OPINION, P8 COMPANIES, P7 INTERNATIONAL, P14 EDITORIAL 2G CASE COUNTERING TAX AVOIDANCE HC refuses to spare Balwa, others from penalty task of nurturing trees France unveils plan to tax internet giants like Google, Amazon China giving in to US trade pressure surely has lessons for India? Crop burning imposes a whopping $30-bn/year cost on India, time govt got serious about it NEW DELHI, THURSDAY, MARCH 7, 2019 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL. XLV NO. 5, 20 PAGES, `6.00 (PATNA `6.00, RAIPUR `7.00) P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E SENSEX: 36,636.10 ▲ 193.56 NIFTY: 11,053.00 ▲ 65.55 NIKKEI 225: 21,596.81 ▼ 129.47 HANG SENG: 29,037.60 ▲ 76.00 `/$: 70.28 ▲ 0.21 `/€: 79.45 ▲ 0.41 BRENT: $65.77 ▼ $0.09 GOLD: `32,174.00 ▲ `36.00 SUSPECT POST-NOTE BAN DEPOSITS IN THE NEWS Indore named cleanest city for third year in a row I-T dept cracks down on over 87k people INDORE WAS adjudged India's cleanest city for the third straight year in the central government's cleanliness survey announced on Wednesday, reports PTI. The second and third positions in the category were grabbed by Ambikapur in Chhattisgarh and Mysore. CBDT tells field officers to complete a probe into these cases by March end, outlines SOPs DHFL shares spurt 11% after auditor report SUMIT JHA New Delhi, March 6 SHARES OF Dewan Housing Finance Corp (DHFL) rose 11% Wednesday after a report by a chartered accountancy firm said there are no indications to confirm allegations that the company has created shell companies to divert funds, reports PTI. The scrip jumped 11.04% to close at `148.80 on the BSE. INASIGNthatthegovernment will show little tolerance to those who deposited huge sums of presumably untaxed cash in banks during the demonetisation period unless theyturnedtax-compliant,the Central Board of Direct Taxes (CBDT) has asked senior income-tax officials to go after over87,000peoplewhoareyet to file income tax (I-T) returns in response to the notices issued to them. The assessment in all these cases should be completed by March-end, the board said, in a missive to the field formations. Tax officials have been instructed by the board to gatheradditional information about the above persons and establish a trail of the funds deposited by them. Further, a detailed analysis of any past People leave live fish, prams in taxis: Uber index A STUDY by cab-aggregator Uber revealed riders have forgotten live fish, milk sachets, prams, ukulele, bunch of banana, aluminium storage shelf, yoga mat, knee pad, and even sarees, in 2018, reports PTI. As per the index, Bengaluru is the most forgetful city in India. Growth (%, y-o-y) 21.9 21 20 15 10 5 9.9 FY15 any information regarding the entry operators — those who launder cash by issuing bogus bills to clients — in a particular chainshouldalsobeforwarded to the concerned jurisdictional AO fortaxing the unaccounted commission receipts. As FE reported earlier, the income-tax department had identified 23.5 lakh permanent account numbers (PANs) forpost-notebancashdeposits being inconsistent with income profiles under the OperationCleanMoney(OCM) programme. THE CENTRAL BOARD of Direct Taxes (CBDT) On Wednesday gave effect to the conditional relief from angel tax to start-ups as notified by the Department forPromotion of Industry and Internal Trade (DPIIT)onFebruary19bymakingthenecessarychangesinthe IncomeTaxAct. In a substantial breather to thousands of start-ups, the DPIIT had raised the cap of funding by unlisted firms or individuals in a start-up that would be exempted from the angeltaxto`25crorefrom`10 croreandalsorelaxedaclutchof rules to ease investment flow intothese.Investmentsbylisted firms having a net worth above `100 crore or annual turnover of `250 crore will be exempted from any such limit,which will enable them to invest more without fears of the angel tax. As FE reported earlier, the CBDT has also sent letters to principal chief commissioners of I-T recently, asking them to “identifythestart-upcasespertaining to them and to ensure that no coercive action is taken in these cases”. Continued on Page 2 Continued on Page 2 19.8 12.5 FY16 FY17 FY18 FY19 (RE) Post-note ban, 23.5 lakh PANs spotted for huge, unexplained cash deposits. Despite alerts, 4.2 lakh of these haven't since filed returns For AY17-18 (FY16-17), notices were sent to 3 lakh for not filing returns, of which 2.1 lakh complied and paid `6,561 crore as tax; the com remaining people now under I-T focus rem income tax returns of these people should also be made to ascertain the nature of their transactions during the demonetisation period (November 8 to December 31, 2016),the CBDT said. “In cases where ultimate beneficiaryofatransactionhas been established, the concerned assessing officer (AO) shall forward the material available at his/her disposal to theAOhavingjurisdictionover theultimatebeneficiarysothat appropriateactioncanbeinitiatedinthatcaseasperrelevant provisionsoftheAct,”theCBDT said. Further, the board said, CBDTfollows up on DPIIT relief, some concerns stay FE BUREAU New Delhi, March 6 Income-tax collections 25 ● ANGEL TAX Special Features BUDGET CARRIER SpiceJet on Wednesday announced Amadeus as its global distribution system (GDS) partner in a move to expand its international footprint, reports fe Bureau in New Delhi. The agreement will help the Gurgaon-based airline to access new markets and grow its customer base. A GDS enables airlines to sell seats to travel agencies and agents based in foreign location. Usually travel agents subscribe to these network providers to search and raise their tickets. PAGE 7 Jaypee Infra suitors’ plans factor in `750 crore with NCLT RESOLUTION APPLICANTS for Jaypee Infratech — state-run NBCC and Sudhir Valia-promoted Suraksha ARC — have factored in their respective resolution plans the `750 crore deposited by the insolvent developer's parent firm, which is lying with National Company Law Tribunal as per the Supreme Court’s directive, report Rishi Ranjan Kala & Surya Sarathi Ray in New Delhi. NBCC wants to utilise the fund for payment as penalty to homebuyers on account of delaying the hand-overs. PAGE 6 Govt unlikely to review FDI rules to placate US THE GOVERNMENT has no plan to review the latest FDI guidelines in e-commerce to placate the US, an official source told FE, reports fe Bureau in New Delhi. The new FDI rules,expected to hit Amazon and Walmart-backed Flipkart, are said to be the one of the immediate triggers for the Trump administration's decision this week to withdraw duty benefits on annual exports worth $5.6 billion from India under the so-called Generalized System of Preferences by May. PAGE 2 THE SUPREME COURT on Wednesday seemed to clearly disagree with the government as it sought to dub the documents relied on by petitioners who sought a review of its rulingontheRafaleaircraftdealas ‘inadmissible’ since they were ‘stolen’ ones. During the hear- ingofthereviewpetitions Attorney-General KK Venugopal said the relevant documents were marked ‘secret’and‘classified’andwere in the public domain in violation of the Official SecretsAct. An investigation into the theft (of the documents) is on, theAGsaidonadayTheHindu, whichcarriedaseriesofarticles critical of the government on the deal byciting official documents,published another one. The question cropped up duringthehearingoftheRafale review petitions when Venugopal objected to the submission of a note bythe petitioners to the bench comprising Chief Justice of India Ranjan Gogoi JYOTI STRUCTURES: A final order is expected to be passed regarding liquidation ordered by the Mumbai bench of the NCLT Leica D-Lux 7: A compact camera for the advanced user SpiceJet announces Amadeus as distribution system partner INDU BHAN New Delhi, March 6 ESSAR STEEL: The appellate tribunal has directed Ahmedabad bench of NCLT to pass a final order on the resolution plan of ArcelorMittal by March 8, failing which it will call for all related files and pass an order By 2025, 20% of data created will be real-time in nature rather than being sent to the network core for processing. This means processing and storage of more data on the edge, says Seagate’s BS Teh ■ eFE, P13 QuickPicks ‘Can’t stolen documents be relied on if relevant?’asks SC MAJOR CASES BEFORE NCLAT 5G will give a major fillip to edge computing The Leica D-Lux 7 is a premium compact camera that delivers impressive results. Available for `94,300, the D-Lux 7 is perfect for the advanced photographer ■ Gadgets, P13 RAFALE RULING REVIEW Fire in building housing NCLAT A fire service officer at the site of a fire at Antyodaya Bhawan, which houses the NCLAT, in New Delhi’s CGO Complex on Wednesday. The NCLAT has suspended hearings till further notice EXPRESS PHOTO: TASHI TOBGYAL RCOM-ERICSSON: Rcom wants to withdraw its appeal against Ericsson's petition dragging the former to the NCLT. The petition was admitted and RCom had appealed against it as it was pursuing a stake sale plan. With that not materialising the company later itself went to NCLT for initiating the insolvency process AMTEK AUTO: Liberty House, the preferred bidder for the bankrupt Amtek Auto, failed to pay the lenders as per the resolution plan after which the lenders dragged it to NCLAT for failing to honour its commitment FLIPKART ACQUISITION Was prepared to face regulatory changes: Walmart FE BUREAU New Delhi, March 6 WALMART, WHICH ACQUIRED 77% stake in Flipkart for $16 billion last year, waspreparedtofaceregulatory changes and still believes that thecountryremainsanimportant growth market for it. Brett Biggs, chief financial officer and executive vicepresident, Walmart, said in a conference call on March 5 ■ Walmart acquired a majority 77% stake in Flipkart for $16 billion last year ■ Effective February 1 this year, new FDI rules prohibited sourcing over 25% of procurement from a single vendor ■ Exclusive sale deals of products disallowed that the company knew there would be“legislation changes” and itwill have to make itsway through it. “When you make investment in India, note things are going to change. They did the first time we were in India and they will again, we know that. We knew that going into an investment andyou’ve just got towork theirwaythrough.And so, we are going to have real changes, we know that,” Biggs said referring to the changes the Indian government brought to the e-commerce rules for marketplace models which had foreign direct investment. Continued on Page 2 andJusticesSanjayKishanKaul and KM Joseph. At one point, Justice Joseph asked,“Can relevant evidence be cut out saying it is illegally obtained? Can’t stolenevidencebelookedintoif it is relevant?” He added: “Suppose great crime is committed, are you going to take shelter under national security? You can’t say that we cannot look into the documents that have come before us.” Even the CJI joined Justice Joseph in asking the AG if “anaccusedishavingdifficulty in proving his innocence, he steals a document and shows it to judge. The document clearly shows he is innocent. Should the judge not admit the document?” Venugopal said that“he has todisclosethesourceofthedocument.The submission is,once the document is a subject matterofcriminality,inmyopinion, thecourtshouldnotlookintoit and the documents cannot be shown in the court as they would affect national security.” Continued on Page 2 JUDGES’ VIEWS If your (govt's) submission is that petitioners have not come bonafide, then that’s different. But can you say that the document is completely not touchable? — CJI RANJAN GOGOI Suppose a great crime is committed, are you going to take shelter under national security? You can't say that we cannot look into the documents that have come before us — JUSTICE KM JOSEPH If the documents were stolen, the government should put its own house in order... But to say we can't even look at those documents may not be a correct submission in law —JUSTICE SANJAY K KAUL BT COTTON Legal win for Bayer Monsanto as HC tells NSL to pay `138 cr BV MAHALAKSHMI & PRABHUDATTA MISHRA Hyderabad/New Delhi, March 6 THE PROTRACTED LEGAL battle between global biotech majorBayerMonsanto and the local companies, which had licensedinitsgeneticallymodified cotton (Bollgard technology), seems to be increasingly going the US-based firm’sway, with the Bombay High Court on Wednesday ordering Nuziveedu Seeds (NSL) to deposit its `138 crore dues to the innovator company in two weeks. Affirming a January 2019 arbitral award that favoured Bayer, the court also restrained the local firm from disposingofanyofitsassetstill the money is deposited with it eitherin cash orvia bank guarantee. ForBayer(whichoperatesin Indiaviaitslocalarm MahycoMonsanto Biotech or MMB), this is the third legal victory in the current calender year against a clutch of firms and other groups disputing its patent rights on the relevant technologyandrefusingtopay it the trait fees (royalty) agreed upon. Apart from the arbitral award and Wednesday’s court riling, on January 8, the Supreme Court had restored COURT’S ORDERS ■ Bombay High Court on Wednesday ordered Nuziveedu Seeds to deposit its dues to the innovator company in two weeks ■ Affirming a January 2019 arbitral award that favoured Bayer, the court also restrained the local firm from disposing of any of its assets till the money is deposited with it either in cash or via bank guanatee Bayer’s BT cotton patent in India till its validity is decided finallybya lowercourt hearing the technical matter in detail. When it comes to raising revenue from the sublicencees here, the biotech major’s hands are howeverstill tied as these firms no longer require annual NoCs from it to sell seeds bearing its technology. Bayer is also hit by the price controls (including sublimits on the trait fee) imposed by the Indian government on the Bt cotton seeds. Continued on Page 2 MARLBORO CIGARETTES Philip Morris paid for India manufacturing despite FDI ban, show documents ADITYA KALRA New Delhi, March 6 PHILIP MORRIS INTERNATIONAL Inc has for years paid manufacturing costs to its Indian partner to make its Marlboro cigarettes, circumventing a nine-year-old government ban on foreign direct investment in the industry, internal company documents reviewed by Reuters showed. The government in 2010 prohibited foreign direct investment (FDI) in cigarette manufacturing, saying the measure would enhance its efforts to curb smoking. Restricting foreign investment leaves cigarette manufacturing largely in the hands of domestic players, and is supposed to prevent any foreign-funded expansion.Ayear after the government’s decision, Japan Tobacco exited India,citing an“unsustainable business model”. Philip Morris, though, stayed in India and used another route, according to company documents dated between May 2009 and January2018.Ayearbefore the FDI ban,it struck an exclusive deal with India’s Godfrey Phillips to locally manufacture the world-famous Marlboro cigarettes. Ever since then, Godfrey has publicly acted as a contractmanufacturerofMarlboro cigarettes in India, whilePhilipMorris’smajority-owned local unit acts as a wholesale trading companyand promotes the brand. ILLUSTRATION: ROHNIT PHORE But dozens of internal company documents — including invoice bills, legal agreements, e-mails and accounting statements — show Philip Morris has for years indirectly paid costs related to Marlboro cigarette manufacturing in India. Some former Indian enforcement officials said the practice of indirectly paying formanufacturingrelated costs violates regulatory rules. However, some lawyers such as Pratibha Jain,a partner at Nishith Desai Associates, disagreed, pointing out that thefederalrulesdidnotexplicitly prohibit such payments. Philip Morris' director for corporate affairs in India, R.Venkatesh,in an e-mail,said the company's "business arrangements with Godfrey Phillips India comply with Indian Foreign Direct Investment Rules". He did not elaborate. Continued on Page 2
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