20 april 2001

uti gets relief on tax demand
mumbai: the whopping rs. 1,100 crore tax demand that hung over it's had like a damocles sword, has been removed. uti, the country's largest mutual fund, won an appeal against the order when the bombay high court quashed the tax demand which sought to levy tax for the assessment years 1992-93 to 1999-2000.

although the court's order states that tax department has the right to levy tax prospectively, it would not affect uti since the government has stopped levying interest tax from april 1, 2000. however, in future if the government reintroduces interest tax, uti will be liable to pay the tax.

uti has not been paying tax on its interest income on the grounds that it is exempt from payment of tax on any income, profits or gains derived from any source, under the uti act (section 32). according to uti, the interest earned by it is nothing but income earned and hence exempt from taxation.

i-t sources said the department would move the apex court challenging the order of high court.

18 april 2001

rbi bans deals as more banks report failure
mumbai: the reverberations of the madhavpura bank scam it seems will never end. now four more cooperative banks have reported failure and rbi has sent circulars to all banks—private, public and foreign—asking them not to have dealings with the failed banks.
the four new blacklisted banks are the mumbai-based friends cooperative bank, western cooperative bank, sitara cooperative bank and first city cooperative bank. apart from these, two other banks, classic cooperative bank and city cooperative bank, have failed in the recent past.
rbi, in a circular sent to the banks has instructed "restriction on dealing with banks," the rbi has indicated that since these banks are under watch, it was advisable for other banks not to have any commercial transaction with them.
these four banks had been categorised as weak for quite some time by the rbi which had also limited withdrawal of deposits to rs 1,000. this meant that depositors could only withdraw rs 1,000 per head.
sources said that apart from the western cooperative bank, which failed because it lent rs 20 crore to an individual borrower on a deposit base of rs 3 crore, the other banks failed due to mismanagement of funds.

17 april 2001