Coal linkages for 11 supercritical units of 660MW each, which will come up in the 12th Plan period of 2012-17, have been sanctioned

The Indian government is believed to have approved fuel linkage for 11 thermal power projects of NTPC Ltd and Damodar Valley Corp Ltd (DVC) totalling an investment of over Rs29,000 crore, reports PTI.

"Coal linkages for the 11 supercritical units of 660MW each, which would come up in the 12th Plan period (2012-17) have been sanctioned," a coal ministry source said.

These 11 units include nine units of NTPC's power plants at Nabinagar (3x660MW), Meja (2x660MW), Solapur (2x660MW) and Mouda (2x660MW) and two units of DVC's Raghunathpur plant in West Bengal.

The global tender for sourcing equipment for these units was floated in October last year.

Supercritical units are environment friendly and improve efficiency of thermal power projects. The equipment would be used in five power projects in Bihar, Uttar Pradesh, Maharashtra and Jharkhand.

The Cabinet committee on infrastructure gave its approval to the bulk tender in September last year.
 

The recent judgement by the apex court will be of great help to businessmen and the same can be relied upon for all the current or future assessments in determining the allowability of bad loans when written off in the books of accounts of the assessee

The Supreme Court has ruled that it is not obligatory on the taxpayer to prove whether a loan has become a bad loan, once such loan has been written off in the books of accounts.

The apex court in a ruling in the case of TRF Ltd versus Commissioner of Income-Tax held that the position in the law is well-settled and after 1 April 1989, it is not necessary for the assessee to establish that the loan, in fact, has become irrecoverable.

This is an important decision rendered by the Supreme Court on the issue of allowability of bad loan as a deduction from business income and this sets at rest the doubts and the widespread litigation that was prevalent in the matter, said Ameet Patel, partner, Sudit K Parekh & Co.

In a tax-alert note, the chartered accountancy firm said that the Income-Tax Act, 1961 has a special section that allows deduction from business or professional income in respect of bad loans. The relevant section is 36(1) (vii).

Earlier, the section was worded in a manner which was interpreted to mean that the taxpayer needed to establish conclusively to the satisfaction of the assessing officer that the amount written off had actually become bad. This led to a situation where most of the times, the taxpayer had to put in extra efforts to show that the loan had actually become bad, the steps taken for recovery of the same and whether any legal action had been taken against the loaner.

Practically, in many cases, bad loans were not allowed as a deduction because the taxpayer was not able to conclusively establish that the loan had become bad.

However, with effect from assessment year 1989-90, there was an amendment in the said section whereby the necessity for establishing the fact that the loan has actually become bad has been done away with. After the said amendment, the only conditions to be fulfilled by a
taxpayer for successfully claiming a deduction in respect of bad loans are as under:

1. The amount which is claimed as a deduction should have been taken into account in computing the income of the assessee for the year in which the amount is written off or any earlier year and
2. The amount should be written off as irrecoverable in the books of accounts of the assessee for the accounting year in which the claim for deduction is made.

The wordings of the Section 36(1)(vii) read with circular 551 dated 23 January 1990 issued by the Central Board Of Direct Taxes (CBDT) leave no scope for debate that any amount incidental to the business or profession of the assessee, which is taken into account in computing the assessable income would be allowed for deduction as a bad loan, if it is written off in the books of the assessee in the previous year.

Despite the above clear provisions of the law, many tax officers continued to disallow the claim for bad loans on the ground that the taxpayer had not conclusively established that the loan had actually become bad. In most cases, the matter had been taken up for litigation. Many Tribunal Benches have held against the Income-tax Department and in favour of the taxpayer that after the amendment to Section 36(1) (vii), the taxpayer does not have to prove the fact that the loan has actually become bad. 

Indian courts have time and again reaffirmed the above view and accordingly allowed the claim of bad loans deductibility.

In a judgment in the case of the Commissioner of Income-Tax versus Star Chemicals (Bombay) Pvt Ltd, the Bombay High Court has reiterated the view that the fact that the loan has been written off as irrecoverable in the accounts of the assessee will suffice for claiming it as a deductible bad loan. It is for the assessee to decide whether the loan has become bad or not and the assessing officer can never insist on production of demonstrative and infallible proof that the loan has become bad.
 

The promoters of TeleCanor allege that investor Hemant Gupta is trying all the tricks to make an open offer for the company. Mr Gupta powerfully argues otherwise

The messy fight between the promoters of TeleCanor Global Ltd and savvy investor Hemant Gupta has surfaced once again where Mr Gupta is on the verge of making an open offer to buy the company if his 1 million warrants are converted into shares.

However, on Thursday, TeleCanor informed the Bombay Stock Exchange (BSE) that “the company is in the process of refunding any amount paid for conversion which is not accompanied by a consent or full payment from the warrant holder. Such refunds will be processed after deducting the initial amount paid for advance amount for share warrants.”

TeleCanor held a board meeting on 26th February to discuss the various complaints of Mr Gupta and also to consider conversion of his warrants into shares. But there seems to be some confusion regarding the ownership of these shares.

“He (Mr Gupta) wants to take away 4.2 lakh shares from the purview of (the) takeover code. He has 2.9 lakh shares, which are with Motilal Oswal Financial Services Ltd (MOFSL),” said Maruti Ram, managing director, TeleCanor.

“On 3 September 2009, shares were transferred from Mr Gupta to Motilal Oswal but it did not appear on the BSE website. We still don’t know who is the real owner of these shares. Why do we have to take his consent if the warrants are fully paid?” asked Mr Ram.

As of end-September 2009, Mr Gupta had 7,72,097 shares or about 12.34% stake in TeleCanor. However, subsequently, his name disappeared from the public shareholders’ list. According to BSE data, as of December 2009, MOFSL held 1,44,900 shares or around 2.5% stake in TeleCanor.

Mr Gupta admitted that he bought some shares from MOFSL and after his failure to pay, the brokerage took over the shares. “I had purchased some shares from MOFSL under margin funding and I have not made the payment, so MOFSL has taken those shares back,” admitted Mr Gupta. An email query sent to MOFSL from Moneylife remained unanswered till writing the story.

TeleCanor promoters have alleged that MOFSL is not disclosing Mr Gupta’s name. Mr Ram said that Mr Gupta has not even signed a consent letter that was sent to him on Wednesday.

If Mr Gupta’s take goes above 15% following conversion of his warrants into shares, he will have to make an open offer. TeleCanor officials met BSE officials on Thursday to discuss the issue, but refused to divulge the details of their discussion.

Separately, Mr Gupta has also questioned how BSE can allot 45 lakh warrants to the promoters which is over 90% of paid-up equity of the company (Rs5 crore).

Moneylife had earlier reported that Mr Gupta had accused the promoter of siphoning off funds meant for funding of a payment gateway business. (Read here). TeleCanor shares shed 23% to Rs33.75 as on 4 March 2010 from Rs43.80 on 8 October 2009. 

According to Mr Gupta, shareholders Vimal and Om Prakash agreed to take around 2 million warrants from Maruti Ram at Rs17-18 (issue price was Rs11.80 which means Maruti Ram will make a profit of Rs5-6 per warrant). “These two gentlemen have paid a total of Rs1.80 crore (part of it in the name of TeleCanor and part in the name of Maruti Ram). This entire money has been deposited by (the) promoter in TeleCanor’s bank account,” alleged Mr Gupta.

He also alleged that the promoter agreed to sell 1.50 lakh warrants at Rs19 per warrant, to Mukesh Shah, a shareholder in TeleCanor. According to Mr Gupta, thereafter, Mr Shah prepared two demand drafts favouring TeleCanor and also in the name of Mr Ram for 90% premium but did not hand over the demand draft to Mr Ram as he was not given possession of warrants and the transfer deed (signed by the seller).

Mr Gupta demands that the BSE declare the promoter’s warrants null and void. “He (Mr Ram) did not pay cash to TeleCanor for application money. He just passed accounting (entries in) the journal voucher. Only under special conditions, a promoter can convert his loan into equity for which disclosure has to be made and permission has to be taken from regulatory bodies to convene an Extraordinary General Meeting (EGM),” added Gupta. He also alleged that Mr Ram has frequently cancelled board meetings due to lack of quorum, but the BSE was keeping quiet. “It makes a mockery of (TeleCanor’s) listing,” said Mr Gupta.