Unnecessary Litigation
This is with regard to Crosshairs (Moneylife, 22 August 2013) by Sucheta Dalal. She has very rightly lamented the policy of UPA-2 of aggressively hounding legitimate businesses by quoting senior counsel Arvind Datar—“unpredictable, unfair and arbitrary tax system.”
 
In India, the State is the most litigious of all—either as petitioner or as respondent. The taxation authorities lead the pack. From the assessment stages, income tax, sales tax, trade and entry tax, value added tax, service tax, central excise and customs duty departments are adept in raising hyped-up demands with an eye “to meet the collection targets.” Then, begins the litigation journey! It requires the taxpayer to knock the doors of the departmental appellate authorities to the tribunals, thence to the High Court and, ultimately, the apex Supreme Court.
 
A selection of the amounts of tax disputes reported of public and private sector is given in the Auditors’ Reports for the year 2012-13. Annual accounts—Indian Oil Corporation Ltd—Rs17,959.53 crore; Shree Renuka Sugars Ltd—Rs.68.91 lakh; Titan Industries Ltd—Rs232.19 crore. There is an urgent need to close these disputes in order to relieve pressures on the judicial system to let it deal with more pressing concerns of the citizens.
Also, Sucheta Dalal has hit the nail on the head on the half baked ‘quick ordinance with minimal (?) public discussion’ conferring sweeping powers to SEBI (“Different Strokes”, Moneylife, 22 August 2013). She rightly points out: “The effectiveness of a statute depends on how well it is implemented.” I entirely agree with her subsequent statements: “Unfortunately, neither SEBI nor any of the other independent regulators modelled on it have really delivered. SEBI is seen as slothful, non-transparent, arrogant and corrupt bureaucracy packed with officials on deputation, looking for their next sinecure. Its senior appointees are on a career extension and have little interest in making a mark or fulfilling their primary mandate of protecting investors and developing markets. They rarely interact with public stakeholders, probably afraid of exposing their sketchy knowledge about markets, financial products and investors’ issues. They get away because there is almost no accountability to the finance ministry, parliament or the people. Very few MPs have either domain knowledge.” The sad truth of the state of affairs has been put down most effectively.
 
Not that IRDA, the latest regulatory kid on the block, is any better. First, it was embroiled in a spat with SEBI in a turf war on ULIPs (unit-linked insurance plans). Now, it has permitted banks to go ahead with insurance brokerage by giving a go by to the Cobrapost exposé where the main thrust of laundering of black money and KYC (know your customer) norm violations arose from bank employees hawking insurance products as a laundering device. When it comes to the Reserve Bank of India, it had put out a discussion paper on cheque-less banking which had to be moth-balled, as a result of the spirited opposition by Moneylife Foundation. 
 
Who says Sucheta’s, and financially literate peoples’, voices are not heard? The powers that be jolly well sit up and take cognisance, or face the adverse consequences!
Nagesh Kini, by email
 
Perfectly Factual!
This is with regard to “False Advertising & Corporate Governance” by Sucheta Dalal (Moneylife, 5 September 2013). Our government only believes in covering fictions under regulations. As ASCI (Advertising Standards Council of India) has no teeth to punish the wrongdoers, it can only direct them to desist from releasing the advertisements with false claims (that too, only those who have voluntarily subscribed to the Advertising Code). What happens to actual users and consumers who have lost money by buying such products with false claims?  
 
Even the statutory regulators have no power to punish for such false claims or award suitable compensation to the consumer complainant. If s/he wants to claim compensation, it can be availed only from consumer courts, that too only when it falls under ‘deficiency in service’. All such false claimants/ advertisers know that nobody will go through the laborious and time-consuming process of litigation. Hence, there is a free reign for falsehood. No Indian law has even been made effective, so far, in this respect. As far as the corporate social responsibility (CSR) is concerned , it is a mere 2%-3%  of the company profits, and for that, too, the corporates manage to frame schemes on paper which only benefit either their own protégées and family members of staff. The consumer interest is never a part of CSR. Consumer is only a ‘milch cow’ for them. 
 
The situation is very grim in the realty sector and the upcoming Real Estate (Regulation and Development) Bill 2013 pending in Parliament will hardly be helpful in its present format.
Mohan Siroya, by email
 
Encourage Taxpayers 
This is with reference to the letter to the editor by Ramesh Kapadia (Moneylife, 25 July 2013). The problem is mainly in raising of demand for unmatched items and then in adjusting the refund of other years against such demand by sending intimation under
Section 245 of the Income-tax Act. 
 
The unmatched items are in respect of the tax deducted by employer for which the assessee has Form 16 (tax deduction certificate) issued by the employer. But demand notice was issued to the assessee by the income-tax department.
 
Section 205 of the Income tax Act reads as under: “Bar on direct demand on assessee; Where tax is deductible at the source under the foregoing provisions of this chapter, the assessee shall not be called upon to pay the tax himself to the extent to which tax has been deducted.”
 
Hence, as per Section 205, there is a bar on income-tax authorities to call upon the assessee to pay the tax himself to the extent to which tax has been deducted. So issuing a demand notice in respect of the amount of tax already deducted is not authorised by the law and such action is illegal. So there is no question of adjusting any refund against such demand u/s 245. When the Income-tax authority cannot send a demand notice in respect of tax already deducted, there is no question of charging interest. As many of the readers may have come across such problems, I am writing this letter to the editor.
 
Moneylife is doing a wonderful job of spreading financial literacy through the magazine.
A Soorianarayanan, by email
 
Unbiased and Genuine
I just bought the three-year subscription to Moneylife magazine and started reading the 22nd August issue. Since I was in office at that time, I just read 3-4 pages. As I lay down on my bed later, there was something which didn’t let me sleep. I picked up my laptop and started reading Moneylife again. It’s 4am now and I have finished reading it. What a marvellous effort you guys are putting together. Thanks for everything (I know I have paid for the same, but still you guys deserve a standing ovation). Once again, thanks for the true, unbiased and genuine work and efforts.
Sunny Arora, by email
 
Only Term Insurance!
This is with regard to “Will RBI allow banks to sell any insurance product?” by Raj Pradhan. Reserve Bank of India (RBI) should allow banks to sell only term insurance and no other policy. All these banks must pay for the mis-selling done by them. They pocket huge commissions from insurance companies and their relationship managers get huge incentives.
Prashant Bansal
 
Economic Independence of India?
This is with regard to “India’s misery index persistently higher first time since 1991.” Misery index indicates the deterioration of living conditions of the masses but it does not entirely reflect the miseries people suffer from for want of shelter, food, clothing, healthcare, schooling, etc. Our 67th Independence Day was recently celebrated but the economic independence of the masses is still far off. The way the economy is drifting, one cannot have any hope to achieve this for another 60 years.
TV Gopalakrishnan
 
Depreciating Rupee
This is with regard to “Rescuing rupee: How NRIs can play a positive role” by AK Ramdas. Enjoy NRIs, at the cost of resident Indians! Our entire exports have been bailed out by the depreciating rupee. Why can’t we aim at quality-oriented export instead of depending upon labour arbitrage? Why can’t we have Indian Google, Microsoft, Apple etc. in many fields?
Vinayak Bhimarao Mudholkar
 
‘Duped by an Illiterate Agent’
This is with regard to “Insurance grievance redress is heavily against the common man: Finance Secretary.” The finance secretary, Rajiv Takru, who is not only literate, but also an eminent economist, was duped by an agent of the Life Insurance Corporation of India. Similarly, although I am a banker, I was duped by an illiterate agent of SBI Life who used to market insurance on behalf of his wife.
S Bhaskara Narayan
 
Congratulations!
This is with regard to “Bajaj Allianz Life refunds Rs30,000: Another Moneylife Helpline success” by Raj Pradhan. Mr Pradhan, congratulations and keep up the good work. In today’s dog eat dog world, Moneylife stands out and does a wonderfully honest job.
N Kanitkar
 
Investors read nothing
This is with regard to “NSEL’s warehousing receipts similar to banker’s receipts of Harshad Mehta scam?” I hope you do not regret writing the book after all these years! It would almost seem that they are studying your book minutely and using the same method and tragically successfully! The regulators, it would seem, have not read your book and if they have they have refused to learn any lessons. You have also written for them. 
 
Investors read nothing but seem to think they know everything.
Anil Agashe

User

Mumbai Metro on slow track, cost up 84% to Rs4,321 crore

The cost of the delayed Versova—Andheri—Ghatkopar Metro project rose 84% to Rs4,321 crore. Although the Reliance Infrastructure-led Mumbai Metro One is going to miss its seventh deadline this September, the company is seeking to hike the fare to substantiate increased project cost

Repeated delays and rising cost of raw material has caused construction cost of the Mumbai Metro project to shoot up by 84%. It is now going to cost Rs4,321 crore, up from its original cost of Rs2,356 crore. The project was scheduled for completion in March 2012, but remains "work in progress," according to Maharashtra chief minister Prithviraj Chauhan. The 12km long Versova- Andheri-Ghatkopar metro project is going to miss its seventh deadline, which was on September 2013, and is now scheduled to be completed early next year.

Right to Information (RTI) Activist Anil Galgali, who is closely following the progress of the Mumbai Metropolitan Region Development Authority (MMRDA) and state government projects, filed an RTI application seeking information on cost escalation and other issues. The response to his RTI query reveals many facts.

The Public Information Officer (PIO) of MMRDA, in his reply stated, "In meeting held on May 2012, Board members had approved a revised budget of Metro project cost around Rs4,321 crore. The MMRDA will not share the additional cost. MMRDA will only consider original cost of Rs2,356 for project and its cost sharing formula would be the same in 70:30 ratio as per the agreement signed between government of Maharashtra and Mumbai Metro One Pvt Ltd (MMOPL)."

As per the agreement, the state government's share in the project was Rs1,194 crore while the rest Rs512 was to be paid by MMOPL. MMOPL is a special purpose vehicle (SPV) set up for the project between MMRDA, Reliance Energy Ltd (now Reliance Infra), and Veolia Transport of France. Reliance Infra holds 69% (Rs354 crore) in the SPV, while MMRDA holds 26% (Rs133 crore) and Veolia the remaining 5% (Rs25 crore) stake in MMOPL. The viability cost funding in the original project was Rs650 crore. While the union government was expected to pay Rs471 crore, the MMRDA was to bear Rs179 crore out of this viability cost funding. In short, as per the original project cost, MMRDA's was expected to pick-up a tab of Rs312 crore for the metro.

Although, the MMRDA has approved revised budget for the project, it had not specified about sharing the additional cost in the MMOPL, the SPV for the project. So this brings forth an important question as to who will then bear the additional burden?

Galgali says, "It is full responsibility of MMOPL to complete project within the deadline. The deadline is extended for seven times and the government should not sanction a single paisa increase to MMOPL and instruct MMRDA to get the metro ready at the earliest".

"MMOPL is keeping everyone in the dark. Even Reliance Infra is not in a position to state the reason behind the cost escalation. This indicates MMOPL's lack of planning and unfortunately the MMRDA has been very soft on MMOPL," Galgali alleged.

He also slammed MMOPL's decision to let Reliance Infra use its name on the coaches for the metro. On this issue, MMRDA in its reply to the RTI application confirmed that the name put up by Reliance Infra on coaches is permitted neither by the Authority nor by the state government.

Reliance Infrastructure-led MMOPL has failed to complete this project before deadlines due to many factors such as changes in designs, rupee depreciation, space crunch, utility shifting and getting approvals, litigations, addition of extra coaches and delay in receiving permission from Indian Railways.

MMOPL has approached the state government as well as the MMRDA seeking revision in ticket fares due to an increase in construction cost and purchasing extra rakes with an expectation of high ridership. The present fares are: Rs6 up to first 3km, Rs8 between 3km to 8km and Rs10 for more than 8km. The demand by MMOPL is to increase the fares up to Rs35. However for time being, this issue will not touched by the state government.

The first phase of Mumbai Metro rail project was inaugurated by Prime Minister Manmohan Singh in June 2006. Mumbai Metro is the India's first public private partnership metro project in which all the three phases of construction, operation and maintenance have been given to a private players.
 

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COMMENTS

pravsemilo

3 years ago

Same is the case here in Hyderabad where a very well respected bluechip is handling the state of affairs.

RTI queries for the concession agreement are not responded to in time and huge fees are charged for asking the same. Appeals to information commissioners are resolved long after the RTI query is sent. Sometimes so late that project has progressed and the one can't do much after getting the information.

Here in Hyderabad, HMRL is given land and as per the concessional agreement it can use the land as it deems fit. Some pieces of land which housed government quarters were also given under this agreement, in addition to the land to develop the railway line. This land is very close to main roads and the railway line. Now HMRL is proposing to develop malls, hotels in this land.

By the time one is able to get hold of concessional agreement, the mall would have been built and nothing much can be done.

Nokia sells handset, services business to Microsoft for 5.44 billion euro

Microsoft has agreed to a 10-year license arrangement to use the Nokia brand on current and subsequently developed products based on the Series 30 and Series 40 operating systems

Mobile handset maker Nokia Corp said it signed an agreement with Microsoft to sell all of its devices and services business and patient licences for 5.44 billion euro in cash, payable at closing the deal.

 

In a release, Nokia said it would to book a gain on sale of about 3.2 billion euro from the deal that is expected to close in first quarter of 2014.

 

Microsoft will acquire substantially all of Nokia's devices and services business, including the mobile phones and smart devices business units as well as an industry-leading design team, operations including all Nokia devices and services production facilities, devices & services-related sales and marketing activities, and related support functions. At closing, around 32,000 people are expected to transfer to Microsoft, including about 4,700 people in Finland.

 

However, Nokia's chief technology office (CTO) organization and patent portfolio will remain within the handset maker Group. The operations that are planned to be transferred to Microsoft generated an estimated 14.9 billion euro, or almost 50%, of Nokia's net sales for the full year 2012.

 

Microsoft has agreed to a 10-year license arrangement to use the Nokia brand on current mobile phones products. Nokia will continue to own and maintain the Nokia brand. Under the terms of the transaction, Microsoft has agreed to a 10-year license arrangement to use the Nokia brand on current and subsequently developed products based on the Series 30 and Series 40 operating systems.  Upon the closing of the transaction, Nokia would be restricted from licensing its brand for use in connection with mobile device sales for 30 months and from using the brand on its own mobile devices until 31 December 2015.

 

Following the transaction, Nokia said it plans to focus on its three established businesses NSN, its network infrastructure and services business; HERE, the mapping and location services business; and Advanced Technologies, the company's technology development and licensing business.

 

As part of the transaction, Nokia will grant Microsoft a 10 year non-exclusive license to its patents as of the time of the closing, and Microsoft will grant Nokia reciprocal rights related to HERE services. In addition, Nokia will grant Microsoft an option to extend this mutual patent agreement to perpetuity. Of the total purchase price of 5.44 billion euro, 3.79 billion euro relates to the purchase of substantially all of the devices and services business, and 1.65 billion euro relates to the mutual patent agreement and future option.

 

Additionally, Microsoft will become a strategic licensee of the HERE platform, and will separately pay Nokia for a four year license. This revenue stream is expected to substantially replace the revenue stream HERE is currently receiving from Nokia's devices and services business internally. If the transaction closes Microsoft is expected to become one of the top three customers of HERE.

 

Microsoft has agreed to make immediately available to Nokia 1.5 billion euro of financing in the form of three 500 million euro tranches of convertible bonds to be issued by Nokia maturing in five, six and seven years, respectively, the release said.

 

As of 2012, Nokia employed 101,982 people across 120 countries, conducted sales in more than 150 countries, and reported annual revenues of around 30 billion euro.

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