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Current Affairs - 08 April 2018

General Affairs 

Supreme Court Collegium Recommends 6 Names For Appointment Of Judges In 2 High Courts
  • The Supreme Court collegium today recommended six names for the appointment as permanent judges of the Gauhati High Court and Jammu and Kashmir High Court.

    The collegium, headed by the Chief Justice Dipak Misra, recommended the names of judicial officer Rashid Ali Dar and advocates Wasim Sadiq Nargal, Nazir Ahmed Beig and Sindhu Sharma to be appointed as judges of the Jammu and Kashmir High Court and directed that seniority be fixed as per the existing practice.

    For the Gauhati High Court, the collegium cleared the names of advocates Sanjay Kumar Medhi and Nani Tagia to be appointed as judges.

    The collegium said it "resolves to recommend that advocates Sanjay Kumar Medhi and Nani Tagia, be appointed as judges of the Gauhati High Court. Their inter se seniority be fixed as per the existing practice".

    "So far as recommendation relating to advocate Nani Tagia is concerned, one of the members of the collegium, Justice Ranjan Gogoi, for reason of propriety, has not participated in the proceedings since Shri Tagia was his junior while he was in the profession," the collegium resolution said.

    For all other recommendations, Justice Gogoi was the part of the collegium along with Chief Justice Dipak Misra and Justice J Chelameswar.

    The collegium also said it "interacted" with candidates before recommending their elevation to the two high courts and that it has been following this practice since last month.

Arvind Kejriwal Demands Probe Into Relation Between LG, Food Commissioner
  • Chief Minister Arvind Kejriwal today demanded a probe by the Public Accounts Committee (PAC) of the Delhi Assembly into the relationship between the Lt Governor and food commissioner with regard to alleged irregularities in distribution of ration.

    Participating in a discussion over 'Outcome Report' on the L-G office in the Delhi Assembly, Mr Kejriwal said that he has requested Lt Governor Anil Baijal thrice to remove the Delhi food commissioner in view of several complaints of alleged irregularities in distribution of ration.

    "What is the relation between the L-G and the food commissioner? There has to be a reason for refusal to remove him even after large scale complaints..." the chief minister said.

    He said that the elected government is being questioned about ration distribution despite all its efforts to improve the state of affairs even in the wake of such non-cooperation from the LG and his appointed officers.

    "I request for the PAC probe into the relationship between LG and the food commissioner," Mr Kejriwal demanded in the House.

Nepal's KP Oli Seeks Investment, Discuss Trade Deficit In Talks With PM Modi
  • On his first foreign trip since he took office earlier this year, Nepalese Prime Minister KP Oli made a strong pitch for investment from India on Saturday, calling the Himalayan country "a safe and stable destination for investment". "Nepal will need massive investment; many of its sectors are virgin territory for investment. I invite Indian companies to come and invest in Nepal... (that) is now safe for foreign investment," Mr Oli was quoted saying by news agency IANS.

    The government's majority allowed for "stability and continuity in policy... towards a liberal economy and liberal economic policies," he added.

    During formal talks with Indian delegations today, including those led by Prime Minister Narendra Modi, Mr Oli is likely to discuss possible deals in waterways and an expansion of an India-backed railway to Kathmandu. He will also be discussing the trade deficit with India and push for India to complete previously promised infrastructure projects, many of which have limped along for decades.

    According to Nepalese media, Mr Oli will take up various issues with PM Modi including the early execution of India-funded projects in Nepal, implementation of the Mahakali water-sharing treaty, and construction of integrated check-posts.

    The trip is also seen as important for India as it tries to win back the strategically-important neighbour that has moved closer to China. Mr Oli held India responsible for his ouster in 2016 and the Madheshi unrest which was followed by an economic blockade by India that crippled Nepal for months.

    Since then there has been intense efforts to salvage the ties. External Affairs Minister Sushma Swaraj visited Nepal before Mr Oli took office to congratulate him for the historic victory. Later, PM Modi extended an invitation to him for a visit to India while congratulating Mr Oli over phone on his win.

    This morning he was accorded an elaborate ceremonial welcome at the Rashtrapati Bhavan.

    In his address, President Ram Nath Kovind said, "It's India's abiding interest in the stability and economic prosperity of Nepal. India stands ready to expand cooperation with Nepal as per Nepal's priorities. No other countries in the world have the bonds of friendship and cooperation that exist between India and Nepal. Regular exchanges of visits at the highest political level demonstrate the priority that we attach to our special partnership."

    Yesterday Mr Oli, who is in India with his wife Radika Shakya and several key ministers, had an informal meeting with PM Modi at his residence. Mr Oli also met Congress President Rahul Gandhi and former Prime Minister Manmohan Singh.

"Not One Promise Kept": Another Ruling Party's Dalit Lawmaker Writes To PM
  • Another Dalit lawmaker from the BJP has joined the chorus of voices questioning accusing the government for failing to deliver on the promises made to the community by the party. Dr Yashwant Singh, the BJP's Lok Sabha member from Nagina in western Uttar Pradesh, is the fifth parliamentarian from the ruling party to be make his reservations about the party's performance be known, the fourth from UP.

    In his letter to Prime Minister Narendra Modi this week, Dr Yashwant Singh blamed the centre for not delivering on even one promise made to the Dalits in the last four years, adding that it was becoming difficult for the party lawmakers to respond to the community who were being harassed.

    He urged PM Modi to take corrective steps and enact laws for quotas in promotion, introduce reservation in the private sector and fill the thousands of vacancies in posts reserved for scheduled castes.

    The lawmaker's letter to PM Modi is seen as an indicator of the growing perception that the Dalit community, which had started responding to overtures from the BJP in recent years, was fast getting disillusioned.

    That message appears to have reached the government, going by how PM Modi and BJP president Amit Shah have used every opportunity over the past week to reaffirm the party's commitment to Dalits.

    At Friday's BJP parliamentary party meeting, all lawmakers were also told to reach out to the community in their respective constituencies and even spend two nights in Dalit-dominated villages closer to Ambedkar Jayanti observed later this month. Amit Shah has already re-started the practice of having lunch at a Dalit family during his two-day visit to Odisha.

    Many in the BJP point how most of those speaking out haven't been in the party for very long and were inducted in the years leading to the 2014 elections.

    Like Dr Yashwant Singh who had been a minister in Mayawati government between 2007 and 2012 and joined the BJP before the Lok Sabha election. Chhote Lal Kharwar, the Lok Sabha member from Robertsganj who complained about Uttar Pradesh Chief Minister Yogi Adityanath, had joined the BJP just in 2014.

    Savitri Bai Phule, who has been one of the more vocal parliamentarians of the five, started her career with the Bahujan Samaj Party, or BSP.  She joined the BJP ahead of the 2012 assembly polls and won the Bahraich seat in 2014

    Ashok Kumar Dohrey, the lawmaker from Etawah, had dumped the BSP and joined the BJP in 2013. Udit Raj was a freelance Dalit leader trying to make his mark in Dalit politics after quitting the bureaucracy. He got a BJP ticket from Delhi in 2014 and won.

    There already has been some unease in the BJP over the growing bonhomie between Mayawati and Akhilesh Yadav's parties, the two arch rivals who partnered in the recent Lok Sabha by elections to defeat the BJP even in Chief Minister Yogi Adityanath's home turf, Gorakhpur.

India Agrees To Open Inland Waterways, Rail Link To Kathmandu
  • India agreed on Saturday to construct a rail link to Nepal's capital, Kathmandu, and to open up inland waterways in the landlocked Himalayan nation that has also been courted by China with transport deals.

    The agreement emerged at the end of talks in New Delhi between Prime Minister Narendra Modi and his Nepali counterpart KP Sharma Oli, making his first foreign visit to India after returning to power earlier this year.

    During his earlier tenure, Mr Oli sealed deals with Beijing in 2016 to use Chinese roads and ports, seeking to reduce Nepal's dependence on India for trade and transit.

    The planned railway line from the border town of Raxaul to Kathmandu would be the mountainous nation's most ambitious railway project. Nepal currently only has rail links on its southern plains.

    "As a first step...India would carry out preparatory survey work within one year," a joint statement after the talks said, to finalise the details of the line.

    Nepali officials say they are already in talks with China over an extension of the Chinese railway network into Nepal from Tibet as part of China's Belt and Road Initiative that Nepal joined last year.

    Analysts said the latest Indian move was spurred by China's expansive infrastructure projects in Nepal as both Asian giants jostle for influence.

    The plan to develop inland waterways will give Nepali cargo additional access to sea and boost its trade, officials said.

Business Affairs

ICICI-Videocon loan: CBI questions Rajiv Kochhar for the third day
  • The questioning of Rajiv Kochhar, ICICI Bank MD and CEO Chanda Kochhar's brother-in-law, by the CBI started on the third consecutive day today in connection with the banks Rs 3,250 crore loan to Videocon Group in 2012, officials here said.

    Kochhar, the founder of Singapore-based Avista Advisory, appeared at the agency's office in the Bandra Kurla Complex in Mumbai this morning, where he was asked about the role of his company in the restructuring of the loan, they said.

    He was asked about the help he extended to Videocon in relation to the loan from ICICI Bank, which was part of a Rs 400-billion credit given by a consortium of 20 banks to the group of Venugopal Dhoot.

    He was detained at the Mumbai airport on Thursday, as he was trying to board a flight for a South East Asian country, on the request of the CBI, they said.

    The deal recently made news after reports questioned the loan and linked it to a possible quid pro quo that Dhoot allegedly had with NuPower Renewables, a company founded by Deepak Kochhar, Chanda Kochhar's husband and Rajiv Kochhar's brother.

    The CBI has registered a preliminary enquiry against Videocon founder Venugopal Dhoot and Deepak Kochhar and unidentified others, they said.

    A preliminary inquiry is the first step by the CBI to gather information about the allegations. If the agency is convinced there exists prima facie material in the matter, it may register a regular case against the accused.

Lockheed welcomes India's mega procurement initiative for over 100 fighter jets
  • American aerospace and defence major Lockheed Martin has welcomed India's mega procurement initiative for fighter jets worth over USD 15 billion and said that it looks forward to responding to the initial tender.

    India yesterday began the process to acquire a fleet of around 110 fighter jets in one of the biggest such procurements in recent years globally which could be worth over USD 15 billion.

    At least 85 per cent of the aircraft will have to be made in India while 15 per cent of them can be in a flyaway condition.

    An RFI (Request for Information) or initial tender for the mega deal was issued by the Indian Air Force and the procurement will be in sync with the government's 'Make in India' initiative in the defence sector, officials said.

    "Lockheed Martin welcomes India's fighter aircraft Request for Information (RFI) and we look forward to responding to it," said Dr Vivek Lall, vice president, strategy and business development at Lockheed Martin.

    "The F-16 remains the only aircraft programme in this competition with the proven performance and industrial scale to meet India's operational needs and 'Make in India' priorities including unmatched export opportunities," he said.

    Indian-American Lall was last year instrumental in the decision of the Trump administration to sell top-of-the-line unarmed drones from General Atomics.

    Lockheed Martin has positioned the newest Block 70 variant of its F-16 aircraft for the Indian Air Force, while Boeing has offered its F/A-18 Super Hornet Block III for the Indian Navy.

    "The two aircraft have been positioned complementarily, and the purchase of the pair is an interesting proposition for policymakers from both countries," US-based think-tank Atlantic Council said in a report released in New Delhi yesterday.

    In the report, 'India's Quest for Fighter Jets: Make in India vs Make America Great Again', it said China's bellicose incursions in the Indo-Pacific region are challenging US geostrategic supremacy in the region.

    Consequently, improving India's capacity to play a stronger role in the region would play a critical role in the US grand strategy, the think-tank said.

    While offshoring both the F-16 and F/A-18 assembly lines would appear to contradict Trump's promise to create more manufacturing jobs in the US, nuances in that policy could open a window of opportunity, Atlantic Council said.

    The F-16s and the F/A-18 Super Hornets manufactured in India would not be sold to the US, it said.

    The F-16 production line will be used to service the orders from the Indian Air Force, as well as any follow-on international orders.

    Noting that the US Air Force has not bought an F-16 since 1999, and is transitioning its multi-role fighter force to the F-35, the think-tank said that any additional F-16 orders would be for non-US customers. An India partnership presents a way to sustain F-16 production, with all the economic and strategic benefits that result, it said.

    Similarly, the F/A-18 Super Hornet production line would also be used to service orders for the Indian Navy, with all US orders manufactured in the US.

    Despite the shift of production lines, there is a considerable work-share component in the proposals by Lockheed Martin and Boeing, which would present a reasonable case for setting up production lines in India, despite the obvious hindrances that such an operation would ordinarily pose for a foreign investor, the think-tank added.

    India's latest hunt for over 100 fighter jets is the first mega procurement initiative for fighter jets after the government scrapped the process to acquire 126 Medium Multi-Role Combat Aircraft (MMRCA) for the IAF around five years ago.

    The IAF has been pressing for expediting the process to acquire the aircraft citing declining strength of its fighter squadron as some of the ageing jets are being phased out.

    Currently, the IAF has 31 fighter squadrons as against authorised strength of 42 squadrons.

Bombay HC lashes out at IT dept for allegedly arm-twisting Shirdi Trust, directs CBDT to conduct investigation
  • Was the income tax department in hurry to achieve its tax collection targets by March 31st, by any means? That's what the Bombay High Court observed while hearing a tax dispute case between the I-T department and Shri Saibaba Sansthan Trust (Shirdi), following which it directed the Central Board of Direct Taxes (CBDT) to conduct a probe against overzealous officers.

    The bench of Justice Sandeep Shinde and Justice MS Sanklecha at Bombay High Court, in their order against the I-T department stated, "The entire exercise, here, appears to be only to assist the revenue to collect some amount of taxes prior to March 31, 2018. This is certainly not expected of an Appellate Authority such as the CIT (A) who adjudicates disputes between the Revenue and the Assessee on a regular basis."

    The Bombay High Court set aside the order dated March 23, 2018 passed by the Commissioner of Income Tax (Appeals) on the Shirdi Trust's stay application. Not only that, the bench directed the registry to serve a copy of its order upon the CBDT to make an enquiry of certain complaints.

    "If the allegations made by the Petitioner (Shirdi Trust) are correct, CBDT will take coercive measures to ensure that its officers, deal with the assessee's fairly and in accordance with the law," the order directed.

    The case

    The I-T department believes that every cash amount or bullion items donated by anonymous devotees in 'hundi' at Shirdi temple in Maharashtra is 'black money', against which Shri Saibaba Sansthan Trust needs to pay 30 per cent of tax.

    For the assessment year of 2015-16, the  Deputy Commissioner of Income Tax (DCIT) on December 31, 2017, passed an order under Section 143 (3) of the Income Tax Act, 1961 (the Act) against Shri Saibaba Sansthan Trust determining an amount of Rs 122.04 crore as tax payable.

    After series of hearing before CIT (A), in an order dated March 23, 2018, the trust was directed to determine the amount payable on the individual heads of demand at varying percentages of the constituents of demand, aggregating to Rs 122.04 crore.

    It resulted in an aggregate amount of Rs 15.16 crore being payable before the balance of the aggregate demand of Rs 122.04 crore could be stayed.

    But at the same time, Commissioner of Income Tax (Exemption) also threatened to attach the Shirdi Trust's bank account and reopen past two assessment years' cases.

    Before that, on March 20, Shirdi Trust had attended the final hearing of its appeal before the CIT (A), as called for. The trust was heard extensively on merits of its appeal from the order dated December 31, 2017 of the Assessing Officer.

    At the conclusion of the hearing on 20th March, 2018, the trust signed an order sheet, prepared by CIT (A), which recorded that the appeal has been finally heard. But on same day, the trust got a telephonic call from the office of the CIT (A) to remain present in the office of the CIT (A) on March 21, 2018 at 10:30am.

    Shockingly, at the meeting held on March 21, 2018, the CIT (A) commenced / started the hearing of the stay application filed by the Shirdi Trust along with its appeal. At the end of the day, the CIT (A) informed the trust that that even if the order on the pending appeal is passed on March 27, 2018, it would not be possible to issue the order before March 31, 2018.

    On March 22, the Trust's CA received a call from the office of the CIT (E) directing the trust to deposit at least Rs 20 crore before March 31, 2018.

    "Further, CIT [Exemption] informed the Shirdi Trust that failing to deposit the amount of at least Rs 20 crore would lead not only to the attachment of the trust's bank accounts but also reopening of the assessment for the past two Assessment Years", the trust complained in its petition.

    CBDT directed to probe

    The HC found the coercive measures of I-T department "very serious", particularly when the Assessing Officer or the CIT (E) could have dealt with the request of deposit by passing an order on the application under Section 220 (6) of the Act filed by the Shirdi Trust.

    In the absence of denial on affidavit by the CIT (A) and CIT (E) the allegations in the petition cannot be discarded. "However it would be best if the Central Board of Direct Taxes (CBDT) carry out the necessary investigation on the above allegations and if there is truth in it, it would take corrective action on the same", the order directed.

    The HC made it clear that if the allegations in the petition filed by Shirdi Trust are correct, then such failures on the part of its officers needs to be corrected by the CBDT before it becomes the norm.

    The Court observed that failing corrective measures by the CBDT would only result in our entertaining petitions from orders under the Act as the alternative remedy would cease to be an efficacious remedy, if such arm twisting measures dehors application of the law, are adopted by the Revenue.

    Thus, the Bombay HC has directed the CBDT to carry out necessary investigation on the allegations made in the petition and if found correct, to take corrective measures to ensure that its officers shall not be overzealous in seeking to recover maximum revenue before March 31 of any financial year in total disregard of the law. 

IRS body passes resolution defending its role in Bengaluru Refund Scam, bashes CBI
  • In a crucial development related to Bengaluru Refund Scam, the Association of Indian Revenue Service (IRS) i.e. Income Tax officers, in General Body Meeting has defended its roles and passed a resolution on the issue of FIR registered by the Central Bureau of Investigation (CBI) against one private person and unknown private persons along with "unknown officials of Central Processing Cell (CPC), IT Department".

    In its resolution on April 5, IRS Association, Karnataka and Goa explained how loopholes in software programme used in the processing of I-T returns and refund claims had given birth to Bengaluru refund scam in crores, and not due to any human intervention - as alleged by CBI. A copy of the resolution is in possession of Indiatoday.in.

    The IRS Association has blamed CBI for creating huge confusion in minds of the public by registering the FIR against the department officials. "It has created mistrust regarding integrity and transparency of processes and procedures at CPC. The baseless allegation about the involvement of officers/officials of CPC in this fraudulent activity without an iota of evidence has demoralized the entire dedicated workforce of Income tax department posted in CPC. The entire episode is causing mental agony and harassment among the officers and officials which needs to be immediately redressed', the Association alleged.

    IRS Association claims that the FIR filed by the CBI and media reporting has tarnished the reputation of income tax department and CPC. "The investigative agency is oblivious to the difference between Section 143 (1) and Section 143 (3) of the Income Tax Act", the Association stated.

    According to the body, the processing of the returns filed is to be done strictly according to Section 143 (1) only. The return of income is not supposed to be subjected to scrutiny or verification under Section 143 (3) at the processing stage. "Even if there is some suspicion with regard to the claim of deductions set-set-aside and not be processed merely out of some subjective suspicion regarding the claim", the Association said.

    The Income Tax officials also clarified that CPC was established as a processing centre and not as any centralized scrutiny centre or any fraud detection unit. "The charges made in the FIR that "red flags raised by the system" were ignored with regard to the revised returns and that "approvals" for refunds were given by the officials is a figment of the imagination of the CBI borne out of ignorance about the systems and procedures at the CPC."

    "Technically, the CPC does not deploy any data analysis and fraud detection software during the processing. "There is no policy to treat revised return as suspicious just because it is a revised return. Also, e majority of fraudulent claims were made by way of original returns and not revised ones", the Association claims.

    In its resolution, the IRS Association has sought a detailed press release from Central Bureau of Direct Taxes (CBDT) explaining the limited scope of section 143(1), the automated processes and procedures at CPC. Also to clarify that there was no involvement of the officers/officials of CPC and service provider in the alleged fraudulent act committed by assesses and unscrupulous tax practitioners.

    The Association has asked to sensitize the CBI about the relevant provisions and limitation under Income Tax Act and impress upon them to remove the role of the department and service provider as accused in the FIR.

    "CBDT should take necessary steps to ensure that the investigation agencies do not subject the officers/officials at CPC to unnecessary harassment in the name of enquiry or investigation," the Association demands.

    According to Association, the CBDT should consider revamping some of the ITR forms like ITR-1 and 4 to make the information contained therein amenable for verification with third-party information available with the department.

    "Efforts should be made to consolidate databases relating to claims of exemptions and deductions so as to validate the claims made in the returns. Steps should be taken to pre-populate/pre-fill the returns with verified/validated data to the maximum extent possible", the Association said.

    It was further suggested that a risk-based evaluation of the returns pending for processing should be carried out first by "Project Insight", subsequent to which the returns will be taken up for processing by CPC.

    What was Bengaluru Refund Scam?

    In Bengaluru, the Income Tax department busted a refund fraud involving 250 private sector staff, working in leading software and technology companies, allegedly claimed refunds totally Rs 5 crore.

    Subsequently, the first information report (FIR) registered by the CBI on February 27, suspected the role of sections of I-T officials posted at CPC and Infosys executives at CPC in the refund fraud. However, the I-T department officials had clarified that it was their surveillance which unearthed the fraud.

Govt changes its nominee on ICICI Bank board
  • In the wake of the ICICI Bank-Videocon loan saga, the government has changed its nominee on the board of ICICI Bank. Amit Agrawal who was serving as the government's nominee Director on the board has been replaced by Lok Ranjan, Joint Secretary, Department of Financial Services, with effect from April 5, 2018.

    The Department of Financial Services informed the bank about the replacement on April 5. It is not certain if the government changed its nominee due to the recent developments.

    Nevertheless, the board extended its full support and gave a clean chit to its MD and CEO Chanda Kochhar. Even Deepak Kochhar, husband on Chanda Kochhar mentioned to India Today TV that she was not aware of his 50:50 tie-up with Videocon Group Chairman Venugopal Dhoot. "Chanda did not know when I set up NuPower. I knew Dhoot through social circles. I told her when Dhoot exited," he told India Today TV.

    The Kochhars are under lens since whistleblower Virendra Gupta's disclosures in 2016 regarding the Rs 3,250 crore plus Rs 660 crore loans and alleged quid pro quo in the form of an identical 10 per cent foreign funding (Rs 325 crore and Rs 66 crore) in Kochhar's husband Deepak Kochhar's company NuPower Renewables. Deepak Kochhar and Videocon promoters - the Dhoots - had together set up a 50:50 JV NuPower Renewables in 2008. These revelations led to allegations of propriety and conflict interest.

General Awareness

Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
Indian Accounting Standards (Ind AS)

  • Context: The Reserve Bank has deferred the implementation of the Indian Accounting Standards (Ind AS) by one year as many banks are not prepared to migrate to the new accounting system. The earlier deadline for banks to switch to the Ind AS was from April 1 2018.

    What is it?

    Ind AS or Indian Accounting Standards govern the accounting and recording of financial transactions as well as the presentation of statements such as profit and loss account and balance sheet of a company. Ind AS has been evolved as a compromise formula that tries to harmonise Indian accounting rules with the IFRS.

    Facts for Prelims:

    The implementation of IndAS for public sector banks requires an amendment to the Banking Regulation Act. The schedule in BR Act relating to financial statement disclosures needs to be changed to the IndAS format.
    Section 29 of the BR Act deals with the accounts and balance sheets of public sector banks. Private sector banks are covered by the Companies Act, which is based on the new accounting standards.

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