Pilot bats for tax breaks on CSR spend
Our Bureau
New Delhi, Sept. 28:
The Corporate Affairs Ministry has backed the idea of providing tax breaks for companies spending on corporate social responsibility (CSR) initiatives.
The new Companies Act makes it mandatory for a category of companies, based on their size and profitability, to spend 2 per cent of their net profits towards CSR annually.
While admitting that companies should be given some tax concession for spending on CSR activities, Corporate Affairs Minister Sachin Pilot said it was eventually the Finance Ministerwho would decide on the issue.
Pilot clarified that the areas for CSR spend were left to the discretion of the companies concerned, but the disclosure of such spends was mandatory.
No SFIO report on Tata-Unitech so far, says Pilot
Our Bureau
New Delhi Sept 30:
The Corporate Affairs Minister Sachin Pilot said on Monday that his Ministry had so far not received any report on the probe by the Serious Fraud Investigation Office (SFIO) in the Tata-Unitech matter.
"'The Ministry has so far not received any such report," Pilot told reporters, when asked about the SFIO probe. He was speaking to reporters on the sidelines of a CII event on corporate social responsibility.
Separately, a Ministry official said that the SFIO probe has been complete and the report was expected within a fortnight.
The Mumbai unit of the SFIO had reportedly conveyed to the Ministry in April that the Rs 1,700 crore given by the Tata Group to Unitech Group was meant to enable the latter purchase telecom licences in January 2008. This SFIO finding is part of a larger probe initiated against Vaishnavi Corporate Communications.
On the NSEL issue, Pilot said the Registrar Of Companies was looking into the alleged violations of the Companies Act by Financial Technologies (India) Ltd and its group companies.
When asked about the allegations made by the SFIO, a Tata Sons spokesperson said, "The Tata group has comprehensively addressed questions from all Government agencies and fully cooperated with all authorities in their investigations, including the SFIO. The group has not seen any SFIO report so far; as such, we are not in a position to address any specific questions relating to any such report. We stress that our group is committed to the highest standards of ethics and business conduct."
Unitech denies allegations
Unitech said that the Tata-Unitech transaction was a legitimate and bona fide business transaction between two real estate companies. "In fact, contrary to what is being alleged, Tata Realty is in advance stage of completing a real estate development on the captioned land which is being marketed as "Tata Primanti"," said Unitech spokesperson.
The Tata-Unitech transaction has been extensively investigated by several agencies including the CBI, and no irregularity has been found in this transaction according to the CBI presentation before the JPC quoted by the media, it added. "None of our companies are/ have been under any investigation by the SFIO. This fact can be independently corroborated from the list of companies under investigation and companies already investigated by the SFIO during the last 3 years, as provided by Sachin Pilot before the Rajya Sabha," Unitech said.
(This article was published on September 30, 2013)
Stretch your willpower…
Bharat Savur
Please savour exercising as a special experience — the stretching, the twisting, the poetic rhythm, the 'aha!' feeling… Talk about how it has benefited you, your fitness, your self-confidence. Hail it as an event, as your saviour. Praise and be raised.
"Why?" you may ask. Why not? If you can admire a work of art, why not admire a work of heart? There are far too many people having a negative perception of their body. To exercise seems a "waste of time", insinuate these wet blankets. They are so busy criticising their body, so rapt in responding to compliments on their toned look with a "Oh, but I haven't lost any weight", that they literally think themselves out of exercising. In fact, most often, it's not the body that lets you down, it's the mind.
Don't you see? Wrong thinking, not savouring, actually erodes trust and good intentions that are so vital to the experience of exercising. When you don't trust, your mind fills with grey negative formations. And you find yourself literally yawning and wishing you were elsewhere while working out. No, don't turn a beautiful stress-busting exercise into a boring stress-filled activity. Get a grip on your mind. Trust the process of working out as a healing one, trust your body, trust the biological laws, trust your sense of discrimination to know what's truly good for you. When trust soaks your spirit, stress topples over, meaning enters, your sense of purpose strengthens.
If you've led a sedentary lifestyle all along, it's easier to sit than stand up and exercise. And when you do work out, the old tendencies resist. To engrave the new habit of exercising in the brain, use the etching tool of savouring. If you enjoy the activity, the brain willingly grooves it in its circuit.
Yes, after a long break from exercising you may have to force yourself. That's okay. Forcing yourself powers your self-regulatory sinew, your will. To empower your will, follow this research-tested method: In an exercise-journal, write the date and 'My goals for this week'. Write down everything. If you plan to walk this week, write down the time, distance, destination, all kinds of details. For example: "I'll walk to the next bus-stop. I'll start 10 minutes early. I'll pack my office-footwear, medication… I'll do a few warm-ups with music. That's my starting cue. I'll switch off my mobile so that I don't get distracted. I'll take the stairs for a bit of extra cardio and sprint through the back gate to avoid small talk with neighbours…"
Journaling serves a dual purpose: *In stating your intentions, you strengthen them and get motivated. *In taking measures against being distracted, you nimbly skip over the humps where the temptation to not exercise lurks. Writing helps turn your promises into plans — you think ahead and effectively find ways to keep moving.
It helps to promise yourself a reward after you've acted on your plan. Say, a tasty, sugar-free energy bar or a nice, low-fat smoothie. More on savouring:
Observe how good you feel after exercising and discuss it at length.
Bask in the sense of accomplishment of seeing yourself through a beautiful cardio session.
Enjoy the reward - it's the icing on the cake.
It's also an effective savouring practice to build up your anticipation: Anticipate getting into an outfit two sizes smaller. Anticipate how sleek you'll look. Such anticipations aren't just temptation-busters, they are powerful enough to actually form a habit of exercising.
Alongside, journal the positive differences in you: Eating with more discrimination and, so, feeling healthier; being more productive due to increased stamina; feeling calmer in tense situations; exhibiting patience with colleagues and relatives; reaching out for credit cards or cigarettes less often…
In fact, exercise is referred to as a 'keystone habit' — meaning, its positive effects spill over to bring on other good habits. There's no doubt in my mind that exercise is a transformative force. I'm not claiming to be perfect because I exercise, but I am definitely better in every way — physically, mentally, spiritually. I still get the occasional sore-throated cough but I have this deep trust in the biological law that "this too shall pass". And it does.
Each of us has two sides to our personality — the loner and the social dude. So, create two habits: One, exercise at home when you need solitude and silence; and two, join a gym/ class where the people are friendly and there's healthy synergy. I know that human connection is more healing than a state-of-the-art treadmill. When exercising satisfies a social need, when your savouring factor gets a boost, you just cannot not exercise.
Most importantly, please conserve your willpower energy. For example, don't fritter it on stuff like answering every email, taking every call with a whiner on the other end, arguing, fuming, and so on. Savour your exercising life, don't squash it.
The writer is co-author of the book 'Fitness for Life'.
(This article was published on September 26, 2013)
CAs to manually file 2 million audit reports in 5 days
K. R. Srivats Unable to sort e-filing muddle, taxman loads burden at 11th hour
New Delhi, Sept. 28:
Unable to solve software glitches in its e-filing system, the Central Board of Direct Taxes has asked assessees to manually file tax audit reports by September 30. The new requirement of manual filing of tax audit reports came through a CBDT notification on September 26.
This means chartered accountants, who do a bulk of the preparation and filing of such reports on behalf of clients, have only five days to comply, failing which tax officials are empowered to levy penalties, which can run into lakhs of rupees in many cases.
The scope of e-filing was expanded this year (assessment year 2013-14) with the law mandating that all tax audit reports be filed electronically.
Corporates unaffected
Indian tax authorities get about 2 million tax audit reports every financial year, a bulk of which are usually filed just before the deadline. Of this, about 5 lakhrelate to corporates, and the remaining relating to individuals, partnership firms.
The latest problem is going to mostly affect the small and medium assessees. Large corporates will not be affected as they are required to file returns by November 30. Strangely, the CBDT on the same day (September 26) extended the last date for electronic filing by a month from September 30 to October 31, even while mandating manual filing by September 30.
Much trouble
Income tax assessees were facing difficulties on uploading due to the frequent changes in the e-filing utility.
In September alone, the utility was changed on three occasions .
The CA fraternity is anguished as most of the tax audit work in the country is done by them — whether it is for corporates, individuals other non-corporate categories.
This is because tax audit reports, from the current assessment year onwards, were required to be filed only electronically and there was no procedure for manual filing for assessment year 2013-14.
"We are requesting CBDT not to stipulate manual filing of tax audit reports.
The electronic filing of the tax audit reports will be done by the extended time of October 31", Subodh Kumar Agarwal, President of the Institute of Chartered Accountants of India (ICAI) told Business Line.
Manual filing is not required by either income tax law or the income tax rules — so, why insist on it through a notification, he asked.
ICAI has therefore approached CBDT seeking withdrawal of the latest directive .
With civil disturbances in Andhra Pradesh and natural calamities in Gujarat and Uttarakhand, as well as massive power blackouts in many other regions hampering work, it is difficult to ensure manual filing of the tax audit reports in a span of four days, it has been submitted.
SBI chairman summoned to court on last day in office
Vinson Kurian Contempt petition filed by officers' union for withdrawing 'check-off' facility
Thiruvananthapuram, Sept. 29:
The Madras High Court has issued a notice to Pratip Chaudhuri, Chairman of State Bank of India, to present himself in court on Monday, his last day in office.
Chaudhuri and Ranjit Goswami, Chief General Manager (Human Rsources) of the bank, have been summoned in a contempt petition filed by the SBI Officers' Association and State Bank Officers' Federation.
A notice has been sent to Chaudhuri in his personal name as well, D. Thomas Franco Rajendra Dev, General Secretary of the Officers' Union, Chennai circle, informed Business Line.
The contempt petition was invoked against breach of an interim stay on a contentious circular issued by the bank withdrawing the 'check-off' facility provided to the association.
This facility provided a lifeline to the association in the form of individual subscriptions from salary accounts of member-officers routed to its account by the bank.
LIFELINE
The management ensured that subscriptions ranging from Rs 100 to Rs 200 per employee went into the association's account on the 25{+t}{+h} of every month, the salary payment day.
The convention has been that, at the time of joining, every employee gives a standing instruction in writing authorising the bank to deduct the sum from his/her salary account.
The management has sought to withdraw the facility suggesting to members of the unions that they pay up their subscriptions individually, Rajendra Dev said.
Earlier last week, the court had allowed a petition seeking an interim stay on the management's circular withdrawing the 'check-off' facility.
While grating the interim stay, Justice N. Kirubakaran had observed that the facility was in operation right from 1975.
It is sought to be withdrawn, and in fact given effect on September 17, 2013, at a time when a similarly placed union (staff union) is enjoying the same benefit.
ORDER IGNORED
"This amounts to discrimination," Justice Kirubakaran said in his order, copy of which is available with Business Line. But the management chose to ignore the stay order and went ahead to pay the salary on September 25 without effecting the check-off facility to members of the circle associations.
This is what forced the unions to file a contempt of court petition, Rajendra Dev said. SBI officers and clerical staff unions have a combined membership of more than two lakh.
Tax wrangle: I-T Dept freezes Nokia's immovable assets
Our Bureau
New Delhi, Sept. 30:
Nokia India's assets have been frozen by the Tax Department even as the handset maker is in the process of completing its $7.2-billion deal with Microsoft.
The Indian tax authorities froze Nokia's mobile phone manufacturing plant in Chennai, certain other buildings and bank accounts last week. Following the Tax Department's action, Nokia moved the Delhi High Court which lifted the sanction on the company's bank accounts, but its immovable assets remain frozen.
The move has been taken by the Tax Department after the handset maker disputed a Rs 4,000-crore tax notice. The Department sought to ensure that the company had sufficient funds to pay the amount before assets are sold to Microsoft.
Nokia said that it welcomed the High Court's order and is now working closely with the tax authorities to find a solution to the remaining issues. "Nokia has sufficient assets in India to meet its tax obligations, details of which will be shared with the tax authorities to allay any concerns they may have."
"Nokia reiterates that it operates with transparency in its business transactions, and is committed to resolving its outstanding issues with Indian tax authorities in accordance with all applicable laws, while also ready to defend ourselves vigorously as needed," it added.
Nokia's Global CEO Stephen Elop had rushed to India to meet top Government functionaries soon after announcing the deal with Microsoft, in a bid to resolve the tax issue.
Nokia India had been slapped with a tax demand notice for the five years beginning 2006-07. The demand concerns the tax treatment of payments made for software supplied by Nokia's parent company for devices produced in India. Indian tax authorities consider the payments as royalties that are subject to taxation in India.
thomas.thomas@thehindu.co.in
NSEL, a case of bad book-keeping
MOHAN R. LAVI No one knew of those empty godowns.
Adoption of global accounting norms would have thrown up the inventory problem.
There's a Malayalam proverb, "adi thettiyaal aaneyum veezhum", which translates as, "Even an elephant will fall with a wrong step".
The National Spot Exchange Limited, which was considered to be an elephant for the commodity community not so long ago, is today on life support.
What started as a payment crisis at the NSEL has turned into a mind-boggling affair with everyone who had anything to do with the exchange — promoters, management, borrowers, stockbrokers — all seemingly having a role to play.
Not surprisingly, the auditors have joined in now, with the body that governs the profession — the Institute of Chartered Accountants of India — on the verge of asking auditors the right questions on what they did wrong.
NSEL Crisis
With easy money from banks consigned to history now, the dramatis personae in the NSEL crisis thought of an innovative way out — why not convert the exchange itself into a bank?
The clients of NSEL brokers had taken positions on longer-term forward contracts when the exchange was only permitted spot contracts in commodities.
Worse, the NSEL permitted 25- to 45-day forward contracts without verifying that the commodities had actually been deposited in the warehouses.
Funding may not have been restricted by the traders and processors to the core business activity.
It is eminently possible that money raised at the NSEL may have been directed to other popular investment channels such as real estate or gold.
But with both these markets depressed, it proved difficult to quickly liquidate assets and return the money — hence the default.
It is widely believed that the registered warehouses of the NSEL do not have the required amount of goods to clear the dues of investors.
The two ingredients that are apparent in any crisis or scam — sheer greed coupled with lax regulatory oversight — stand out glaringly in the NSEL saga.
A solution
It is not often that accounting standards can assist in minimising scams. And, unravelling financial crises is not the stated objective of accounting standards. However, the International Accounting Standard 2 (IAS 2) on Inventories has a solution to the situation that NSEL and its entourage find themselves in.
It states that commodity broker-traders who measure their inventories at fair value less costs to sell. Changes in fair value less costs to sell are recognised in profit or loss in the period of the change. Broker-traders are those who buy or sell commodities for others or on their own account.
The inventories they deal in are principally acquired with the purpose of selling in the near future and generating a profit from fluctuations in price.
The Indian equivalent of IAS-2 does not have this paragraph on inventory of commodity brokers, though the IFRS-equivalent has it.
Had this clause been part of our accounting standards, users of financial statements could at least have known that the borrowers in the NSEL crisis did not have any commodities as collateral to back the money they traded in.
In case they did have commodity stock and had traded in them, the gain/loss on these transactions would have been reflected in their financial statements — which could have provided indicators that they were dealing with unsustainable volumes.
Move over to IFRS
The powers that be have been pussyfooting on the adoption of International Financial Reporting Standards (IFRS) for years now. It is time the Government announces IFRS adoption — in a phased manner as was envisaged in the roadmap. This should not be stretched to eternity but should be reasonable — asking all entities to transition within a period of three years seems fair.
With their laser-like focus on fair value as the default measurement option, financial reporting and disclosures, IFRS standards could be one of the ways in which we could expect less scams.
Like the US' GAAP and IFRS, the Ministry of Corporate Affairs should ensure that introducing 'prior period' items in financial statements, reflecting earlier omissions and errors, is considered a serious error.
Both, the entity that prepared them and the auditor who signed them should be called into question. Blaming changes in the financial statements on subsequent events will simply not wash.
(The author is Director, Finance, Ellucian.)
(This article was published on September 30, 2013)
Oct 31 deadline for e-filing audit reports of tax returns
PTI
New Delhi, Sept 26:
The government today extended the last date for uploading audit reports of income tax returns by a month to October 31.
The due date, which was earlier September 30, has been extended in the wake of difficulty in uploading the report of audit electronically as prescribed under the sub—rule (2) of Rule 12 of the IT rules for the assessment year 2013—14.
"It has come to the notice of the CBDT (Central Board of Direct Taxes) that many assessees who are required to file their income tax returns by September 30, 2013 are finding it difficult to upload the report of audit electronically.
"Therefore, the CBDT has decided to extend the time for furnishing the report of audit electronically till October 31, 2013," the finance ministry said in a statement.
The statement, however added that, the assessees are required to file the report of audit manually with the jurisdictional Assessing Officer by September 30, 2013.
As per the Central Board of Direct Taxes (CBDT), there has been an unprecedented surge in number of returns being e—filed.
(This article was published on September 26, 2013)
Mumbai police files FIR against NSEL promoters, directors, defaulters
PTI
Mumbai, Sept 30:
The Economic Offence Wing of the Mumbai police today searched the offices and residences of promoters, directors and defaulting brokers of the crippled National Spot Exchange (NSEL) and filed an FIR against them in connection with Rs 5,600 crore payment crisis.
The NSEL, promoted by Jignesh Shah-led Financial Technologies, has been facing problems in settling Rs 5,600 crore dues of 148 members/brokers, representing 13,000 investor-clients, after it suspended trade on July 31 on the government's direction.
"An FIR was registered today against the NSEL promoters, directors and defaulters on charges of cheating, forgery and breach of trust among others," an official at Economic Offence Wing of the Mumbai Police told PTI.
Swinging into action following the Mayaram committee report that implicated the exchange and its promoters, the authorities conducted searches at 184 locations across 16 States, including Mumbai residences of Jignesh Shah, Chairman and Managing Director of Financial Technologies, and Joseph Massey, Managing Director and CEO of MCX Stock Exchange.
While Shah could not be reached for comments, Massey, denied any raid at his residence.
"While I clarify that there was no raid at my house, I want to say that I am willing to cooperate fully with the police in the investigations," Massey told PTI.
A special investigating team had been formed to conduct a preliminary inquiry after complaints from a couple of investors against NSEL, the EOW official said.
The inquiry concluded that it was a criminal offence following which the FIR was registered, the official added.
The SIT conducted its inquiry after receiving crucial inputs from the commodity market regulator Forward Markets Commission and Registrar of Companies, the official said.
BJP leader and Investors Grievances Forum president Kirit Somaiya had also recently filed a PIL in the Bombay High Court stating that NSEL forged/manipulated documents regarding stocks and liquidity and allowed some of the companies to pledge the same stock with more than one financial institution.
Somaiya has also alleged that government officials and politicians connived with NSEL to cheat investors.
There are 24 buyers/members who have to pay Rs 5,600 crore to the spot exchange for settling dues of the investors.
(This article was published on September 30, 2013)
No impact of crisis on MCX AGM
Our Bureau
Mumbai, Sept. 30:
Unlike the ruckus at the Financial Technologies Annual General Meeting in Chennai last week, it was a smooth sailing for the Multi Commodity Exchange (MCX) directors at the shareholders' meeting held in Mumbai on Monday.
Jignesh Shah, Promoter of MCX, was conspicuous by his absence at the meeting, which was chaired by the Forward Markets Commission nominated independent director R.M. Pravinkumar.
Investors were concerned over the impact of the National Spot Exchange fiasco, and the related discussions dominated the proceedings for the better part of the meeting. Pravinkumar explained in great detail that the crisis in NSEL would not have any impact on the MCX, and added that the latter was a tightly regulated exchange and had risk management practices in place.
"Except for the fact that MCX and NSEL share the same parentage in Financial Technologies, there is no link between both the exchanges," he added.
Investors also insisted that the exchange should consider distributing Rs 1,000 crore reserves in its exchange books as dividend to shareholders. Pravinkumar said the exchange would use the reserves to launch new products, once the FCRA Act is amended.
The exchange also dismissed reports that estranged Managing Director of NSEL Anjani Sinha or his close relatives have any trading position on the MCX.
(This article was published on September 30, 2013)
Penalising cos: Suspension should be last step, says SEBI
Our Bureau
Mumbai, Sept. 30:
SEBI has mandated a four-step procedure for stock exchanges to take action against companies that do not comply with listing agreement norms culminating in the suspension of the scrip.
The aim is to protect the interest of non-promoters, as the exit route is closed for such investors after suspension of trading.
The market regulator has prescribed a standard operating procedure for consistency and uniformity of approach for taking such action for non-compliance regarding timely submission of annual reports, shareholding pattern, financial results and compliance of corporate governance.
Corporates would first be fined on a daily basis.
After two quarters of non-compliance, the company would be shifted to 'Z' Category, where the trades would be settled on a trade-to-trade basis.
Continued non-compliance would lead to freezing of shares of the promoters and promoter group.
This would be done before suspension of trading in shares of the company.
To provide an exit window for the non-promoters, after 15 days of suspension, trading in the shares of a non-compliant entity will be available on the 'trade-for-trade' basis, on the first trading day of every week for six months.
