CBDT Sets Up High-Powered Panel To Decide Retro Tax Cases (Vodafone)

It may be recalled that in Vodafone International vs. UOI 341 ITR 1 the Supreme Court held that a transfer of shares of an offshore company would not chargeable to tax in India even if all the assets of the company were situated in India. To suprecede the judgement, a retrospective amendment was inserted in s. 9(1)(i) of the Income-tax Act, 1961 by the Finance Act 2012 w.r.e.f. 1.4.1962. The Shome Committee also issued a detailed report on the subject. The CBDT has now issued an Order dated 28.08.2014 u/s 119 of the Act and set up a Committee to implement the said provisions of s. 9(1)(i). The Order provides that if the AO considers that any income is deemed to accrue or arise in India before 1st April, 2012 through transfer of a capital asset situate in India in consequence of the amendments introduced with retrospective effect, he shall shall seek prior approval of the Committee for the proposed action. The Committee is required to examine the proposed action of the AO and, after providing an opportunity to the assessee, take a decision on the proposed action within 60 days. The Committee's decision is binding on the AO

Over 2L flats remain unsold due to demand-supply gap





The unabated demand-supply gap in the residential property market has created a pile-up of 2,13,742 unsold units, according to a Knight Frank India report released on Tuesday . The unsold inventory could take almost three years to sell.

The half-yearly report, India Real Estate Outlook,analyses the residential and office market performance in the Mumbai metropolitan region (MMR) between January and June 2014.

Demand in the region dropped by a whopping 25% during this period in comparison with the same period last year. "Buyers continued to sit on the fence for the most part of H1 2014 in anticipa tion that the new and stable leadership at the Centre would revive the ailing economy ," it said The most expensive location (south Mumbai) accounts for less than 1% of the 4,47,294 under-construction units in the MMR. " A comparison with all other micromarkets in MMR shows that the inventory level in south Mumbai market will take maximum time of 18 quarters (4.5 years) to sell," it said.

Central Mumbai, on the other hand, emerged as a prominent residential market on the back of premium residential and social segment and corporate headquarters from manufacturing, media and consulting sectors. It will take almost four years to clear the inventory that has been in the market for the past nine quarters.

The western suburbs saw a 19% jump in new launches compared to 12% during the same period last year. This belt has an unsold inventory of over three years.

With developers deferring fresh launches, new project completions dropped by 25% in H1 2014 compared to the same period last year.





`1 lakh cr of your money: What’ve banks done with it?

dna exposes one of the best-kept secrets in the Indian banking industry: Fraud cases on the rise

Mumbai: Bank funds of about Rs 1 lakh crore are caught up in frauds or under investigation by the Central Bureau of Investigation (CBI). But banks are greening their books by selling off bad loans to asset reconstruction companies (ARCs) or by restructuring payments (where the tenure of loan is altered when there is a repayment issue) or plain writing it off to make their balance-sheets rosier. As on June 30, about Rs 2.54 lakh crore of bank loans turned into bad loans after borrowers defaulted on repayments. Add another Rs 4.46 lakh crore of restructured assets and you have around Rs 7 lakh crore out of the Rs 61.98 lakh crore of bank loans (read depositors' money) that are under stress. Frauds and vigilance investigations have become commonplace. Depositors' money is getting wasted on operationalising promoters' business plans that are being drawn up to swindle money from banks. Most frauds are staged by dubious businessmen, who are hand-in-glove with corrupt bankers. Which are the notable frauds reported? Banks are closely monitoring the Bhushan Steel case (Rs 40,000 crore) while the account has still not turned bad. Kingfisher (Rs 4,022 crore), Deccan Chronicle (Rs 4,000 crore), Zoom Developers (Rs 2,400 crore). Winsome Diamonds (Rs 6,581 crore) and First Leasing Financial (Rs 1,000 crore) are some of the other big cases. Aren't banks punished? The RBI recently carried out an independent scrutiny of the loan and current accounts of Deccan Chronicle Holdings and slapped a combined monetary penalty of Rs 1.5 crore on 12 banks for violation of various rules. They were five public sector and seven private banks. While the maximum penalty of Rs 40 lakh was imposed on ICICI Bank, others penalised include Andhra Bank, Axis Bank, Canara Bank, Corporation Bank, HDFC Bank, IDBI Bank, IndusInd Bank, Kotak Mahindra, Ratnakar Bank, State Bank of Hyderabad and Yes Bank. How do banks report drop in bad loans? Despite an increase in frauds, many big banks like SBI and ICICI Bank have reported lower bad loans in the first quarter of 2014-15. Banks have sold bad loans of close to Rs 30,000 crore to ARCs till the end of the first quarter ended June 30, 2014. Banks have started selling off loans that are just 60 days due for repayment to avoid an NPA tag on their balance-sheets. What do ARCs do? Asset reconstruction companies (ARCs) specialise in recovery of loans or reviving the fortunes of stressed companies. Banks like SBI, ICICI Bank and IDBI Bank together have set up an ARC --ARCIL. There are private ARCs owned by Edelweiss and JM Financial. How do banks sell bad loans? Banks often sell the loans at a discount of 20-40%. ARCs pay 15% of the bad loans in cash and the remaining as security receipts, to be encashed over 8 years. All public sector banks sell loans through an auction process. Private sector banks sell them through bilateral deals. What is RBI doing about it? RBI said in its annual report released on Thursday. The increase in the level of restructured standard advances since 2012-13 reflects potential hidden stress in the quality of loan assets. The improvement in NPAs during Q4 of 2013-14 needs to be cautiously examined in the face of the increased of?oad of loans to ARCs by banks. Is it planning any concrete action? The RBI is proposing to cut down bank exposure to companies by half, so that funding to companies is drastically brought down. Tightening norms will help banks in risk mitigation during cyclical downturns.

Modi makes a clean break, ends Plan era, wants to build Team India





PM Makes Strong Pitch To Involve People In National Reconstruction Project Suggests 10-Yr Freeze On All Divisive Issues

Prime Minister Narendra Modi on Friday made a marked break from the past in his maiden Independence Day speech with many firsts --notably by scrapping the Nehruvian vestige, the Planning Commission, and by ending his 65-minute extempore speech with the slogan of "Vande Mataram".

Unlike in the past when prime ministers announced government schemes from the ramparts of the Red Fort on August 15, Modi exhorted countrymen to rise to their full potential, realize their responsibilities and shape their own destinies.

To this direction, he pushed people towards cleanline ss, sought protection of women by urging parents to ensure their boys are raised right, told MPs to create model villages with their MPLAD funds, nudged industry to move towards "zero defect" manu facturing, and asked bureaucrats to stop fighting among themselves and get on with their common task of governance.

Instead of the traditional "mai-baap sarkar" that prov ided goods and services to a passive populace, the prime minister sought to involve the people in a national "cando" reconstruction project. Some of the things that he said sounded repetitive but that was possibly to emphasize their importance in his scheme of development.
On India's fractious politics of caste and religion, he came up with another first -a 10-year moratorium on violence triggered by these divisive issues.

"Let's resolve for once in our hearts, let's put a moratorium on all such activities for 10 years, we shall march ahead to a society which will be free from all such tensions," he said. Modi made a pitch for a sub-continental project to eradicate poverty , saying how that was once issue that dragged India and its neighbours down. While his emphasis on neighbours isn't new, what was new is that he avoided mentioning Pakistan in any adversarial context.

The one big government measure that the Prime Minister announced for the poor was a mega financial inclusion plan as well as an accident insurance cover of Rs 1 lakh. The other big announcement was, of course, the dismantling of the Planning Commission, which would be replaced, said sources, by a new body called the National Development and Reforms Commission which would have active participation from states and whose brief would extend to collaborating with the private sector.

The winding up of the Planning Commission was an important, but not the sole symbol of the change that Modi wants to bring in. As he said, "I am saying from the rampart of the Red Fort that it is a very old system and it will have to be rejuvenated, it will have to be changed a lot. Sometimes it costs more to repair the old house, but, it gives us no satisfaction." Modi's speech reflected his attention to details and his focus on shoring up governance.
But Modi moved beyond his known concern about delivery mechanisms and invoked the need to develop a national character and a sense of national purpose. This was reflected in his call for improving public hygiene standards and building toilet for women and the girl child. He had already moved the issue high on the hierarchy of public concerns, but the speech saw the PM seeking to turn the government goal into a national mission by linking it to the issue of gender justice and dignity of the poor.

For the full report, log on to http:www.timesofindia.com





Chembur resident gets state’s first e-challan





A Chembur resident has become the first person in the state to be issued an e-challan. He was sent the challan for a traffic violation committed in Navi Mumbai, as his vehicle had stepped on the zebra crossing at the NRI Junction, Palm Beach Road. The offence was recorded on a CCTV at the crossing.

Traffic police surprised motorists with a quiet launch of the CCTV-based e-challan system in Navi Mumbai Municipal Corporation's jurisdiction last month. The drive began with Palm Beach Road, where 24 cameras have been installed at nine locations. "We sent 15 e-challans through registered post. CCTV footage is

used to identify the car number and owner using data updated by the transport department,'' said DCP (traffic), Vijay Patil.

"E-challan will improve discipline among drivers," said K L Prasad, police commissioner,

Navi Mumbai. The city has 262 CCTVs and the police commissioner's office has asked the civic body to install another 400.

While the CCTVs capture traffic images in which the vehicle number is identified, the

command centre at the police commissioner's office takes a screenshot and also keeps the video clipping as evidence. An e-challan is prepared and posted with a covering letter from the traffic inspector. While the e-challan includes an image of the vehicle committing the violation, the covering letter provides details of the offence, the location and the option to pay a compounded fine or approach the court. At present, the fine can be paid at the CBD traffic chowky on the Sion-Panvel highway. It has to be paid within seven days from the receipt of the letter or the department forwards the case to the jurisdictional court at CBD Belapur.

"An online payment gateway will be soon be operational. The defaulter can then pay the fine online," added Patil.

"Delhi too has an evidencebased challan. I am sure it will enable greater compliance," said Rajesh Agarwal, the state government's principal secretary (IT), who chaired the CCTV committee.

Entire Backbay may be opened up for development





The Mahim shoreline is not the only stretch in Mumbai to be declared a bay by the state coastal authority , opening it further to construction.
The entire Backbay area, extending from Nariman Point and Cuffe Parade to Girgaum Chowpatty , has also been classified as a bay based on a report by the National Hydrographic Institute in Dehradun.

The shift in nomenclature, effected earlier this year, could create a bonanza for builders in south Mumbai in the months ahead. The state urban development department and the BMC are already grappling with the prospect of seeing large parts of Mumbai's coastline open up to rampant construction due to the process of redefinition. Till 2011, Coastal Regulation Zone (CRZ) norms had restricted construction activity up to 500m from the sea's high tide line. But an amendment in that year reduced the minimum distance for construction activity near a bay from 500m to just 100m, while retaining the old protection for seafronts.

3.5-acre plot freed, P 5 Taking advantage of the change, many Mumbai builders with prime plots near the coast rushed to the National Hydrographic Institute and the Institute of Remote Sensing (IRS) in Chennai. The institutes reportedly certified several areas as bays and marked out the plots as being outside the 100m zone.

The director of hydrography clarified that Backbay has been depicted as a bay on the institute's official navigational charts. Based on this classification, the Maharashtra Coastal Zone Management Authority (MCZMA), earlier this year, green-lighted construction on a 3.5-acre plot in Gamdevi, which earlier fell within the 500m CRZ protection line. The builder is rumoured to be developer Sudhakar Shetty. He could not be reached for comment despite several attempts by TOI.

"The builder got a favourable mention in the minutes of the MCZMA, which put his plot close to Girgaum Chowpatty out of the purview of CRZ," said a source.

Debi Goenka of the Conservation Action Trust said the shorelines in Mumbai could technically be defined as bays. "The problem is with the Union environment ministry, then headed by Jairam Ramesh, which allowed CRZ restrictions for bays to be reduced from 500m to 100m," he said. Architect and housing activist P K Das warned any attempt to dilute CRZ will lead to "development anarchy".

Government sources al

leged the MCZMA was selectively granting environmental clearances to some plots.

As reported by TOI on July 24, the urban development department and the BMC objected to the MCZMA clearing building projects by removing them from CRZ on the basis of the new bay definition. The state government stayed the coastal authority's approvals.

But R A Rajeev, the IAS officer who was removed as state environment secretary (he was chairman of MCZMA) last week, said the authority did not take any controversial decisions. "The MCZMA approved projects based on reports by the hydrographer and authorized agencies of the environment ministry. The authority sim

ply followed their observations on the demarcation of these plots," he told TOI.

"We did not pick and choose cases. Every project was scrutinized. Some were cleared by the Bombay high court," said Rajeev, adding that there were 15 such cases in the pipeline.

A new coastal zone management plan (CZMP) for Mumbai is currently being prepared by IRS Chennai.

Builders whose plots abut Backbay are waiting anxiously to free their plots from CRZ.

"They are hoping the draft CZMP plan would be approved by the National Coastal Zone Management Authority and published accordingly, showing these areas as a bay," said a source.

TIMES VIEW: It's ultimately experts who will determine whether these areas qualify as bays or not. But there is something drastically wrong in the law and the process if a mere change in nomenclature of an area can mean so much of difference in terms of development. Mumbai is already bursting at its seams and can barely provide the infrastructure its residents need; it's imperative the city gets a dose of planned development.

THE WORLD AT YOUR FEET - High income, low tax... House that!





Buy that new penthouse, reap lakhs in tax savings. Here's how the math works

The upside of being a `high-net-worth individual' (HNWI) is that you get a fatter pay cheque than most people.
The downside is that a big chunk of it will be taken away by the taxman. But there are ways of getting around that; in fact you can save a lot of tax by buying a house -as long as you let it out and not live in it.

Kuldeep Kumar, executive director of PricewaterhouseCoopers, says that's because, under Sec tion 24 of the Income Tax Act, you are al lowed deduction of the entire interest payment on your home loan from your taxable income -provided you club the rental income from the house with it.

After the new Budget, home buyers are allowed a deduction of Rs 2,00,000 on interest payment of their home loan. But no such limit exists if you can show your purchase as an investment, and not for personal use. The tax benefit is huge, says Vivek Jain, a senior chartered ac countant. If you are wonder ing how, the math is simple: with interest rates at around 10% per annum and rentals from a residential property hovering around 3% of capital value even in the metros, your actual outgo amounts to about 7% every year. This "net loss" is what you can rightfully claim as deduction from your taxable income.

LOSS IS GAIN

Here's how the calculation works out. Let's say you have an income of Rs 1.20 crore per annum, putting you in the 33.99% tax bracket. You buy a house worth Rs 3.30 crore for which you pay Rs 30 lakh up front and get financing of Rs 3 crore from a bank. At 10% interest rate, your EMI will be Rs 2,89,506. In the first year, your total payout will be Rs 34,74,072 -Rs 29,77,656 as interest payment and the rest towards repayment of principal. Going by market trends, your annual rental income would at most be Rs 11,50,000, or 3.5% of capital value. After deducting 30% as maintenance expense, your net taxable rental income will be Rs 8,05,000 (70% of 11,50,000). Deduct this from the interest amount (Rs 29,77,656) and your "net loss" stands at Rs 21,72,656. This amount will be deducted from your taxable income, reducing your tax liability by as much as Rs 7,38,486.

RETURNS OF RENT

With part of EMI being used to pay the principal, the interest burden will decline with each year; the second year, it will be reduced to Rs 29,25,675.
With rental income rising by , say, 5% during the period, the net loss will come down to Rs 20,80,425 and you get to save Rs 7,07,136 as tax in Year Two.
Interest amounts will fall further but a simple calculation shows that even if rentals keep increasing at 5% CAGR, your income from rent will exceed your interest outgo only in the 15th year.

FLOOR POWER

Buyers who are yet to get possession of their flat stand to gain as well, says Kumar.
The entire accumulated interest payout during the construction period can be claimed as deduction over the next five years once possession is taken.

After 15 years, you can sell the house and reinvest the money in a new one. Of course, you can always invest in more than one property and save even more tax. All it takes is an even fatter pay cheque.