[sustran] Profitmaking should not be punished: R Ashoka

[Vinay Baindur]

BMTC was a charitable institution and making profits at the same time ? and
now it is not and will have to pay IT .
But the 2nd option which is  a charitable institution which does not make
profits?



http://www.dnaindia.com/bangalore/report_profitmaking-should-not-be-punished-r-ashoka_1665326



*Profitmaking should not be punished: R Ashoka
*
Published: Wednesday, Mar 21, 2012, 13:34 IST
By DNA Correspondent | Place: Bangalore | Agency: DNA

Home and transport minister R Ashoka has alleged that the income-tax
department’s act of freezing the accounts of the state’s transport
corporations and declassifying them from the status of ‘charitable
institutions’ will send a bad signal to state corporations and prevent
efforts to make profit.

The resistance with regard to taxing the profit made by the BMTC and KSRTC
was on principle, he said. “We have surplus money, but why should we pay
this to the central government? This will only prevent other transport
corporations to step up efforts to make profit. We are the only transport
corporation in the country to make profit,” he said. “Profit making should
not be punished,” he added.

But the fact of the matter is that the BMTC had an operational loss of Rs18
crore in 2009-10, according to KR Srinivas, managing director, BMTC. “If
the BMTC makes a profit, it is from the commercial activities of the BMTC
such as renting out spaces, advertisements and so on. This covers about 80%
of the costs of operation,” he said.

The commercial revenue that the BMTC had for the previous year was Rs14
crore, he added. He also said most of the BMTC’s services were concession
based. Citing the example of student passes, which forms a major chunk of
the BMTC’s services, he said that 50% comes from the state government,
which is about Rs60 crore per annum, paid in four instalments.

When asked if this is the BMTC’s argument against taxation, the MD said:
“Leave that to us. The fact is that up till 2008, we were exempted from
paying tax as we were a ‘charitable institution’.
But then an amendment to the Financial Act in 2008 said that if any
institution made an income above Rs10 lakh from commercial revenue, this
was taxable.”

It does not matter that we are at operational loss as the I-T department
looks at the revenue as a whole and not in isolation. Even as the
discussion with the I-T department continues, officials continue to
maintain that operations will not be hit.

Srinivas said that buses will continue to operate even along those routes
where the operations were no feasible.

Officials in the BMTC maintain that with daily revenue of Rs3 crore to
Rs3.5 crore, the BMTC will be able to manage services even if their
accounts are frozen, at least for the time being.




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http://expressbuzz.com/states/karnataka/cm-writes-to-centre-on-frozen-accounts/374134.html

*CM writes to Centre on frozen accounts
*
Express News Service
Last Updated : 20 Mar 2012 10:20:52 AM IST

BANGALORE: Karnataka State Road Transport Corporation (KSRTC) and Bangalore
Metropolitan Transport Corporation (BMTC) are in talks with the Income Tax
department, two days after their bank accounts were frozen for non-payment
of tax for the year 2009-10. Also, their status, ‘charitable institutions’
was taken away.

On Monday, officials from both the Corporations seemed optimistic of
resolving the issue. “Discussions are in the process. However, bus services
will not be  affected,” said a senior BMTC official. Both the transport
Corporations clear fuel dues at the end of every week, which runs upto `50
crore in a month. An official said the Corporations had an option to keep
the daily collection in-house without depositing it in the bank and pay the
oil companies to keep the services running.

“It is a very difficult situation for the Corporations. However, payments
for this week have been made, which means services will not be affected,”
the official said.

The IT department freezed the accounts  inspite of a pending appeal before
them.

Transport Minister R Ashok on Monday confirmed that the chief minister had
written to the Central Government requesting them to intervene and
de-freeze the accounts.  “The government must encourage profit making
departments. It can noted that this is not happening with any other
transport system in India. Both the Coporations are charitable institutions
because they give concession passes to war veterans, students and other
passengers of other categories,” Ashok said.

The minister assured that daily activities would not be affected as both
the organisations were financially sound and had no pending bills. KSRTC
and BMTC declared a profit of `57 crore and `55 crore respectively in the
previous financial year.