| Realtors under Sebi scanner for fraudulent investment schemes |
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New Delhi, 24 March Suspecting investor frauds in the projects being launched by numerous real estate developers, capital markets regulator Securities and Exchange Board of India ( Sebi) is probing them for possible violations of collective investment scheme (CIS) regulations. A CIS entity typically raises funds from the public to invest the money in a project or investment scheme proposed with the capital collected from apool of investors and the returns are shared on pro- rata basis at a later stage The regulator has been flooded with complaints of investors being duped by real estate companies promising huge returns in projects proposed to be developed from scratch through public money, prompting it to launch probe against 50- 60 such developers, a senior official said. Most of these companies are operating in the northern and western states, while some of them are also active in West Bengal, Assam and other parts of the country, he said. |
| One travel allowance can be extended |
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When one of my friends said he was rushing to plan a trip by March 2013, as he did not want to lose the LTA exemption, he caught everyone's attention. When I explained the deadline was December 2013, not March 2013, some of those present wondered whether they could plan two holidays in case they hadn't taken any in the last block — 201013. The answer was ' yes'. Isaid LTA could be availed of twice in a four- calendar- year period, for self or family ( spouse, children and dependent parents). In case of air travel, the LTA exemption would be valid for travel in the economy class of a national carrier, through the shortest route. For other modes of travel, exemption would be valid on the air- conditioned first- class train fare through the shortest route, in case the end- points are connected by rail. If not, it is also valid on the first- or deluxe- class fares of public road transport, if there is a recognised mode of public transport. A friend who is a passionate driver and frequently takes trips in his car across the country was sceptical on whether tax rules would recognise travel by personal vehicle. Again, the answer is ' yes'. However, to discourage false claims, some employers don't allow this. According to law, exemption is allowed on all modes of travel and is restricted to the actual expenses on travel — fuel and toll charges. Of course, if required, the bills for these would have to be presented as proof for verification by tax authorities. Some employees claim such exemptions in their tax returns, in case an employer doesn't allow these exemptions. For travel to multiple places, exemption would be based on the cost of travelling to only one destination. Usually, one selects the farthest destination. Another friend, who said he had not taken a leave in the last three years, wanted to know whether he could take one or two leaves by December 2013. And, if he took a single leave, would he lose the other? He was happy to know there was a ' carryover' concept, according to which an unutilised LTA could be carried forward and claimed in the first year of the next four- year block. This means in the 2014- 17 block, anyone with a leftover LTA claim would be entitled to three trips. As I knew my friend was planning to join another organisation in the near future, I clarified LTA could be claimed for multiple trips from both the employers, if the concession was unutilised. Of course, the norm for the total number of trips would have to be adhered to and employers would ask for a declaration of the number of trips the exemption was being claimed for. Some friends planning to go abroad were disappointed at the fact that exemption was available only for travel within India. That, too, for travel alone, not accommodation, food or sightseeing. What if a person entitled to an LTA doesn't get leave and his/ her family travels without him? Unfortunately, to avail of an LTA, an employee has to be part of the trip. As we started planning our next reunion, travel plans changed. The friend rushing to plan a trip keeping in mind the March 2013 deadline postponed his plans. Another decided to avail of the ' carryover option'. And, many of us expressed hope the law would be changed to include foreign trips and hotel expenses as well. If you don't use the two LTA exemptions by December 2013, one can be availed of in 2014- 17 LTA EXPLAINED: |You will get LTA allowance twice in ablock of four years |Allowed for domestic travel, by train, flight or road |Not allowed for foreign travel |2010- 2013 block is getting over in December 2013 |You are allowed to carry over one allowance to the next block |Even if you leave one company without using the LTA, it can be claimed from the next firm PRAMOD ACHUTHAN The writer is Tax Partner, Ernst & Young LTA can be claimed for self or family (spouse, children and dependent parents). But you have to travel with them to claim it The exemption is available only for travel within India |
| Former regulators cold to the idea |
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Mumbai, 24 March The proposal of the Financial Sector Legislative Reforms Commission (FSLRC) to have a unified regulator for the financial sector has not gone down well with former regulators of various financial sectors. Former regulators and industry experts are of the view that a super- regulator would not be able to do justice in addressing the varied problems that each of the financial sector faces. A government- appointed panel, chaired by retired Supreme Court judge B N Srikrishna, on Friday proposed a unified regulator for markets, insurance, commodities and pensions. The panel, whose proposals could change the financial landscape of India, also suggested five additional agencies, including an appellate tribunal that would subsume the Securities Appellate Tribunal ( SAT). The panel gave its report to Finance Minister P Chidambaram, who said the report would be made public in three to four days, after he discussed it with the Prime Minister. CS Rao, former chairman of the Insurance and Regulatory Development Authority (Irda), said this proposal might not help at a time when some countries that had adopted asuper regulator model are turning back to the original regulatory structure of individual regulators. He added that, in small nations, like Singapore, it could be feasible, where this model would help avoid overlaps. " In a large country like India, you need expertise in each field. This proposal would lead to a situation where people at the lateral level would have very little background of the segment ( example: insurance or stock markets) that they are working for. In some situations, a stock market expert could be working on insurance issue or vice versa," he said. Some others differ. G N Bajpai, former chairman of the Securities and Exchange Board of India ( Sebi) favoured a consolidated regulator for all financial services. "As FSDC is already existing, the concept of aconsolidated regulator has already been accepted in India. In any case, that's the need of the hour." His opinion is significant as at present, different regulators for different financial services leave room for regulatory arbitrage as distributors for these different products are the same. Distributors sell all products -- be they life or non- life insurance, MFs, bank products or security market products. Different regulators and different rules framed by them only create confusion for investors/ customers. Rao said, " Some have a view that the unified regulator model would help remove inter- regulatory disputes. But, I believe that to deal with this issue, we need to have alternate mechanisms in place, rather than having asuper regulator." BC Khatua, former chairman of commodity derivatives market regulator, the Forward Markets Commission thinks the commodity market needs a different treatment as it is still not mature and need to be nurtured. He said, " Commodity market is also a fundamentally different market from equity, insurance or pension segments. The basic intent of the commodity market is risk management and investment is incidental," he said. However, he has a different view for integration of regulatory practices in commodities. He said, " We have a separate regulator for commodities and for warehouses, and both should be consolidated under one regulator as commodity exchanges in any case recognise warehouses. In future, warehouse receipts will be traded on the same commodity exchanges as negotiable instruments." The approach paper had also said there was a need for separating the adjudication function from the mainstream activities of a regulator, to achieve greater separation of powers. This, said a former financial sector regulator, would curb the independent regulatory powers of the financial sector regulator. Lack of clarity could also be an issue, said some ex- regulators. J Hari Narayan, former Irda chairman, said the proposed model would lead to further confusion in the system. " The proposal lacks clarity. It has been adopted from the English model, which has its own faults. Dilution of regulations seem to be the purpose behind this proposal," he said. EXPERT VIEW "Commodity market is also fundamentally different from the equity, insurance or pension segments. The basic intent of the commodity market is risk management and investment is incidental. While other markets are basically investments for higher returns, in commodities, higher prices hurt consumers, while lower prices affect farmers and manufacturers, as the case may be" BC KHATUA Former FMC chairman "In a large country like India, you need expertise in each field. This proposal would lead to a situation where people at the lateral level would have very little background of the segment ( example: insurance or stock markets) that they are working for. In some situations, a stock market expert could be working on insurance issue or vice versa" CS RAO "FSDC is already existing. So, the concept of a "The proposal lacks any clarity. It has been adopted from the English model, which has its own faults. Dilution of regulations seems to be the purpose behind this proposal" JHARI NARAYAN Former Irda chairman |
| LEGAL DIGEST |
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The Supreme Court last week held that if a party to an arbitration agreement failed to appoint an arbitrator despite the demand of the opposite party, it forfeited the right to appoint one. After an application is made to the Chief Justice for appointment of an arbitrator the inactive party cannot come up with his nominee, the court stated in the judgment, Deep Trading Company vs Indian Oil Corporation. In this case, the corporation granted dealership of its oil products to the former firm. Later, the corporation suspended its supplies alleging violation of the terms. The firm wanted arbitration on the dispute. At first, the corporation did respond. But when the dealer moved the Allahabad Chief Justice under the Arbitration and Conciliation Act, the corporation named one of its executives as arbitrator. The Chief Justice, therefore, did not appoint an arbitrator. The dealer moved the Supreme Court. It stated that the corporation had failed to act as required under the procedure agreed upon by the parties and despite the demand by the dealer to appoint the arbitrator, the corporation did not make appointment until the application was made under the Act by the dealer. Under such circumstances, the corporation has forfeited its right of appointment of an arbitrator. The Chief Justice should have appointed an arbitrator. Therefore, the Supreme Court remanded the matter to the high court Chief Justice. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> UP pleas on urban land dismissed The Supreme Court has ruled that a land holder is entitled to notice before take- over of surplus urban land. The " deemed vesting" of surplus urban land under the Urban Land ( Ceiling and Regulation) Act would not amount to taking de facto possession unless the land holder had voluntarily surrendered the land. The owners must be given notice before taking possession under the new Act of 1999. Dismissing nearly a 100 appeals moved by the UP government against the judgments of the Allahabad High Court, the Supreme Court further stated that requirement of giving notice is mandatory. Though the relevant sections use the word 'may' it has to be understood as ' shall' in this context. Otherwise, " it might result in the land holder being dispossessed without notice," the Supreme Court said in the judgment, State of UP vs Hari Ram. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Summons for invalid cheque In a case of bounced cheque, the magistrate who issued summons to an accused person cannot recall his order due to lack of territorial jurisdiction, the Supreme Court has held in the case, Iris Computers Ltd vs Askari Infotech Ltd. The judgment of the Karnataka High Court was held to be contrary to law. In this case, a complaint was filed for issuing cheque without sufficient funds under Section 138 of the Negotiable Instruments Act. The magistrate issued summons to the accused person. He moved an application questioning the maintainability of the complaint due to lack of territorial jurisdiction. The magistrate then recalled his order issuing summons. The payee moved the high court for quashing the magistrate's order of recall of the summons. The high court rejected the petition. On appeal, the Supreme Court allowed it and ruled that the magistrate was not justified in recalling his summons order. It asked the magistrate to take the complaint and proceed with the prosecution. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Tax on scientific research The Delhi High Court last week directed the income tax authorities to reconsider the claim of the Centre for Development of Telematics that it was a ' scientific research association' entitled to exemption from tax. Section 35( 1)( ii) of the Income Tax deals with two categories of institutions. One category is that of a ' scientific research association' which has as its object undertaking of research and the other category is that of a university, college or other institutions which undertake some amount of scientific research. The centre was aggrieved as it has been placed in the second category. While it receives certain royalty and consultancy charges, those are ancillary to its sole object of undertaking scientific research, it argued. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Designs registered abroad A full bench of the Delhi high court has stated that only a previously registered Indian design can be a ground for cancellation of subsequently registered design in India, and a design registered in a foreign country cannot be aground for seeking cancellation of a design registered. The full bench dealt with Section 19 of the Designs Act 2000, as a division bench felt that some high court decisions were wrong. Therefore it referred the question to the full bench in the case, Reckitt Benkiser India Ltd vs Wyeth Ltd. It was called upon to examine Section 19 dealing with cancellation of design registered in India on account of a design previously registered here. What happens if the design is registered abroad, in a Paris Convention country? The full bench has not given a ready answer, but said the facts and circumstances have to be considered. " Each case has to be necessarily judged by putting the subject design with the articles side by side with the prior publication material and only after thoroughly scrutinising the same any finding can be given," the court said. MJ ANTONY THINKSTOCK |
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Company Secretary, Chennai
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