• Growth intact-Indian economy seen growing 7.1% despite slowdown
• SEBI to seek details on end use of money raised via pawned shares
• New Companies Bill likely to see stronger auditing regulations
• Govt to slap Rs 477-crore fine on telcos
• ITC-Sheraton ruling holds hope for foreign hoteliers
• According to the advance estimates of national income released by the Central Statistical Organisation (CSO), the Indian economy will turn in the second-fastest growth rate in the world after China’s 8% for 2008-09. India’s GDP is expected to sustain or improve on this growth rate next fiscal. CSO’s forecast of 7.1% in the current fiscal, the lowest in the last six years, is higher than those by most non-government estimates. The economy had grown 7.8% in the first half, suggesting a sharp slowdown in the second half. Growth has been fuelled by sustained investment and still-buoyant services. Growth rate in the manufacturing sector halved from 8.2% in 2007-08 to 4.1% in 2008-09. (ET)
• SEBI is planning to make it compulsory for promoters to disclose the end use of funds raised through pledging their shares with financiers in order to increase transparency and provide more information to investors. SEBI is also considering putting in place rules to prevent misuse of the holding company structure by promoters to get around the disclosure requirements. (ET)
• According to sources, the new Companies Bill would provide a stronger regulatory platform and stronger auditing standards. The new Companies Bill, currently before the Parliamentary standing committee on finance, specifically provides for a clause, which states that the govt may by notification, lay down auditing standards. It further provides that until any auditing standards are notified, any standard or standards of auditing specified by the Institute of Chartered Accountants of India shall be deemed to be the auditing standards. (FE)
• Communications ministry is set to impose a combined fine of Rs 477.15 crore on all telcos—existing operators and well as new licensees—for failing to meet their roll-out obligations. As per the licence conditions, all operators are scheduled to launch services, in a phased manner in pre-determined geographical areas within a stipulated time frame. All operators have failed to fulfill this criteria, especially in the smaller towns and cities, where their network roll-outs have happened at a slower pace. Additionally, all the new telecom licensees including Loop, Unitech, Datacom, S Tel, Shyam-Sistema and Swan have failed to honour their rollout commitments.(ET)
• Delhi High Court has recently held that income paid by the Indian partner to its foreign counterpart is exempt from tax since it cannot be considered royalty or technical fees. The ruling came in favour of US-based Sheraton International Inc in response to an appeal filed by the IT department challenging the service agreement between ITC and Sheraton International Inc. The I-T department has taxed 75 per cent of the revenues that ITC paid to Sheraton for four assessment years — 1995-96, 1996-97, 1999-2000 and 200001 — as royalty or technical fees under section 9 (1)(vi) of the Income Tax Act, 1961. The High Court said that royalty and technical fees are strictly meant for transfer of technological know-how or other types of included services. Payments (usually a percentage of the room sales) for marketing-related services and the use of trademarks are incidental to the main objective of the commercial agreement. The ruling will benefit other foreign hoteliers that have signed similar agreements with their Indian counterparts to manage their brands. (BS)
