• Private PF investment in equities to be tax-free
• New FDI rule allows Unitech to raise 5k cr sans govt nod
• Exchange earned on films abroad can get I-T deduction – SC
• Firms committing criminal offences can be prosecuted, but not sent to jail - SC
• Task force recommends regulator for real estate
• Industry to see capacity addition in 2010: CMIE
• CII seeks change in accounting norms
• Central Board of Direct Taxes (CBDT) has issued a notification, aligning the investment pattern prescribed in its rules with the new one given by the Department of Economic Affairs, to allow tax-free status to equity investments made by funds such as private provident funds and superannuation funds. The DEA, under the finance ministry, had announced the new investment formula for these funds in August 2008, permitting them to invest up to 15% of their corpus in the stock market instead of the earlier 5%. The new investment pattern comes into effect from April 1, 2009. According to the new pattern, equity investments can be made in shares of companies on which derivatives are available on BSE and NSE. Accordingly, the funds can channelise up to 55% of their funds in central and state government securities and units of mutual funds investing in such securities. They can also park up to 40% of their funds in debt securities with maturity of not less than three years issued by companies, banks and public financial institutions, term deposits of scheduled commercial banks and rupee bonds having an outstanding maturity of at least three years issued by multilateral institutions such as the International Bank for Reconstruction and Development, International Finance Corporation and the Asian Development Bank. Investment in money market mutual funds has been capped at 5% of the total corpus. (ET)
• Following recent change in the foreign investment policy, real estate company Unitech can now raise a maximum of Rs 5,000 crore through global depository receipts (GDRs) without waiting for an approval from the FIPB. The finance ministry has accepted Unitech’s request to withdraw its proposal to raise foreign capital through GDRs and instead allowed it to access the automatic route. Finance ministry has acceded to Unitech’s contention that it is owned and controlled by resident Indian citizens and its downstream investments in other companies would not be deemed foreign. The company had sought FIPB’s permission to issue GDRs and convert its status from operating to operating-cum-holding company for investing in companies down the line. (ET)
• Supreme Court has dismissed the appeal of the income tax department and ruled that the foreign exchange earned by transferring the right of exploitation of films outside India by way of lease is admissible for deduction under Section 80HHC of the Income Tax Act 1961. According to the department, movies/films are not goods hence Section 80HHC cannot be invoked which grants benefit only to sale. (BS)
• Supreme Court, in the case of Standard Chartered Bank vs Directorate of Enforcement held that companies which commit criminal offence can be prosecuted and sentenced to fine, though they cannot be sent to jail as they are only juristic persons. Reiterating its principle stated in Ballarpur Industries Ltd vs State of Tamil Nadu, SC observed that "there is no immunity to the companies from prosecution merely because the prosecution is in respect of offences for which the punishment prescribed is mandatory imprisonment and fine. It has been held that though a company cannot be sentenced to imprisonment, it can nevertheless, be prosecuted and the court can impose punishment of fine instead." (BS)
• A high-level task force of Govt has recommended setting up a “real estate regulator” and a dedicated institutional framework to look into the issue of providing affordable houses to the people. The regulator could serve as a single window for overseeing and monitoring the affordable housing agenda and promote policy reforms such as stamp duty and registration and protect consumer from real estate fraud. (Mint)
• According to Centre for Monitoring Indian Economy’s (CMIE) monthly review, Indian industry is likely to see a lot of capacity addition in FY10. A compilation of investments schedules of companies shows that at least 900 projects entailing an investment of Rs 5 trillion are scheduled for commissioning in FY10. This will be the single largest annual commissioning of investments in India. (Mint)
• Confederation of Indian Industry (CII) has suggested modification in the accounting norm of recording notional losses on account of foreign exchange transactions, a demand that does not finds favour with accounting regulator Institute of Chartered Accountants of India. CII has proposed that the accounting requirements be reviewed to allow the accounting of foreign exchange revaluation gains/losses over the remaining tenor of the underlying items of borrowings or receivables. (Mint)
