The Hindu Business Line : Why reserve seats for women on boards as in buses?

I too have reservations about reservation for women on company boards. And I am no misogynist either. It is one thing to give mandatory representation to women in the political decision-making process. But the idea of reservation for women on boards of companies is height of romanticism.

If the Government feels that the move will have a sobering effect on the male-dominated boards, I am afraid it is in for disappointment. And if it expects buccaneer entrepreneurs to be less rapacious under the watchful eyes of women, once again its expectation may be belied. It is not even remotely suggested that women are not fit for the rough and tumble of boardroom jousts.

A woman should make it to the board on her own steam. Else, she may be a part of the board under sufferance. Corporate governance presupposes following of sound business practices — profit maximisation tempered with altruistic concerns. Let not the Government trivialise the concept. The optional regime of giving representation to small shareholders has had no takers so far.

Ship change

WHAT exactly are the implications of amendment to Section 33AC relating to the shipping industry? - M. A. Thomas, Kochi

Earlier, a shipping company was barred from selling the ship that it had acquired out of the reserves created from the tax-exempt shipping profits for eight years. Now the bar is for a shorter period — three years. This has been welcomed by the shipping industry in general because shipping, being a cyclical industry, requires a fleet-footed and nimble response — if the business is suffering from a prolonged lull better dispose of the ship rather than keep it idle and incur the huge minimum maintenance expenses.

But the rider subject to which this relaxation has come is not something the industry had bargained for — the sale proceeds from sale of ship would become taxable unless it is used within a year from the end of the previous year in which it was sold to acquire a new ship. This rider can be assailed on two grounds.

For one, it goes against the very grain of the relaxation. Why relax the rigour of holding period of eight years to three years only to insist upon immediate reinvestment. It is illogical to expect a company to dispose of its ship in one year and go for fresh acquisition in the very next year. In fact, the new regime is worse than the earlier one. Earlier, nothing happened if one sold the new ship after eight years.

Now there is no respite. You must keep recycling the exempted income in acquisition of new ships whether you want one or not. Moreover, it is wrong to tax the entire sale proceeds. At best what can be brought into the tax net is the exempted income.

House repairs

CAN I claim tax benefits under Sections 88 and 24 in respect of loans taken for carrying out extensive repairs to house? - R. Doraiswamy, e-mail

No, Section 88 excludes cost of renovation or repair from its purview. As far as Section 24 is concerned, well, being a standard deduction, it matters very little whether you have spent more or less or nothing at all. You get 30 per cent of the annual value as standard deduction period. The only other deduction under this section is interest.

Development A/c

WE HAVE acquired a huge plot of land on a 99-year lease and divided it into small commercial plots after developing the same for letting them out to entrepreneurs. Sizeable expenses have been incurred on grading and levelling the land which together with the cost of the lease have been debited to `development of property account'. The development costs have been suitably loaded on roads, substations, office-buildings, and so on. What should we do with the balance in the `development of property account'? - Sreela C. S., e-mail

`Development of property' is a transitory account such as capital work-in-progress. Its role is over once the development of property is finished. You should, therefore, show the cost of the leased land separately in the balance-sheet.The expenditure on development has, of course, been rightly loaded on individual assets created on the leased land.

(ASK! Send in your queries on accounting, auditing, corporate law and taxation to ask@thehindu.co.in)

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