Companies & Sectors
Tax tribunal rules against Vodafone

The income-tax (I-T) department has jurisdiction in the Rs8,500 crore transfer-pricing tax dispute involving the sale of its call centre business to Hutchison in 2007

 

The Income Tax Appellate Tribunal (ITAT) has ruled that that the income-tax (I-T) department has jurisdiction in the Rs8,500 crore transfer-pricing tax dispute involving the sale of its call centre business to Hutchison in 2007.

 

''Assessee's (Vodafone India) appeal is partly allowed. But according to us, this is an international transaction and the assignment of call option took place,'' the 2 judge ITAT bench said.

 

ITAT was hearing a plea of Vodafone India Services, made in 2012, challenging the jurisdiction of the tax department in issuing a draft transfer-pricing order that sought to add Rs 8,500 crore to Vodafone's taxable income for FY08.

 

The order came after the Bombay High Court had refused to intervene in the matter earlier and asked the Tribunal to hear the case on a day-to-day basis. The matter will now go back to the HC as Vodafone can appeal against the ITAT order. The I-T department had asked Vodafone to cough up Rs3,700 crore as tax last year for sale of its call centre business to Hong Kong-based Hutchison in 2007. However, in that case the Bombay HC had ruled in Vodafone's favour and dismissed the IT department's claim.

 

This case is separate from the other major tax battle Vodafone has been fighting, which involved a tax liability of another Rs3,200 crore. But this claim was earlier dismissed by the Bombay HC.

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Russia to construct 12 nuclear reactors for India

Russian President Vladimir Putin had been pushing for Rosatom to increase the number of reactors it could supply to as many as 25

 

Russia's state-owned Rosatom said it would supply 12 nuclear energy reactors for India over 20 years, under an agreement aimed at boosting nuclear energy cooperation signed by the two countries during a summit in New Delhi.

 

A 1,000-megawatt reactor is operating at the Russian-built Kudankulam power station in Tamil Nadu, with a second due to come onstream in 2015. Russian President Vladimir Putin had been pushing for Rosatom to increase the number of reactors it could supply to as many as 25. A total of six reactors will be built at Kudankulam, according to Indian officials. A further six reactors are to follow at a site that has not yet been determined.

 

All eyes are on the Annual Russia-India Summit and its aftermath. There has been a shift in India's stance vis-a-vis Russia and its traditional western rivals. A controversy was also averted as a Crimean leader was also in New Delhi today as he appealed to Putin to end the conflict over Crimea and Ukraine.

 

Russia has traditionally been India's closest defence partner and ally. Russia has been seeking closer ties with China and signed a landmark gas supply agreement this year.

 

India is looking for greater access to the Russian petrochemical resources, and as expected has not been a party to the West's sanctions against Russia since the Ukraine crisis.

 

"This is President Putin's 11th annual summit and my first. I am confident that our bilateral cooperation will acquire new vigour," PM Modi said, and President Putin also chimed in with a positive note regarding the talks.

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SBI Chief proposes alternative fund raising to meet Basel-III norms

Following Wednesday's Cabinet decision to stop endlessly funding PSBs, SBI's Arundhati Bhattacharya spoke about this opportunity for wider reform

 

SBI chairman Arundhati Bhattacharya said that the government's decision to stop funding public sector banks (PSBs) will lead to competition and reforms in the sector which has been dogged by long-standing NPAs.

 

She proposed that banks could look to raise funds by issuing shares with differential voting rights, so that banks could raise capital enough to meet Basel-III capital adequacy norms.

 

“The writing on the wall is very clear...they (PSBs) have to think of differential voting rights. It is time to lay out some kind of roadmap on how much the banks need to do and how much support it would get,” she said.

 

“The big daddy back there is not going to be around to give them capital as and when they need. If they need to be competitive and want to grow, then they definitely need to look at other places for more capital,” she added.

 

With the government deciding that it will start diluting its stake to bring it down to 52%, the PSBs will be able to raise around Rs1.60 lakh crore. "The news that the government has allowed PSBs to bring down government stake to 52% kicks off the next round of reforms... because for the first time clear signal has been given (to PSBs) to source capital from the market.”

 

The SBI chairman also stressed that the Indian banking space needs consolidation and that this should ideally result in 3 to 4 major banks. "It is extremely important for India to have 3-4 major banks. ... We should allow the banks to come together and talk among themselves. In the past also we have seen government has forced some mergers...it is very important for the banks to determine who should be their correct partners," she said.

 

The Basel-III norms are slated to come into effect on 31 March 2019. Indian banks would need to meet capital adequacy norms to improve risk management and governance by the deadline.

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