Convergence Plus
Thursday, January 17, 2019
Department of Telecom assigns mobile tracking project to C-DoT

Department of Telecom assigns mobile tracking project to C-DoTThe Department of Telecom has assigned the mobile phone tracking project -- aimed at bringing down counterfeit cellphones and discouraging theft -- to the Centre for Development of Telematics (C-DoT). "Decision was taken in July 2017 to get the project done through BSNL. Now, the decision has been reviewed to assign the project to C-DoT," an official source told PTI. C-DoT will have to develop and implement the project which is named Central Equipment Identity Register (CEIR). The government has proposed to allocate Rs 15 crore for setting up CEIR in the country that will bring down the number of counterfeit handsets and discourage theft, according to the Union Budget 2018-19.

The CEIR system will block all services on stolen or lost mobile phones on any network even if the SIM card is removed or IMEI number of the handset is changed.

CEIR is also expected to protect consumer interest and facilitate law enforcement authorities for lawful interception.

CEIR will connect the IMEI database of all mobile operators. It will act as a central system for all network operators to share blacklisted mobile terminals so that devices placed under the said category in one network will not work on the other, even if the SIM card in the device is changed, it said.

IMEI number -- a unique 15-digit serial number of mobile devices -- is allocated by global industry body GSMA and bodies authorised by it. When a mobile phone is lost, the victim is required to mention the IMEI number of the handset for tracking.
"C-DOT has been asked to complete pilot project of CEIR covering all telecom operators by March 2018 in Maharashtra telecom circle," the source said.

CEIR will be regularly updated with IMEI of lost, stolen or counterfeit handsets. The DoT has barred telecom operators from providing service to any mobile phone with fake IMEI number but the operators face problem in identifying handsets with duplicate IMEI number.

CEIR will also help operators in identifying handsets with fake IMEI numbers as it will have details of handset model to which the IMEI had been originally allocated. (Source: Economic Times)

Income Tax panel refuses to stay Rs 110 crore tax demand on Flipkart

Income Tax panel refuses to stay Rs 110 crore tax demand on Flipkart An income tax panel refused to stay a demand of Rs 110 crore on Flipkart, India's largest online retailing platform, after it was asked to reclassify discounts and marketing spend as capital expenditure. This may have implications for rival Amazon, which faces a similar liability, and others.

The Income Tax Appellate Tribunal (ITAT) in Bengaluru asked Flipkart to deposit Rs 55 crore and provide bank guarantees to the tune of Rs 55 crore by February 28. While the tax assessed is for 2015-16, similar demands may be made for subsequent years. Hearings will continue after February 28.

Currently, companies categorise discounts and marketing costs as revenue expenses, while spending on factory construction is categorised as capital expenditure. If discounts are classified as capital expenditure, Flipkart, which otherwise incurs a loss, becomes a profit-making entity and liable to pay domestic taxes.

Taxi-hailing companies Uber and Ola follow a similar model of offering discounts to consumers, although there is no such tax demand on them.

The revenue authorities demanded taxes of about Rs 110 crore on an estimated profit of Rs 408 crore for the financial year 2015-16, when Flipkart originally reported a loss of Rs 796 crore. ETwas the first to report on the tax demand on September 2 and later the loss of an appeal to the Commissioner of Income Tax (Appeals) on January 22.

Flipkart approached the appellate tribunal in February and pleaded that the tax demand be stayed because it would cause "financial hardships for the company". The tribunal refused its plea on the ground that prima facie, there was no financial hardship.

Flipkart didn't respond to queries. The issue involves money spent by ecommerce companies on marketing through deep discounts offered to consumers. Flipkart, Amazon and other ecommerce companies classify the discounts as marketing expenses and deduct it from revenue, thereby posting a loss and not being liable to pay tax.

"Discounts are a function of business and are given for various reasons including expansion of business and market conditions," said Ketan Dalal, managing partner at Katalyst Advisors.

"Categorising discounts as capital expenditure is inconsistent with business realities. Tax has to be paid on income and that is obviously post-discount." Experts expect similar tax demands on startups including Amazon, Ola, Uber and Snapdeal. The income tax department's stand is that and large marketing costs are part of brand building.

"These discounts, along with huge marketing and advertising expenses, are creating market intangibles for the company," a tax official said. "This means these are not costs, but capital for the company."

Some experts said ecommerce companies including Flipkart and Amazon are online marketplaces and brand loyalty is not a factor. The discounts offered on products that vendors sell online on Flipkart and Amazon are typically reimbursed by ecommerce companies.

"To say that discounts are capital expenditure since they result in enduring benefit may be a little farfetched," said Amit Maheshwari, partner at Ashok Maheshwary & Associates LLP. "In this industry, discounts are necessary to survive and typically do not result in any enduring benefit to these companies."

Earlier cases have set a precedent in this matter, with the courts holding that the tax department cannot put itself in the shoes of an industrialist in determining the quantum of an expense that needs to be incurred, said Sanjay Sanghvi, partner (tax) at law firm Khaitan & Co.

"If the tax department starts treating discounts or marketing spend as capital expenditure/brand building capex, then several other businesses using similar business strategies could also come under the tax cloud," Sanghvi said.

While the current tax demand is for 2015-16, a senior Flipkart executive said similar demands may be raised for other financial years. "We expect the tax department to maintain the same stand for financial years 2016-17 and 2017-18," he said.

Reclassifying discounts or marketing costs could alter the way companies record their income and expenses. (Source: Economic Times)

Telecom firm, agent, vendor booked in missing techie case

Telecom firm, agent, vendor booked in missing techie caseAlmost two months after software engineer Kumar Ajitabh, 29, went missing, the Whitefield police have filed a cheating case against a telecom company, one of its agents, and a vendor from Kolar, who issued a SIM card to the prime suspect allegedly using documents of someone else. The agent and the vendor have been arrested.

The police said the suspect, who remains unknown, was issued a Reliance Jio SIM card based on documents of a beedi worker from Kolar.

Following this, the police have filed cases against the company, the agent, Shivu, and the vendor Anand.
Ajitabh, who worked for a British telecom company, left his Whitefield apartment on December 18, 2017 to sell his car. He wanted to sell the car to fund his education at a premier management institution in Kolkata. He was reportedly on his way to meet the prospective buyer who had got in touch with him through an online buying and selling platform for old and used goods. His roommates, who realised he was missing, began to search for him the next day. After they failed to find him, they filed a missing complaint with the police on December 20.

HC direction

The police intensified their search and formed four special teams to track down Ajitabh following a direction from the High Court of Karnataka. The special team of the Whitefield police, who were trying to track down the suspect based on mobile phone call detail records and the details furnished to get the SIM card, landed at the house of the beedi worker, Shabana, 45, at Rahmath Nagar in Kolar.
She told the police she had submitted her Aaadhar details to get a free Jio SIM card, which she discarded a few days later as it had become defunct. The police suspect her documents were used to give a SIM to the prime suspect, who used it to contact Ajitabh. Based on Shabana’s statement, the police registered the case on Saturday.

‘Only a number’
“The prime suspect is still a number. We booked a case against the company as well because they should exercise caution while issuing SIM cards,” said an officer.

A Reliance Jio statement said, “We exercise full diligence and comply with all the applicable regulations for issuing SIMs. We will extend full support as may be required by the investigation authorities.” (Source: The Hindu)

Majority of 8-12 year old kids prone to online threats: WEF report

Majority of 8-12 year old kids prone to online threats: WEF report“The purpose of the ‘2018 DQ Impact Report’ is to highlight the need for concerted action by government, industry and civil society”

Majority of kids in the age bracket of 8-12 are subjected to online threats like cyber-bullying and video game addiction, and the situation is “acute” in emerging economies, says a survey. The joint report by DQ Institute and the World Economic Forum, over 50 per cent of 8-12 year olds are susceptible to cyber-bullying, video game addiction, offline meetings, disinformation and online sexual grooming.

Notably, the problem is more acute in emerging economies, where “internet adoption has been more rapid and less subject to appropriate safeguards by parents, industry or government.” The purpose of the ‘2018 DQ Impact Report’ is to highlight the need for concerted action by government, industry and civil society to help parents counter the threats facing the youngest ‘digital citizens’ and “such a need is more acute in emerging economies”, it said.

“We must act quickly and take positive steps to help these children facing cyber-risks around the world, especially in information and communication technology (ICT)-emerging countries. We need to work together to help our children outsmart cyber-risks and become successful and responsible digital citizens who maximise their potential and minimise cyber-risks,” said Yuhyun Park, Founder and Chief Executive Officer of the DQ Institute, Singapore.

The study of 38,000 children noted that 47 per cent have been victimised through cyber-bullying in the past year. “Today’s youth make up an important part of our informed society, they will be tomorrow’s voters and our future leaders. Ensuring they are better equipped to face the challenges of hyper-connected life, earlier on, should be a societal priority,” said Cheryl Martin, MD, Head of Industries and Member of the Managing Board at the WEF.

Moreover, the children spend an average of 32 hours per week in front of digital screens for entertainment alone — longer than the time they spend in school, the study said. There is a positive association between screen time and exposure to cyber-bullying, video game addiction, offline meetings and online sexual behaviours, it said. ( Source: The Hindu Businessline)

Vodafone, Idea may have a new brand name after merger

Vodafone, Idea may have a new brand name after merger Vodafone India and IdeaBSE 1.01 % Cellular, India's second-and third ranked telcos that are merging, are working on a new name and brand identity for the combined entity, which may come into effect a year after the transaction closes, people familiar with the matter said. "There will be a new brand identity — work has started on it," a senior consultant working on the merged company's new identity said, speaking on the condition of anonymity due to non-disclosure agreements. The UK-based Vodafone and the Kumar Mangalam Birla-owned Idea are chalking out a new positioning that will attract customers and retain the recall value associated with both the parent companies, according to the people.

The two companies didn't respond to ET's emailed queries. The merger will create India's largest mobile phone operator by subscribers and revenue market share. The companies expect the deal to close in the first half of 2018, though experts said it may come through by March-April. The companies are in the final leg of getting regulatory approvals for the merger, which will allow them to better take on Reliance Jio Infocomm and current No. 1 telco Bharti Airtel in an intensely competitive market that has eroded revenue, profit and cash flows.

"A new brand will help them start afresh without any baggage," said Jessie Paul, chief executive officer of marketing advisory firm Paul Writer in Bengaluru. "With Vodafone's strength in its urban circles and Idea Cellular's in rural areas, a new brand from scratch makes more sense." In March 2017, both the companies said that the brand strategy of the combined company will be developed in due course and will leverage customers' affinity for the existing brands, built up over the past decade.

Senior executives in the telcos aware of the developments said it will be a while before any new brand is rolled out. "Nothing is locked as of now and all options are open. We are veering towards maintaining status quo for at least one year," said a senior executive aware of the developments at one of the telcos. "It's very likely that one unified brand will emerge," said a senior executive at an advertising firm that has worked with one of the telcos. chaos that would ensue as a result of a new brand, however, would be a major issue, naturally."

Idea and Vodafone India have hired Aon to chalk out salary structures, pulled in Bain Consultants to advise on overall strategies and have roped in leadership management company Spencer Stuart to shortlist candidates for major roles in the combined entity. (Source: Economic Times)

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