MISSIVE

Volume XXXII

January 2014

Topics Page

No

Direct Tax 1

Transfer Pricing 4

Service Tax 5

Central Excise 5

Value Added Tax 7

Customs 8

FEMA 10

Company Law 11

Transactions that made

headlines

12

Never hold your head high with pride or ego, even the winner of a gold

medal gets his medal only when he puts his head down!!!

Index

Dear Patron

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Knowledge Management Team

1

DIRECT TAX

DCIT vs. Allied Investments Housing P. Ltd

(ITAT Chennai)

14A & Rule 8D: Onus is on AO to show how

assessee’s claim is incorrect. AO has to

show direct nexus between expenditure &

exempt income. Disallowance cannot be

made on presumptions.

Facts

Ao had made disallowance u/s 14A read with

rule 8D. The assessee claimed that the

disallowance was not permissible on the

ground that the AO had not pointed out any

direct nexus between the interest expenditure

incurred and the exempt income earned

during the year.

CIT(A) accepted the claim of assessee. On

appeal by the department to the Tribunal

HELD dismissing the appeal:

(i) A disallowance u/s 14A read with Rule 8D

cannot be made without recording

satisfaction as to how the assessee’s

calculation of s. 14A disallowance is

incorrect. It is a prerequisite that before

invoking Rule 8D, the AO must record his

satisfaction on how the assessee’s

calculation is incorrect. The AO cannot

apply Rule 8D without pointing out any

inaccuracy in the method of

apportionment or allocation of expenses.

Further, the onus is on the AO to show

that expenditure has been incurred by

the assessee for earning tax-free income.

Without discharging the onus, the AO is

not entitled to make an ad hoc

disallowance. A clear finding of incurring

of expenditure is necessary. No

disallowance can be made on the basis

of presumptions,

(ii) AO has not pointed out any direct nexus

between the interest expenditure

incurred and the exempt income earned

during the year.

CIT v. M/s MWP Ltd [TS-617-HC-2013(KAR)]

Clear Direction must to initiate penalty

proceedings

Facts

Assessee is an investment company

incorporated in India, provided for a

diminution in the value of investments. . The

Assessing Officer sought an explanation from

the assessee as to the reasons for providing for

the diminution. The assessee responded,

conceding the fact that while the diminution

was provided based on Accounting Standard

13, it was not allowable under the provisions of

the Act. The assessee subsequently withdrew

the claim.

While passing the assessment order, the AO

disallowed the claim of the assessee and

stated at the end of the order that “Penalty

proceedings u/s 271(1)(c) initiated

separately”. Overruling the objection of the

assessee that the claim was withdrawn with

the intention to buy peace, the AO imposed a

penalty. Upon appeal, the Commissioner of

Income Tax (Appeals) confirmed the penalty.

Upon further appeal, the Income-tax

Appellate Tribunal reconsidered the entire

material on record and held that the final

position of the income returned by the

assessee was ‘Nil’. The ITAT also noted that the

2

claim was withdrawn to buy peace and avoid

litigation even before a meaningful

investigation was carried out by the AO.

Relying on the ruling of the Supreme Court in

the case of K C Builders & Another [265 ITR

562], the ITAT held that there was no case for

concealment as there was no loss of revenue.

Aggrieved, The Revenue approached the High

Court.

The High Court, ruling in favour of the

assessee, observed as under –

Relying on the Supreme Court ruling in

the case of Rajendranath [120 ITR 14]

and the subsequent High Court ruling in

the case of Manjunatha Cotton &

Ginning Factory [35 Taxmann.com 250],

the High Court held that the phrase

‘penalty proceedings under section

271(1)(c) are initiated separately’ did

not comply with the word ‘direction’ as

contemplated under section 271(1)(c)

of the Act;

A direction by a statutory authority was

in the nature of an order equiring

positive compliance. When it is left to

the option of the ITO whether or not

take action, it could not be described

as a direction. Since, in the present

case, no direction as discussed above

was given in the assessment order, the

deeming provisions of section 271(1B)

were

not attracted. Therefore, it was held

that conditions prescribed under

section 271(1)(c) were not

satisfied.

Mitsubishi Corporation (AAR No. 1309 of

212)

AAR application can not be rejected

merely because the return has been filled.

To rejct the AAR Application, notice of the

assessment should have been issued by

the tax authority.

Facts

The applicant, a tax resident of japan,

established a branch office in India after

obtaining the necessary approval from

Reserve Bank of India. The branch office

provide support services to the applicant.

During the year under consideration the

applicant entered into two separate contracts

with Indian company, i.e. offshore supply

contract and onshore service contract.

In order to determine the taxability of

payments received on account of offshore

and onshore supply contract, the applicant

made an application before the AAR.

However, the tax department objected the

admissibility of the application stating that

return of income was filed by the applicant

before filling the application. The tax

department contented that when return of

income is filed, it should be treated as pending

before the income tax authority.

AAR Ruling

In this case, AAR held that mere filling of return

of income before filing of the application does

not necessarily mean that the question raised

in the application is already pending before

the tax authority. Further, it was held that mere

filing of return of income does not attract the

bar, unless the question raised in the

application for advance ruling is an issue in the

return filed.

3

DIT v. Pride Foramer SAS (ITA No. 16 of

2009)

Interest on tax refund effectively

connected with the permanent

establishment in India is not taxable as

interest income under the India-France tax

treaty

Facts

The taxpayer, a resident of France, offered to

tax the profits earned in connection with the

business of exploration, etc., of mineral oils.

However, the interest earned in India on the

refund of income tax was not offered to tax as

business income.

High court’s Ruling

The Uttarakhand high court held that the

income should be taxed under the Article 12 of

tax treaty, if the recipient of interest does not

have a permanent establishment in the

country where he receives the interest. The

high court also held that since there was no

dispute regarding the taxpayer having a

permanent place of business in India, the

interest earned in India on the refund of

income-tax is not covered under Article 12(1)

and 12(2) of the tax treaty.

CIT v. Dynamic Enterprises (ITA No.

1414/2006)

Money Paid to Retiring Partners on

Retirement is not taxable in Firm’s Hands

Facts

The taxpayer is a partnership firm engaged in

the real estate business. The taxpayer came in

to existence on 9 January 1985. The taxpayer

consisting of three partners (existing partners)

was reconstituted during 1993 and five new

partners were introduced in the taxpayer. Prior

to reconstitution, the assets of the taxpayers

were revalued as per the report of the

registered valuer on 28 March 1993 and the

difference between the revalued amount and

the book value was credited to the existing

partner’s capital account in PSR. The existing

partners retired from the taxpayer with effect

from 1 April 1994 and the balance standing to

the credit of their respective capital account

was paid to them.

As per the AO & Commissioner of Income-tax

(Appeals) held that there is a transfer of

property from the old firm to the new firm. The

introduction of new partners and the

retirement of existing partners was a device to

transfer the immovable property and to evade

capital gain tax as well as stamp duty.

Therefore, he held that capital gain tax is liable

to be paid by the taxpayer.

The ITAT held that the reconstituted firm

cannot be termed as transferor even for the

argument sake. The process of transfer requires

a person who has a right in an asset and then

such a right either sold, exchanged or

relinquished to the another person. In the given

case, the taxpayer has not transferred any

right in immovable properties. Therefore, there

is no transfer and the firm is not liable to pay

capital gains tax.

High Court Ruling

Karnataka High court held that, In order to

attract sub section (4) of section 45 the

following conditions need to be fulfilled:

There should be a distribution of capital

assets of the firm

Such distribution should result in the

transfer of a capital asset by the firm in

favour of the partner

4

On account of the transfer there should

be a profit or gain derived by the firm

and

Such distribution should be on

dissolution of the firm or otherwise.

In the present case, the retiring partner’s were

given the value of their share in the partnership

and no capital asset was transferred. In the

absence of distribution of capital , no profit

and gain arose in the hands of partnership

firm. Therefore it seems that the amount paid

to the retiring partner should neither be

taxable in the hands of firm nor in hands of

partner.

TRANSFER PRICING

Li and Fung India Pvt. Ltd vs. CIT (Delhi High

Court)(ITA No. 306 of 2012)

The Delhi High Court held that TNMM under

rule 10B(1)(e) comtemplates that the

assessee’s net profit margin realized from

international transactions had to be

calculated only with reference to cost

incurred by it, and not by any other entity,

either third party vendors or the AE.

Facts

The taxpayer received remuneration

computed of its costs plus 5% for providing

sourcing support services to its Hong Kong-

based related party and applied TNMM to

determine the arm’s length price.

The Transfer Pricing Officer accepted that

TNMM was the most appropriate method for

determining the arm’s length price but

determined that the “cost” (for purposes of the

5% markup) must include the FOB value of

exports i.e., exports of an Indian manufacturer

to overseas third parties.

The Delhi High Court held in favor of the

Assessee that the TPO’s determination of an

arm’s length price based on a 5% markup of

the “free on board” (FOB) value of goods

sourced for a related party’s contract with

third parties was contrary to the transfer pricing

rules under India’s income tax law and

regulations.

GlenmarkPharmaceuticals Ltd v. Addl. CIT

(ITA No. 5031/M/2012)

The Mumbai Bench of the Income Tax

Appellate Tribunal in the case of Glenmark

Pharmaceuticals Limited by held that naked

bank guarantee quotes given on public

websites are not good external Comparable

Uncontrolled Prices (CUPs) unless adequate

adjustments as per Rule 10B of the Income-tax

Rule, 1962 for various factors such as the risk

profile/ financial position of the applicant,

terms of the guarantee, securities involved,

etc. are made to make the two comparable.

Further, the Tribunal also ruled on the

conceptual distinction between bank

guarantees and corporate Guarantees. While

corporate guarantees are issued in order to

support the AE, bank guarantees are issued by

banks in the general course of their business.

Thus, commercial considerations in the two

cases differ. In the case of a corporate

guarantee, the purpose is to support the AE

and derive long term benefit, while in bank

guarantees, the service is rendered in the

general course of its business, and the benefit

derived by the bank is towards the profit

element associated with the rendered service.

VIHI LLC v. ADIT (ITA No. 17 (Mds.)/2012)

The Chennai Bench of the Income-tax

Appellate Tribunal held that the

“discounted cash flow” method was

preferable over the “yield” method or “net

5

asset value” method for purposes of

determining the arm’s length price of

shares transferred to related parties.

Facts

The taxpayer transferred its 91% share interest

in an Indian entity to its related parties in

Singapore and Mauritius and the valuation was

determined, using the “net asset value”

method, as INR 15.05 per share and using the

“profit earning capacity value” method as INR

9.23 per share. The taxpayer then took the

average of these two values, and added a

discount of 15% because the shares were not

listed on an exchange.

The Transfer Pricing Officer, however, adopted

the “discounted cash flow” method and

valued the shares at INR 36.31 per share and

made a transfer pricing adjustment.

The tribunal found, among other reasons, that

because the taxpayer itself used the

“discounted cash flow” method in the

subsequent year, this was the most

appropriate method for determining the value

of the shares. Still, the tribunal accepted the

taxpayer’s argument that a fresh “discounted

cash flow” analysis could be presented to the

Transfer Pricing Officer and remanded the

case.

SERVICE TAX Amendment in notification no. 06/2013-ST

dated 18.04.2013 for adding additional

categories in the list of exports not eligible

under Focus Market Scheme and

Incremental Export Incentive Scheme

The said notification exempts the taxable

services provided or agreed to be provided

against Focus Market Scheme duty credit

scripby a person located in the taxable

territory from the whole of the service tax

leviable thereon under section 66B of the said

Act.

Following categories of exports have been

added in the list of exports ineligible for Focus

Market Scheme:

Export of Meat and Meat Products;

Export of Cotton;

Export of Cotton Yarn;

Export which are subject to Minimum

Export Price or Export Duty

Following categories of exports have been

added in the list of exports ineligible for

Incremental Export Incentive Scheme:

Cotton;

Cotton Yarn;

Export which are subject to Minimum

Export Price or Export Duty

Notification No. 17/2013-Service Tax dated

26th December, 2013

Central Excise

Amendment in notification no. 30/2012

dated 9.07.2012 for adding additional

categories in the list of exports not eligible

under Focus Market Scheme and

Incremental Export Incentive Scheme

The said notification exempts capital goods

specified in the First Schedule and the Second

Schedule to the Central Excise Tariff Act, when

cleared against a Status Holder Incentive

Scheme duty credit scrip issued to a Status

Holder by the Regional Authority in

accordance with paragraph 3.16 of the

Foreign Trade Policy from,-

6

(i) the whole of the duty of excise leviable

thereon under the First Schedule and the

Second Schedule to the Central Excise Tariff

Act, 1985 (5 of 1986);

(ii) the whole of the additional duty of excise

leviable thereon under section 3 of the

Additional Duties of Excise (Goods of Special

Importance) Act, 1957 (58 of 1957); and

(iii) the whole of the additional duty of excise

leviable thereon under section 3 of the

Additional Duties of Excise (Textiles and Textile

Articles) Act, 1978 (40 of 1978).

Following categories of exports have been

added in the list of exports ineligible for Focus

Market Scheme:

Export of Meat and Meat Products;

Export of Cotton;

Export of Cotton Yarn;

Export which are subject to Minimum

Export Price or Export Duty

Following categories of exports have been

added in the list of exports ineligible for

Incremental Export Incentive Scheme:

Cotton;

Cotton Yarn;

Export which are subject to Minimum

Export Price or Export Duty

Notification No. 31/2013-Central Excise dated

26th December, 2013

Fixation of tariff value in respect of

excisable goods falling under heading

3304 in retail packages and in respect of

which the provisions of section 4A of the

Central Excise Act, 1944 do not apply

Central Government has fixed tariff value in

respect of the excisable goods, falling under

heading 3304 of the First Schedule to the

Central Excise Tariff Act, 1985 (5 of 1986) i.e.

Beauty or make-up preparations and

preparation for the care of the skin, in retail

packages, and in respect of which the

provisions of section 4A of the Central Excise

Act, 1944 (1 of 1944) do not apply, equivalent

to the retail sale price declared on such goods

less such amount of abatement from such

retail sale price as specified for such goods in

the notification No.49/2008-Central Excise

(N.T.), dated 24th December, 2008

Notification No.16/2013-Central Excise (N.T.)

dated 31st December, 2013

Central Excise (Third Amendment) Rules,

2013

Central Excise (Third Amendment) Rules, 2013

shall come into force with effect from the 1st

day of March, 2014.

In the Central Excise Rules, 2002:

a) In rule 9 (which states the persons who

are required to get themselves

registered), in sub-rule (1), after the

words “uses excisable goods” the

words “or an importer who issues an

invoice on which CENVAT Credit can

be taken,” shall be inserted;

b) In rule 11 in sub-rule (7), the first proviso

shall be omitted (which provided that

in case of the first stage dealer

receiving imported goods under an

invoice bearing an indication that the

7

credit of additional duty of customs

levied on the said goods under sub-

section (5) of section 3 of the Customs

Tariff Act, 1975 (51 of 1975) shall not be

admissible, the said dealer shall on the

resale of the said imported goods,

indicate on the invoice issued by him

that no credit of the additional duty

levied under sub-section (5) of section

3 of the Customs Tariff Act, 1975 shall

be admissible)

Notification No. 17 /2013 – Central Excise (N.T.)

dated 31th December, 2013

CENVAT Credit (Third Amendment) Rules,

2013

CENVAT Credit (Third Amendment) Rules, 2013

shall come into force with effect from the 1st

day of March, 2014.

In the CENVAT Credit Rules, 2004:

a) Definition of first stage dealer has been

amended to a dealer:

(i) who purchases the goods directly from

the manufacturer under the cover of

an invoiceissued in terms of the

provisions of Central Excise Rules, 2002

or from the depot of the said

manufacturer, or from premises of the

consignment agent of the said

manufacturer or from any other

premises from where the goods are

sold by or on behalf of the said

manufacturer, under cover of an

invoice; or

(ii) an importer who sells goods imported

by him under the cover of an invoice

on which CENVAT credit may be taken

and such invoice shall include an

invoice issued from his depot or the

premises of his consignment agent

b) In Rule 9 which states the documents on

the basis of which CENVAT credit can be

taken by the manufacturer or the provider

of output service or input service distributor,

the following documents have been

omitted:

c) Invoice issued by an importer or an

importer from his depot or from the

premises of the consignment agent of the

said importer if the said depot or the

premises, as the case may be, is registered

in terms of the provisions of Central Excise

Rules, 2002

Notification No. 18 /2013-Central Excise (N.T.)

dated 31th December, 2013

VALUE ADDED TAX

The details of programmes/functions, to be

organised in the Banquet Halls, Farm

Houses, Marriage/Party Halls, Hotels, Open

Ground etc. to be submitted

The details of programmes/functions, to be

organised in the Banquet Halls, Farm Houses,

Marriage/Party Halls, Hotels, Open Ground

etc., where food and/or liquor items are to be

supplied/provided and cost of booking

exceeds rupees one lakh per function, shall be

submitted by the owner/lessee/custodian of

the venue through a return in Form BE-2,

annexed to this notification, atleast 3 days

before the start of the fortnight i.e. return for

the first fortnight of a month should be filed by

3 days before first day of a month and for

second fortnight it should be filed by 12thof the

8

month. Such persons also have to enrol

themselves by filing information in Form BE-

1.Information of the booking/cancellation

done after filing of return should be provided

by revising the relevant return within a week of

such cancellation.

This notification shall be effective from 2nd

fortnight of January 2014

Notification no.F.3(393)/Policy/VAT/2013/1086-

1096 dated 19th December, 2013

Re-notification of Bank of Maharashtra as

appropriate Government Treasury

Bank of Maharashtra located in National

Capital Territory of Delhi has been re-notified

as appropriate Government Treasury for the

purpose of deposit of Value Added Tax dues in

relation to a dealer who are registered or liable

to be registered under the Act and from

contractees (TAN holders)

Notification

no.F.7(400)/Policy/VAT/2011/PF/1107-1120

dated 20th December, 2013

Extension of the date of filing of audit

report

Date of submission of audit report in Form AR-1

for the year 2012-13 by dealers having turnover

of Rs. 10 crores or more has been extended

from 31st December 2013 to 31st January 2014.

Notification no.F.3(384)/Policy/VAT/2013/1148-

1160 dated 31st December, 2013

CUSTOMS

Increase in rate of BCD on natural rubber

Notification no. 12/2012-Cus, dated 17.3.2012

has been amended so as to increase the non-

advalorem rate of BCD on natural rubber from

Rs 20/kg to Rs 30 /kg.

Notification No. 51/2013-Customs dated 20th

December, 2013

Amendment in notification no. 93/2009

dated 11.09.2009 for adding additional

categories in the list of exports not eligible

under Focus Market Scheme and

Incremental Export Incentive Scheme

The said notification exempts goods when

imported into India against a duty credit scrip

issued under the Focus Market Scheme in

accordance with paragraph 3.14 of the

Foreign Trade Policy from,-

(a) the whole of the duty of customs leviable

thereon under the First Schedule to the

Customs Tariff Act, 1975 (51 of 1975); and

(b) the whole of the additional duty leviable

thereon under section 3 of the said Customs

Tariff Act,

Following categories of exports have been

added in the list of exports ineligible for Focus

Market Scheme:

Export of Meat and Meat Products;

Export of Cotton;

Export of Cotton Yarn;

Export which are subject to Minimum

Export Price or Export Duty

Following categories of exports have been

added in the list of exports ineligible for

Incremental Export Incentive Scheme:

9

Cotton;

Cotton Yarn;

Export which are subject to Minimum

Export Price or Export Duty

Notification No. 52/2013-Customsdated 26th

December, 2013

Conversion Rate for Foreign Exchange

Rate of exchange of conversion of each of the

following foreign currency into Indian currency

or vice versa shall, with effect from 20th

December, 2013 be the rate mentioned

against it in the given tables:

SCHEDULE-I

S.

No.

Foreign

Currency

Rate of exchange of

one unit of foreign

currency equivalent to

Indian rupees

(For

Imported

Goods)

(For

Export

Goods)

1. Australian

Dollar

55.80 54.30

2. Bahrain Dinar 170.25 160.90

3. Canadian

Dollar

58.90 57.45

4. Danish Kroner 11.60 11.25

5. EURO 86.15 84.15

6. Hong Kong

Dollar

8.10 8.00

7. Kuwait Dinar 227.40 214.85

8. New Zealand

Dollar

51.75 50.45

9. Norwegian

Kroner

10.30 10.00

10. Pound

Sterling

103.30 101.00

11. Singapore

Dollar

49.90 48.80

12. South African

Rand

6.20 5.85

13. Saudi

Arabian Riyal

17.10 16.15

14. Swedish 9.65 9.35

Kroner

15. Swiss France 70.45 68.75

16. UAE Dirham 17.45 16.50

17. US Dollar 62.90 61.90

SCHEDULE-II

Notification No. 131/2013-Customs (N.T.) dated

19th December, 2013

CASE LAWS

Volkswagen India Pvt. Ltd vs CCE,

Pune-I

Hiring employees of foreign holding/group

companies on full-time employment basis

cannot be taxed as ‘manpower supply

service’

The Mumbai Tribunal has held in Volkswagen

India Pvt Ltd v CCE that the arrangement for

hiring employees of foreign holding or other

group companies on full-time employment

basis creates an employer-employee

relationship between the appellant and the

employees so hired.

Despite the fact that a portion of the salary of

such employees is paid at their home location

through the concerned holding/group

company, it has been held that the

reimbursement of such cost to the concerned

S.

No.

Foreign

Currency

Rate of exchange of 100

units of foreign currency

equivalent to Indian

rupees

(For Imported

Goods)

(For Export

Goods)

1. Japanese

Yen

60.70 59.30

2. Kenya

Shilling

74.70 70.20

10

foreign companies by the appellant could not

be held liable to service tax under ‘manpower

supply services’. The Tribunal observed that the

employees so hired were to work solely under

the control and supervision of the appellant

and the appellant had no recourse to the

holding/group companies for the performance

of, or any other administrative control over

such employees. The Tribunal has followed the

Delhi Tribunal judgment in Paramount

Communication Ltd v CCE having similar facts.

L&T Ltd. vs. CCE, Vadodara-II

Inter-unit services not taxable

SEZ unit and DTA unit of a company are not

separate legal entities in general law (even

though invoices have been issued and

agreements have been entered) or under the

definition of ‘person’ under section 2(v) of the

SEZ Act read with Rule 19(7) of the SEZ Rules,

and hence services provided by SEZ unit to

DTA unit is not liable for service tax.

Anupama Coal Carriers Pvt. Ltd. vs.

CCE

Cargo Handling Services

The activity of moving coal from various

quarries to the railway siding (within the mining

area) using payloaders would not be liable for

service tax under the category of “Cargo

Handling Service” since for classifying an

activity as Cargo Handling Service it must be

proved that it is a service adjunct to the actual

transportation of goods i.e. services just before

transportation of goods or post transportation

services when cargo has been discharged The

movement of goods within a mine from one

place to another is not such a service.

AGS Entertainment Pvt. Ltd. vs. Union of

India

Copyright Services

In a writ petition challenging the vires of the

provision of section 65(105) (zzzzt) of the

Finance Act, 1994 which defines taxable

service in the context of temporary transfer or

permitting the use or enjoyment of any

copyright as defined under the Copyright Act,

1957, the Hon’ble High Court of Madras after

analysing various agreements between

producers and distributors and distributors and

sub-distributors/exhibitors/theatre owners held

that there is only a temporary transfer of

copyright or permission to use or enjoy

copyright of the film for a consideration and

the producer retains the effective control over

the film such as the right to deal with and

dispose of the rights to any third parties, right to

screen the picture over the satellite channels,

Doordarshan channels, etc. Such transaction

would not amount to “transfer of the right to

use the copyright” by the producer to the

distributor or distributor to exhibitor so as to

amount as “sale” within the meaning of Article

366(29A)(d). It is only the permanent transfer of

copyright (by assignment or otherwise) which

will not amount to rendering of service and

would be excluded from the purview of service

tax. Accordingly the High Court held that the

temporary transfer of copyrights or the

permission to use or enjoy the copyright would

not fall either under Entry 54 of List II or Entry

92A of List I but is well within the legislative

competence of the Parliament for levying

service tax under Entry 97 of List I

FEMA

A.P. (DIR Series) Circular No. 81 dated

December 24, 2013

11

Borrowing and Lending in Rupees -

Investments by persons resident outside

India in the tax free, secured, redeemable,

non-convertible bonds

As per Regulation No. 6 (2) of Foreign

Exchange Management (Borrowing and

Lending in Rupees) Regulations, 2000

restrictions are imposed on person resident in

India who have borrowed in Rupees from a

person resident outside India to the effect that

such borrowed funds cannot be used for any

investment, whether by way of capital or

otherwise, in any company or partnership firm

or proprietorship concern or any entity,

whether incorporated or not, or for relending.

Upon review, it has been decided to permit

such resident entities / companies in India,

authorised by the Government of India, to

issue tax-free, secured, redeemable, non-

convertible bonds in Rupees to persons

resident outside India to use such borrowed

funds for the following purposes:

(i) for on lending / re-lending to the

infrastructure sector; and

(ii) for keeping in fixed deposits with

banks in India pending utilization by

them for permissible end-uses.

COMPANY LAW

Clarification with regard to the

applicability of section 182(3) of the

Companies Act, 2013.

[Circular No. 19/2013 dated 10thDecember,

2013]

Pursuant to the receipt of number of

representations seeking clarification on

disclosures to be made under section 182 of

the Companies Act, 2013,consequent to the

coming into force of the scheme relating to

‘Electoral Trust Companies’ vide Notification

issued by the Ministry of Corporate Affairs

dated 31st January, 2013, the Ministry of

Corporate Affairs had clarified as under:

(i) Companies contributing any

amount or amounts to an ‘Electoral

Trust Company’ for contributing to

a Political Party or Parties are not

required to make disclosures

required under section 182(3) of

Companies Act, 2013. It will suffice if

the Accounts of the Company

disclose the amount released to an

Electoral Trust Company.

(ii) Companies contributing any

amount(s) directly to a political

party(ies) will be required to make

disclosures laid down in section

182(3) of the Companies Act, 2013.

(iii) Electoral Trust Companies will be

required to disclose all amounts

received by them from other

companies/sources in their Books of

Accounts and also disclose the

amount(s) contributed by them to

a political party or parties as

required by section 182(3) of

Companies, 2013.

Clarification with regard to holding of

shares or exercising power in a fiduciary

capacity – Holding and Subsidiary

relationship under section 2(87) of the

Companies Act, 2013.

[Circular No. 20/2013 dated 27th December,

2013]

12

Pursuant to the receipt of number of

representations in relation to the notification of

Section 2(87) of the Companies Act, 2013,

which defines “Subsidiary Company” or

Subsidiary”, it has been clarified by the Ministry

of Corporate Affairs that the shares held by a

company or power exercisable by it in another

company in a ‘fiduciary Capacity’ shall not be

counted for the purpose of determining the

holding-subsidiary relationship in terms of the

provision of the said section 2(87) of the

Companies Act, 2013.

TRANSACTIONS THAT

MADE HEADLINES DLF set to sell Aman Resorts to a US firm for

close to $350M

Tata Housing to buy Alstom T&D’s Bangalore

property for over $19M

GMR to sell entire 40% stake in Istanbul

airport to Malaysia Airport for $308M

Tesco to buy 50% in Tata’s hypermarket

chain Star Bazaar

US court dismisses Cooper's appeal to force

Apollo Tyres for completing $2.5B deal

Torrent acquiring Elder Pharma’s domestic

formulation business for $322M

Strides Arcolab completes sale of Agila to

Mylan for over $1.75B

Ministers back plan for spectrum fee in

telecom M&A deals

Wipro to acquire US-based Opus CMC for

$75M

Diamond trader buys Cadbury House in

Mumbai for $56M

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