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Govt cancelled 2.24 lakh suspected shell firms after note ban

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Arun Jaitley

New Delhi, Nov 5: The Ministry of Corporate Affairs (MCA) on Sunday said it struck off around 2.24 lakh companies for remaining inactive for a period of two years or more. 

Apart from this government also disqualified around  3.09 lakh Directors, who were on the Board of Companies that have failed to file Financial Statements and/or Annual Returns for a continuous period of three (3) financial years during 2013-14 to 2015-16.

Following the decision of  striking-off defaulting companies, restrictions have been imposed on operation of their bank accounts in accordance with the law.

“A Preliminary Enquiry on the basis of information received from 56 banks in respect of 35,000 companies involving 58,000 accounts has revealed that an amount of over Rs. 17,000 crore was deposited and withdrawn after demonetization. In one case, a company which had a negative Opening Balance on 8th November, 2016, deposited and withdrew Rs.2,484 crore post-demonetization” the official press release said.

“Apart from the restrictions on bank accounts, action has also been taken to restrict sale and transfer of moveable and immoveable properties of struck-off companies until they are restored. The State Governments have been advised to take necessary action in this regard by disallowing registration of such transactions”, it added.

In one particular account, the MCA said, an account which had a negative balance on 8 November, deposited and withdrew Rs 2,484 crore post note ban.Another company was found to have as many as 2,134 accounts.

However, the action is a part of the special drive conducted by a special task force constituted by the Prime Minister’s Office under the joint chairmanship of revenue secretary and secretary, corporate affairs. The task force was in-charge of chalking out the drive against such defaulting companies with the help of various enforcement agencies.

Besides this, in a separate action the MCA more than 3.09 lakh board of directors were disqualified for their companies failing to file financial statements and/or annual reports for a continuous period of three financial years during  2013-14 to 2015-16, necessary under the Companies Act 2013.

According to Preliminary enquiry over 3,000 disqualified Directors are Directors in more than 20 companies each, which is beyond the limit prescribed under the Law.

“Further, in the light of the evidence with respect to abuse of the Corporate Structure through multi-layering, not more than two (2) layers are now permitted beyond the wholly owned subsidiary. This is in addition to the existing restriction which prohibits a company to make investment through more than two layers of investment companies”, MCA statement asserted.

In a bid to address the criminality angle, the Director, Additional Director or Assistant Director of SFIO have been recently authorized to arrest any person believed to be guilty of any fraud punishable under the Act. Under Section 447 of the Act, which defines fraud, stringent punishment including imprisonment up to 10 years is stipulated. Further, reference has been made to the Ministry of Finance to include it as a Scheduled Offence under the Prevention of Money Laundering Act. it further added.

The Ministry claimed that it has taken several actions to demolish the practice of dummy directors including seeding Director Identification Number (DIN) with permanent account number (PAN) and Aadhaar at the time of DIN application through biometric matching for new applications.

Wefornews Bureau

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Vodafone retrospective tax decision was erroneous: Jaitley

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Vodafone Tax Case

The decision taken by the previous UPA government to tax British telecom multinational Vodafone Group retrospectively was an “erroneous” one, the likes of which the ruling NDA would be loath to repeat, Finance Minister Arun Jaitley said on Saturday.

He was responding to a question from the audience here on the issue at the ET Global Business Summit here.

“I always felt Vodafone tax decision was an erroneous decision. This government decided it will not be taking any retrospective decision,” Jaitley said.

It was precisely for this reason that the Long Term Capital Gains Tax reintroduced in the Budget earlier this month had been exempted for investments made up to January 31, 2018, he added.

The Budget 2018-19 has proposed to tax long-term capital gains on equities exceeding Rs 1 lakh at 10 per cent, which is expected to bring in revenue of Rs 20,000 crore.

However, capital gains made on shares until January 31, 2018, will be “grandfathered”, Jaitley said while presenting the budget, adding “we have protected all investments coming in before February 1”.

Vodafone is facing tax claims and interest totalling more than Rs 22,000 crore in India, which includes Rs 14,200 crore for acquiring Hutchison’s stake in 2007.

The UPA government had said that the Hutchison-Vodafone deal was liable for tax deduction at source (TDS) under the Income Tax (IT) Act. While the Supreme Court subsequently quashed the demand in January 2012, the government amended the IT Act retrospectively, putting the liability back on Vodafone Group.

The company last year said an international arbitration tribunal would begin trial on Vodafone’s challenge to India’s retrospective legislation to seek Rs 22,100 crore in taxes.

In this connection, the UK India Business Council (UKIBC) has said thatb predictability and clarity regarding retrospective taxation would help British companies to invest more in India.

“I think that if there was more clarity, certainty, predictability around retrospective taxation and (resolving) the Vodafone issue that would help the UK companies make their investment decisions in India,” UKIBC Managing Director Richard McCallum told IANS over a telephonic interaction on Friday.

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Equities recoup on value buying after 3 weeks of losses

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sensex

Mumbai, Feb 24: After three weeks of consecutive losses, the key Indian equity indices bounced back from their lows to close this week with humble gains on value buying by investors.

Market observers said futures and options (F&O) expiry infused volatility in the domestic markets, amid global cues and a slew of domestic developments like the $1.8 billion fraud reported by the Punjab National Bank (PNB) and a weakening rupee due to the continuous outflow of foreign funds.

However, losses were trimmed as bargain-hunting by investors on the last trading day of the week lifted the benchmark indices.

On a weekly basis, the barometer 30-scrip Sensitive Index (Sensex) of the Bombay Stock Exchange (BSE) edged higher by 131.39 points or 0.39 per cent to close at 34,142.15 points.

The wider Nifty50 of the National Stock Exchange (NSE) closed trade at 10,491.05 points — up 38.75 points or 0.37 per cent from its previous week’s close.

“The week gone by saw the Nifty bouncing back from a low of 10,302 to finally end with a modest gain. This week’s gains came after three weeks of losses,” Deepak Jasani, Head, Retail Research, HDFC Securities, told IANS.

According to D.K. Aggarwal, Chairman and Managing Director of SMC Investments and Advisors, markets across the globe fluctuated wildly — highlighting the market’s fragility — as investors continued to assess the quickening pace of economic growth and the prospects of the US Federal Reserve’s tightening efforts.

“Back home, the sentiment of market participants have been dented by factors such as surging US bond yields, a multi-crore fraud in India’s second-largest public sector lender PNB and the return of long-term capital gains (LTCG) tax on equities, which put a break on the record-setting market rally,” he added.

During the eight trading sessions following the detection of a $1.8 billion fraud in one of the branches of the PNB, the bank’s shares on the BSE have plunged almost 30 per cent to Rs 113.40 per share.

Gitanjali Gems, the other listed entity involved in the fraud case, also witnessed an eight-day fall in its shares, nosediving 60.54 per cent to Rs 24.80 per share.

“The consolidation in the domestic market continued due to the NPA (non-performing assets) issue in public-sector banks, trade deficit, conflict between NSE and SGX, rise in bond yield and depreciation in rupee due to selling by FIIs (foreign institutional investors),” said Vinod Nair, Head of Research, Geojit Financial Services.

On the currency front, the rupee weakened by 51-52 paise to close at 64.73 against the US dollar from last week’s close of 64.21-22.

Provisional figures from the stock exchanges showed that FIIs sold-off scrips worth Rs 5,781.98 crore, while domestic institutional investors (DIIs) purchased scrips worth Rs 5,972.69 crore during the week.

Figures from the National Securities Depository (NSDL) revealed that foreign portfolio investors off-loaded equities worth Rs 3,054.94 crore, or $468.06 million, during February 20-23.

Sectorwise, Jasani said: “The top sectoral gainers were IT, metal and Bank Nifty indices. The top losers were auto, realty and pharma indices.”

The top weekly Sensex gainers were: Tata Consultancy Services (up 4.76 per cent at Rs 3,076.90); Yes Bank (up 3.75 per cent at Rs 323.60); Infosys (up 2.74 per cent at Rs 1,155.65); Kotak Bank (up 2.67 per cent at Rs 1,079.85); and Coal India (up 2.49 per cent at Rs 310.55).

The losers were: Bajaj Auto (down 3.70 per cent at Rs 2,988); Asian Paints (down 3.65 per cent at Rs 1,101.90); Mahindra and Mahindra (down 3.29 per cent at Rs 719.30); Tata Motors (down 2.73 per cent at Rs 360.45); and Tata Motors (DVR) (down 2.32 per cent at Rs 203.85).

IANS

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In the Indian system politicians are accountable but regulators are not: FM Jaitely on Banking frauds

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arun Jaitely
Finance Minister Arun Jaitely at Global Business Summit (Photo-ANI)

Finance Minister Arun Jaitley on Saturday told that cases of periodical willful default are much more dangerous than business failure and bank frauds.

Speaking at Global Business Summit the leader pointed out that these kinds of incidents not only harm the economic atmosphere like the ease of doing business but also scars the economy.

The finance minister Jaitley also said, “If a fraud is taking place in multiple branches of banking system & no one raised the red flag, doesn’t that become worrisome for a country. Similarly, top management who were indifferent, multiple layers of auditing system which chose to look another way, it creates a worrisome situation.”

The leader also referred that Regulators plays important roles and decide the rules of the game and they have to have a third eye which perpetually is open.

“Unfortunately, in the Indian system we politicians are accountable but regulators are not,” he added.

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