International Project Financing University Essay Example

PROJECT FINANCING

The Projects are building blocks of a development plan. Creation of utilities is the sine qua non of business. Schemes in which investment is made in anticipation of deriving future benefits there from are known as projects. Project is thus a package of measures selected to reach an objective that has been precisely designated beforehand and is objectively verifiable. The basic characteristic of project is that it involves current outlay of funds in the expectation of future benefits.

The inputs of the project come in the form of equipment, supplies, personnel, etc. An efficient project makes productive use of land and other natural resources with the help of capital applying technical capability of human resources, giving an output adequate to enhance the nation’s economic growth. Project Financing involves raising funds for the acquisition of fixed assets such as land and buildings, plant and machinery, vehicle furniture and fittings etc. which are used in business to earn income.

It is necessary to define the financial requirements of a project at the investment and initial operational stage. During the period of construction or the project stage usually called the gestation period, the investment does not give anything in return. The investments in procurement of assets are illiquid and are known as Sunk Capital. Hence the project planners try to get such assets financed through external sources such as Buyer’s Credit.

Some relate to the specific financing structure, others to the nature and viability of the project itself, and still others to political, economic and related risks in the country in which the project will operate. Generally these risks as falling in the following broad categories: ?Political and regulatory risk – including regulatory risks related to pricing and permits approval, certainty within the regulatory system, along with the possibility of retroactive environmental legislation. There may also be risk of project expropriation and risk that unexpected political developments may prevent efficient use of domestic resources.

THE DECISION CRITERIA INTERNAL RATE OF RETURN AND NET PRESENT VALUE INTERNAL RATE OF RETURN

The internal rate of return may be defined as the rate that equates investment outlay with present value of inflow received after one period. In other words rate of return is the discount rate which makes NPV zero. Here it’s a case of receiving loan from a financer. So the internal rate is the rate that equates the loan amount received in the beginning as reduced by various upfront charges with the various cash outflows in form of repayment of principal ,interest charges and various other expenses. DECISION-After analyzing various options, the option in which this rate is the least will be the cheapest source of finance. For arriving at the best-suited and cheapest source of financing for the project, both the NPV and IRR of each option can be considered.

P1/(1+r)1 + P2/(1+r)2 + P3/(1+r)3

Pn/(1+r)n – U = C1/(1 + r)1 + C2/(1 + r)2 + C3/(1 + r)3

Cn/(1 + r)n P = Facility Amount drawn at different time periods

U = Up-Front charges

C = Various Outflows that include various Charges plus Interest Payments and Repayments at different Time Period

r = Rate of return/ Cost of Debt

NET PRESENT VALUE

Net present value being a discounted cash flow technique evaluates present value of future cash flows. In this case, we will calculate present value of future outflows for decision purposes.

DECISION

the option which gives the least present value of cash outflows made in the future at different time periods will be cheapest source.

NPV = [(P1/(1+r)1 + P2/(1+r)2 + P3/(1+r)3 …Pn/(1+r)n )-U] – C1/(1 + r)n – C2/(1 + r)n – C3/(1 + r)n… Cn/(1 + r)n P = Facility Amount drawn at time intervals

U = Up-Front charges

C = Various Outflows that include various Charges plus Interest Payments and Repayments at different Time Period

r = Discount Rate

The section scheme followed for the project is as follows:

  • Section 1: Introduction Objective, Methodology, Hypothesis and explanation of the key concepts.
  • Section 2: Literature Review Involves looking at researches done, their findings, and their correlation to the changing business scenarios.
  • Section 3: Research Methodology Includes interpretation of the Mozambique project, the explanation of the key concepts involved in the project.
  • Section 4: Findings and analysis Here we will analyze the various costs and the revenue generated by the project.
  • Section 5: Conclusion Concluding the research and giving the limitation.

Currently, there are very few published papers on project finance. In fact, there has Been only one article directly on project finance published in the four leading finance Journals, and not more than 15 articles in all finance journals over the past 20 years. As a starting point, the growing use of project finance challenges the Modigliani And Miller’s (1958) ‘irrelevance’ proposition, the idea that corporate financing decisions do not affect firm value under certain conditions.

One of the key assumptions Underlying their irrelevance proposition is that financing and investment decisions are separable and independent. When this assumption holds, various financing decisions such as the firm’s organisational, capital, and ownership structures do not affect asset values or investment decisions.. Myers and Majluf (1984) explained that project finance can help reduce under investment due to asymmetric information, under investment occurs only when the value of both assets-in-place and investment opportunities is uncertain.

Myers and Majluf recommend two solutions: financing assets separately (i. . , project finance) and holding financial slack. While financing assets separately clearly improves information flow, this information-based motivation for using project finance has trouble explaining why non-recourse debt, the sine quo non of project finance, is needed. Stulz, (1984) examined that leverage affects expected cash flows available to capital providers; other structural attributes affect real investment decisions. The ability to create a standalone project company and finance it with non-recourse debt reduces the opportunity cost of under investment due to managerial risk aversion (or debt overhang ).

Stulz (1996) claims that Project finance allows the firm to isolate asset risk in a separate entity where it has limited ability to inflict collateral damage on the sponsoring firm; in essence, it allows firms to truncate large left-hand tail outcomes, which is the primary goal of risk management. Return to Equity in Project Finance for Infrastructure Duke University – Duke Center for International Development Sanford February 2000 Economics Teaching Program Working Paper In project finance, the viability of the project is based on the expected cash flows generated by the project rather than on the strength of the company’s balance sheet.

Thus, it is relevant to construct the annual cash flow from the equity point of view and estimate the annual returns to the equity holder but the usual simplifications for calculating the cost of capital do not permit the explicit estimation of the annual returns to the equity holder. Interpretation This paper relaxes many of the assumptions in the typical analysis, and provides a simple and practical way to estimate directly the annual returns to the equity holder. This approach requires the calculation of the annual present values of the future cash flows from the point of view of the equity holder.

Two equivalent ways for calculating the annual equity values are shown. Most importantly, the construction of the cash flow statement from the equity point of view permits the analysis of the likely impacts of contracts on the risk profile of the project for the equity holder.

The components of the business plan are General Approach Forecasting freight traffic has been an independent exercise in terms of the identification of the overall potential. There are two streams of traffic viz. National Traffic or traffic originating and terminating within Mozambique and International traffic or traffic that originates or terminates outside Mozambique. Forecast for national traffic has been made based on it current level, competitiveness vis-a-vis road mode and expected future economic scenario.

Forecast of international traffic, which is entirely imports or exports through Beira Port, has been made considering the composition of moving cargo through Beira Port vis-a-vis moving this cargo via other alternative ports. Marketing Strategy, Implementation Plan and Measures to attract additional Traffic. Appreciating this as the most important activity, the Marketing sub function has been made part of Corporate Services which will be directly look after by the Chief Executive Officer of the SPC. The Marketing Manager will co-ordinate with clients to prepare an annual plan for movement of traffic by rail.

He will negotiate the tariff for individual clients for approval. Marketing Manager will also explore possibilities for new traffic for movement by rail. Potential for new traffic will be explored by interaction with the key players in country’s economy and exporters in neighboring countries. Preliminary analysis shows that container traffic may have a vast potential in the future which will be exploited by providing value added services.

RAIL OPERATING PLAN

The rail-operating plan will be based on our experience of operation of railways in India as well as in other countries. The endeavor will be to make railway operations safe, efficient, competitive and customer friendly. This will be achieved through introduction of new systems, facility, and equipment with improved performance through upgraded maintenance techniques and extensive training of employees.

CALCULATION OF PROFITS AND LOSS

The profit and loss account gives the break up of various costs and the revenue projects, involved in the project over the period of 25 years which being the tenure of the project. In the years 2008 to 2012 there is a loss in terms of profits as the expenses increase on account of the Sena line becoming operative, after the period of 4 years the Revenues take a leap as the traffic in the Sena line is expected to increase. From the profits every year 5% of the Net Profits are transferred to the General Reserve. The profit & loss account, the balance sheet projects are given below

CONCLUSION

The objective was to analyse the project from the bidding stage to implementation, the criteria for the selection of the project from the point of view of both the bidder and the Mozambique government is the highest NPV the project was awarded to Rites, as its projected NPV was the highest amongst the bidders. The reason Rites chose to bid for the project as the organization had substantial experience in the implementation of railway projects and was confident of generating a high NPV.

Income From House Property

Introduction This lesson deals with income, which falls under the head ‘Income from house property’. The scope of income charged under this head is defined by section 22 of the Income Tax Act and the computation of income falling under this head is governed by sections 23 to 27. All the provisions relating to tax treatment of income from house property are explained in this lesson. Objectives After going through this lesson, you will be able to understand: The meaning of house property Who is treated as owner of house property?

The treatment of rental income from properties under different circumstances Determination of the annual value of a house property The expenses deductible from rental/notional income from house property Special treatment given to self-occupied house property Treatment of income/loss from house property. Basis of Charge (Section 22) The annual value of a property, consisting of any buildings or lands appurtenant thereto, of which the assessee is the owner, is chargeable to tax under the head ‘Income from house property’.

However, if a house property, or any portion thereof, is occupied by the assessee, for the purpose of any business or profession, carried on by him, the profits of which are chargeable to income-tax, the value of such property is not chargeable to tax under this head. Thus, three conditions are to be satisfied for property income to be taxable under this head. The property should consist of buildings or lands appurtenant thereto. The assessee should be the owner of the property.

The property should not be used by the owner for the purpose of any business or profession carried on by him, the profits of which are chargeable to income-tax. Applicability of Section 22 Buildings or lands appurtenant thereto approach roads to and from public streets, compounds, courtyards, backyards, playgrounds, kitchen garden, motor garage, stable or coach home, cattle-shed etc, attached to and forming part of the building.

In respect of non-residential buildings, the appurtenant lands may be in the form of car-parking spaces, roads connecting one department with another department, playgrounds for the benefit of employees, etc. Ownership of house property Deemed Owner If an individual transfers a house property to his or her spouse (except in connection with an agreement to live apart) or to a minor child (except a married daughter) without adequate consideration, he is deemed as the owner of the property for tax purposes.

However, if an individual transfers cash to his or her spouse or minor child, and the transferee acquires a house property out of the gifted amount, the transferor shall not be treated as the deemed owner of the house property. The holder of an Impartible Estate is deemed to be the owner of all the properties comprised in the estate. A member of a co-operative society, company or association of persons, to whom a property (or a part thereof) is allotted or leased under a house building scheme of the society, company or association, is deemed to be the owner of such property.

A person who has acquired a property under a power of attorney transaction, by satisfying the conditions of section 53A of the Transfer of Property Act, that is under a written agreement, the purchaser has paid the consideration or is ready to pay the consideration and has taken the possession of the property, is the deemed owner of the property, although he may not be the registered owner.

A person who has acquired a right in a building (under clause (f) of section 269UA), by way of a lease for a term of not less than 12 years (whether fixed originally or extended through a provision in the agreement), is the deemed owner of the property. This provision does not cover any right by way of a lease renewable from month to month or for a period not exceeding one year. Property Used For Own Business or Profession The owner of a house property is not liable to tax under this head if the property is used by him for his own business or profession. But the business or profession should be such whose income is chargeable to tax.

Chargeability to tax does not mean that the income is actually taxed. It is possible that in a particular year the profits are not sufficient enough to attract tax liability. What it means is that the income from such business or profession is not exempt from tax. If an employer builds quarters for residential use by his employees and the letting out of these quarters is considered as incidental to his business, the income from such property is not taxable under this head, because the property in this case is considered to be used by the owner for his own business. It shall, therefore, be taxed as business income.

The above position will not change even if the buildings are let out to government authorities for locating their undertakings like Banks, Post Office, Police Station, Central Excise Office, etc. , provided the dominant purpose of letting out the accommodation is to enable the assessee to carry on his business more efficiently and smoothly. Also, income from paying-guest accommodation is taxable as income from business. Where house property owned by a partner is used by the firm (neither it is let out to the firm nor any rent is obtained for it) for its business purposes, the partner is entitled to the exemption.

The reason for this exemption is that the notional rent of property is not allowable as a permissible deduction while computing business income, if a person carries on the business or profession in his own house property. Composite Rent In some cases, the owner obtains rent of other assets (like furniture) or he charges for different services provided in the building (for instance, charges for lift, security, air conditioning, etc. ), apart from obtaining the rent of the building. The amount so recovered is known as composite rent.

If the owner of a house property gets a composite rent for the property as well as for services rendered to the tenants, composite rent is to be split up and the sum which is attributable to the use of property is to be assessed in the form of annual value under section 22. The amount which relates to rendition of the services (such as electricity supply, provisions of lifts, supply of water, watch and ward facilities, etc. ) is charged to tax under the head ‘Profits and gains of business or profession’ or under the head ‘Income from other sources’.

If there is letting of machinery, plant and furniture and also letting of the building and the two lettings form part and parcel of the same transaction or the two lettings are inseparable, then such income is taxable either as business income or income from other sources. This happens in the case of letting out of hotel rooms, theatres, auditoriums, etc. It is commonly understood that the charges per day for a room in a hotel are not specifically for the room only. In fact, a major portion of room tariff is for the amenities and services provided in the hotel.

Similar is the case where a cinema house is let out at composite rent charged for the building, furniture, machines, equipment, staff, power consumption, etc. In all such cases, the composite rent received by the owner of the property is not to be split up and nothing is taxable as income from house property. Rental Income of A Dealer in House Property If a person is engaged in the business of purchasing house properties with the purpose of letting them on high rents and disposing off those properties which are not profitable for this purpose, the rental income from such property will not be taxed as business income.

Any rent from house property, whether received by a dealer or a landlord, is taxable under the head ‘Income from house property’. It will remain so even if the property is held by the assessee as stock-in-trade of a business or if the assessee is a company which is incorporated for the purpose of building houses and letting them on rent. Disputed Ownership If the title of ownership of a house property is disputed in a court of law, the decision as to who is the owner rests with the Income-tax Department. Mere existence of dispute as to title cannot hold up an assessment even if a suit has been filed.

Generally the recipient of rental income or the person who is in possession of the property is treated as owner. House Property in a Foreign Country A resident assessee is taxable under section 22 in respect of annual value of a property in a foreign country. A resident but not ordinarily resident or a nonresident is, however, chargeable under section 22 in respect of income of a house property situated aboard, provided income is received in India during the previous year. If tax incidence is attracted under section 22 in respect of a house property situated abroad, its annual value will be omputed as if the property is situated in India. Property Incomes Exempt From Tax Some incomes from house property are exempt from tax. They are neither taxable nor included in the total income of the assessee for the rate purposes. These are: Income from a farm house [section 2(1A) (c) and section 10(1)]. Annual value of one palace in the occupation of an ex-ruler [section 10(19A)]. Property income of a local authority [section 10(20)]. Property income of an approved scientific research association [section 10(21)].

Property income of an educational institution and hospital [section 10(23C)]. Property income of a registered trade union [section 10(24)]. Income from property held for charitable purposes [section 11]. Property income of a political party [section 13A]. Income from property used for own business or profession [section 22]. Annual value of oneself occupied property [section 23(2)]. Computation of Income from Let Out House Property Income from house property is determined as under: Determination of Annual Value Gross Annual Value [Section 23(1)]

The following four factors have to be taken into consideration while determining the Gross Annual Value of the property: Rent payable by the tenant (actual rent) Municipal valuation of the property. Fair rental value (market value of a similar property in the same area). Standard rent payable under the Rent Control Act. Actual Rent It is the most important factor in determining the annual value of a let out house property. It does not include rent for the period during which the property remains vacant. Moreover, it does not include the rent that the tax payer is unable to realize, if certain conditions are satisfied.

Sometimes a tenant pays a composite rent for the property as well as certain benefits provided by the landlord. Such composite rent is to be disintegrated and only that part of it which is attributable to the letting out of the house property is to be considered in the determination of the annual value. Municipal Valuation Municipal or local authorities charge house tax on properties situated in the urban areas. For this purpose, they have to determine the income earning capacity of the property so as to calculate the amount of house tax to be paid by the owner of the property.

But this valuation cannot be treated as a conclusive evidence of the rental value of the property, although such valuation is given due consideration by the Assessing Officer. Fair Rental Value It is the rent normally charged for similar house properties in the same locality. Although two properties cannot be alike in every respect, the evidence provided by transactions of other parties in the matter of other properties in the neighborhood, more or less comparable to the property in question, is relevant in arriving at reasonable expected rent.

Standard Rent Standard Rent is the maximum rent which a person can legally recover from his tenant under a Rent Control Act. This rule is applicable even if a tenant has lost his right to apply for fixation of the standard rent. This means that if a property is covered under the Rent Control Act, its reasonable expected rent cannot exceed the standard rent. The Gross Annual Value is the municipal value, the actual rent (whether received or receivable) or the fair rental value, whichever is highest.

If, however, the Rent Control Act applies to the property, the gross annual value cannot exceed the standard rent under the Rent Control Act, or the actual rent, whichever is higher. If the property is let out but remains vacant during any part or whole of the year and due to such vacancy, the rent received is less than the reasonable expected rent, such lesser amount shall be the Annual value. For the purpose of determining the Annual value, the actual rent shall not include the rent which cannot be realized by the owner.

However, the following conditions need to be satisfied for this: The tenancy is bona fide; The defaulting tenant has vacated, or steps have been taken to compel him to vacate the property. The defaulting tenant is not in occupation of any other property of the assessee; The assessee has taken all reasonable steps to institute legal proceedings for the recovery of the unpaid rent or satisfied the Assessing Officer that legal proceedings would be useless. ILLUSTRATION: Find the Gross Annual Value in the case of the following properties: Solution:

Since Rent Control Act is not applicable, GAV will be the highest of municipal value, fair rent and actual rent. Hence, the GAV will be Rs. 60,000. GAV cannot exceed the standard rent or actual rent, whichever is higher. Therefore, GAV will be Rs. 95,000. Actual rent receivable will be reduced by the amount of unrealized rent i. e. Rs. 72,000 – Rs. 5,000 = Rs. 67,000. Now, GAV will be the highest of municipal value, fair rent and actual rent, subject to the maximum of standard rent. Hence, GAV will be Rs. 68,000.

GAV will be the actual rent receivable adjusted by the loss due to vacancy i. e. Rs. 72,000 – Rs. 48,000 = Rs. 24,000. Actual rent receivable will be reduced by the amount of unrealized rent and loss due to vacancy i. e. Rs. 1, 68,000 – Rs. 42,000 – Rs. 14,000 = Rs. 1, 12,000. Now, we will take the highest of municipal value, fair rent and actual rent, subject to the maximum of standard rent. So, GAV will be Rs. 1, 75,000 reduced by the loss due to vacancy i. e. Rs. 1, 75,000 – Rs. 14,000 = Rs. 1, 61,000. Deduction of Municipal Taxes

From the annual value as determined above municipal taxes are to be deducted if the following conditions are fulfilled: The property is let out during the whole or any part of the previous year The Municipal taxes must be borne by the landlord (If the Municipal taxes or any part thereof are borne by the tenant, it will not be allowed). The Municipal taxes must be paid during the year (Where the municipal taxes become due but have not been actually paid, it will not be allowed. Similarly, the year to which the taxes relate to, is also immaterial).

Deductions under Section 24 Statutory Deduction 30 per cent of the net annual value will be allowed as a deduction towards repairs and collection of rent for the property, irrespective of the actual expenditure incurred. Interest on Borrowed Capital The interest on borrowed capital will be allowable as a deduction on an accrual basis if the money has been borrowed to buy or construct the house. Amount of interest payable for the relevant year should be calculated and claimed as deduction. It is immaterial whether the interest has actually been paid during the year or not.

However, there should be a clear link between the borrowal and the construction/purchase etc. , of the property. If money is borrowed for some other purpose, interest payable thereon cannot be claimed as deduction. The following points are to be kept in mind while claiming deduction on account of interest on borrowed capital: In case the property is let out, the entire amount of interest accrued during the year is deductible. The borrowal may be for construction/acquisition or repairs/renewals. A fresh loan may be raised exclusively to repay the original loan taken for purchase/ construction etc. of the property. In such a case also, the interest on the fresh loan will be allowable. Interest payable on interest will not be allowed. Brokerage or commission paid to arrange a loan for house construction will not be allowed. When interest is payable outside India, no deduction will be allowed unless tax is deducted at source or someone in India is treated as agent of the non-resident. Interest attributable to period prior to construction or acquisition Money may be borrowed prior to the acquisition or construction of the property.

In such a case, the period commencing from the date of borrowing and ending on the date of repayment of loan or on March 31 immediately preceding the date of acquisition or completion of construction, whichever is earlier, is termed as the pre-construction period. The interest paid/payable for the pre-construction period is to be aggregated and claimed as deduction in five equal installments during five successive financial years starting with the year in which the acquisition or construction is completed. This deduction s not allowed if the loan is utilized for repairs, renewal or reconstruction. Solution: Computation of Income from Self – Occupied House Property The annual value of one self-occupied house property, which has not been actually let out at any time during the previous year, is taken as ‘Nil’ [Section 23(2) (a)]. From the annual value, only the interest on borrowed capital is allowed as a deduction under section 24. The amount of deduction will be: Either the actual amount accrued or Rs. 30,000/- whichever is less When borrowal of money or acquisition of the property is after 31. . 1999 – deduction is Rs. 1, 50,000/- applicable to A. Y 2002-03 and onwards. However, if the borrowal is for repairs, renewals or reconstruction, the deduction is restricted to Rs. 30, 000. If the borrowal is for construction/acquisition, higher deduction as noted above is available. If a person owns more than one house property, using all of them for self occupation, he is entitled to exercise an option in terms of which, the annual value of one house property as specified by him will be taken at Nil.

The other self occupied house property/is will be deemed to be let out and their annual value will be determined on notional basis as if they had been let out. Annual Value of One House Away from Work Place [Section 23(2) (b)] A person may own a house property, for example, in Bangalore, which he normally uses for his residence. He is transferred to Chennai, where he does not own any house property and stays in a rental accommodation.

In such a case, the house property in Bangalore cannot be used for self-occupation and notional income, therefore, would normally have been chargeable although he derives no benefit from the property. To save the tax payer from hardship in such situations, it has been specifically provided that the annual value of such a property would be taken to be nil subjects to the following conditions: The assessee must be the owner of only one house property. He is not able to occupy the house property because of his employment, business etc. away from the place where the property is situated. The property should not have been actually let or any benefit is derived there from. He has to reside at the place of employment in a building not belonging to him. If a house property consists of two or more independent residential units, one of which is self – occupied and the other unit(s) is let out, the income from the different units is to be calculated separately. The income from the unit which is self – occupied for residential purposes is to be calculated as per the provisions of Section 23(2)(a) i. . the annual value will be taken as nil and only interest on borrowed capital will be deductible up to the maximum limit of Rs. 1,50,000 or Rs. 30,000, as the case may be. The income from the let out unit(s) will be calculated in the same manner as the income from any let out house property. If a house property is self – occupied for a part of the year and let out for the remaining part of the year, the benefit of Section 23(2) (a) is not available and the income from the property will be calculated as if it is let out.

ILLUSTRATION: X owns two houses. The relevant details are as follows: Calculate income for house property for the assessment year 2006-2007. Solution: Some Special Provisions Taxability of Unrealized Rent recovered later (Section 25A) Where any rent cannot be realized, and subsequently if such amount is realized, such an amount will be deemed to be the income from house property of that year in which it is received. We have seen earlier that the basic requirement for assessment of this income is the ownership of the property.

However, in the cases where unrealized rent is subsequently realized, it is not necessary that the assessee continues to be the owner of the property in the year of receipt also. Assessment of arrears of rent received (Section 25B) When the owner of a property receives arrears of rent from such a property, the same shall be deemed to be the income from house property in the year of receipt. 30% of the receipt shall be allowed as deduction towards repairs, collection charges etc. No other deduction will be allowed.

As in the case of unrealized rent, the assessee need not be the owner of the property in the year of receipt. House property owned by co-owners (section 26) Loss from House Property The loss from one house property can be set off against the income from another house property. The remaining loss, if any, can be set off against incomes under any other head like salary. In case the loss does not get wiped out completely, the balance will be carried forward to the next assessment year to be set off against the income from house property of that year.

However, such carry forward is restricted to eight assessment years only. Conclusion Under section 22 of the Income Tax Act, the annual value of house property, consisting of buildings and lands appurtenant thereto, is taxable under the head ‘Income from House Property’, in the hands of the owner (or deemed owner) of the property, provided that the property is not used by the assessee for the purpose of his own business or profession.

For determining the annual value of the house property, the actual rent received or receivable from the property, the municipal valuation, the fair rental value and the standard rent under the Rent Control Act are taken into account. From the Gross Annual Value of the property, the Municipal Taxes are deducted to arrive at the Net Annual Value. Section 24 of the Income Tax Act provides that 30% of the NAV and the interest on borrowed capital shall be deducted from the NAV to obtain the taxable income from house property.

As per Section 23(2) of the Income Tax Act, the annual value of oneself occupied house property is taken to be nil. No deductions are permissible from the annual value of such property, except the interest on borrowed capital, subject to the maximum limit of Rs. 1, 50,000 or Rs. 30, 000 as the case may be. The above provisions may result in loss from house property, which may be set off against income from another house property or against incomes under the other heads. The balance loss may be carried forward, to be set off against the income from house property, up to a maximum of eight assessment years.

Wireless Monitoring Of Water Level Using Radio Frequency Identification

Wireless Monitoring of Water Level using Radio Frequency Identification (RFID) Technology In Partial Fulfillment of the Requirements in Introduction to Research in ICT Marc Dominic Cabioc Elera Marie Joaquin Denmark Padua Jeymark Palma John Nino Requina BSIT 3A October 23, 2009 Wireless Flood Monitoring Using Radio Frequency Identification (RFID) Technology ABSTRACT Radio Frequency Identification (RFID) technology is commonly used for object identification and tracking. In this study we explore the feasibility of its use in wireless monitoring of water level that will serve as an early warning system for flood occurrence.

To measure the level of water, water detecting sensors monitors the signal and sends it to the RFID tag. A receiver unit emits an electromagnetic field which when detected by the passive RFID tag causes it to transmit water level data in its memory to the receiver. This data will soon be sent to a data collecting computer where a mobile phone is connected. Registered mobile numbers will be sent a notification about the status of the water level and warn them about the occurrence of flood in their area.

Potential application of this study could be in the field of disaster control where water level can be monitored to predict the occurrence of flood near the area using wireless and mobile technology. Although limitation in transmission range require proximity reading of sensor, using existing equipment that regularly pass over the field as mount for the interrogator would increase feasibility of this system. Chapter 1 The Problem Chapter 1 consists of five parts; namely: (1) Background of the Study, (2) Objectives of the Study, (3) Significance of the Study, (4) Definition of Terms, and (5) Delimitation of the Study.

Part One, Background of the Study, presents the rationale of the thesis project/research study. Part Two, Objective of the Study, includes general and specific objective of the proposed project. It states the aims of the study, on what to solve, prove and implement. Part Three, Significance of the Study, indicates the advantages that can be obtained from the implementations of the study. Part Four, Definition of Terms, gives the conceptual and operational meanings of the important terms used in the study. Part Five, Delimitation of the Study, discuss the scope and limitation of the project.

Background of the Study Floods make an enormous impact on the environment and society today. Floods destroy properties including homes business establishments and infrastructures. Also, in cases of severe floods many people lost their lives and some suffers into the long term effect of flooding. Early warning to the people near flood prone areas could help lessen the harmful effects of flooding. Radio Frequency Identification is one the most commonly used technology when it comes to wireless transmission of data in terms of smaller amount of data and provides limitless future potentials.

As the industry has witnessed rapid growth in developing and applying RFID technology we must take advantage and se this technology to build a system that help in save property and lives in the future. In this study we integrate the use of RFID technology in the4 field of disaster control by creating a system that will help prevent massive destruction of flood in a certain area. By using the technology to transmit signals to a remote system in order to monitor the level of water in riverbanks and predict the occurrence of flood.

The implementation of this technology will help prevent lost of lives and property because of early warning and prevention. Statement of the Problem The feasibility of RFID technology when used in wireless monitoring of water level. Objectives of the Study The main purpose of this study is to develop a system that measures the water level of a certain area in order to predict the future occurrence of flooding and to send warning information to the local population. This study also aims to assess the performance of the project in accordance with certain criteria. Specifically answer the following questions: 1.

What are the components of the system proposed? 2. What is the feasibility of RFID Technology as to be used as a tool in this study? 3. How will this system benefits the people in the area of implementation? 4. What is the level of precision of monitoring water level using RFID Technology? Significance of the Study The study will give great innovation especially to the residents near the riverbanks where flooding is their major problem during rainy days. Through monitoring of the water levels this could be the basis of possible flood occurrence. Early warning of upcoming flood will help save life and properties.

Also the area’s disaster control unit will function well in bringing warning to the residents of the upcoming flood if they will utilize this technology. Another significance of this study is to prove the transmission range of RFID when integrated into other devices and how useful the technology is. This study will also lead to future innovation that will use RFID technology in it most feasible aspects to aid people’s needs. The researchers will also apply knowledge they learned from their previous lessons and gain insights during the progress of the study.

Thus this study makes significance because RFID’s feasibility was explored for the development of a wireless water level monitoring as the basis of flood occurrence. Definition of Terms For better understanding of the study, the following words are operationally defined: RFID System In this study RFID System is referred to a system that include includes three components: (1) a tag or transponder, (2) an interrogator (reader), and (3) an antenna that emits radio signals to activate the tag and read/write data to it. Radio Frequency Identification (RFID)

In this study, Radio frequency Identification or RFID is referred to a technology used as means of monitoring water level for prediction of flood to flood-prone areas. RFID Tags or Transponder In this study RFID Tags or Transponder is referred to a device which is part of the RFID system where in it acts as a listener for radio signals sent by the reader. When it receive radio query it responds to it by transmitting information in its memory to the reader. RFID Reader, Interrogator or Transceiver In this study RFID Reader, Interrogator or Transceiver is referred to a device which sends and receive signals from a tag.

Sensor In this study sensor is referred to a device that gather analog data and transmit it to the microcontroller. Microcontroller In this study, microcontroller is referred to a device which analyzed signals from the sensor, give measurements of water level and transfer data to the RFID chip. Data Collecting PC In this study Data collecting PC is referred to a device which stores data and information send by the RFID reader. Mobile Phone In this study mobile phone is referred to a device used to inform local population regarding the water level and the possibility of having a flood in the area. Flood

In this study flood is referred to as the condition where the system will help to prevent by measuring the water level in riverbanks in a wireless manner using RFID. Delimitation of the Study The study focuses on the monitoring of water level in a wireless manner using Radio Frequency Technology. During the progress of the study we will not be using actual RFID tags and readers because of its high cost instead the use of simulation will be presented for the actual scenario. The simulation includes a water detecting device, RFID system which includes RFID tags, readers and antenna, data collecting computer and a mobile phone.

Also included is a middleware that will bridge generated tags to the database with the help of the Emulator. The emulator will help in connecting devices to handle the monitoring of water levels. After data was collected it will be analyze to detect if there are possibilities of flood occurrence. Then data will be sent to mobile user near the flood-prone areas when the level becomes higher in order for people to prepare for the future evacuation. Chapter II Review of Related Literature Development of a “SMART” Wireless Soil Monitoring Sensor Prototype using RFID Technology

T. K. Hamrita and his partner E. C. Hoffacker developed a lab prototype system for wireless measurement of soil temperature using a commercially available 13. 56-MHz RFID passive tag. Temperature is sensed by a thermometer Integrated Circuit (IC) that produces a Pulse Width Modulated (PWM) Signal. On the other hand, an embedded Motorola 68HC11 microcontroller monitors this signal, produces averaged measurements, and sends them to the RFID “tag” or transponder unit, hence the “smart” feature of the sensor.

At the same time, a receiving unit called “interrogator” emits an electromagnetic field, which when detected by the passive RFID tag causes it to transmit temperature data stored in its memory to the interrogator. The latter detects these measurements and sends them to a data collection PC. The architecture of the developed system prototype allows for additional soil transducers to be integrated into it without changes to the sensor design. Potential applications for this sensor could be in the area of precision farming where soil properties such as temperature might be monitored in a wireless manner.

Monitoring System for Farming Operations with Wearable Devices Utilized Sensor The proposed farm operation monitoring system using “Field Servers” and wearable device equipped with an RFID reader and motion sensors was to automatically monitor farmer’s activities. The proposed system was used in recognizing farming operations by analyzing the data from the sensors and detected RFID tags that are attached to various objects such as farming materials, facilities, and machinery. Moreover, this system provides useful information in real-time and controls specific machines in a coordinated manner on the basis of recognized operation.

Functionally Layered Video Coding for Water Level Monitoring The study proposes a new type of layered video coding especially for the use of monitoring water level of a river. A sensor node of the system decomposes an input video signal into some kinds of component signals and produces a bit stream functionally separated into three layers. The first layer contains the minimum components effective for detecting the water level. It is transmitted at very low bit rate for regular monitoring. The second layer contains signals for thumb-nail video browsing.

The third layer contains additional data for decoding the original video signal. These are transmitted in case of necessity. A video signal is decomposed into several bands with the three dimensional Haar transform. Optimum bands to be contained into the 1st layer are experimentally investigated considering both of water level detection and data size to be transmitted. As a result, bit rate for transmitting the first layer is reduced by 32. 5% at the cost of negligible 3. 7% decrease of recognition performance for one of video examples.

Better Farming through RFID Tagging The system enables farmers to maintain a more meaningful account of individual animals by analyzing movement and eating patterns in real time. This data can be used to determine health, allowing farmers to treat or remove sick cows before they affect the wellness of the entire herd, as well as plan milking and fertilization schedules that can help maximize productivity. The system will utilize an active, ultra-wide band RFID tags and readers. These tags emit a series of short signals at frequencies between 6 and 8 GHz.

The extremely short nature of these pulses makes them less vulnerable to RF interference from objects and other RF noise, relative to conventional RFID real-time location systems. Once a reader receives a tag’s signal by means of a phased array antenna, it calculates the tag’s location by employing two complementary techniques: time difference of arrival (TDOA) and angle of arrival (AOA). This technology has implications for agricultural operations of any scale. It can provide smaller farms with an effective, low-cost way to modernize in order to compete in a marketplace that is increasingly industrial.

Intelligent Sensors Gear Up For Real-time Flood Monitoring This system makes use of grid computing that could reduce the cost of flood damage by providing warnings of local flooding in time for people to take pre-emptive action. Most current systems issue general warnings over large areas because they rely on sparsely-distributed sensors which send information to a central point for analysis. This new system, which is based on a network of intelligent sensors that can be placed in flood-prone sites, promises rapid, low-cost warnings specific to these sites.

The system now undergoing trial in Yorkshire consists of 13 depth sensors fixed in locations across a flood plain and a digital camera which rather like a traffic speed camera, monitors flow rate from the speed of flotsam between two points. Each sensor incorporates a powerful computer, no bigger than a packet of gum, which communicates wirelessly with other sensors in the network to form a computing grid. When flood waters are rising, the sensors can change how they operate together so that the network can continue to monitor the situation even if some sensors are submerged or swept away.

The sensors are also able to adjust their power consumption so batteries are conserved during dry times and power is available for increased activity during flood. As soon as the sensors detect water coming down the valley, the network gears up. In order to provide flood warnings, the system makes use of flood forecasting models which were developed at Lancaster by Professor Peter Young and colleagues. The models can be run on the sensor computing grid and adjusted so that their predictions stay in line with what the sensors are recording. RFID for Animals, Food and Farming

The report concerns about RFID in the food supply chain, from arable farming and livestock to presentation in the retail store. It also covers some benefits if the RFID tag stays on the food to the private home. Also included in the report, are tagging of pets and use of RFID on. It also analyses the use of RFID and allied technologies, with a profusion of case studies from across the world. There are many reasons for the growth of both of these markets, because RFID is increasingly used to track, monitor condition, prevent errors and theft, and even locate from a distance.

This increases sales, improves customer satisfaction and reduces costs. As if this were not enough, there is increasing legislation driving the use of RFID for safety, notably with livestock and pets, for rapid and optimal response to disease outbreaks, proof of vaccination, registration and so on. RFID and Sensor-Based Services With Radio Frequency Identification (RFID), companies can more accurately track assets and monitor key indicators, gain greater visibility into their operations, and make decisions based on real-time information.

Increasingly, RFID tags are being combined with many types of sensors and tracking technologies like GPS to give companies greater visibility into their supply chains for reduced risk and optimized business processes. Oracle RFID and Sensor-Based Services provide companies looking to adopt RFID technology with a comprehensive set of capabilities to capture, manage, analyze, access, and responds to data from sensors such as RFID, location, and temperature.

Based on Oracle’s mature, proven technology—including Oracle Database, Oracle Fusion Middleware, and Oracle Enterprise Manager—Oracle RFID and Sensor-Based Services enable companies to quickly and easily integrate sensor-based information into their enterprise systems. Oracle’s solution includes a Supplier Compliance Workspace, Sensor Edge Server, Sensor Edge Mobile, and integrated support in the Oracle Database, Oracle Fusion Middleware, and Oracle E-Business Suite. Architectural Design Fig. 1. A block diagram showing the architectural design of the Wireless Monitoring of Water Level using RFID Technology

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