Exit Polls Give BJP The Thumbs-Up



Set To Form Govt In M'rashtra & Haryana, But Not All Projections Give It Clear Majority Sena May Finish 2nd, Cong 3rd, MNS To Fare Worse Than In 2009

BJP will form the next government in both Maharashtra and Haryana, exit polls predicted on Wednesday . The only thing they did not agree on was whether the party would win a clear majority on its own. If the polls are proved right, it will validate BJP's bold gamble in going it alone in both states, as well as its focus on a Narendra Modi-centred campaign that dwelt more on governance issues than on the communal rhetoric often associated with the saffron party .

Of the four exit polls that made projections for Maharashtra, one--by Today's Chanakya--gave BJP 151 seats or a clear majority in the 288member assembly . Another, done by AC Nielsen for ABP News, predicted that the par ty would just hit the half-way mark of 144. The CVoter poll conducted for Times Now gave BJP 138 seats and the Cicero poll for the India Today group gave it 124. According to the latter two, while BJP would need some support from others, it should hardly find that a problem.

Interestingly , Shiv Sena too is not seen as a major loser, at least in terms of seats, from the break-up of the 25-yearold alliance with BJP . All the polls agreed that it would finish second and improve significantly on its 2009 tally of 44 seats, though the numbers varied from 59 to 77. Three of the four polls put Congress in third spot, just a little ahead of NCP , while one had it the other way round. MNS would get fewer than the 13 seats it won in 2009, all polls said.

In Haryana, which recorded an all-time high turnout of 73%, only three polls made predictions. Two of them gave BJP a clear majority, while the third had it hitting the half-way mark. The ABP News poll suggested BJP will win 54 seats in the 90-member House, Chanakya 52 and CVoter 45. If any of these comes true, BJP will comfortably form the government in the state.

Modi's popularity still a vote-catcher?

PM Narendra Modi's dominance looks set to be entrenched with exit polls indicating that BJP chief Amit Shah's gamble of going it alone in Maharashtra and Haryana may have paid off.The gains indicated suggest continuing popularity of Modi and his message of development and probity. P 14

 

 

Vodafone wins Rs 3,200cr tax case



No Levy On Transfer Of Shares To Mauritius-Based Parent, Rules HC

Vodafone got a shot in the arm on Friday after the Bombay high court ruled in its favour in the transfer pricing case relating to undervaluation of share capital issued by Vodafone India Services Private Limited (Vodafone India) to its Mauritius parent.

The tax department sought to bring the transaction of issue of share capital within the transfer pricing ambit. It held that the differential between the price at which shares were issued by Vodafone India and the valuation done by the tax department to be in the nature of a loan to the Mauritius-based parent company . In other words, equity was recharacterized as a loan. The tax department raised a demand of around Rs 3,200 crore.

However, the high court held that issue of shares does not give rise to any income and there can be no question of any transfer pricing adjustment. A bench of Chief Justice Mohit Shah and Justice M S Sanklecha ruled, "Issue of shares at a premium by the petitioner to its non-resident holding company does not give rise to any income from an admitted international transaction." For the purpose of application of transfer pricing provisions, one of the prerequisites is that there must be an international transaction between associated enterprises (Vodafone India and the Mauritius company in this case). However, in the absence of income, no international transaction can arise.

"There is no charge express or implied, in letter or in spirit to tax issue of shares at a premium as income. In this case, the revenue seems to be confusing the measure to a charge and calling the measure a notional income. We find that there is absence of any charge in the Act to subject issue of shares at a premium to tax," ob served the high court.

Vodafone said in a statement on Friday that the company "has maintained consistently throughout the legal proceedings that this transaction was not taxable. We welcome the decision today in the Bombay high court".

On August 21, 2008, Vodafone India had issued 2,89,224 equity shares of Rs 10 each at a premium of Rs 8,500 per share.

However, the transfer pricing officer revalued the shares at Rs 53,775 per share. Based on arm's length pricing adjustment, the tax department held a total shortfall of Rs 1,308.91 crore to be a deemed loan given by Vodafone India to its holding company. Periodical interest income was also held chargeable to tax in the hands of Vodafone India.

Sanjay Tolia, leader, transfer pricing at PwC India, said, "It is a welcome judgment as the transaction of issue of shares by Vodafone was nothing but a capital account transaction, and consequently the share premium, if any, ought to be capital receipt. The transfer pricing provisions permit the transaction to be re-quantified but not to be re-characterized. Hence, there was no question of the transaction resulting in 'income' taxable in India. The judgment will not only serve as a precedent in the legal arena but will also lend the much needed boost to foreign investors." Pranav Sayta, tax partner, EY India, said, "The verdict not only spells victory for Vodafone but also holds hope for other companies which are facing a similar dispute. One has to wait and see whether the tax department accepts this order or decides to appeal before the Supreme Court." Shell and two Essar Group companies are among several other MNCs contesting similar transfer pricing cases.

 





RIL, Punj Lloyd bag defence deals





A small change in foreign investment rules—by doing away with minimum 51% holding by a single Indian entity in a defence venture—has helped Mukesh Ambani's Reliance Aerospace and Punj Lloyd bag licences that they had been waiting for.

While increasing the foreign direct investment (FDI) cap for defence to 49%, the government did away with the clause that had been in the policy for years, as part of a strategy to attract investment in local manufacturing units. In special cases, 100% FDI has been allowed. The earlier rule did not allow Reliance Aerospace to get the licences to manufacture weapon launchers for combat aircraft as the promoters hold 45.3% in Reliance Industries. Similarly, the promoters of Punj Lloyd together have a 37% stake, which restricted a wholly owned subsidiary's ability to bag licences to manufacture torpedoes, rocket launchers and combat vehicle, sources familiar with the development told TOI.

While the government did not disclose any details, an official statement said that a committee had cleared 19 proposals from several large Indian corporate houses — including the Tatas, Mahindra and Bharat Forge — to bag licences for defence manufacturing.

In at least 14 other cases, the government has informed companies that licences are no longer required. These included Tata Advanced System's proposal to manufacture aircraft and spacecraft components, Mahindra Aerostructure, which wants to make parts of aircraft and Reliance Aerospace's flight control system manufacturing plans.

Even before FDI rules were changed, the department of industrial policy and promotion had reduced the number of items in the defence sector that need licences and freed dualuse items, such as radars and aircraft components that have civilian use too, from licensing requirement.

For years, the defence ministry has frowned upon the entry of the private sector into the arena even as it had relied on imports, often involving middlemen. In fact, during UPA's term in office, the commerce and industry ministry's plea to increase the FDI cap for the sector was repeatedly blocked by A K Antony , the then defence minister. In recent months, however, the mood has changed as the department of defence production has backed private and foreign capital in local ventures.

Now, the government is working on further easing the rules, including doing away with annual capacity ceiling in industrial licences and also permit of sale of licensed items to other entities under the control of the home ministry , state governments, PSUs and other valid defence licensed companies without approval.

 





POLL KHOL SAWAAL A fun clip on election promises