caught on tape telling undercover reporters (posing as lobbyist) that
companies will pay him more than $ 140,000 a year to amend legislation.

 


“All nations have found themselves in the same boat.”



— Russian Prime Minister Vladimir Putin, exhorting his
colleagues at the davos “economic egotism” because of the economic crisis.

 


“We have been in business for 300 years. We were hit by the
phylloxera insect in the 19th century that destroyed our vines. . . . we have
faced two world wars. I see the crisis as a challenging but constructive event.”


— Dominique
Heriard Dubreuil, Chairman of the Remy Cointreau Group – the producer of Remy
Martin cognac and Piper-Heidsieck champagne — taking the long view on the
current economic malaise.

(Source : Newsweek,
26-1-2009 and 9-2-2009)

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Govt. to allow foreign MNCs to impose annual service fee

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52 Govt. to allow foreign MNCs to impose
annual service fee


The Government is considering a proposal to allow foreign
multinationals to impose an ‘annual service fee’ on their Indian subsidiary for
providing management services. The foreign direct investment (FDI) policy, while
allowing payment of royalty, licence fee and technical know-how fee, does not
provide for payment of annual service fee by Indian subsidiaries.


If allowed, this may become another important source of
income for foreign multinational companies from their Indian arms. The issue
came up in the last meeting of foreign investment promotion board (FIPB), when
it took up the proposal of Canada-based potato and French-fry major McCain Foods
for removal of restriction on payment of service fees by McCain India, a major
supplier of cut-potatoes to fast food giants like McDonalds and KFC in India.


The board deferred its decision on the proposal and referred
it to the Reserve Bank of India (RBI) as it has foreign exchange implications.
Mc Cain Canada has a management fee arrangement with group
companies/subsidiaries in order to facilitate the operations of its group
companies and to cover the cost of providing general management services.

McCain India has not made any payment so far in respect of
services provided to it by McCain Canada in view of restriction imposed by the
Government in 1995 in their original approval. “The approval was subject to the
condition that no service fee shall be paid by the Indian subsidiary company,”
an official in the Department of Industrial Policy and Promotion said.

The board’s decision on the company’s request for allowing
payment of service fee to parent company is being watched closely by the
industry, since it will set a precedent for other multinational companies that
charge such fees from subsidiaries in other countries. Arguing its case, the
foreign food processing firm has pointed out that the condition was imposed in
1995 when there were strict foreign exchange control regulations.

A senior official in the DIPP said that the RBI will have to
take a final view on whether an annual service charge could be allowed under
regulations of Foreign Exchange Management Act (FEMA). “If the fee is in the
form of royalty or technical know-how fee, then it can be allowed. Because, in
the present environment, there are no restrictions under the FEMA for companies
intending to make payments towards constancy or services.

FEMA also permits payments towards service fee/ consultancy
fees of up to $ 1 million per project without apex bank’s prior approval,” the
DIPP official said. He also said that introduction of annual service fee in FEMA
may require the RBI to increase the limit of remittances payable to foreign
companies. The various forms of management services provided by international
parent companies to their subsidiaries in various countries include corporate
secretarial services, insurance services, legal advice, pension plan management,
engineering services and other corporate information services. McCain Canada
calculates the quantum of service fee chargeable to the subsidiary based on
actual expenses incurred by it on managing its international operations.

(Source : The Economic Times, 27-1-2009)

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Offshore tax shelters much too inviting

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53 Offshore tax shelters much too inviting



American companies, especially those receiving federal aid,
should be expected to pay a fair share of U.S. taxes.

Pretty well buried under all the hoopla of President Barack
Obama’s inaugural was a report last week that could help the U.S. Treasury tame
its way-out-of-whack balance sheet. The Government Accountability Office report
looked at U.S. companies that stash money in foreign countries to shelter them
from U.S. taxes.

U.S. Sen. Carl Levin, D-Mich., who requested the report along
with fellow Democratic Sen. Byron Dorgan of North Dakota, estimates that such
companies are avoiding $ 100 billion in U.S. taxes. And many of them — including
Bank of America and Citigroup — have lately been on the receiving end of
billions of dollars in federal bailout money or fat federal government
contracts.

Now, $ 100 billion may seem like pocket change when you’re
running a trillion-dollar budget deficit and carrying a $ 10.4-trillion national
debt. But you know, every billion counts when you are trying to spend your way
out of a recession. Unfortunately, this offshoring of taxable assets is entirely
legal, which Levin and Dorgan hope to do something about.


Common sense, not to mention common decency, would seem to
dictate that if you take tax dollars you also pay your full share of tax bills.

According to the report by the GAO, which is the
congressional watchdog agency on government programmes and spending, 83 of the
100 largest publicly traded U.S. corporations and 63 of the 100 largest publicly
traded companies with government contracts have subsidiaries in places that are
regarded as tax havens. There is no official definition of such places, but they
have common characteristics, such as no or low local taxes, political stability,
laws that keep financial dealings secret, and a tendency to promote themselves
in the right circles as great places to keep your money out of reach of Uncle
Sam or other tax-grabbing governments.

Bermuda, for example, has no income tax on foreign earnings
and allows foreign companies to incorporate there under an ‘exempt’ status. Plus
the island is not a bad place to have to go to visit your money. The British
Virgin Islands, the Cayman Islands, Switzerland and Luxembourg are among other
places that attract extraordinary amounts of foreign corporate capital. None of
the countries identified in the GAO report as tax havens appears to have much in
the way of a military or other things that take a lot of tax dollars. When they
have emergencies, they probably just call us.

To be fair, the GAO report says some companies have
legitimate business reasons to operate in places that also happen to have
favorable tax and privacy laws.

But does insurance giant AIG, for example, recipient of $ 85
billion in federal bailout money, really need five subsidiaries in Bermuda and
three in Switzerland, as listed in the GAO report ? Does Boeing need six in
Bermuda and 16 in the U.S. Virgin Islands ? The report shows Midland-based Dow
Chemical with 35 subsidiary operations in countries identified as tax havens,
Ford with two, General Motors with 11, and GMAC — in which the U.S. Treasury now
has a $ 5-billion stake — with two, one in Bermuda and the other in Switzerland.
How many car loans can you make in such places ?

There are those who will say that if the United States had
more reasonable tax laws, Uncle Sam wouldn’t be driving all this money into
offshore shelters. But there are those, too, who will say that no business will
pass up an opportunity to cut its own taxes.

Back in 2007, when Levin first started raising this issue
through the permanent sub-committee on investigations that he chairs, he had an
ally in the Senate behind legislation to at least make the companies disclose
their financial offshoring, which could have had an impact on their ability to
secure federal help. Levin’s bill was cosponsored by the junior Senator from
Illinois, a Democrat named Barack Obama.

So something tells that while the GAO report didn’t make much
of a splash, it will not be the last word on this issue.

(Source : Internet, 25-1-2009)

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Delay as stratagem — The Supreme Court makes a serious attempt to wake up slumbering babus who do not appeal in lost cases

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18. Delay as stratagem — The Supreme Court makes
a serious attempt to wake up slumbering babus who do not appeal in lost cases

When the revenue departments sleep over cases they
had lost in the courts and do not appeal for long, it is difficult to tell
whether it is just red tape or something else. Their lethargy causes losses to
the government and gains to tax dodgers.

The new chief justice of India (CJI) started his
stint in the Supreme Court a few months ago with a strict code for the indolent
babus. Some appeals are filed after a delay of a thousand and one nights. He has
ordered investigation into the delays in some gross cases. His campaign is
expected to nudge bureaucrats to move appeals faster. On the part of the
assessees, the CJI has insisted on them paying a substantial part of the tax
demand before hearing their late appeals.

The judges stated : “We feel that the beneficiary
of the judgment may be hand-in-glove with the officials in the government
department who deal with the files, and files are suppressed for a long period,
and then the appeal before the High Court or the Supreme Court is filed after a
long delay to get the appeal dismissed on the ground of delay. Huge amounts of
public money or public property may be involved and the government will be the
loser on the technical point of limitation in such cases. This racket has been
going on for a long time. Now the time has come that this racket is ended and
the officials responsible given severe punishment.”

Last year, the Court asked the Karnataka Government
to pay INR10,00,000 for filing an appeal after a delay of 14 years (State of
Karnataka v. Moideen Kunhi). It also asked the government to take action against
“every person responsible for the alleged fraud and delay in pursuing legal
remedies”.

In another case, State of Delhi v. Ahmed Jaan, the
court passed a similar order. The Courts go by the maxim : “Equity aids the
vigilant, not those who slumber on their rights.” Therefore, the Limitation Act
specifies the delays permissible in filing different types of petitions. The
Companies Act and most other legislation have similar clauses setting time
limits to press claims. Stale claims do not impress the judiciary.

(Source:Extracts from
M. J. Anthony’s Column ‘Out of Court’ in The Business Standard, dated
13-10-2010)

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Morningstar’s India site — www.morningstar.in

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  1. Morningstar’s India site — www.morningstar.in

Morningstar
India, a wholly owned subsidiary of Nasdaqlisted Morningstar Inc., recently
launched above new Web site for individual investors in India. The Indian
initiative offers free access to research and commentary on fund industry
news, fund-specific news, and fund reports written by Morningstar India’s fund
analyst team.

The visitors
can view Morningstar Rating for funds and the Morningstar Style Box
designation for the funds they research, along with local index data to track
fund from performance against the market. They can also search the site’s
database of more than 1,150 Indian domestic funds using various tracking and
analysing tools.

Morningstar
offers an extensive line of Internet, software and print- based products and
services for individuals, financial advisors and institutions. The company
provides data on nearly 3,25,000 investment offerings, including stocks,
mutual funds, etc. along with real time global market data on more than four
million equities, indexes, futures, options, commodities, and precious metals,
in addition to foreign exchange and treasury markets.

(Source :
Business India Magazine, 6-9-2009)

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Google for videos

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  1. Google for videos


Every minute thousands of videos are uploaded on sites like YouTube, Hulu and
many others, much like millions of Web pages being added every day. So, how do
you find your information in all this heap ? www.blinkx.com has built a
reputation as the remote control for the video Web. With an index of over 35
million hours of searchable video and more than 530 media partnerships,
including national broadcasters, commercial media giants, and private video
libraries, it has cemented its position as the premier destination for online
TV. The site pioneered video search on the net that uses a unique combination
of patented conceptual search, speech recognition and video analysis software
to efficiently, automatically and accurately find and qualify online video.
The site, which earned much of its $ 14 million revenue from advertisements in
2008-09, is pushing ahead with its indexed video database to enlarge usage. No
wonder, in August 2009, the site broke into the top 10 most popular video
sites, listed by a recent Nielsen Video Census report of video usage in the
USA. Go for it.

(Source :
Business India Magazine, 18-10-2009)

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News you can use :

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  1. News you can use :

Click to
Health — www.bolohealth.com


This site is newest portal dedicated to health and wellness information,
launched in July, 2009. The site’s home page is packed with information on
diverse aspects of heath including pregnancy and women’s heath, skin, hair and
beauty, diet nutrition and fitness, sex and relationships, children’s heath
and parenting and much more. Then there is a search engine to facilitate
information on various health conditions organised alphabetically.
Interestingly, the portal is interactive wherein users can interact with the
site’s panel of doctors and health professional, create networks and forums
with like-minded health enthusiasts and even start their own blogs on topics
of their interest.


Apart from features and quizzes prepared by medical writers, the site also has
a depository of health related slide shows and videos, health calculators and
a search facility to locate doctors and hospitals. The portal’s offering in
terms of its content and the relevance of information to the Indian audiences
makes it an interesting visit.

(Source :
Business India Magazine, 18-10-2009)

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Video tape of a will is legal, says Delhi HC

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  1. Video tape of a will is legal, says Delhi HC

In
a ruling that might make settlement of a disputed will easier, the Delhi high
court on Friday admitted video recording of a will as legally admissible
evidence.


While deciding a 1985 case seeking grant of a will, the court was pleasantly
surprised to find that it had been duly videographed, making the task of the
court easier. The making of the video of the execution of the last will in
this case has made the task of this court easier in arriving at its conclusion
as to its genuineness, Justice S. Muralidhar noted in his verdict. He went on
to suggest that the Delhi government make a video recording of the entire
process of execution of a will at the time of registration in order to make
the courts’ task easier and more transparent.

(Source :
Internet & Media Reports, 12-10-2009)

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Ernst & Young raided amid fraud probe in Hong Kong

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  1. Ernst & Young raided amid fraud probe in Hong
    Kong


The Hong Kong offices of accounting giant Ernst & Young were raided by police
as part of a fraud investigation linked to the city’s biggest corporate
collapse, local media said on Wednesday.


The search, which occurred on Tuesday, came after Ernst & Young was accused in
court earlier this month of falsifying documents to shield itself from a
negligence claim brought by the liquidators of electronics company Akai
Holdings, the South China Morning Post reported.


The lawsuit ended last week with an out-of-court settlement, with Ernst &
Young paying the liquidators, Borrelli Walsh, hundreds of millions of Hong
Kong dollars, according to the Post.


Police only confirmed the Commercial Crime Bureau of the Hong Kong Police
Force searched offices of an accounting firm Tuesday and took away some
documents in connection to a ‘suspected forgery’ case, spokeswoman Candice Siu
said. She did not identify the firm.


Siu said a 41-year-old man surnamed Dang was also arrested. The Post
identified the man as Edmund Dang, one of Ernst & Young’s partners in Hong
Kong.


Ernst & Young’s spokeswoman in Hong Kong did not immediately respond to calls
seeking comment.


Akai was liquidated in August 2000 and left creditors with debts of more than
$ 1 billion, making it the city’s biggest corporate liquidation.

(Source :
Associated Press, 30-9-2009)

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Sebi panel favours half-yearly auditing

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  1. Sebi panel favours half-yearly auditing

The Sebi
panel on disclosure and accounting standards has suggested that listed firms
must submit audited balance sheets every six months against the current
practice of doing it once a year.

Wiser after
the Rs.7,136 crore Satyam Computer Services Ltd. fraud, a committee of capital
market regulator Securities and Exchange Board of India, or Sebi, on Monday
recommended a slew of measures to make financial reporting by listed firms
more transparent and less confusing for investors.

The Sebi
panel on disclosure and accounting standards has suggested that listed firms
must submit audited balance sheets every six months against the current
practice of doing it once a year.

“. . . . A
more frequent disclosure of the asset-liability position of companies would
assist the shareholders in assessing the financial health of the companies,
thereby helping them in making informed investment decisions,” the panel said
in a discussion paper on the Sebi website.

The paper is
open for public comments till 25 September. In one of the biggest accounting
scandals in Indian corporate history, B. Ramalinga Raju, founder and former
chairman of Satyam, confessed on 7 January to having fudged the company’s
account books to the tune of Rs.7,136 crore over several years.

The panel is
also in favour of reducing the time available for companies to file their
audited financial results from 60 days to 45 days for each of the first three
quarters of a fiscal year. For the last quarter and full year, firms can
continue to follow the 60-day norm.

The audited
consolidated annual earnings need to be reported within 60 days instead of the
earlier 90.

“When
companies report unaudited numbers, in many cases, a lot of variation is found
when final numbers are released at the end of the year and investors often
have an annual surprise. Half-yearly audit will reduce such surprises to a
great extent,” said Suresh Surana, director, Astute Consulting and Business
Services Pvt. Ltd, a Mumbai-based consulting firm.

While it is
good news for investors, for auditors it will mean more work and more
stringent timelines, he said.

The Sebi
panel has also suggested that from now on, companies with subsidiaries should
report only consolidated earnings and such reports should give details about
turnover, profit after tax and profit before tax on a stand-alone basis as a
footnote. Companies now report both stand-alone and consolidated results,
often confusing investors.

Many firms
with subsidiaries file their consolidated results on the exchanges long after
they file their stand-alone numbers.

“In the
light of the various options given to listed entities, it was seen that
several categories of financial results in respect of a particular period for
an entity were disseminated in public domain, which tends to confuse the
investors at large,” the committee said.

At the end
of the last quarter, listed firms have an option to either submit un-audited
last quarter financial results within one month from the end of the last
quarter or go for consolidated audited results for the full year after 90
days.

So, if a
firm opts to submit annual audited results in lieu of last quarter financial
results, there is no information available in the public domain about its
financials for about five months or more, and this could make the shares of
the firm prone to insider trading, the panel has pointed out.

It has made
the audit committee of a company responsible for ensuring that the chief
financial officer (CFO) of a company “has the necessary accounting or related
financial management expertise”.

Surana of
Astute Consulting said the role of CFOs has become very demanding and will be
more difficult with the international financial reporting standards coming
into effect from April 2011.

Following
the Satyam scam, its chief financial officer Srinivas Vadlamani along with
Ramalinga Raju, his brother and Satyam’s former managing director B. Rama Raju,
and two Price Waterhouse auditors Srinivas Talluri and S. Gopalakrishnan were
arrested. They continue to be in jail even as investigations by various
agencies, including Sebi and the Central Bureau of Investigation, have been
on.

(Source :
Internet & Media Reports, 12-10-2009)

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Check your credit worthiness for Rs.142

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  1. Check your credit worthiness for Rs.142

Has a bank
turned down your loan application citing poor credit history ? Now you can
check why your credit record worked against you and seek recourse by obtaining
a copy of your credit report.

All you need
to do is fill up an application form available at Credit Information Bureau
(India) or Cibil’s website, attach a draft for Rs.142 and an identity proof
and mail it to Cibil. The report would reach you within a week.

Credit
scores, which are used by banks to assess an applicant’s creditworthiness is
new to India, with Cibil, which started operations around five years ago,
being the sole service provider at present, though it could soon have
competition from three other players.

While only
banking records were available at present, the information provider has
started pilot projects with Bharti Airtel and Vodafone to include data related
to telephone bill payments as well, Thukral said. Going forward, information
from general insurance companies would also be included, he said.

From the
database covering over 140 million accounts, the agency provides a credit
score between 300 and 900 for banks to enable the lenders to decide on whether
a loan could be sanctioned or not.

In the past,
several individuals have complained that their credit records were not updated
affecting their overall score. On its part, Cibil blamed banks for not
updating the records, but customers could do little to find out how the
problem arose.

But the
Cibil Credit Report, launched a month ago, would help individuals find out the
exact causes. The report provides details such as identification (Permanent
Account Number, passport number, voter identity card number), address and
contact details, along with the date when you moved in. It also provides the
list of all your bank accounts, the zero balance accounts, the approved credit
limit on your cards and the outstanding and overdue balance. Further, there
are details of all loans that you have availed, including those already
repaid.

Besides,
details for the last three years for each loan is given, which provides a
month-wise status — ranging from standard, overdue, special mention account,
sub-standard or doubtful.

In addition,
the report provides the list of enquiries made in recent months along with the
purpose for which an enquiry was made. While the name of the bank is not
given, the date of enquiry, the purpose (whether it is for a credit card or a
home loan) and the amount is provided.

While the
process was manual at present, Cibil has tied up with a business process
outsourcing outfit, and by the end of the current financial year, would put in
place payment gateways to enable online payments.

Meanwhile,
the agency today announced the launch of Cibil Locate Plus, which will help
lenders update their customer contact information. The new product will
provide information such as customer identification details, customer contact
addresses along with the reported dates and all the customer contact numbers
available in the database.

(Source :
The Economic Times, 18-9-2009)

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Another financial crisis inevitable : Greenspan

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  1. Another financial crisis inevitable : Greenspan

Another
global financial crisis is inevitable because human nature always reverts to
‘speculative excesses’ during a period of sustained prosperity, former U.S.
Federal Reserve Chairman Alan Greenspan said.

“The crisis
will happen again but it will be different,” he told BBC Two’s “The Love of
Money” television series.

“That is the
unquenchable capability of human beings when confronted with long periods of
prosperity to presume that that will continue,” he said.

Greenspan,
speaking to the BBC to mark the first anniversary of the fall of U.S.
investment bank Lehman Brothers, said Britain will be hit worse than the U.S.
by the subsequent worldwide financial crisis and global recession because it
has a globally-focussed economy.

(Source :
Business Standard, 11-9-2009)

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Swiss banks offer to tax Indian, other foreign clients

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  1. Swiss banks offer to tax Indian, other foreign
    clients


Pressed hard for giving access to details of money stashed away by Indians and
other overseas clients with them, Swiss banks have offered to tax this wealth
on behalf of the respective foreign governments.


India, where there have been long-running demands for concrete actions to
bring back the black money lying in highly secretive Swiss banks, will begin
talks in December for a new tax treaty with Switzerland so that it could get
details about the defaulters.


Besides India, a number of other countries are also said to be looking at
similar treaties, while the US recently reached an agreement for giving access
to close to 4,450 bank accounts of Americans with Swiss banking major UBS.

As
an alternative to the information exchange, Swiss banks have mooted the idea
of a ‘universal withholding tax’ — wherein they would tax the earnings
generated from the wealth of foreigners deposited with them and transfer the
proceeds to the government of the concerned country — and is currently
discussing the same with the relevant authorities.


Out of this, about 694 billion Swiss francs (over Rs.30,00,000 crore) were
held by foreign private clients.


The Swiss banks have offered to charge tax directly at source on behalf of the
foreign country with which a taxation agreement is in place. The revenue would
be forwarded to the Swiss Federal Tax Administration for passing on to the
client’s country of domicile. However, the concerned client’s identity would
not be revealed.


Under this system, the foreign country would have a guarantee that all
investment income — and not just a small portion as at present — received by
their taxpayers via a Swiss paying agent would be subject to taxation.


The new tax would be of a final nature in legal terms; in other words it would
constitute a definitive tax assessment. After the bank in Switzerland has
deducted the tax, the bank client would — from the perspective of his home tax
authorities — automatically have fulfilled his tax obligations with regard to
this income”.


Another advantage would be that foreign countries could be offered the same
tax treatment for those of their citizens with bank accounts in Switzerland.


Apart from charging withholding tax, the proposed model would also levy a
retention tax on dividends, income from collective investments and capital
gains.

A
domestic withholding tax system is already in place in Switzerland for many
decades, whereby 35% of the annual interest paid on a savings account in a
Swiss bank is with held and forwarded to the Swiss tax authorities.


The tax is applicable to anyone receiving interest or dividends from a
Swiss-domiciled source, irrespective of their own domicile.

(Source :
Business Standard, 27-9-2009)

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US, EU envoys protest India’s tax demands

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  1. US, EU envoys protest India’s tax demands

In a
remarkable demonstration of solidarity in economic diplomacy, ambassadors and
high commissioners of seven rich countries have jointly protested against
features of what they term India’s ‘retrograde’ tax regime.

The
ambassadors of the US, the Netherlands and Spain, high commissioners of UK,
New Zealand and Australia and head of European Commission delegation, have
written to finance minister Pranab Mukherjee seeking an appointment, while
expressing their anxiety over the ‘‘growing unpredictability in India’s tax
policies’’ that are creating ‘unquantifiable risk in investment planning.’

The letter
has been marked to commerce minister Anand Sharma, deputy chairman of Planning
Commission Montek Singh Ahluwalia, cabinet secretary K. M. Chandrasekhar as
well as the secretaries of external affairs, finance, DIPP and commerce &
industry ministries.

The envoys’
concern pertains to application of punitive tax liabilities on deals with
retrospective effect. Their anxiety was triggered by the $ 2-billion tax
controversy involving Vodafone’s $ 12-billion buyout of Hutchison’s stake in
Hutch-Essar, and includes tax troubles in deals like SabMiller’s acquisition
of Foster’s Indian beer business, Aditya Birla Nuvo’s acquisition of shares in
Idea Cellular from AT&T Mauritius, transfer of GECIS Global (Luxembourg)
shares by GE to a consortium of US private equity funds and Vedanta’s
acquisition of Sesa Goa shares held by Mitsui through a UK holding company.

(Source :
The Times of India, 14-10-2009)

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America’s wars

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23. America’s wars


The book raises a troubling thought : What is it that,
generation after generation, impels America’s best and the brightest to lead
their country into war, with little clarity regarding national interests and war
aims, but pursued with an extraordinary passion and firepower that destroy the
lives of thousands of its soldiers and leave behind a horrendous debris of
devastated nations and cities, wrecked societies and broken peoples that take
decades to repair and heal ?

(Source: Extracts from Book Review by Talmiz Ahmad, a Diplomat,
of “Obama’s Wars” by Bob Woodward in
 

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Girl power puts Gujarati lexicon at your fingertips

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  1. Girl power puts Gujarati lexicon at your fingertips

If the online Gujarati lexicon has proved a boon for
translators or writers, this bunch of five 20-something girls ought to take
the credit. Their love for their mother tongue is phenomenal and so is their
passion for language. Hence, with the help of technology they have made words
available at your fingertips.

Sumaiya Vohra, Padma Javad, Maitri Shah, Shruti Amin and
Deval Vyas run an IT firm which handles jobs of researching and compiling
Gujarati words. After digitizing ‘Bhagwadgomandal’ — a major dictionary of
Gujarati language — their recent achievement was to put ‘lokkosh’, a Gujarati
lexicon, online.

(Source : The Times of India, 29-10-2009)

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Virtual hub for books

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  1. Virtual hub for books

Vishal Information Technologies, a BSE/NSE-listed digital
content solution company, recently unveiled www.coralhub.com, an online book
market place that offers facility to buy and sell books on the Net. Booklovers
can browse mote than 3 million titles using a customer-friendly, simple-to-use
interface that displays the book title with brief synopsis, author, discounted
price, and ISBN number. The ‘Sell Books’ section of the site allows users to
sell old books to those looking for a specific title at an affordable price.
The customers are not charged any shipping cost for delivery across India.

(Source : Business India Magazine, 1-11-2009)

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Dormant bank accounts : RBI issues vital clarification

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  1. Dormant bank accounts : RBI issues vital clarification

A couple of months back the RBI had issued detailed
guidelines on inoperative or dormant bank accounts — savings as well as
current account. It had stated that if there are no transactions in the
account for a period over two years, it is to be treated as dormant. Further,
for the purpose of classifying an account as inoperative, both the types of
transactions i.e., debit as well as credit transactions induced at the
instance of customers as well as third party should be considered.

RBI now states that there may be instances where the
customer has given a mandate for crediting the interest on Fixed Deposit
account to the Savings Bank account and there are no other operations in the
Savings Bank account. Some doubts have arisen whether such an account is to be
treated as inoperative account after two years.

In this connection, the Banker of the Banks has clarified
that since the interest on Fixed Deposit account is credited to the Savings
Bank accounts as per the mandate of the customer, the same should be treated
as a customer induced transaction. As such, the account should be treated as
operative account as long as the interest on Fixed Deposit account is credited
to the Savings Bank account. The Savings Bank account can be treated as
inoperative account only after two years from the date of the last credit
entry of the interest on Fixed Deposit account.

(Source : Internet & Media Reports, 4-11-2009)

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News you can use ACES online

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  1. News you can use ACES online

Recently, the excise and service tax department unveiled
the Automation of Central Excise and Service Tax (ACES), a workflow-based
application software available at www.aces.gov.in. An application-based
facility, ACES would be installed at all the Central excise centres in
Bangalore and Hyderabad initially and throughout the country by end-2009,
enabling the assessees to do all transactions with the department through the
Net. ACES would completely replace the current mode of manual filing of
returns, payment of taxes, seeking of refund and rebate on duties, helping
assessees obtain registration under Central excise/service tax and also view
and track status of their document online. Some of the services offered online
include registration, filing and tracking of documents, e-mails of
business-related issues, payment of Central excise and service tax and a help
line.

(Source : Business India Magazine, 1-11-2009)

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Prolonged use of cellphones causes cancer

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  1. Prolonged use of cellphones causes cancer

Heavy mobile phone users face a higher risk of developing
cancers, according to a landmark international study overseen by the WHO.

Even though the conclusion of the research will be revealed
only later this year, a preliminary breakdown of the results found a
‘significantly increased risk’ of some brain tumours ‘related to use of mobile
phones for a period of 10 years or more’ in some studies.

The conclusion of the £ 20 million study, while not
definitive, will undermine assurances that the devices are safe. Several
countries, notably France, have started strengthening warnings in this regard
and American politicians are urgently investigating the risks.

The Interphone inquiry has been probing the link between
exposure to mobile phones and three types of brain tumour and a tumour of the
salivary gland. The landmark international project carried out research in 13
countries, interviewing tumour sufferers and people in good health to see
whether their mobile phone use differed. It questioned about 12,800 people
between 2000 and 2004, the report said.

However, a breakdown of the latest findings shows that six
of eight Interphone studies found some rise in the risk of glioma (the most
common brain tumour), with one finding a 39% increase.

(Source : The Times of India, 25-10-2009)

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Cooking oils fail health test

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51 Cooking oils fail health test


Trans fat, a known trigger for heart attacks, causing
thousands of premature deaths globally every year, has been found in
tremendously high quantities in almost all popular Indian cooking oils.


Laboratory tests conducted by Delhi-based Centre for Science
and Environment (CSE) on seven vanaspati brands, 21 different brands of
vegetable oils (soyabean, sunflower, groundnut, mustard, coconut, olive, sesame
and palm), desi ghee and butter available in Indian markets found that trans fat
levels were five to 12 times higher than the world’s recommended standards in
all vanaspati brands.


According to the latest recommendations, trans fat in oil
should not exceed 2% of the total oil. However, the study found trans fat levels
to be as high as 23.7% in the case of Panghat vanaspati brand and 23.31% in the
case of Raag vanaspati. Rath vanaspati had 15.9% trans fat, Gagan had 14.8%,
Jindal had 13.7% while Gemini had 12.7% trans fat content.

Interestingly, the lowest trans fats level was found in desi
ghee and in Amul butter — 5.3% and 3.73%, respectively.

Trans fat occurs when liquid oils solidify by partial
hydrogenation, a process that stretches food shelf life and changes safe
unsaturated fat into a killer. It is known to increase bad LDL cholesterol,
triglycerides and insulin levels and reduces beneficial HDL cholesterol. Trans
fats also trigger cancer, diabetes, immune dysfunction, obesity and reproductive
problems.

In 2005, all restaurants in California went trans fat free
voluntarily. In 2008, the US government made it mandatory. The following year,
even New York banned trans fat. Scientists say an increase of 5 gm of trans fat
a day is equivalent to a 25% increased risk of cardiovascular diseases.

Shockingly, say CSE researchers, even while Indian food
regulators have accepted trans fat as a serious health concern, they are
delaying setting the standard, presumably under pressure from the edible oil
industry. As a result, India has no regulation to check the content of trans fat
in oil.

In 2004, the Health Ministry’s oils and fats sub-committee,
under the Central Committee for Food Standards, begun discussions on a standard
for trans fat. In January 2008, the sub-committee forwarded its recommendations
to the Central Committee for Standards. But the Central Committee is still
awaiting more data and information.

(Source : The Times of India, 4-2-2009)

 

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HC dismisses IT Dept. appeals due to delay

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17. HC dismisses IT Dept. appeals due to delay


The Bombay High Court recently dismissed 40 appeals filed by
the Income-tax (IT) Department challenging 40 orders of the IT Tribunal, for not
filing its papers in time. The IT Department cited shortage of stamp papers as
reason for the delay. The Court dismissed the applications which were filed
after a delay of over one year.

The Court, however, held that a delay of one year in filing
an appeal was not inordinate in case of a department like IT that undertakes
‘large-scale litigation.’

The Court however allowed those applications seeking
condonation of delay between six days to 345 days, on the ground that they
provided a ‘reasonable explanation’ for the delay in filing appeal.

IT Department contended that every time the Department
receives an order from the IT Tribunal, a scrutiny report is prepared and sent
to the higher officials for approval.

(Source : Internet, 7-10-2008)

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Barack Obama, the President-elect of USA delivered one of the finest speeches (extempore) on November 5, on winning the Presidential election. It moved many with its sheer poetry. Hereunder are some extracts of the speech, which readers would cherish to r

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16. Barack Obama, the President-elect of USA delivered one of the
finest speeches (extempore) on November 5, on winning the Presidential election.
It moved many with its sheer poetry. Hereunder are some extracts of the speech,
which readers would cherish to read.


Hello, Chicago ! If there is anyone out there who still
doubts that America is a place where all things are possible, who still wonders
if the dream of our founders is alive in our time, who still questions the power
of our democracy, tonight is your answer. It’s the answer told by lines that
stretched around schools and churches in numbers this nation has never seen, by
people who waited three hours and four hours, many for the first time in their
lives, because they believed that this time must be different, that their voices
could be that difference.

It’s the answer spoken by young and old, rich and poor,
Democrat and Republican, black, white, Hispanic, Asian, Native American, gay,
straight, disabled and not disabled. Americans who sent a message to the world
that we have never been just a collection of individuals or a collection of red
States and blue States.

We are, and always will be, the United States of America.
It’s the answer that led those who’ve been told for so long by so many to be
cynical and fearful and doubtful about what we can achieve to put their hands on
the arc of history and bend it once toward the hope of a better day.

It’s been a long time coming, but tonight, because of what we
did on this date in this election at this defining moment change has come to
America.

I was never the likeliest candidate for this office. We
didn’t start with much money or many endorsements. It was built by working men
and women who dug into what little savings they had to give $ 5 and $ 10 and
$ 20 to the cause.

It drew strength from the not-so-young people who braved the
bitter cold and scorching heat to knock on doors of strangers, and from the
millions of Americans who volunteered and organised and proved that more than
two centuries later a government of the people, by the people, and for the
people has not perished from the Earth. This is your victory.

And I know you didn’t do this just to win an election. And I
know you didn’t do it for me. You did it because you understand the enormity of
the task that lies ahead. For even as we celebrate tonight, we know the
challenges that tomorrow will bring are the greatest of our life-time — two
wars, a planet in peril, the worst financial crisis in a century.

The road ahead will be long. Our climb will be steep. We may
not get there in one year or even in one term. But, America, I have never been
more hopeful than I am tonight that we will get there.

But I will always be honest with you about the challenges we
face. I will listen to you, especially when we disagree. And, above all, I will
ask you to join in the work of remaking this nation, the only way it’s been done
in America for 221 years — block by block, brick by brick, calloused hand by
calloused hand.

What began 21 months ago in the depths of winter cannot end
on this autumn night. This victory alone is not the change we seek. It is only
the chance for us to make the change. And that cannot happen if we go back to
the way things were. It can’t happen without you, without a new spirit of
service, a new spirit of sacrifice.

Tonight we proved once more that the true strength of our
nation comes not from the might of our arms or the scale of our wealth, but from
the enduring power of our ideals : democracy, liberty, opportunity and
unyielding hope. That’s the true genius of America.

Yes we can change. America, we have come so far. We have seen
so much. But there is so much more to do. So tonight, let us ask ourselves — if
our children should live to see the next century; if my daughters should be so
lucky to live as long as Ann Nixon Cooper,* what change will they see ? What
progress will we have made ?

This is our chance to answer that call. This is our moment.
This is our time, to put our people back to work and open doors of opportunity
for our kids; to restore prosperity and promote the cause of peace; to reclaim
the American dream and reaffirm that fundamental truth, that, out of many, we
are one; that while we breathe, we hope. And where we are met with cynicism and
doubts and those who tell us that we can’t, we will respond with that timeless
creed that sums up the spirit of a people : Yes, we can.



* Ann Nixon Cooper is 106 years old. In this election, she
touched her finger to a screen, and cast her vote, because after 106 years in
America, through the best of times and the darkest of hours, she knows how
America can change.

(Source : Livenint, 6-11-2008)

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Pledged share disclosure diktat may extend to holding companies.

New Page 28. Pledged
share disclosure diktat may extend to holding companies.

The Securities and Exchange
Board of India (SEBI) is considering amendments to regulations with regard to
pledging of shares by promoters of listed firms to include their holding
companies too.

The regulator was examining if
promoters can be asked to disclose pledging of a holding company shares with
banks and non-banking finance companies (NBFCs).
In the aftermath of the Satyam Computers fiasco, Sebi had mandated that
promoters of listed companies disclose the amount of shares they had pledged.
The shares of holding companies were, however, kept out of the purview of this
guideline as holding companies were not listed on exchanges.

Disclosing information about
shares of holding companies involves the risk of divulging vital information
about the monetary value of their shares and the firm’s holding pattern in
subsidiary firms that are listed. Any fall in the valuation of shares of holding
companies, if pledged, would result in lenders asking the promoters to top up
their margins. In case the promoters fail to do so, the lenders may sell the
pledged shares to recover their dues.This raises the hazard of effecting a
change in ownership, and the market regulator has received representations that
such risks need to be communicated to investors. Sebi is currently examining
possibilities and consequences of any such amendment. The issue is quite complex
as holding companies are generally unlisted and, hence, don’t fall under Sebi’s
purview.

(Source : The Business
Standard, 14-3-2009)

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Auditors may get powers to refuse to sign accounts

New Page 26. Auditors
may get powers to refuse to sign accounts

Auditors may get powers to
refuse signing a company’s accounts if these are not found to be in order. A
special group constituted by the Institute of Chartered Accountants of India
(ICAI), the statutory body regulating the profession in India, is veering round
to the view that the Institute should push for statutory backing to such a move.

Company balance sheets could
soon acquire a new look, with the Government asking ICAI to suggest ways to
strengthen reporting norms following Satyam Computer Services founder Ramalinga
Raju’s shock confession to long-term financial fraud on January 7. ICAI sources
said the mandate from the Government was to ensure that company managements did
not use notes to accounts as a cover-up for misdemeanors.

Currently, auditors may only
qualify accounts if managements are unwilling to accept the discrepancies they
point out. “If the law mandates that the management has to incorporate the
effects of the qualifications, the situation will be completely different. This
will also help us penalise auditors for lapses,” said an ICAI source privy to
the discussions.

“Over the next few months you
will see steps such as those initiated by the US after the Enron and Worldcom
controversies,” another MCA official said.

(Source : Business Standard,
9-3-2009)

 

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Multiple auditors may make entry in India Inc books

New Page 27. Multiple
auditors may make entry in India Inc books

Companies may soon have to get
their financial statements vetted by more than one auditor. The Institute of
Chartered Accountants of India (ICAI), the country’s accounting and auditing
rule-maker, is considering a proposal to make it mandatory for companies to get
their books audited by more than one auditor, so that each of the audit firms
could observe the practices followed by the other. The regulator believes the
move will ensure that auditors do not enter into a cosy arrangement with the
company management.

Joint auditing of financial
statements is a common practice within public sector undertakings (PSUs), due to
the huge volume of data auditors are required to go through. Even as PSUs engage
joint auditors for the reason of a judicious division of their audit work,
private companies are not always in favour of engaging more than one auditor.
Audit in India can be done by CAs whose names are registered with the ICAI.
Auditors of PSUs are selected from a list of chartered accountants whose names
are cleared by the office of the Comptroller and Auditor General of India (CAG).

(Source : The Economic Times,
9-3-2009)

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Warren Buffett’s advice for 2009

New Page 25.
Warren Buffett’s advice for 2009

We begin this New
Year with dampened enthusiasm and dented optimism. Our happiness is diluted and
our peace is threatened by the financial illness that has infected our families,
organisation and nations. Everyone is desperate to fine remedy that will cure
their financial illness and help them recover their financial health. They
expect the financial experts to provide them with remedies, forgetting the fact
that it is these experts who created this financial mess. Every new year, I
adopt a couple of old maxims as my beacons to guide my future. This
self-prescribed therapy has ensured that with each passing year, I grow wiser
and not older.

This year, I invite
you to tap into the financial wisdom of our elders along with me, and become
financially wiser.











Hard work
: All hard work
brings a profit, But mere talk leads only to poverty.


Laziness


:


A sleeping lobster is carried away by
the water current.

Earning


:


Never depend on a single source of

income.(At
least make your investment get you second earning.)


Spending


:


If you buy things you don’t need,

you’ll soon sell things you need.


Savings



Don’t save what is left after spending. Spend what is
left after saving.

Borrowings


:

The borrower becomes the lender’s slave.

Accounting

:

It’s no use carrying an umbrella, if your shoes are leaking.

Auditing

:

Beware of little expenses. A small leak can sink a large ship.

Risk-taking

:

Never test the depth of the river with both feet. (Have an alternate plan ready)

US economy crisis — $ 1 salary for Citi Group chief

New Page 24. US economy
crisis — $ 1 salary for Citi Group chief

Faced with national outrage at
the financial meltdown in the US channelled through a hearing by angry
law-makers, the India-born CEO of Citigroup Vikram Pandit said he will take a
salary of $ 1 and no bonus until the bank, which has accepted $ 45 billion in
government bailout money, returns to profitability.

People lined up from 6 a.m. in
the Rayburn office building for the 10 a.m. hearing, an indication of how deep
the economic crisis is now cutting into society. The testimony was also reviewed
extensively on line. About Pandit’s $ 1 offer, one blogger commented, “He’s
still overpaid.” Such is the anger in America.

(Source : The Times of India,
13-2-2009)

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Recession ignites unrest People worlwide take to streets as economies crash

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50 Recession ignites unrest People worlwide
take to streets as economies crash


In the grand sweep of the current financial crisis, a few
riots here and there may not seem to add up to much. But it is a sign of things
to come : a new age of rebellion. The financial meltdown has become part of the
real economy and is now beginning to shape real politics. More and more citizens
on the edge of the global crisis are taking to the streets. Bulgaria has been
gripped this month by its worst riots since 1997 when street power helped to
topple a Socialist government. Now Socialists are at the helm again and are
having to fend off popular protests about government incompetence and
corruption.

 

Iceland, Bulgaria, Latvia : these are not natural protest
cultures. Something is going amiss. The LSE economist Robert Wade recently
warned the world was approaching a new tipping point. Starting from March-May
2009, we can expect large-scale civil unrest, he said. “It will be caused by the
rise of general awareness throughout Europe, America and Asia that hundreds of
millions of people in rich and poor countries are experiencing rapidly falling
consumption standards; that the crisis is getting worse not better; and that it
has escaped the control of public authorities, national and international.”

 

Governments have so far managed to deflect attention from
their role in the crash, their slipshod monitoring, by declaring themselves to
be indispensable to the solution. This may save the skins of politicians in
wealthier countries who can expensively try to prop up banks and sickly
industries. But it does not work in countries that are heavily indebted, with
bloated and exposed financial sectors.

(Source : The Times of India, 2-2-2009)

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Personal touch : Name cow to get more milk

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49 Personal touch : Name cow to get more
milk


By just giving a cow a name and treating it as an individual,
farmers can increase their milk yield substantially. The study by Catherine
Douglas and Peter Rowlinson of Newcastle University found that when each cow was
called by name on farms, the overall milk yield was higher than where they were
herded in a group.

“Just as people respond better to the personal touch, cows
also feel happier and more relaxed if they are given a bit more one-to-one
attention,” explained Douglas, who works at the Newcastle School of Agriculture,
Food and Rural Development.

“What our study shows is what many good, caring farmers have
long since believed. By placing more importance on the individual, such as
calling a cow by its name or interacting with the animal more as it grows up, we
can not only improve the animal’s welfare and her perception of humans, but also
increase milk production.”

Douglas and Rowlinson questioned 516 British dairy farmers
about how they believed humans could affect the productivity, behaviour and
welfare of dairy cattle. Almost half or 46% said the cows on their farm were
called by name. Those that called their cows by name had a 258 litre higher milk
yield than those who did not, said a Newcastle release.

Sixty-six percent of farmers said they “knew all the cows in
the herd” and 48% agreed that positive human contact was more likely to produce
cows with a good milking temperament. Almost 10% said that a fear of humans
resulted in a poor milking temperament.

(Source : The Times of India, 29-1-2009)

(Compiler’s remark — This is practised in India since
ancient times.)

 

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CBI seeks HC nod to prosecute judge

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47 CBI seeks HC nod to prosecute judge



The CBI has sought approval to prosecute a Punjab and Haryana
HC judge, Justice Nirmal Yadav, in the cash-at-Judge’s-door scam which came to
light in August last year. The agency said it has completed investigations in
the case and sent a report to the Union Government and the SC.

The Judge, Nirmal Yadav is accused of taking money from a
Delhi-based hotelier. Sources said that a report had been sent also to the DoPT
by the agency because the allegations against the Judge have been substantiated
by enough evidence and it now needs the approval to prosecute the Judge. In this
case the go ahead can be provided by President Pratibha Patil in consultation
with CJI K. G. Balakrishnan.

(Source : The Times of India, 24-1-2009)

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Vatican demands closure of tax havens

New Page 23.
Vatican demands closure of tax havens

Pope feels closure of
such offshore banks is the first step out of the current crisis

While international
pressure is mounting on offshore banks to relax secrecy rules, the Vatican, the
seat of the Catholic Church, wants all offshore tax havens to be closed. The
official statement from the Vatican, called an encyclical, is expected to ask
for a closure of such tax havens. The encyclical is scheduled to be released on
March 18 by Pope Benedict XVI.
The Catholic Church periodically issues the encyclical on various issues it is
concerned with. It had planned to come out with an encyclical on tax havens last
year, but postponed the date following a decision to do a thorough research on
global economics and the reasons that have led to the current slowdown.

The paper, in a
scathing attack on “unhealthy and inequitable financial practices,” also pointed
to the alarming figure of global deficit caused by offshore banking. The size of
global deficit is estimated to be around $ 255 billion, almost three times the
aid given to developing countries globally. Closure of these offshore banks,
according to the Pope, should be the first step out of the current global
economic crisis. It is also reliably learnt that the encyclical sees the tax
havens as the main conduit for transferring money from poverty-stricken nations
to the rich world and the consequent impoverishment of the people in developing
and under-developed countries.

The Vatican looks at
the huge amounts siphoned off to these offshore banks as the money that the
governments in developing countries could have utilised for helping the poor.
The Church’s concern on offshore banking also coincides with the global
awareness of fiscal dangers caused by tax havens. Such havens have also featured
in issues raised during the recent US presidential campaign. Democratic
presidential candidate John Edward had said that deposits worth $ 1.5 trillion
were held by US citizens in various offshore banks.

Current US president
Barrack Obama has vowed to check tax evasion by US citizens, estimated to be
around $ 100 billion every year. UK, too, has promised to review ‘offshore
centres’ under its jurisdiction. Unofficial estimates suggest that money stashed
away in these tax havens could be anywhere between $ 11-12 trillion.

According to a recent
report submitted to the Central Board of Direct Taxes, (CBDT) by a former
revenue official, the value of deposits held by Indians in Swiss Banks alone
could be over $ 1 trillion.

(Source : The
Economic Times, 23-2-2009)

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US infrastructure on shaky ground America’s roads, dams, bridges, schools are in dire straits, according to a report by the American Society of Civil Engineers, which assigned an overall ‘d’ grade to the nation’s infrastructure

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48 US infrastructure on shaky ground
America’s roads, dams, bridges, schools are in dire straits, according to a
report by the American Society of Civil Engineers, which assigned an overall ‘d’
grade to the nation’s infrastructure


America’s roads, public transit and aviation have gotten
worse in the past four years. Water and sewage systems are dreadful. The basic
physical backbone of American society is barely above failing, a report by top
engineers says. It’ll cost $ 2.2 trillion to fix America’s ailing
infrastructure, according to highlights of a report being released early, just
as the House of Representatives readies its first vote on President Barack
Obama’s call for a massive economic stimulus spending package. The country’s
roads, dumps, dams, bridges, schools and rail systems need lots of that money,
say the engineers, who would get a piece of the pie in working on the repairs.
Government officials are already aiming billions of dollars at those physical
needs as part of a $ 825 billion economic stimulus package. But the engineers
say that’s not enough. Overall, the American Society of Civil Engineers gives
the US physical backbone for everything from schools and parks to dams and
levees a D. That’s the same overall grade as the last time the group gave a
report, in 2005, but it really is slipping from a ‘high D’ to a ‘low D’, said
report chairman Andrew Herrmann.

(Source : The Times of India, 29-1-2009)

 

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Chinese restaurant has robots as waitresses !

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39. Chinese restaurant has
robots as waitresses !


A new restaurant has opened
in Shandong province of China which has robots as waitresses. The Dalu Robot
Restaurant, in Jinan, has six robot waitresses and can cater to up to 100
diners. The website Orange reported that the restaurant’s 21 tables are set in
circles and the robots follow a fixed route to serve diners in rotation. After
serving, the robots return to the kitchen to refill their carts for the next
round. Restaurant spokeswoman Wang Xianwei said all of the waiting on tables is
done by robots. However, the food is prepared by humans, and people are also
employed to welcome customers.

(Source : The Economic
Times, dated 11-12-2010)

“Many bought into the idea
that America could go from a technology-based, export-oriented powerhouse to a
services-led, consumption-based economy — and somehow still expect to
prosper . . . . That idea was flat wrong . . . . Our economy tilted instead
toward the quicker profits of financial services.”

— Jeffrey R. Immelt, Chairman
and Chief Executive, GE.

“Even if you’re doing a good
job, it doesn’t always get reported that way.”

— Steven A. Ballmer, Chief
Executive, Microsoft.

It takes about 1,000 litres
of water to produce a kg of grain, while it takes over 100,000 litres to produce
a kg of beef.

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Intel-Tech giant plans creating ‘Sub-Atom’ chip In India

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37. Intel-Tech giant plans
creating ‘Sub-Atom’ chip In India


Efforts to take PCs to the
masses in India hasn’t had a great record. Yet, Intel is taking new initiatives
in that direction.

The company’s chief
technology officer, Justin Rattner, said that he’s starting what he calls a
‘frugal engineering’ effort at its India facility. “It’s intended to bring high
technology to these huge populations, to those whom our products for the most
part do not touch today. And India seemed to be the perfect place to do that
kind of work,” he said.

Rattner said his lab was
‘kicking around ideas’ in the space. “We want to do very low-cost PCs, very
power efficient, very robust in the face of unreliable power sources. So we are
moving from a US/European audience, with hundreds of millions of customers, to
an audience of a billion or two billion. Give them online reach, but at a price
point that is unprecedented,” he said.

For this, he is even looking
at developing a new processor, a ‘Sub-Atom’ as he called it. Atom is currently
Intel’s cheapest processor and is used for netbooks, net tops, smartphones and
the company’s smart TV platform.

Rattner expects the India
lab to do a lot of rethinking on how to provide various functions on a chip.
“The India lab is currently working on absolutely leading-edge technologies, now
moving from 32 nanometre chips to 22 nm ones. What if we backed off, and used
chips of two generations back, say 65 nm ? Now, those plants are fully
depreciated, so the wafer costs are dramatically lower. But for a very high
volume, low-cost product, that technology may be sufficient. It’s a big mental
shift for Intel”, he said.

(Source : Extracts from
an article written by Mr. Sujit John in The Times of India, dated 13-12-2010)

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Cell towers likely sources of radiation, disease : Study of DoT says India should tighten norms

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38. Cell towers likely sources
of radiation, disease : Study of DoT says India should tighten norms


Cellphone operators have
long denied their transmitting towers atop buildings or on highways have any
adverse bearing on the health of humans or animals, despite several studies
across the world concluding the contrary. Now a report for the Department of
Telecommunication by a faculty of the Indian Institute of Technology, Powai,
reinforces what scientists have long held : that areas around cellphone towers
are high-radiation and consequently high-risk zones. Moreover, it recommends
that India, which has very ‘relaxed radiation norms’, must raise the safety bar.

Girish Kumar, professor,
electrical engineering department of the Powai institute, said : “These towers
transmit radiation 24×7, so people living nearby will receive 10,000 to
10,000,000 times stronger signal than required for mobile communication. In
India, crores of people reside in these high radiation zones.”

Kumar noted that the cell
phone industry was becoming “another cigarette industry, which for long kept
claiming smoking is not harmful. In fact, cellphone/tower radiation is worse
than smoking as one cannot see it or smell it, and its effect on health is noted
after a long period of exposure. Unfortunately, all of us are absorbing this
slow poison unknowingly.”

Cell shocking :



(1)
Cancer risk :



Use of mobile phones for
more than years poses a risk of brain cancer. Children and teenagers are five
times more susceptible as their brain is not fully developed and radiation
penetration is much deeper.

(2)
Infertility :



Studies confirm cell phone
radiation can drastically affect male fertility. Studies have found 30% sperm
decrease in intensive mobile phone users, in addition to damage of sperms.

(3)
Neurodegenerative diseases :



People living near mobile
phone base stations are also at risk of developing neuropsychiatric problems
as headache, memory loss, nausea, dizziness, tremors, muscle spasms, numbness,
tingling, altered reflexes, muscle and joint paint, leg/foot pain, depression,
and sleep disturbance. More severe reactions include seizures, paralysis,
psychosis and stroke.

(4)
Skin damage :



Radiation from cell towers
and mobile phones affects human skin. It can result in an increase in mast
cells, leading to the clinical symptoms of itch, pain, edema and erythema. It
also may be instrumental in higher concentration of the transtyretin protein,
which has an important role in causing nerves diseases like Alzheimers.

(5)
Interference with other gadgets :



Radio frequency exposure
from cellular phone base antennas and mobiles can affect patients with
pacemakers, implantable cardiovascular defibrillators and impulse generators.

(6)
Melatonin reduction :



Melatonin, a vital
neurohormone, regulates our circadian rhythm. Studies with animals show a
reduction in melatonin levels following radio frequency radiation exposure
from cell phones and cell towers. Turning off transmitters resulted in a
significant increased melatonin levels within few days.

(7)
Ear & eye damage :



Radiation emitted by
mobiles may damage the delicate workings of the inner ear, and long-term and
intensive use for more than four years and for longer than 30 minutes a day
creates high risk of irreversible hearing loss. Frequent use of mobiles can
also damage the visual system.

(8)
Sleep disorders :



Use of handsets before
going to bed delays and reduces sleep, and causes headaches, confusion and
depression. The findings are especially alarming for children and teenagers as
they use cell phones at night and keep the phone next to their head, it may
lead to mood and personality changes, depression, lack of concentration and
poor academic performance.

(Source : The Times of
India, dated 7-12-2010)

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Not the worst of times

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36. Not the worst of times


As 2010 draws to a close,
the opening lines of Dickens’ A Tale of Two Cities seem appropriate. What we see
is an unusual combination of bad headlines and good economic data — not just in
India but the world as a whole. The headlines talk of Europe being in a
debt-cum-currency crisis, and President Obama battling slow growth and high
unemployment. What the headlines don’t catch is that the International Monetary
Fund has upped its global growth forecast for (calendar) 2010, from 4.2% in
April to 4.8% in October. That is not very far from the average of about 5%
growth achieved in the three years from 2005 to 2007, before the Great Recession
hit. Note also that all talk of a double-dip recession has evaporated.

This combination, of
negative headlines masking good economic data, is evident in India too. The
Government is in crisis, corruption scandals rock the nation, and Parliament is
non-functional. But the economy chugs along, with GDP growth in April-September
at 8.9% — higher than forecast. The full year could see a return to 9% growth,
buoyed by a bumper kharif harvest. Tax revenue is doing well, the foreign
exchange reserves continue to climb, and the inflation curve is dipping. As Jack
Nicholson might say, this is as good as it gets.

If the macro-economic
numbers are so good, what explains the general sense of crisis ? The answer in
the West is that the problem is not growth per se, but its distribution.
While India and China grow at 9% to 10%, the developed economies are managing
barely 2% — not fast enough to reduce the unemployment numbers that surged
during the recession of 2009. The bigger worry is that many of the rich
economies, having piled up massive debt, fear a decade of slow growth as they
pay off the debt; in other words, there will be no quick exit — not just for
Greece and Ireland but also for Britain and others.

In India, the issues that
dominate the headlines can be licked more easily, provided one decides that
every crisis can be made into an opportunity. The Raja scandal can be used to
clean up the telecom rules once and for all. The mining and land acquisition
scandals have already provoked new Bills to clean up policies in these
problem-ridden sectors. All that one needs then is for the Government to decide
that, if it is willing to have the Supreme Court oversee the investigation of
the telecom scandal, it can live with a fully independent Central Bureau of
Investigation. Manmohan Singh must see that it is not enough for him to be
honest, his Government must be honest too. The only way he can ensure that is by
having an effective crime investigation agency that is immune to political
influence.

(Source : Extracts from
an article written by Mr. T. N. Ninan in Business Standard, dated 11-12-2010)

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Short of judges, govt. to start 2 IAS-like services

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35. Short of judges, govt.
to start 2 IAS-like services


The Centre is finalising the
creation of two all India services Indian Judicial Service (IJS) and Indian
Legal Service (ILS) to fulfil its promise to create 15,000 additional courts by
2012 and meet the demand for services of legal professionals from various
departments of the Union and State governments.

We will create two all-India
services IJS and ILS mainly aimed at capacity building at the lower levels of
the judiciary and to provide professional legal advice to various departments,
Law Minister M. Veerappa Moily told TOI.

Though he was tight-lipped
about the time frame of the plan, the Minister said the IJS would help attract
talent from all over the country for
appointment at the sessions judge level.

The ministry’s Vision
Document prepared last year had promised the creation of 15,000 posts of judges
for two years to tackle the backlog of nearly 2.5 crore cases in the trial
courts. But with that apparently not working out, the Government is keen to add
to the number of nearly 17,000 trial court judges by creating the IJS.

Law leash on lawyers conduct
likely soon :

The Government has proposed
a law, the Legal Practitioners (Regulations and Maintenance of Standards in
Professions, Protecting the Interest of Clients and Promoting the Rule of Law)
Act, 2010, to oversee the conduct of more than one million legal professionals
and supervise legal education. It also envisages a Legal Services Board that
will establish a panel to represent the interests of clients of legal
professionals.

(Source : The Times of
India, dated 5-11-2010)

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Govt. proposes super regulator for lawyers

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34. Govt. proposes super
regulator for lawyers


The Centre came out with a
proposed legislation to create a super regulatory body to oversee the ethics and
conduct of more than one million advocates and legal professionals as well
supervise the legal education system.

Given the flexing of muscle
by the Bar Council of India (BCI) in the recent past by being the sole
regulatory body for advocates, the ministry’s move is seen by experts as one
that would clip the wings of BCI.

Importantly, the proposed
law Legal Practitioners (Regulations and Maintenance of Standards in
Professions, Protecting the Interest of Clients and Promoting the Rule of Law)
Act, 2010 aims to control the conduct of legal professionals solicitors not
appearing in courts, those appearing in tribunals or even representing clients
in departmental inquiries who had not been within the ambit of the regulatory
mechanism of BCI.

It aims to protect clients
from harassment at the hands of those legal professionals who are not covered
under the Advocates Act, 1961, having not been registered by the concerned State
Bar Councils. The ministry has sought comments on the proposed law from the
public and the legal fraternity.

In addition, the Legal
Services Board (LSB), proposed to be set up under the Act in line with the one
functioning in the UK, would establish and maintain a panel of persons to be
known as consumer panel to represent the interests of consumers and clients of
the legal professionals. This move is meant to check exploitation of litigants
and clients by legal professionals, including advocates. The consumer panel
shall have a fair degree of representation of both the consumers/clients of the
legal professionals and those who are using or may be contemplating using the
services of the legal professionals as consumers/clients, the proposed law
mentioned.


(Source : The Times of
India, dated 5-11-2010)



 

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The right to privacy

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33. The right to privacy

For a government that has
been busy granting the people of India rights to employment, education and food,
the United Progress Alliance has been lackadaisical in protecting the citizens’
right to privacy. Industrialist Ratan Tata was, therefore, right to seek the
protection of the Supreme Court in the matter relating to leaked tapes of
telephone tapping undertaken by the Union Government’s tax authorities. After
finishing its internal investigations, the Government must tell the Parliament
as to why the Income-tax Department ordered the tapping of the telephone of
public relations professional Niira Radia, what relevant information was
procured and what action taken and, most importantly, how those secret tapes got
leaked. A government has the right to gather information about illegal and
anti-national activities of a citizen, provided due procedure is followed. Even
so, there can be no justification for leaking such tapes to the media and making
private conversations public. If the tapes have revealed any act of criminality,
illegality and such like penal offences, the Government is duty-bound to take
action against such offenders. However, no government should allow its
intelligence arms to be used to play favourites with corporate houses, the media
or political rivals.

When conversations taped are
purely private in nature, perhaps malevolent, perhaps in bad taste, perhaps
revealing a lack of integrity or judgement on the part of the interlocutors, but
not pointing to any criminal misconduct, agencies of the Government have no
business to go public. The Government has correctly decided to probe the leak of
these tapes and the guilty ought to be punished.

The leaking of the tapes
has, of course, contributed to some soul-searching within the media and the
corporate world, and that is a good thing. A positive consequence of the ongoing
controversies could be that new norms of corporate, political, governmental and
media conduct will be adopted by all concerned. While the consequences of an
illegal act, namely the leaking of the tapes, have been positive both for the
media and public life, the act itself should not go unchallenged. There have
been far too many instances of a breach of privacy and governmental intrusion
into a citizen’s private life in recent months. An atmosphere of fear is being
generated. People worry if they are being spied upon and their privacy intruded.
What’s troubling is that rather than any national interest, such investigations
seem to serve political and corporate interests. There has to be a greater
degree of transparency in the functioning of revenue and intelligence agencies.
These agencies should not be seen as handmaidens of vested interests and those
in power. Shades of the ignominious Emergency Era are being painted, with
detractors of the ruling dispensation finding themselves in difficult
situations. These tendencies should be nipped in the bud. Hopefully, the Supreme
Court will do its bit to empower the citizen, defending the right to privacy
without in any way coming in the way of the normal functioning of various arms
of the Government. For their part, both the media and the corporate world have
their lessons to learn.

(Source : The Business
Standard, dated 1-12-2010)

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Bihar : Victory for hope

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32. Bihar : Victory for hope


Governance trumps caste
politics as NDA sweeps Bihar. One hopes that political parties across all
colours pay heed to development agenda and jettison caste-based politics.

In this season of scams, the
Bihar assembly election outcome comes as welcome relief. The massive endorsement
given to Nitish Kumar, who sought a fresh mandate for his record in office and
emphasised a politics of governance over caste and communal paradigms, has
far-reaching implications not just in Bihar but also for the rest of the
country. A better-governed Bihar, one of India’s most populated and
underdeveloped states, will have a positive impact on the social and economic
profile of the country.

The Bihar verdict is
extraordinary for a variety of reasons. The scale of the result itself is
astounding because no political party or coalition has swept assembly elections
in Bihar in this manner in recent times. The success of the Janata Dal (United)-BJP
combine is comprehensive. The wins have come from across the state, and a
three-fourths majority could not have been possible but for support cutting
across caste and communal divides. Clearly, Nitish Kumar’s tenure as chief
minister has been a departure from the chaos under Lalu Prasad and Rabri Devi.

Nitish didn’t radically
transform Bihar, but gave Biharis hope of a better future. The turnaround in the
law and order situation, a prerequisite for state building, was the first step
towards realising that. A beginning was made in building infrastructure in the
state. Roads, bridges and culverts were built which made it possible for people
to travel and made small businesses viable. School education got a fillip with
massive recruitment of teachers, while school-going girls were given uniforms
and bicycles. The rise in enrolment figures and fall in school dropout rates
indicate that these interventions have succeeded. Women have been major
beneficiaries of these interventions and they voted in large numbers, presumably
for Nitish and allies.

The challenge now is to
deliver on the mandate. The current consensus in Bihar is for social peace and
economic development. Hopefully, the opposition in Bihar too will take the cue
from the election results and reorient its politics accordingly.

(Source : Times of
India, dated 25-11-2010)

(Comment : One hopes
that political parties across all colours pay heed to development agenda and
jettison caste-based politics)

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What will India do with UNSC membership ?

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31. What will India do with UNSC membership ?


Now that India has been
elected as a non-permanent member of the United Nations Security Council (UNSC),
for a two-year term, the Government and India’s diplomatic and strategic policy
community have to decide what to do with it. There is no doubt that India has
come a long way from the ignominious defeat of 1996, when India lost the UNSC
Asian seat to Japan 40 : 142 votes, winning this time 187 : 5 votes. India’s
economic rise in the past decade and its new strategic relationships with
several major and rising powers have all contributed to this impressive vote in
its favour. However, getting into the Security Council is only the first step.
India’s problem is that on many vital global and regional issues, there is no
genuine national consensus at home. Given the weakness of inherently fractious
and myopic coalition politics, there is always the danger that on vital issues,
the Government may find its hands and feet tied when it comes to taking a
position at the UNSC.

Hence, now that India is a
UNSC member, the Government should pro-actively seek to build a national
consensus on foreign policy issues of vital concern to India. In a democracy,
there will always be some critics of Government. That is both a necessary and
valuable aspect of a democracy. However, within the national mainstream, there
has to be some consensus on important international and regional issues where
India would be required to articulate its views at the UNSC. Apart from building
political consensus on international issues, the Government must also revitalise
and strengthen its foreign policy machinery. India has one of the smallest
foreign offices among major and rising powers. Its institutional capacity and
capability for diplomacy has not kept pace with the challenges of the new
post-Cold War and increasingly multipolar world that India now deals with.
Increasing recruitment at the entry level will not suffice. India needs a
quantum increase in manpower and intellectual capability in its foreign policy
machinery in a short period of time. This can only come from lateral entry of
professionals from other walks of life into diplomatic service. This challenge
will become even more pressing once India takes over the UNSC Asia seat from
Japan.

(Source : The Business
Standard, dated 14-10-2010)

(Comment : We also
need lateral entry of professionals in other areas of policy making !).

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Any bona fide measures taken by revenue to prevent circulation of black money, cannot be objected as interference with personal liberty or freedom of a citizen — SC

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  1. Any bona fide measures taken by revenue to
    prevent circulation of black money, cannot be objected as interference with
    personal liberty or freedom of a citizen — SC



The carrying of a huge sum itself gives rise to a
legitimate suspicion; the intelligence officers of revenue are, therefore,
entitled to satisfy themselves, not only that the money is from a legitimate
source, but also satisfy themselves that such a large amount is being carried
for a legitimate purpose; therefore, even if the carrier is not guilty of any
offence in carrying the money, the verification or seizure may be warranted to
ensure that the money is not intended for commission of a crime or offence.

Rajendran Chingaravelu v. R. K. Mishra, Addl. CIT,
(Civil Appeal No. 7914 of 2009) dated November 24, 2009.

(Source : Internet & Media Reports, dated 14-12-2009)

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Foreign investment proposals — via Mauritius

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  1. Foreign investment proposals — via Mauritius

As per recent press reports, the Foreign Investment
Promotion Board (FIPB) has rejected the view of the Tax Authorities to reject
foreign direct investment (FDI) proposals where such investments are proposed
to be made via Mauritius. The FIPB is said to have taken a policy decision not
to overrule such FDI proposals merely because they are proposed to be made
from Mauritius. The Tax Authorities are suspecting that ‘Treaty shopping’ is
being done by foreign investors by using Mauritius jurisdiction for investing
in India.

This question came up before the FIPB while considering a
proposal by a Mauritian holding company which wanted to invest a large sum of
money in a fund in India (India Value Fund). It is reported that rejecting the
‘Treaty shopping’ objection of the Department of Revenue, Ministry of Finance
(Revenue Department), the FIPB has approved this proposal and the proposal
will now be placed for final approval before the Cabinet Committee of Economic
Affairs (CCAE) of the Government of India.

The Revenue Department was having a generic objection to
foreign investment routed through Mauritius, with which India has signed a
DTAA. The concern of the Revenue Department is that Treaty shopping by a
resident of a third country results in loss of tax revenue for the Indian
Government by claiming capital gains tax exemption in India under the DTAA. It
is worth mentioning here that a large portion of FDI in India comes from
Mauritius.

The view of the FIPB is that since India has signed a DTAA
with Mauritius which is in force, the Revenue Department cannot take a generic
objection of ‘Treaty shopping’ for denying the foreign investment proposed via
Mauritius.

[It will be pertinent to note here that the Revenue
Department has issued a clarification dated 13 April 2000 (Circular No. 789)
clarifying that Foreign Institutional Investors (FIIs) and other foreign
investors who hold a valid ‘Tax Residency Certificate’ granted by Mauritius
Tax Authorities, will be regarded as residents of Mauritius and also the
beneficial owners of shares, etc. for granting of capital gains tax exemption
in India as per the India-Mauritius DTAA. The legal validity of this Circular
was later approved by the Supreme Court of India in its landmark ruling in the
case of Union of India v. Azadi Bachao Andolan, (2003) 263 ITR 706.]

(Source : Business Standard, New Delhi, dated
7-11-2009)

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Non-residents can work on Indian projects only on employment visa; Business visa norms to be tightened.

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  1. Non-residents can work on Indian projects only on
    employment visa; Business visa norms to be tightened.

In the present liberalised economic environment, Indian
companies are awarding work for execution of projects/contracts to foreign
companies, including Chinese. This has resulted in inflow of foreign
nationals, including Chinese, for execution of projects/contracts in several
sectors e.g., steel, power, etc. It has come to the notice of the
Government that a large number of foreign nationals, including Chinese were
coming for execution of projects/contracts in India on Business Visas instead
of the Employment Visas.

The matter has, therefore, been reviewed by the Government
and it has been decided that henceforth Business Visa will be issued only to
bona fide foreign businessmen who want to visit India to establish an
industrial/business venture or to explore possibilities to set up
industrial/business venture in India or who want to purchase/sell industrial
or commercial products or consumer durables, etc. according to provisions of
Visa manual.

It has also been decided that all foreign nationals coming
for execution of projects/contracts in India will have to come only on
Employment Visa and that such Visa will be granted only to skilled and
qualified professional appointed at senior level, skilled position such as
technical expert, senior executive or in a managerial position, etc. and will
not be granted for jobs for which a large number of qualified Indians are
available. Suitable instructions/guidelines have been issued to the Indian
Missions abroad to effectively regulate Employment and Business Visa regimes
and ensure that these are issued strictly as per prescribed norms.

As per the guidelines issued by the Government, Employment
Visa for foreign personnel coming to India for execution of projects/contracts
may be granted by Indian Missions to highly skilled and professionals to the
extent of 1% of the total persons employed on the project, subject to a
maximum of 20. However, this has been raised to 1% or maximum of 40 for power
and steel sector projects till June 2010. In case more foreign nationals are
required for any project then clearance of Ministry of Labour & Employment is
required.

(This information was given by the Minister of State for
Labour and Employment Shri Harish Rawat in a written reply in the Rajya Sabha.)

(Source : Internet & Media Reports, dated 16-12-2009)

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Anti-money laundering Act : RBI tightens KYC norms for politically exposed persons

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  1. Anti-money laundering Act : RBI tightens KYC norms for
    politically exposed persons

With the Prevention of Money Laundering (Amendment) Act,
2009 (No. 21 of 2009) coming into force from June 1, the RBI has advised all
NBFCs to maintain records of clients for a period of 10 years from the date of
transaction. The NBFCs will have to keep records of the identity of the
clients, both domestic or international, which will permit reconstruction of
individual transactions so as to provide, if necessary, evidence for
prosecution of persons involved in criminal activity.

However, records pertaining to the identification of the
customer and his address (e.g., copies of documents like passports,
identity cards, driving licences, PAN card, utility bills, etc.) obtained
while opening the account and during the course of business relationship would
continue to be preserved for at least 10 years after the business relationship
is ended as required under Rule 10.

RBI has further issued detailed guidelines on Customer Due
Diligence (CDD) measures to be made applicable to Politically Exposed Persons
(PEP) and their family members or close relatives. It is further advised that
in the event of an existing customer or the beneficial owner of an existing
account, subsequently becoming a PEP, NBFCs (including RNBCs) should obtain
senior management approval to continue the business relationship and subject
the account to the CDD measures as applicable to the customers of PEP category
including enhanced monitoring on an ongoing basis.

(Source : Internet & Media Reports, dated 17-11-2009)

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Fin panel moots dual rate for GST, end to all sops

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  1. Fin panel moots dual rate for GST, end to all sops

A task force on GST set up by the Thirteenth Finance
Commission has recommended that the tax on all goods and services be dropped
to 5% at the Centre and 7% at the state level, and that all exemptions be
scrapped. It does not, however, recommend a concessional rate for essential
items, as is the norm at present with the central excise and state value-added
tax.

The task force recommendations need not form the basis of
any decision on GST framework made by the Centre and states, both of which are
at an advanced stage of finalising their proposals for a dual GST. However, it
would serve as an input for the Finance Commission to work out the formula for
sharing Centre’s tax revenues with states. The report suggests that states as
well as the Centre completely give up their discretion to effect any changes
to tax rates unilaterally.

The changes will have to be approved by a council of
ministers, which would have the state finance ministers and the Union finance
minister as members. States would see this as an encroachment on their fiscal
autonomy. The council is to be a constitutional body, unlike the empowered
panel of state FMs which is a toothless body.

The panel has recommended that exemptions given to SEZs be
scrapped, and instead all goods and services exports be zero-rated. Only
public services provided by all levels of government, unprocessed food covered
by the PDS, education and health are to be exempt.

Other far-reaching recommendations include bringing real
estate into the ambit of GST. Thirteenth Finance Commission Chairman Vijay
Kelkar had been keen on this, and said as much at various fora. GST on real
estate would benefit homebuyers. Prices would fall as developers would get
credit for taxes paid on all inputs.

The impact of broadbasing the tax and dropping the rate
would be mixed. At one level, tax rates on most items will plummet,
translating into lower prices for buyers. The report suggests the transition
to the ‘flawless GST’ would result in a 1.22-2.53% drop in the prices of most
manufactured goods. Conversely, a host of items that are currently outside the
tax net or enjoy concessional rates — such as agri commodities and services —
may become slightly expensive.

(Source : The Economic Times, dated 16-12-2009)

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The CAG report on public sector units is a scandal in numbers.

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  1. The CAG report on public
    sector units is a scandal in numbers.

  • 419 number of Central public sector undertakings.

  • Rs.4,77,191 crore invested in equity and loans in
    government companies, corporations and institutions.

  • 284 companies and corporations audited by CAG. Of these
    185 earned profits, 70 were in the red and 24 were not operational.

  • 30 number of PSUs that were defunct or under liquidation.

  • 13 number of companies recommended for closure, winding
    up.

  • 72 number of companies with a negative net worth.

  • Rs.94,428 crore accumulated losses of the 72 companies in
    2007-08.

(Source : Business India Magazine, dated 8-11-2009)

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No entry for foreign law firms : Bombay High Court

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  1. No entry for foreign law
    firms : Bombay High Court

Foreign law firms have finally got a firm no-entry sign for
India. Almost 15 years after the RBI permitted three foreign law firms to set
up shop in India, the Bombay High Court said the decision of the bank was
unjustified under the existing laws that governed advocates and their practice
in the country.

Putting a full stop on the ‘can-they-can’t-they’ arguments
over entry of foreign law firms into India even for practice on only
non-litigious matters, the HC Bench headed by the Chief Justice held that
foreign law firms were barred from practising in the country under the
existing Advocates Act of 1961 and the various bar councils under it.

The HC disposed of a public interest litigation filed by
Lawyers’ Collective way back in 1995 against the permission given by the RBI
to the three foreign law firms. In 1995, the HC had stayed the bank’s
decision, but then the matter lay in cold storage for years before a lengthy
and heated hearing on the issue took place in Court for and against the
proposition. The Government said that practice by lawyers under the law meant
only litigious practice in Court, but dismissing that argument, the HC held
that, “It would mean that advocates debarred for professional misconduct would
then merrily carry on with practice in litigious matters.’’

“When efforts are being made to see that the legal
profession stands tall in the fast-changing world, it would be improper to
hold that the 1961 Advocates Act and the bar councils have limited role to
play in the field relating to practice of law,’’ the Court held.

But on the issues of reciprocity and other rules to enable
practice by foreign law firms in India, the HC directed the Central Government
which has been dealing with the issue for the last 15 years, to take an
appropriate decision ‘expeditiously’. The Centre was all for paving the way
for foreign law firms, but the Bar Council of India (BCI) was against letting
them in.

Till the Government decides to come out with a new law or
amend the existing laws, the HC said that persons practising the legal
profession whether in litigation or non-litigation work will be governed by
the Advocates Act, the Bar Council of India and the various state bar councils
as well as Courts to take action for professional misconduct.

Non-litigious practice of law in India is not unregulated
said the HC, quashing an argument made by the pro-foreign law firms’ lobby
that the law in India only covered practice in Court.

(Source : The Times of India, dated 17-12-2009)

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Fill vacant OBC quota seats with general category candidates : SC

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34 Fill vacant OBC quota seats with general category
candidates : SC

The Supreme Court today declared that the seats re-served
for ‘other backward classes’ (OBC) in Central educational institutions that
remain unfilled can’t be carried over to the next year and would have to be
filled in the same year from the general category.

The Court also ruled that the relaxation of marks for the OBC
category should not be more than 10% of those fixed for the general category.

These orders will come into effect this year itself.

The Constitution Bench headed by Chief Justice K. G.
Balakrishnan passed the orders while hearing an application seeking
clarifications in a recent judgment on the OBC quota in Central educational
institutions, especially the ones like the IITs and IIMs. In that judgment, a
few Judges had made certain observations on the limit for relaxation of rules
for the OBC candidates. Today’s order puts to rest doubts over the issue in
Government circles, educational institutions’ managements and students.

Moving the application, senior counsel K. K. Venugopal raised
another controversial issue, namely, the economic criterion for identifying the
OBC community. He referred to a reported decision of the Union Cabinet to make
every family with income up to Rs.4.5 lakh eligible for the reservation.

The counsel said that this was contempt of Court as it was
intended to circumvent the ‘creamy layer’ rule. He recalled the declaration of
the Kerala Government some time ago that there was no ‘creamy layer’ to be kept
out of the benefit in that State. The Supreme Court had struck down the
Notification.

The Judges told the counsel that this was a separate issue
and if a petition was moved regarding this, they would consider it. Venugopal
said he would move a petition challenging the Cabinet decision.

(Source : Business Standard, dated 15-10-2008)

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A reader’s feedback in Outlook Business dated 18-10-2008

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33 A reader’s feedback in Outlook Business dated 18-10-2008


“Your story says that India Inc is suffering unfairly because
of imbroglios such as Singur. But, remember villagers who have no other means to
make a living are affected by such uncontrolled indus-trialisation. Progress
should be equitable, with no one left behind.”

— Anirbhan Dasgupta, Kolkata

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Greenspan admits to ‘flaw’ in his

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31 Greenspan admits to ‘flaw’ in his market ideology

Former Federal Reserve Chairman Alan Greenspan said a
“once-in-a-century credit tsunami” has engulfed financial markets and conceded
that his free-market ideology shunning regulation was flawed.

“Yes, I found a flaw,” Greenspan said in response to a
grilling from the House Committee on Oversight and Government Reform. “That is
precisely the reason I was shocked because I’d been going for 40 years or more
with very considerable evidence that it was working exceptionally well.”

Greenspan said he was “partially” wrong in opposing
regulation of derivatives and acknowledged that financial institutions didn’t
protect shareholders and investments as well as he expected. Forecasting is an
inexact science, he said.

In May 2005 speech, Greenspan said that “private regulation
generally has proved far better at constraining excessive risk-taking than has
government regulation.”

Committee Chairman Henry Waxman, a California Democrat, said
Greenspan had “the authority to prevent irresponsible lending practices that led
to the sub-prime mortgage crisis.”

“You were advised to do so by many others,” he told
Greenspan. “And now our whole economy is paying the price.”

Greenspan opposed increasing financial supervision as Fed
Chairman from August 1987 to January 2006. Policy makers are now struggling to
contain a financial crisis marked by record foreclosures, falling asset prices
and almost $ 660 billion in writedowns and losses tied to US sub-prime
mortgages.

(Source : Business Standard, dated 24-10-2008)

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US Court verdict on software process patent stirs debate

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29 US Court verdict on software process patent stirs debate

A US Federal Court judgment disallowing business method (or
process) patenting, may have a direct impact on the ongoing debate over
amendments to the Indian patents manual. The US judgment could help in
interpreting whether business processes or software written in India can be
patented or not.

While large IT players like Microsoft, IBM have given a
thumbs up to the Bilski judgment, Indian companies like Infosys had been
lobbying for patents on software systems and methods. A US Federal Court for
appeals in Washington ruled against Bernard Bilski, who wanted to patent a
method for managing weather-related risk through commodities trading. The Court
said that business methods (like Amazon.com Inc’s one-click to buy goods on the
Internet, which was quashed later) cannot be patented.

Sun Microsystems’s director, Jaijit Bhattacharya said that it
was a positive move towards an appropriate interpretation of innovation and
patentability of software. “It would allow a more open regime and would help in
wider access to computing technologies,” he said.

Companies like IBM, Microsoft lobbied against business method
patenting. But companies like Accenture, Royal Philips Electronics NV, Bain
Capital LC were asking for more protection for business method patenting.

However, the ruling does not significantly impact large
Indian IT services companies, as none are majorly into product development and
patenting, at least at present. India’s largest IT services company TCS said
that it’s reviewing its stand on software patenting in the light of the current
judgment.

“The ideas and frameworks for business processes should not
be patentable but the content written within those frameworks should be allowed
to be copyrighted. Indian law is also within boundaries of the US Court
judgment,” said Nasscom President Som Mittal. There are few world famous Indian
IT products — like Flexcube and Finacle. But the judgment may affect smaller
companies which want to innovate, but were earlier being strangled by large
corporations on account of patenting of a process.
The judgment may also be used in the larger debate on software patenting in the
country. Venkatesh Hariharan, founding member of Knowledge Commons, an NGO,
said : “Business method patents are seven times more likely to be litigated as
compared to other patents, because it’s difficult to determine the boundaries of
abstract patents categories like business method and software patents. Indian
law is against software patents, but in practice, several software and business
method patents have been granted and these will need to be weeded out to prevent
future litigation. Overall, this is a good decision because it will reduce the
risk of litigation that hangs over users and developers of software.” Knowledge
Commons is lobbying for ‘no patents on software in India’ if it (the software)
is not tied to a specific hardware.

According to S. 3(k) of the Indian Patent Act : “A
mathematical or business method or a computer programme per se or
algorithms are not patentable.” But software in conjunction with hardware is
patentable in accordance with Indian law, which is giving rise to ambiguity. The
Bilski judgment may however be used as a reference for drafting the amendments
to the Indian Patents Manual and will also help in interpretation of the Indian
Patent Act. While rulings over the years have used different methods to
determine if a process is patentable, the Federal Court ruling said the sole
analysis should be the ‘machine-or-transformation’ test — which requires showing
that the claimed invention is either tied to a particular machine or that it
transforms an ‘article’ (such as a substance or data).

(Source : The Economic Times, dated 1-11-2008)

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Declare war on terror

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30 Declare war on terror

We, the people of India,

Declare war on terror today.

We face the gravest threat as a nation.

We pledge to


Fight against those who kill the innocent


Support measures that insure our safety


Expose corruption and incompetence that endanger

our security



Defeat the enemy by having zero tolerance of terror


Eliminate the forces which propagate hate


Be united in our resolve

Till victory is ours

(Source : India Today, dated 15-12-2008)

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Freedom from economics — Olympics in numbers

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28 Freedom from economics — Olympics in numbers

91,000 :

The number of seats available in the Bird’s Nest.

50 :

In minutes, the time it took to send all the athletes present
back to the Olympic Village after the ceremony.

10,000 :

The number of raincoats prepared for the athletes in case of
rain.

22,000 :

The number of performers and advisors for the ceremony.

314,224 :

Couples tied the knot across China on 8-8-2008, a one-day
record for marriages since 1949, when the People’s Republic of China was
founded. In Beijing alone, the host city of the Olympics, 15,646 couples were
married, 23 times the daily average.

75 :

In minutes, the time it took for the audience to leave after
the ceremony, which was 15 minutes less than expected.

(Source : The Economic Times, 11-8-2008)

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India and China — A comparison

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  1. India and China — A comparison

The government simply has to find a way to deliver the
basics. That is what will defeat the Maoists and hold off China.

Tensions with China and the challenge posed by Maoists have
had their share of headlines these past few weeks. They are seemingly
unconnected issues, but they come into focus together when one looks at key
statistics on economic growth and human development. Take China first, for it
has acquired massive strategic advantage in terms of global economic impact,
diplomatic reach, military might and a hold on the world’s imagination because
it has performed spectacularly over three decades. Its economy has grown
10-fold since 1978, while its foreign trade has multiplied 70-fold in the last
decade alone; its exports are now more than India’s GDP. By way of comparison,
India’s GDP has multiplied about six-fold in the same period. It will take
India a full decade to reach China’s current level of per capita income. By
then, China will have overtaken the United States as the world’s largest
economy (calculated on the basis of purchasing power parity).

When it comes to human development indicators, the gap is
even greater. China’s human development index (calculated by the UNDP on the
basis of three factors — income, life expectancy and education) was 0.772 in
2007; India’s was 0.612, which was the level China had reached in 1990 ! At
the present rate of progress on the index (1.3% a year for India, about the
same as China’s), it will take two decades for India to get to where China is
today. As for economic development, China creates 10 times the power
generation capacity that India does in a year. Whichever indicator you choose,
China is one to two decades ahead of India, and on a rapid ascendancy curve.
Naturally, it will flex its muscles.

All this is history, and explains power disparities between
the two countries today. What of the future ? Some answers come in the World
Competitiveness Report, put out by the International Institute of Management
Development (IMD). Among 57 countries, China ranks 20th, India comes in 30th.
What is revealing is why India ranks so low. Of four primary factors, the
country does very well on economic performance (12th) and business efficiency
(11th). But on government efficiency it ranks 35th, and on infrastructure 57th
(i.e., last !). Go into the details and the rankings become even more
instructive : the last rank is on account of education, and health and
environment, while on business legislation India comes in 42nd. In other
words, the primary challenges are in areas where action is required most of
all from the government.

(Source : T. N. Ninan in Business Standard,
24-10-2009)

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Stop consuming these medicines — Popular cold, pain drugs face ban

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  1. Stop consuming these medicines — Popular cold, pain drugs
    face ban

Popular and widely-used medicines like phenylpropanolamine
or PPA (found in cough and cold remedies like Vicks Action-500, Solvin,
Wincold), gastrointestinal tegaserod (marketed as Ibsinorm, Tegod, Tegibs),
anti-bacterial gatifloxacin (Gaity) and painkiller nimesulide (Nice and
Nimulid) are under government scanner on concerns raised about their adverse
reactions. The drug technical advisory board (DTAB) will take a decision next
month to ban or restrict the usage of these and other drugs whose combined
market sales are pegged close to Rs.400-500 crore a year.

Other ‘controversial’ drugs, letrozole (used for
infertility treatment in women; letroz), emergency contraceptive drug
levonorgestrel (I-pill and Unwanted 72), and human placenta extract (Placentrex
lotion and gel sold by Albert David) will also be examined by the health
ministry. Besides taking a decision on banning certain drugs or restricting
the use of some, DTAB will examine next month whether emergency contraceptive
pills should be available over-the-counter (OTC) as reports of their misuse
are frequent. It will also take a decision on whether letrozole, approved for
use in breast cancer, should be used for infertility treatment or not, a
health ministry official told TOI.

Earlier this year, the DTAB banned anti-obesity drug,
rimonabant, on account of its serious side effects.

(Pending a formal ban, doctors should stop prescribing and
we should stop using these medicines)

(Source : The Times of India, 1-11-2009)

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Security body sniffs at PN path to havens — Measures to Trace origin of funds thru PNs — NSC

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  1. Security body sniffs at PN path to havens — Measures to
    Trace origin of funds thru PNs — NSC

The National Security Council Secretariat has called for
measures to trace the origin of inflows through participatory notes (PNs) and
entities registered in tax havens like Mauritius, Cyprus and Cayman Islands, a
move that can impact both portfolio flows and foreign direct investment (FDI).

Unchecked flow of funds through these routes could result
in country-specific restrictions being rendered useless, the council has
informed top guns in the government. If the traceability condition does not
materialise, the government should make prior government approval mandatory
for investment from all known tax havens, the Council has suggested.

This means that investment in sectors where 100% FDI is
allowed through the automatic route would also need approval from the Foreign
Investment Promotion Board (FIPB) if the government accepts the Council’s
suggestion.

In the case of PNs, the Council has called for more
disclosures since actual source of funds remains unknown even after extensive
investigation. There is also a need to distinguish investment by private funds
as compared to sovereign funds, the Council has said in a note, recommending
measures to step in security screening of FDI in view of increase in
cross-border terror attacks and escalation in money laundering.

PNs are used by overseas investors, who are not registered
with SEBI, to invest in the Indian market through registered foreign
institutional investors (FIIs). Despite recent efforts to discourage
investments through PNs, flows through this route continue.

Almost 44% of the equity FDI inflows into the country
originate from Mauritius while Cyprus accounts for nearly 2.93% of the FDI
flowing into India. Cayman Islands is the 12th largest source of FDI flows
into India, accounting for nearly 0.71% of the foreign investment into India.

The revenue department has also been objecting to FDI from
tax havens on grounds of ‘treaty shopping’ or use of these destinations to
route funds flows with the objective of gaining a tax advantage.

(Source : The Economic Times, 23-10-2009)

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CVC for major penalty against 4 from CBEC and 3 from CBDT in August

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  1. CVC for major penalty against 4 from CBEC and 3 from CBDT
    in August

The Central Vigilance Commission disposed of 536 cases
during August 2009 referred to it for advice. The Commission advised
initiations of major penalty proceedings against 106 officers. Of these, 21
were from M/o Railways, 21 from public sector banks, 13 from MCD, 8 from
Northern Coalfields Ltd., 5 from Central Coalfields Ltd., 4 each from CBEC,
MHA & Ministry of Urban Development, 3 each from P.G. Institute of Medical
Education & CBDT, 2 each from D/o Telecommunications, Ministry of Labour and
ESIC. The remaining 7 cases pertained to different departments of the
Government of India and PSUs.

The Commission also advised imposition of major penalty
against 68 officers including 14 from National Aluminum Co. Ltd., 12 each from
Central Coalfileds Ltd. & Public Sector Banks, six from Ministry of Railways,
5 each from National Insurance Co. Ltd. & DDA, 2 each from Border Roads
Development Board & Central Board of Excise and Customs. Remaining 10 cases
pertained to different departments of the Government of India and PSUs.

On the Commission’s recommendations, the competent
authorities issued sanctions for prosecution against 20 officers including 16
from CBEC. Major penalty was imposed on 77 officers. These included 10 from
FCI, 9 from Ministry of Railways, 8 from New India Insurance Co. Ltd., 7 each
from Public Sector Banks & Oriental Insurance Co. Ltd., 6 each from Department
of Telecommunications & ICAR, 5 from Eastern Coalfields Ltd., 3 each from DDA,
Council for Development Peoples & CBDT, 2 each from Central Warehousing Corp.
Ltd. & Ministry of Water Resources. The remaining 6 cases pertained to
different departments of the Govt. of India and PSUs.

Recoveries to the tune of Rs.29.15 crore were affected
after Commission conducted technical examination of some departments.

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7,500 offshore tax evaders come clean

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  1. 7,500 offshore tax evaders come clean

Some 7,500 wealthy Americans turned over information about
hidden overseas assets, including some valued at more than $ 100 million,
ahead of a tax amnesty program’s deadline, the top US tax collector said. Doug
Shulman, commissioner of the Internal Revenue Service, said his agency would
expand its crackdown on offshore tax evasion and will open new criminal
investigation offices in Beijing, Panama and Sydney, Australia. The amnesty
plan revealed accounts in 70 countries.

Under the amnesty program that began in September, tax
cheats can declare offshore accounts and income, pay reduced fines and, in
general, get immunity from criminal prosecution. The program turned up
undeclared offshore accounts ranging from $ 10,000 to more than $ 100 million.
At the heart of the US offshore tax effort is the government’s investigation
of UBS AG (UBSN.VX). The giant Swiss bank earlier this year settled a criminal
probe by paying $ 780 million and admitting it helped US citizens evade taxes.
In August, the bank agreed to turn over 4,450 names of clients with
undisclosed offshore accounts to end a related civil lawsuit.

Senator Carl Levin, a Democrat and chairman of the Senate
Permanent Subcommittee on Investigations, has estimated the US loses $ 100
billion annually from international tax evasion. He questioned how many of the
individuals came forward without nudging from banks.

(Source : www.financialexpress.com, 20-10-2009)

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Govt. readies biz vigilance system

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  1. Govt. readies biz vigilance system

Having failed to detect the Satyam scam, the government has
embarked on a new vigilant system to track corporate frauds. As a part of
this, it has decided to look into companies whose financials are found to be
suspicious.

There will be several triggers to generate any suspicion on
the activities of a corporate. These include things like unusually high jump
in profits, suspect related party transactions, and huge amounts of unutilised
cash and bank balance, the official said.
Once a list of suspect companies is drawn up, these would be looked into by
the RDs and the RoCs who would look into their filings and financials further.

However, this would be a noninvasive document verification exercise, the
official said, pointing out that there was no intention of hounding the
corporate sector.

The technology-driven initiative comes as the government is
taking steps to further strengthen the MCA21 programme, which was initiated in
2006 and enables electronic filings, storage, retrieval, processing and
transmission of transactions, including incorporation of a company, and filing
of annual and statutory returns. The exercise to upgrade MCA21 has started,
ministry officials said.

(Note : Let us keep our fingers crossed & see how
the system actually works. People behind the system are more important than
the technology involved. Corruption can subvert any sophisticated & advanced
system.)

(Source : The Times of India, 27-10-2009)

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PwC wants early Satyam settlement

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  1. PwC wants early Satyam settlement

Price Waterhouse, the Indian affiliate of global accounting
firm PricewaterhouseCoopers, has filed a consent application with capital
market regulator SEBI as part of an effort to reach an early settlement to the
ongoing investigation into the accounting fraud at Satyam Computers, renamed
as Mahindra Satyam, after the Mahindra group acquired the troubled company
earlier this year.

Price Waterhouse was the statutory auditor for Satyam
Computer, whose founder Ramalinga Raju confessed in January this year to
having fudged accounts to perpetrate a Rs.7,000-crore financial fraud. A probe
into the scam revealed that documents were forged to back fake bank deposits.

Price Waterhouse filed an application late last week in response to the show
cause notice that SEBI had issued in February 2009. This consent application
is in line with SEBI’s regulations and does not acknowledge Price Waterhouse’s
alleged wrongdoing in the Satyam fraud.

A Price Waterhouse spokesperson confirmed that the firm has
decided to pursue consent proceedings in relation to SEBI proceedings on the
audit of Satyam Computer Services rather than engage in a potentially long
drawn out legal proceedings with the regulator.

Under SEBI rules, after a consent application is filed,
representatives of SEBI meet up with the company to arrive at some sort of a
settlement, which could also include payment of a fine. After both parties
agree to a settlement, a high powered committee of SEBI passes a consent
order.

(Source : The Economic Times, 24-10-2009)

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Rules under Information Technology Act notified

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  1. Rules under Information Technology Act notified

The Information Technology (Amendment) Act, 2008 has come
into force today. The Rules pertaining to S. 52 (Salary, Allowances and Other
Terms and Conditions of Service of Chairperson and Members), S. 54 (Procedure
for Investigation of Misbehaviour or Incapacity of Chairperson and Members),
S. 69 (Procedure and Safeguards for Interception, Monitoring and Decryption of
Information), S. 69A (Procedure and Safeguards for Blocking for Access of
Information by Public), S. 69B (Procedure and safeguard for Monitoring and
Collecting Traffic Data or Information) and notification u/s.70B for
appointment of the Indian Computer Emergency Response Team have also been
notified.

With proliferation of information technology enabled
services such as e-governance, e-commerce and e-transactions; data security,
data privacy and implementation of security practices and procedures relating
to these applications of electronic communications have assumed greater
importance and they require harmonisation with the provisions of the
Information Technology Act. Further, protection of Critical Information
Infrastructure is pivotal to national security, economy, public health and
safety, thus it had become necessary to declare such infrastructure as
protected system, so as to restrict unauthorised access.

So, penal provisions were required to be included in the
Information Technology Act, 2000. Also, the Act needed to be
technology-neutral to provide for alternative technology of electronic
signature for bringing harmonisation with Model Law on Electronic Signatures
adopted by United Nations Commission on International Trade Law (UNCITRAL)
Keeping in view the above, Government had introduced the Information
Technology (Amendment) Bill, 2006 in the Lok Sabha on 15th December 2006. Both
Houses of Parliament passed the Bill on 23rd December 2008. Subsequently the
Information Technology (Amendment) Act, 2008 received the assent of President
on 5th February 2009 and was notified in the Gazette of India.

(Source : Internet & Media Reports, 28-10-2009)

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