ONGC wants to challenge govt on tax-sop rollback

In 2008, the government had modified the definition of ‘mineral oil’ to mean that it does not include production of gas for the seven-year break from income-tax payment

The Oil and Natural Gas Corp (ONGC) wants to challenge the government’s decision to withdraw the seven-year tax holiday on production of natural gas in a High Court as the economics of its deep-sea projects will be severely hit because of the decision, reports PTI.

In 2008, erstwhile finance minister P Chidambaram had modified the definition of ‘mineral oil’ to mean that it does not include production of gas for the purpose of grant of the seven-year break from payment of income-tax. The amendment was made applicable retrospectively to all blocks awarded since 1999.

ONGC, which is in the process of firming up investment plans to bring to production gas fields in the Krishna Godavari basin, wanted to appeal against the decision in either the Delhi or Gujarat High Court, a company official said.

The company was, however, vetoed by the Committee on Disputes (COD) in the Cabinet Secretariat, which said as a State-owned firm, ONGC had no business to challenge government decisions.

ONGC, like Gujarat State Petroleum Corp (GSPC) and Niko Resources, wanted to file writ petitions to challenge the constitutional validity of retrospective amendments made to Section 80-IB (9) of the Income-Tax Act.

GSPC and Niko have got interim relief from the Gujarat High Court, which stayed operation of the amendments in respect to their blocks.

ONGC feels that unless tax breaks are restored for gas produced from areas awarded in the past, it stands to incur large monetary loss in terms of enhanced tax liability.

The official said that ONGC had submitted an application seeking approval of the government for filing a writ petition in either the Delhi or Gujarat High Court.

In reply, ONGC was told that it had no business to question the legal validity of any Central enactment. It was also told that if it was aggrieved by any amendment to the Income-Tax Act, the matter should be taken up with the finance minister through the petroleum minister.

The official said that petroleum minister Murli Deora had protested against the move with Mr Chidambaram and then with current finance minister Pranab Mukherjee, saying that the change was against the assurance given to parties who invested in the New Exploration Licensing Policy (NELP) since its advent in 1999.

ONGC has written to the oil ministry saying that the retrospective amendments in the law undermine the confidence of taxpayers in the fairness of tax administration.

“Such retrospective amendments also cause hardships to the taxpayers who have acted according to the pre-amended provisions of the Act,” said ONGC.

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    1 decade ago

    How can the Committee on Disputes not give permission to ONGC to contest the arbitrary retrospective amendment to the law . When dealing with issues brought up by PSUs, the COD tends to look upon PSUs as part of Govt. instead of dealing with them on 'an arms length' basis. After all there are large number of minority shareholders' interests involved.The COD should also have the power or discretion to recommend genuine issues of PSUs to the appropriate Ministry for consideration instead of just blindly vetoing litigation

    Micro, small-cap oriented funds outshine in bull market

    In a clear sign that we are in an extended bull market, funds with predominant exposure to growth stocks have outperformed the rest by a huge margin

    When mutual funds with a predominant focus on growth stocks like micro, small and mid-cap stocks completely outshine funds with a large-cap bias, one can be certain that the bulls are out in full force in the stock markets.

    Moneylife ran a study on the performance of equity-diversified funds between December quarter of last year and March quarter of this year. It is interesting to note that seven out of the top ten performing funds have a bias towards growth stocks, that is, micro, small or mid-cap stocks.

    DSP BlackRock Micro Cap Fund emerged the top performer, with absolute returns of 13% compared to its benchmark (BSE Small Cap) returns of 2%. Religare Mid N Small Cap Fund (up 9%) and ICICI Emerging STAR Fund (up 8%) are the next best performers, beating their respective benchmarks (CNX Mid Cap and CNX Nifty Junior), which returned 4% each.

    Canara Robeco FORCE Fund is also among the top performers, with returns of 8% over this period, compared to its benchmark’s (S&P Nifty) returns of 1%. The other growth-stock oriented funds in the top ten include IDFC Small and Mid Cap Equity Fund, ICICI Prudential Discovery Fund (up 7% each) and Religare Mid Cap Fund (up 6%).

    It is only during an extended rally that small and micro-cap stocks exhibit such stellar performance. The moment the market’s fortunes take a turn for the worse, these very stocks are beaten down the most. The very same funds will then exhibit a different performance altogether. As such, it is important that their current run is not extrapolated too much. Any signs of weakness in the markets should be enough to throw these stocks out of gear.

    Among the worst performing funds, JM has taken the cake by throwing up the worst five performing funds in the equity diversified space. All these funds have underperformed their respective benchmarks. These include the JM Emerging Leaders Fund (-6%), JM Core 11 Fund (-5%), JM Small & Mid Cap Fund (-5%), JM Mid Cap Fund (-5%) and JM Multi Strategy Fund (-5%).

    These underperformers are followed by the Reliance Natural Resources Fund, which is actually a sector fund, concentrating on companies engaged in discovery, development, production and distribution of natural resources. It has given returns of -3%, compared to its benchmark’s (BSE 200) returns of 1%. Bharti AXA Equity Fund, Taurus Bonanza Fund and Sundaram BNP Paribas SMILE Fund have also witnessed similar underperformance.

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    aniruddha naha

    1 decade ago


    I went through your article. I would like to know how these funds have performed on a 2 year and 3 year period basis, which would include periods when the markets were really weak?

    Financial castles in the air-III

    Builders are offering ‘guaranteed’ returns—and rebates— to home-buyers in return for upfront payments even for under-construction properties. This is the third part of a continuing series

    DLF, the official sponsor of the Indian Premier League (IPL), is trying out different financial moves to run its core business, real estate. It is offering different rebates for its various properties if homebuyers pay almost 95% of the basic sale price (BSP) within one month of booking a property.  

    A real-estate agent from New Delhi told Moneylife that DLF is offering 10% rebate on the BSP for its residential project −‘New Town Heights, DLF Gurgaon’, by offering a down-payment scheme. The customer has to pay Rs5 lakh at the time of booking the property; 97.5% of the sale price within 30 days and remaining 2.5% can be paid when the customer receives the occupation certificate. Currently, the price of the project is Rs2,150 per square feet.

    Recently, the Delhi High Court asked market watchdog Securities and Exchange Board of India (SEBI) to probe a ‘mis-statement’ in DLF’s Red Herring Prospectus while it had launched its initial public offering (IPO) in 2007.

    The developer is also offering a higher rebate of 10.50% for its ‘River Valley’ residential apartment project at Panjim in Goa, while it is offering a 10% rebate for its ‘Express Greens I & II’ project in Gurgaon, according to the real-estate agent.

    For the River Valley project, the consumer is supposed to pay Rs2,50,000 for a one bedroom, hall & kitchen (BHK) flat, Rs4,00,000 for a two-BHK and Rs5,00,000 for a two-and-a-half BHK, at the time of booking. The remaining 95% of sale price has to be shelled out within two months after booking the flat. The remaining 5% including interest-bearing maintenance security (IBMS) charges, stamp duty & registration charges and other charges have to be paid at the time the company hands over the occupation certificate.

    According to DLF’s website, for the ‘Express Greens I & II’ project, the applicant has to pay Rs5 lakh at the time of booking an apartment in the tower; 95% of sale price within 30 days; 2.5% of the sale price when the occupation certificate is applied for, and 2.5% of the sale price (including IBMS, stamp duty and registration) at the time of receipt of the occupation certificate. Currently, the prices of the Gurgaon apartments are Rs2,250 per sq ft.
    (This is what DLF’s website says: See here)

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