SC rejects govt’s review petition in Vodafone case

 

 FC :SS Negi Mar 20 2012 , New Delhi

In a setback to the government, the Supreme Court on Tuesday dismissed the Centre’s petition for review of in the top court verdict in the Vodafone’s capital gains tax case.

The apex court in a brief order said “no merit” was found in the review petition filed by the government against its January 20 judgement. In the verdict, the top court had quashed the income tax department’s notice to Vodafone for recovery of nearly Rs 12,000 crore as tax on capital gains for investment made it in India's telecom sector.

“We have carefully gone through the review petition filed by the Union of India on February 17. We find no merit in the review petition. The petition is, accordingly dismissed,” a bench of chief justice of India SH Kapadia and justices KS Radhakrishnan and Swatanter Kumar said. The same bench also delivered the verdict. 
As per the Supreme Court’s rules on procedure for hearing the cases, a review petition is also heard by the same bench, which deli-vers the main verdict. A revi-ew petition is only admitted if petitioner has establish an “error” of fact, or law in the verdict sought to be revie-wed, otherwise it would not be entertained. The review petition was decided in a chamber hearing by the bench as is normal practice.

The I-T department had sought tax on capital gains from Vodafone for acquiring the shares of Hutchison in a deal signed in a third country in 2007. Hatchison at that time had invested in Indian telecom sector in a joint venture with Essar.

The apex court in its January 20 verdict had ruled that the Indian Income Tax Act would not apply to any off shore agreement between two foreign companies for acquiring of shares even if the company so acquired was already doing business in India if they were paying tax in the country of their registration.

The main grounds for review laid down by the Centre was that the price of $ 11.08 billion paid by Vodafone in a deal signed in a foreign land was only an “accidental or consequential” transfer of share and be recognised independently of the right and entitlement of Hutchison Telecom India in relation to its business in India, therefore, it was covered under the tax laws of the country.

The government further had said that the apex court should take into consideration different provisions of I-T Act in “extensive” manner with regard to transfer of property as defined in section 2(47) of the Act and it should be read with section 9 to have an “inclusive definition” for the purpose of direct or indirect transfer of such property in India, which would make it liable to be taxed as per the Indian laws.

The apex court in its verdict had said the issue arising out of the Vodafone case had far wider dimension of the flow of the FDI towards "the location with a strong governance infrastructure, which Includes enactment of laws and how well the legal system works.”

The CJI and the two judges in their verdict had ruled, “by applying the ‘look at’ test in order to ascertain the true nature and character of the transaction (between two foreign companies), we hold, that the offshore transaction herein is a bona fide structured FDI investment into India which fell outside India’s territorial tax jurisdiction, hence not taxable.”

'Leadership is thinking out of the box'

 





Sachin Kumar and Tejeesh N S Behl, Hindustan Times 14 March 2012


One of India's 48 billionaires - the latest Forbes rich list ranks him at 270 with a net worth of $4.1 billion - Uday Kotak, 53, vice-chairman and managing director, Kotak Mahindra Bank says leadership is about being disruptive and thinking out of the box.Excerpts from an  interview:

What would be the defining trait of leadership, according to you?Leadership is building a team having a common purpose, and executing that purpose. It is about identifying an opportunity in advance and most of the times people see it after it's gone. For example, nobody saw an opportunity in tablets but Steve Jobs. Even the consumer didn't know that they have a need. So when an opportunity flows most people ignore it. And once you get that opportunity, your ability to execute it - that is the key difference between success and failure. There are many visionaries but success is with the person who executes that vision. People underestimate the importance of execution.

How do you identify opportunity and execute it?You have to follow your own instinct. Humans have a tendency to think that it is too risky, or I can't do that. In India we have two diseases, what I call needling and tolding. You ask any manager and he will say we need to do this - in that case why don't you do this. And second is tolding - I have told him, or passed on the work to someone else. Why have you told him, why haven't you done that yourself.

What is your leadership style?I like to build consensus, but once I'm clear about something then I decide. I try to carry my team along but I am not scared to take a decision if it is not popular.
I also think leadership should not be predictable. If it's too predictable then people know that if they behave in a particular manner, then the boss will react in a set way. But unpredictability does not imply inconsistency - you have to be consistent in your philosophy but must have the ability to think out of the box.

 

Any such instance of unpredictability you can recount?It was not an easy decision for us to buy back the Goldman Sachs stake in 2006. The predictable thing was to sell out but we finally looked deep inside and went with our conviction - which brings to another important issue about leadership. That the line between conviction and foolhardiness is very thin.

Has the job of a leader become tough in times of a slowdown, especially when he has to take a decision on downsizing?Every downturn is an opportunity because if you have the right strategy and you execute it right, then post-downturn you have chances of getting a higher market share.

But often employees are the last to know about developments. Is that due to a lack of respect or is the leader too scared to tell the truth?I think it is both. It is extremely important to carry your team in good and bad times. And when leadership does not have the trust of its people, it's a huge sign of weakness of the firm. The two most important constituents of any firm are customers and employees. With both these categories I put disproportionate importance to trust. Conduct of a person builds trust and trust is fragile, it has to be nurtured. A firm must give as much importance to internal communication as to external communication.

So where do most leaders go wrong?Most of the times people struggle on the 'who' and lose the sight of 'what'. It is not about who is right, but what is right. Stick to the principle of what is right and manage the who separately.

 

Which historical leader do you admire most and why?Mahatama Gandhi, he was the smartest negotiator in the world. What negotiating leverage did he have when he went to the queen in a dhoti and yet, he shifted the negotiating leverage in his favour - as if saying that I am half naked because of what you have done to my country. The way Gandhi used fasts as a negotiating leverage, smartly, time and again, that too in era of no mobiles - he is the one of the smartest negotiators history has seen.

Budget for common man

 

HT:16 March 2012

For an economy still slowing down and unlikely to see brisk hiring or steep payhikes, finance minister Pranab Mukherjee has given salaried bread-winners a reason to cheer. 

To begin with, those earning Rs 2 lakh more need not pay any tax at all, raising the exemption limit by Rs  20000 from 1.80 lakhs.

He also proposed to rejig income tax slabs — a move that will leave more money in the hands of the common man.

The new tax slabs could be in line with the Direct Taxes Code (DTC) Bill, which was introduced in Parliament in 2010.

Incomes between Rs 2-5 lakh will be taxed at 10%, income between Rs 5 -10 lakh be taxed at 20% and income above Rs 10 lakh per annum be taxed at 30%.

At present, income between Rs 1.8 lakh and Rs 5 lakh is taxed at 10%, income between Rs 5-8 lakh is taxed at 20%, while annual income of above Rs 8 lakh attracts a tax rate of 30%.

A rejig in tax slabs along with a hike in exemption limits will enhance people's disposable income, which, in turn will boost consumption spending as well as savings.

The government is negotiating a maze of thorny issues ahead of this year's budget amid faltering demand and rising prices that have hit growth in the broader economy, even as prices remain out of control.

“Although DTC will not be effective from this year, I propose to introduce the DTC rates for personal income tax… These changes will provide substantial relief to tax payers,” Mukherjee said in his budget speech.

The parliamentary standing committee on finance has recommended raising the income tax exemption limit to Rs 3 lakh from the existing Rs 1.8 lakh.

The committee headed by  BJP leader and former finance minister Yashwant Singh,  has also recommended a major rejig in tax slabs.

It has recommended 10% tax for those in the income bracket of Rs 3-10 lakh, 20% for Rs 10-20 lakh and 30% for income beyond Rs 20 lakh.

 

Kingfisher Airlines may lose flying licence

 

The Hindu :PTI:NEW DELHI, March 19, 2012

Ailing Kingfisher Airlines on Monday faced the prospects of its flying licence being cancelled and its boss Vijay Mallya had been asked by the Directorate General of Civil Aviation (DGCA) to present a clear picture of the cash-strapped private carrier.

The DGCA mulled cancellation of Kingfisher's flying permit after the airline on Monday submitted to it the summer flight schedule with 15 to 16 aircraft as against 28 planes submitted last month.

“The airline not only lacks aircraft, they also lack funds for day-to-day operations. They are failing to meet their flight schedule, causing inconvenience to passengers and also they failed to give salaries to their employees for the past four-five months,” official sources said.

Sources said Kingfisher might be planning a quite shutdown and Mr. Mallya being an ‘accountable' person has been asked to meet the DGCA to present a clear picture.

The whole picture was likely to become clear in few days, the officials said.

The beleaguered airline was served a showcause notice by the DGCA towards the end of February asking why its licence should not be suspended as it had made unannounced cancellations.

The 15-day mandatory notice period has already lapsed and they have failed to give a valid reason for curtailment of their flight schedule, most of their explanations are unsatisfactory and they have not given a definite recovery plan, officials said requesting anonymity, adding the airline was now operating only 15 or 16 aircraft.

Facing severe fund crunch, the airline has decided to curtail its overseas flights operations to avoid further losses and also return of a leased aircraft.

According to sources, the airline has planned to suspend its overseas operations from March 25, except Delhi-London, which it is withdrawing from April 9. Also the airline would return its wide body airbus A330-200 aircraft to a lessor in the United Kingdom.

Struggling to stay afloat, around 60 accounts of Kingfisher Airlines have been frozen by the tax authorities for its failure to pay taxes after levying it from the passengers.

Angry over not being paid for four months, airline pilots reported sick, forcing the airline to curtail its scheduled flights.

Mr. Mallya at a meeting with the pilots last Friday said their grievances would be looked into but did not set a timeframe.

 

He had also said the airline would come out with a crystal clear roadmap for its future in a few days.

Kingfisher has a total debt of about Rs.7,057 crore and accumulated losses of about Rs.6,000 crore.

Earlier this month, global airlines body IATA suspended Kingfisher for not clearing its dues. This was the second time in just over a month that the airline was suspended on the same count from the IATA Clearing House (ICH) through which airlines and related firms settle accounts for services provided by them to other such companies.