SPN Missive January2014

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Dear Patron …

Dear Patron

Here we are with the Thirty second successive issue of our monthly ‘Missive’.

We trust you will enjoy reading this Missive, even while soaking in the contents. We would very much appreciate your feedback which consistently helps us in improving and upgrading the contents.

Thanks and regards,

Knowledge Management Team

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  • 1. MISSIVE Volume XXXII January 2014
  • 2. 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 Here we are with the Thirty second successive issue of our monthly ‘Missive’. We trust you will enjoy reading this Missive, even while soaking in the contents. We would very much appreciate your feedback which consistently helps us in improving and upgrading the contents. Thanks and regards, Knowledge Management Team
  • 3. 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
  • 4. 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.
  • 5. 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
  • 6. 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
  • 7. 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,-
  • 8. 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
  • 9. 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
  • 10. 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:
  • 11. 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
  • 12. 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
  • 13. 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]
  • 14. 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
  • 15. www.spnagrath.com A-380, DefenceColony, New Delhi – 110024, India. This publication is intended as a service to clients and associates and to provide them with details of the important Transaction updates. It has been prepared for the general guidance on matters of interest only, and does not constitute professional advice. No person shall act upon the information contained in this publication without obtaining specific professional advice. Due care has been taken while compiling the information, however, no representation (express or implied) is given as to the accuracy or completeness of the information contained in this publication