| YES Bank board says no to Shagun Kapur Gogia |
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Kolkata/ Mumbai, 29 June The YES Bank board has rejected the application of Shagun Kapur Gogia, daughter of deceased co- founder Ashok Kapur, for induction as a member. In a letter addressed to Gogia's mother, Madhu Kapur, who holds a 12 per cent stake in YES Bank, the private lender said its board of directors, after extensive deliberations, had unanimously agreed not to accept her recommendation to appoint her daughter on the board. The letter has been reviewed by Business Standard. YES Bank's board met on Thursday afternoon after the Bombay High Court directed the bank to advance its board meeting by a month and consider Gogia's appointment. The board meeting was originally scheduled on July 24. Madhu Kapur and her two children ( Gogia and Gaurav Kapur) had moved the court alleging their right as co- promoters was violated. Sources familiar with the development said the bank's board reviewed the Reserve Bank of India's ( RBI's) guidelines and relevant laws while discussing Gogia's appointment. It also evaluated the past and present composition of the YES Bank board and current composition of the boards of some of the country's other private banks. The letter said YES Bank's cofounder, MD & CEO Rana Kapoor voluntarily recused himself when the agenda of Gogia's appointment was considered at the nominations and governance committee meetings and subsequently at the board meeting. While Gogia confirmed receipt of the letter, YES Bank declined to comment and reiterated the statement issued by the bank on Thursday morning. "As the matter is sub judice, the final decision of the board on the subject will be submitted to the court at its scheduled hearing on July 1 as per the court order," the bank had said ahead of its board meeting on June 27. The Bombay High Court is scheduled to hear the case on Monday. The bank had on Friday said it would induct three of its top management executives on the board to reinforce its positioning as the 'Professionals Bank of India'. Rajat Monga ( senior group president for financial markets & chief financial officer), Sanjay Palve ( senior group president &senior managing director for corporate finance) and Pralay Mondal (senior group president for branch, retail & business banking) will join the board, subject to approval from RBI and shareholders. CO- FOUNDER MD & CEO RANA KAPOOR recused himself when the agenda of Gogia's appointment was considered at the nominations and governance committee meetings and subsequently at the board meeting |
| Relief for tech firms as I- T revokes circular on transfer pricing | |
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New Delhi, 29 June The income- tax department on Saturday revoked its recent circular on adoption of profit- split method as a preferred mode for computing tax liability on multinational companies' development centres in India. It also clarified that another circular, relating to the parameters defining R& D centres, would be suitably modified. The two circulars, issued in March this year, had drawn serious concerns, especially from technology and pharma companies. One of the two circulars was on application of profit- split method for transfer pricing, while the other was for identifying development centres engaged in contract R& D services with insignificant risk. According to the profit- split method, part of parent company's profit is taken into account while computing the tax liability of its centres. This would have meant a significant jump in tax demand on research & development centres of foreign companies operating in India. While industry players cheered Saturday's move, experts said it would avert future trouble in the area of transfer pricing, which is already embroiled in significant litigation. "The peak assessment season has yet to begin; so, the clarification at this stage is more than welcome," said S P Singh, senior director, Deloitte Haskins & Sells. Rough calculations suggest that over $ 2 billion are stuck in transfer- pricing litigation involving software development centres alone. Nasscom Director Bishakha Bhattacharya said the profit- split method's withdrawal as " the default means of arm's- length pricing" was welcome. Also, the promise to " remove the ambiguity involved in the definition of R& D centres will prevent the situation from worsening further". R& D centres account for asignificant portion of Indian software services firms' export revenues. Most large multinational firms, including IBM and Microsoft, have been embroiled in transfer pricing litigation in the past. A panel formed by the government under former CBDT chairman N Rangachary to resolve these issues had in September last year given its report on ' Taxation of Development Centres and IT Sector'. These and a few other circulars were The tax department's circular three listed five conditions to decide whether or not with insignificant risk. Singh five parameters under the definition of contract R& D service provider with insignificant risk. "However, it was very difficult for companies to meet all the parameters." Turn to Page 14 > Clarifies ' profit- split' will not be only method to compute tax UNTANGLING TAXATION |Profit- splitThe method, under which partofa parent company's profitis taken into accountwhile computing the taxliabilityofits centres, will notbe the onlywayof computing taxliabilityin case ofMNCs' R& D units in India |BeneficiariesSoftware and pharma companies, which are the mostimpacted bytransfer pricing issues, to benefit |Definition The parameters defining R& D centres with insignificantriskhave been eased; some vague terms in the definition to be clarifed |LitigationThe move will avertfurther litigation, as the peakassessmentseason has yetto begin |$ 2 billionThe amountthat has been stuckin litigation over transfer- pricing issues in the IT sector alone | |
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