• Press Note 4 offers relief to foreign cos
• IT dept seeks Hutch details from Mauritius
• IT dept moves court to recover Rs 500 crore from BSE brokers
• Inflation at 15-month low of 3.36%; may fall below 1% by March
• Govt has issued Press Note 4 of 2009, clarifying the position on downstream investments by foreign owned or controlled co.s. According to the Press Note, a foreign-owned or controlled Indian company, that either runs a business (operates, in government parlance) or runs a business and also makes downstream investments in other companies will no longer have to seek prior clearance from FIPB for making investments in yet another company. Such co.s will only need to intimate FIPB, DIPP and the Secretariat for Industrial Assistance (SIA) within 30 days of downstream investment. Two categories of foreign-owned or controlled Indian companies which will still need FIPB clearance for making downstream investments are, investment companies (called holding companies in Press Note 9 of 1999) and companies that neither operate nor invest at the moment but could undertake either activity subsequently. An Indian company simply means a company registered in India, regardless of ownership and control. A foreign-owned Indian company means a company registered in India with a majority foreign holding. And, a foreign-controlled Indian company means a company registered in India having majority of directors on the board appointed by non residents. (ET)
• Income-tax department is learnt to have sent letters to govt of Mauritius seeking information on the nature of business carried out by Mauritius-based subsidiaries through which Hutchison International had sold its stake in Indian telecom major Hutchison-Essar to Vodafone. The move is learnt to be part of the IT department’s efforts to strengthen its $2-billion tax case against Vodafone. The dept is also learnt to have sent letters to govt of Netherlands, seeking details of the structure and nature of the business of Vodafone. (ET)
• IT Dept has moved Bombay High Court to recover nearly Rs 500 crore from top stock brokers (nearly 60 %), who have managed to avoid paying income tax on pretext of claiming a 25 % depreciation benefit using the written down value method on the Bombay Stock Exchange (BSE) membership card. These brokers are learnt to have converted their member cards to corporate cards in 1997, after govt gave a onetime exemption from capital gains tax to encourage speedy corporatisation of the broking business. The I-T dept is of the view that depreciation benefits can be claimed on items like plant and machinery, which suffer wear-and-tear with time, and not on the card, the value of which fluctuates and can also appreciate. (BS)
• Inflation has fallen sharply by 56 basis points to a 15-month low of 3.36% for the week ended February 14, raising expectations of rate cuts from RBI. With the government already announcing a 2% cut in service tax and excise duty, the action is now expected to shift towards the RBI. Inflation stood at 3.92% in the previous week. inflation rate is now expected to fall below 1% by March end, while RBI has targeted an inflation of 3% or lower. (FE)
