• DoT wants 3G halted till security improves
• Forex from overseas film rights to get tax sops: SC
• No tax on expats for work unrelated to Indian ops
• FCCB buyback deadline may be extended
• Auditors may get powers to refuse to sign accounts
• SC dismisses DCM’s appeal on inter-state sales
• Kotak Mahindra likely to bid for RBS Indian assets
• Tech-savvy, English-proficient workforce to keep India a top outsourcing destination’
• New SEZ notification needs clarity, procedural changes, says KPMG
• SpiceJet, GoAir in talks for consolidation
• DoT has asked state-owned telcos BSNL and MTNL to stop providing 3G services such as high-speed internet and video conferencing on mobiles until the country’s security agencies put up the requisite infrastructure to track these high-end services. BSNL & MTNL, who currently are the 3G service providers, are expected to reply to DoT’s demands early this week. According to sources, 3G offerings of both co.s will continue to be available even as they address the concerns of security agencies. (ET)
• Supreme Court has recently ruled, turning down the plea of revenue department which stated that films are not ‘goods’ thus deduction under Section 80HHC was not permissible to them, that the foreign exchange earned by transferring rights of exploitation of films outside India by way of lease is admissible for deduction under Section 80HHC of the Income-Tax Act, 1961. The court stated that the basic requirement of Section 80HHC is earning in foreign exchange and retention of profits for export business. Profits are embedded in the ‘income’ earned. Earning of income depends on sale of goods and services. As the difference between the two is getting blurred with globalization and cross-border transaction, with technological advancement one has to change the thinking regarding concepts like goods, merchandise and articles. (ET)
• According to a recent ruling by the Delhi bench of the Income Tax Appellate Tribunal (ITAT), tax liability of expatriate employees responsible for operations of a co in India as well as other countries in the region could go down substantially as they need not pay tax on salary earned outside India for work unrelated to Indian operations. The ruling states that if the expat employee is able to substantiate that he has not performed any activity relating to Indian operations while working outside India, the salary for those days would not be taxable here. (ET)
• According to sources, Reserve Bank of India (RBI) is considering a proposal to allow companies another six months to buy back or prepay their Foreign Currency Convertible Bonds (FCCBs). The deadline for the original buyback scheme ends on March 31. Of the 156 companies that raised money through FCCBs, 9 co.s (including Mahindra & Mahindra, Reliance Communications, Tulip Telecom, Moser Baer, Jubilant Organosys, Radico Khaitan, Hotel Leela, Pidilite Industries and Uflex) have exercised a premature buyback option after RBI announced the scheme in December 2008 and have bought back bonds worth $240 million (around Rs 1,200 crore) at a discount of 30 to 50 per cent on the face value. (BS)
• According to sources, a special group constituted by the Institute of Chartered Accountants of India (ICAI)is planning to push for statutory backing for empowering auditors to refuse signing a company’s accounts if they are not found to be in order. Govt is laso learnt to be asking ICAI to suggest ways to strengthen reporting norms. The special group is expected to finalise the recommendations over the next few weeks and submit its report to the ministry of corporate affairs (MCA). (BS)
• Supreme Court has dismissed the appeal of DCM Ltd and upheld the judgment of the Delhi high court in a case raising the question whether the delivery of chemicals to stockists and distributors made in Delhi was local or inter-state deal. The distributors/ stockists of DCM had assigned territories outside Delhi. DCM maintained that they were local sales. However, the revenue authorities felt that they were inter-state sales under the Central Sales Tax Act. The Delhi high court held that the sales were inter-state sales and directed the company to show that the chemicals were locally sold by the purchasing dealers and that they were not transferred to branches outside Delhi. The company appealed to the Supreme Court, which dismissed its petition. (BS)
• According to sources, Kotak Mahindra Bank may bid for the takeover of the Indian operations of the Royal Bank of Scotland (RBS), which has put some of its Asia-Pacific operations on the block after being badly hit by the global financial crisis. HSBC, Standard Chartered and Australia’s ANZ have already expressed their interest to buy out RBS’s Asia-Pacific operations. Currently, RBS India operations basically constitute the business of ABN Amro acquired internationally last year. (FE)
• Global financial firm Moody’s has said India will remain a top outsourcing destination because of its tech-savvy and English-proficient urban workforce whose wages are much lower than their western counterparts. It further stated that India’s outsourcing industry would certainly be hurt by the global downturn, as demand for IT support or telemarketing has weakened significantly in recent months. However, it would recover well after the global economy rebounds, though the recovery is expected to be gradual as businesses will remain cautious with investment plans. (FE)
• KPMG has said that govt should further clear its stand regarding the latest notification on SEZs and make the cumbersome procedure more streamlined. Govt should clarify as to whether the new notification is optional because as per the SEZ Act the services provided to the SEZ units are completely exempt from service tax. The process of claiming the funds require following an elaborate procedure, the process should be streamlined so that the refunds are obtained on a timely basis, preferably within 30 days.
• According to sources, Delhi-based low-cost carrier SpiceJet is in talks with the Wadia group-owned GoAir for either a merger or to acquire a controlling stake and the SpiceJet CEO Sanjay Aggarwal met GoAir Managing Director Jeh Wadia to discuss a deal recently. SpiceJet is also learnt to have recently made an offer to GoAir Chief Financial Officer G P Gupta to join the Delhi-based airline as chief administrative officer. While SpiceJet reportedly wants to set up a regional airline to connect smaller cities, GoAir flies to several smaller cities and has applied for slots to several more. (BS)
