rnm alert vol lix november 2013 alert vol lix novembe… · the amendment to the india-mauritius...

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All Rights of Circulation restricted www.rnm.in ISSUE NO.59 NOVEMBER, 2013 RNM ALERT Thinking of the Bottom Line – Think of Us Dear Readers, Team RNM represented by Mr. Raghu Marwah, Partner attended the Asia-Pacific Regional Conference of GGI in Mumbai from the 5 th to 8 th of December 2013. The Key Note Speaker at the Conference was Shri S.S. Mundra, Chairman and Managing Director of Bank of Baroda, India’s second largest bank. Mr. Raghu Marwah as Chairman- Asia of the Mergers & Acquisition (M&A) Practice Group of GGI gave a presentation on ‘Bridging the Price Gap in dealmaking’, which was very well received. The revenue collections of the Income tax department have been up during April-November of the F.Y. 2013-14 by 13.18 percent at Rs.3,686,550 million as against Rs.3,257,360 million in the same period last year. While gross collection of Corporate taxes has shown an increase of 9.66 percent (Rs.2,251,240 million as against Rs. 2,052,910 million last year), gross collection of Personal income tax is up by 19.60 percent (Rs.1,397,630 million as against Rs. 1,168,620 million last year). Team RNM believes that the enhanced use of technology by the Department has led to a more accurate collection of revenues as well as a more keener focus on international tax transactions. The sharply higher food prices drove consumer price inflation to higher than expected levels, with retail inflation jumping to 9-month high in November 2013 at 11.24%. The amendment to the India-Mauritius Double Tax Avoidance Agreement (DTAA) to introduce a Limitation of Benefit (LOB) clause therein, which has been a long standing demand of the Indian side, has been agreed in principle. This amendment would potentially prevent the misuse of the DTAA from round tripping and treaty shopping. Wishing all our readers a Merry Christmas and a happy New Year. May the coming season bring happiness and peace to all. Regards, CA U.N. Marwah For and behalf of the RNM Alert Editorial Board

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Page 1: RNM Alert VOL LIX November 2013 Alert VOL LIX Novembe… · The amendment to the India-Mauritius Double Tax Avoidance Agreement (DTAA) to introduce a Limitation of Benefit (LOB) clause

All Rights of Circulation restricted

www.rnm.in

ISSUE NO.59 NOVEMBER, 2013

RNM ALERT

Thinking of the Bottom Line – Think of Us

Dear Readers, Team RNM represented by Mr. Raghu Marwah, Partner attended the Asia-Pacific Regional Conference of GGI in Mumbai from the 5th to 8th of December 2013. The Key Note Speaker at the Conference was Shri S.S. Mundra, Chairman and Managing Director of Bank of Baroda, India’s second largest bank. Mr. Raghu Marwah as Chairman- Asia of the Mergers & Acquisition (M&A) Practice Group of GGI gave a presentation on ‘Bridging the Price Gap in dealmaking’, which was

very well received. The revenue collections of the Income tax department have been up during April-November of the F.Y. 2013-14 by 13.18 percent at Rs.3,686,550 million as against Rs.3,257,360 million in the same period last year. While gross collection of Corporate taxes has shown an increase of 9.66 percent (Rs.2,251,240 million as against Rs. 2,052,910 million last year), gross collection of Personal income tax is up by 19.60 percent (Rs.1,397,630 million as against Rs. 1,168,620 million last year). Team RNM believes that the enhanced use of technology by the Department has led to a more accurate collection of revenues as well as a more keener focus on international tax transactions. The sharply higher food prices drove consumer price inflation to higher than expected levels, with retail inflation jumping to 9-month high in November 2013 at 11.24%. The amendment to the India-Mauritius Double Tax Avoidance Agreement (DTAA) to introduce a Limitation of Benefit (LOB) clause therein, which has been a long standing demand of the Indian side, has been agreed in principle. This amendment would potentially prevent the misuse of the DTAA from round tripping and treaty shopping. Wishing all our readers a Merry Christmas and a happy New Year. May the coming season bring happiness and peace to all.

Regards, CA U.N. Marwah

For and behalf of the RNM Alert Editorial Board

Page 2: RNM Alert VOL LIX November 2013 Alert VOL LIX Novembe… · The amendment to the India-Mauritius Double Tax Avoidance Agreement (DTAA) to introduce a Limitation of Benefit (LOB) clause

Issue No. 59: November, 2013 Page 2 of 19

CONTENTS Direct Tax

- Case Laws

- Deemed Dividend 4 - Definition of transfer 4 - Income deemed to accrue or arise in India 4 - Profit & Loss from Business and Profession 4 - Capital Gain 5 - Transfer Pricing 5 - Power to call for information 5 - Procedure for Assessment 5 - Tax Deducted at Source 5-6 - Collection & Recovery 6 - Others 6 - Wealth Tax 6

Indirect Tax

- Case Laws CENVAT

- Appeals against rejection of registration application 7 - Delay in passing review order not condonable 7 - Buyer not liable for pending duty 7 - Recovery of Duty on retrospectively price-rise can be barred by limitation of time 7 - Import value declared before British Authority also valid in India 7 - Ground for rejection of refunds claim 7 - Assess is entitled to credit even if supplier not pay duty 8

Service Tax - Suppression of Fact 8 - Credit cannot be denied as address of assessee not mentioned on Invoice 8 - Reimbursement part of value for service tax 8 - Abatement available to recipient of GTA 8 - Invalid authorization for appeal 8

Central Sales Tax/ VAT - Penalty for carrying goods without proper declaration 9

- Notification/Circular - Last date for quarterly filing of statement extended to 30th of March 9 - Service Tax to be paid Online w.e.f. 1st Jan. ’14 by Certain Assessee’s: Ambit widened 9

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Issue No. 59: November, 2013 Page 3 of 19

DIRECT TAX DIRECT TAX

Company Law Updates - Circular/Notification/Guidance

- Clarification with regard to applicability of provision of sec372A of Cos. Act, 1956 10 - Electoral Trust Notification 10

RBI Updates - Circular/Notification/Guidance

- FII – participation by SEBI registered FIIs, QFI & SEBI 11 registered long term investors in credit enhanced bonds - FDI in Financial sector – transfer of shares 11 - Amendment to the ‘Issue of FCC Bonds & Ordinary Shares Scheme, 1993 11-12 - FDI in India – definition of ‘Group Company’ 12

Corporate Finance - Latest News

- Private Equity 13-15 - Mergers & Acquisition 15-17 - Venture Capital 17-19

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Issue No. 59: November, 2013 Page 4 of 19

DIRECT TAX Case Laws Deemed Dividend Sec 2(22)(e) - Where assessee-company received loan from another company and assessee was not a shareholder in said company, deeming provisions of section 2(22)(e) were not applicable to impugned transaction of loan. [Source: ACIT v. Source Hub India (P.) Ltd. (2013) 38 taxmann.com 147 (Bangalore - Trib)]

Definition of Transfer Sec 2(47) - Amount received by Partner on his retirement is not chargeable to tax as capital gains. [Source: CIT vs. Riyaz A. Sheikh (Bombay High Court) ITA No. 1969/2011]

Income deemed to accrue or arise in India Sec 9 - Payments of hire charges under time charter agreement made to non-resident Companies for hiring of ships for transportation of coal amounted to royalty falling under clause (iva) of Explanation 2 to Section 9(1)(vi) and, thus, assessee was liable to deduct tax at source while making said payments [Source: Poompuhar Shipping Corporation Ltd vs. ITO [2013] 38 taxmann.com 150 (Madras)]

Sec 9 - Non-exclusive and non-transferable license to use customized software not taxable as “royalty” under Article 12 of India-USA DTAA. [Source: DIT vs. Infrasoft Ltd (Delhi High Court) [2013] 39 taxmann.com 88 (Delhi)]

Sec 9 - Payment made to a foreign Company for marketing survey and identifying potential foreign customers for assessee's product was only for consultancy services and it was taxable in India as FTS. [Source: English Indian Clays Ltd. vs. ACIT (2013) 39 taxmann.com 50 (Cochin - Trib)] Profit & Loss from Business & Profession Sec 37(1) - Media cost paid for the import of a master copy of Oracle Software used for duplication and licensing is an expenditure of a revenue nature and as such is an allowable deduction [Source: Oracle India (P.) Ltd. v. CIT [2013] 39 taxmann.com 150 (Delhi)] Sec 40(a)(i) - Where circular effective at relevant time exonerates an assessee from TDS obligation on payment to non-resident, subsequent circular would not create such an obligation retrospectively [Source: CIT v. Model Exims Kanpur (2013) 38 taxmann.com 319 (Allahabad)] Sec 40A(2) - Where assessee had charged less sale price from sister concern as compared to non-sister concerns, provisions of Section 40A could not be invoked as no payment had been made for any item of expenditure [Source: CIT vs. Rajnish Ahuja [2013] 38 taxmann.com 401 (Punjab & Haryana)]

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Issue No. 59: November, 2013 Page 5 of 19

Capital Gain Sec 45(4) – Sec 45(4) does not apply if the retiring partner takes only money towards the value of his share and there is no distribution of capital assets among the partners. [Source: CIT vs. M/s Dynamic Enterprises (Karnataka High Court – Full Bench) ITA No. 1414/2006] Sec 50B - Where no monetary consideration was involved in transfer of manufacturing division along with all its assets and liabilities under Amalgamation scheme, same could not be considered as slump sale. [Source: ITO vs. Zinger Investments (P.) Ltd (2013) 38 taxmann.com 388 (Hyderabad - Trib.)]

Sec 54EC - Where Capital Gain arose out of long-term capital asset and was invested in specified assets, exemption u/s 54EC could not be denied due to deeming fiction of short term capital gain created u/s 50 [Source: CIT vs. Aditya Medisales Ltd (2013) 38 taxmann.com 244 (Gujarat)]

Sec 54F – There is no condition that assessee should utilize sale consideration only for purpose of acquisition of new property. [Source: Kapil Kumar Agarwal vs. ACIT [2013] 38 taxmann.com 384 (Delhi - Trib.)]

Transfer Pricing Sec 92C – Arms Length Price (ALP) of Royalty for trademark usage and technical know-how fee can be determined as per Transaction Net Margin Method (TNMM). Approval of RBI and Govt. means payment is as at arms length. [Source: Cadbury India Ltd vs. ACIT (ITAT Mumbai) ITA No. 7408/Mum/2010]

Sec 92CA(1) - Existence of income is a jurisdictional requirement for the applicability of Transfer Pricing provisions. AO must deal with it after giving personal hearing before making reference to TPO. The Dept. should not treat the assessee as an adversary who has to be taxed, no matter what. [Source: Vodafone India Services (P.) Ltd. vs. Union of India (2013) 39 taxmann.com 201 (Bombay)]

Power to call for information Sec 133(6) - AO empowered to launch fishing and roving enquiry with a view to detect tax evasion. [Source: Kathiroor Service Cooperative Bank Ltd vs. CIT (Supreme Court) Civil Appeal No. 7460/2013]

Procedure of Assessment Sec 143(2) - Where Revenue dispatched notice under section 143(2), and the fact that notice was not received back raise a presumption of service under Section 27 of the General Clauses Act, 1897 [Source: Shahbad Cooperative Sugar Mills Ltd. vs. Dy.CIT (2013) 38 taxmann.com 204 (Punjab & Haryana)] Tax Deducted at Source Sec 194A - Assessee is liable to deduct tax at source on interest payments, even if it has not claimed same as deduction while computing its total income.

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Issue No. 59: November, 2013 Page 6 of 19

[Source: Agreenco Fibre Foam (P.) Ltd vs. ITO(TDS) (2013) 38 taxmann.com 155 (Cochin - Trib.)]

Sec 194C - Payment made by one advertising agency to other advertising agency for getting work done would be subjected to TDS under section 194C [Source: Aakash Tah vs. ACIT (2013) 38 taxmann.com 330 (Chandigarh - Trib.)]

Sec 194I - Lease premium paid for acquiring leasehold land for a period of 60 years did not fall within meaning of 'rent' under section 194-I and, therefore, assessee was not liable to deduct tax at source while making said payment. [Source: ITO (TDS) V. Navi Mumbai SEZ (P.) Ltd (2013) 38 taxmann.com 218 (Mumbai Trib.)]

Collection & Recovery Sec 226 – Assessing Officers (AO’s) action of recovering outstanding taxes without affording reasonable time to take remedial steps is a misuse of powers and a gross violation of the directions laid down by the Courts. AO has to refund the taxes recovered [Source: Maharashtra Housing & Area Development Authority vs. ADIT (ITAT Mumbai) ITA No.6678/M/2013] Others ITAT duty-bound to deal with all judgements cited during hearing of Appeal [Source: Dattani & Co vs. ITO (Gujarat High Court) ITA No. 847, 848, 849 of 2013]

Where premium arising from sale of land was added on substantive basis to income of an AOP which consisted of nine persons including assessee, protective assessment of said amount again in hands of assessee in its individual capacity was not sustainable. [Source: CIT vs. Teachers Housing Cooperative Society [2013] 38 taxmann.com 394 (Allahabad)]

Wealth Tax Sec 2(ea) - Merely notifying land for purpose of urbanization /development does not convert agricultural land into non-agricultural land liable to wealth tax. [Source: M.R. Raghuram v. WTO (2013) 38 taxmann.com 54 (Karnataka)]

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Issue No. 59: November, 2013 Page 7 of 19

INDIRECT TAX

Case Law CENVAT Appeals Against Rejection of Registration Application If a letter conveys rejection of centralized registration and ground thereof, it can be treated as an order eligible for appellate remedies [Source: Comm. of Cent. Ex., Pune – III v. Maharashtra State Bureau of Text Books Production & Curriculum Research, [2013] 39 taxmann.com 8 (Mumbai - CESTAT)]

Delay in Passing Review Order Not Condonable If review order of Committee of Commissioners/ Chief Commissioners, directing adjudicating authority to file appeal, is passed beyond prescribed period, such delay in passing of review order cannot be condoned and any appeal filed in pursuance thereof is not maintainable [Source: Comm. of Cent. Ex., Commissionerate Delhi-III, Gurgaon v. Kap Cones, [2013] 38taxmann.com 312(Punjab & Haryana)] Buyer Not Liable for Pending Duty Pending excise dues of owner of land/building/plant/machinery are not in relation to such properties (but are related only to manufactured goods) and cannot be demanded from buyer of said properties who purchased them in auction organised by State Finance Corporation. [Source: Rana Girders Ltd. v. Union of India, [2013] 38 taxmann.com 313 (SC)] Recovery of Duty on Retrospectively Price-Rise Can be Barred by Limitation of Time Excise & Customs: In case of retrospective price-rise, assessee is liable to pay differential duty thereon along with interest and time-limit of section 11A of Central Excise Act, 1944 will apply for recovery of such interest as well [Source: Hindustan Insecticiedes Ltd. v. Comm. of Cent. Ex., LTU [2013] 38 taxmann.com 427 (Delhi)] Import Value Declared Before British Authority Also Valid in India Excise & Custom : When assessee has declared value of jewellery at 14,500 pound for getting VAT Refund from British authority, then, on import of such jewellery in India, value shall be taken at 14,500 Pound and assessee cannot contend that value of 14,500 pound was declared on higher side to claim more refund British authority [Source: Ashok Kumar R Patel v. Union of India, [2013] 38 taxmann.com 350 (Gujarat)] Ground for Rejection of Refund Claim Excise & Custom: A refund claim filed within time-limit prescribed under law for seeking refund of excess duty paid by assessee under self-assessment cannot be rejected on ground of not opting for provisional assessment [Source: ACCEL Transmatic Ltd. v. Comm. of Cent. Ex., Chennai, [2013] 38 taxmann.com 347 (Chennai - CESTAT)

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Issue No. 59: November, 2013 Page 8 of 19

Assessee is Entitled to Credit Even if Supplier Not Pay Duty Requirement of taking "reasonable steps" does not mean that assessee is required to verify from department whether duty stands paid by supplier because that would be practically impossible and would lead to transactions getting delayed; therefore, assessee is entitled to credit even if supplier has not paid duty to department [Source: Comm. of Central Excise, Jalandhar v. Kay Kay Industries, [2013] 38 taxmann.com 336 (SC)]

Service Tax Suppression of Fact Mere omission to declare activity before department would not amount to suppression of fact so as to warrant penalty under section 78 [Source: Jetking Infotrain Ltd. v. Comm. of Service Tax, Mumbai - I, [2013] 39 taxmann.com 7 (Mumbai - CESTAT)]

Credit Cannot be Denied as Address of Assessee not Mentioned on Invoices Cenvat Credit : Where there is no dispute that assessee had received input services and utilised them for providing output services, credit cannot be denied merely on ground that address of assessee was not mentioned on invoices on which credit was availed [Source: Comm. of Service Tax, Ahmedabad v. Lambda Therapeutic Research Ltd. [2013]39taxmann.com 6(Ahmedabad - CESTAT)] Reimbursement Part of Value for Service Tax Supply of crew/seafarers to ships amounts to 'manpower supply services' and reimbursement of wages paid to crew/seafarers is includible in value of services [Source: Comm. of Cent. Ex., Mumbai v. Jubilant Enpro (P.) Ltd., [2013] 38 taxmann.com 297 (Mumbai - CESTAT)] Abatement Available to Recipient of GTA A recipient of goods transport agency's services may claim abatement of 75 per cent even if consignment notes issued by goods transport agency are not endorsed as to non-availment of credit by goods transport agency [Source: Kalpena Industries Ltd. v. Comm. of Service tax, Vapi, [2013] 38 taxmann.com 339 (Ahmedabad - CESTAT)] Invalid Authorization for Appeal ST: Where committee of two Chief Commissioners merely appends signatures to respective note sheets drawn up by subordinate officers and there is no record/disclosure of due application of mind, authorization to prefer appeal is invalid [Source: Comm. of Service Tax, Delhi v. L.R. Sharma & Co., [2013] 38 taxmann.com 283 (New Delhi - CESTAT)]

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Issue No. 59: November, 2013 Page 9 of 19

Central Sales Tax/ VAT Penalty for Carrying Goods without Proper Declaration CST & VAT : In case of goods being carried by vehicles without proper declaration, penalty can be levied on 'person-in-charge of goods', which includes 'owner of goods'; therefore, penalty levied on 'owner of goods' instead of incharge of vehicle was valid [Source: Assistant Commercial Taxes Officer v. Parekh Enterprises, [2013] 38 taxmann.com 351 (SC)]

Notification/Circular Last Date for Quarterly Filing of Statement Extended to 30th of Month Service Tax notification No.12/2013-Service Tax, dated 1st July,2013, has been amended and provision has been made that the SEZ Unit or the Developer shall furnish to the jurisdictional Superintendent of Central Excise a quarterly statement, in Form A-3, furnishing the details of specified services received by it without payment of service tax, by 30th of the month following the particular quarter: Provided that for the quarter of July, 2013 to September, 2013, the said statement shall be furnished by the 15th of December, 2013. [Source: Notification No. 15/ 2013-Service Tax dated:- 21st November, 2013] Service Tax to be paid Online w.e.f. 1st Jan. ’14 by Certain Assessee’s: Ambit widened The proviso of Rule 6(2) of the Service Tax Rules, 1994 has been amended with effect from 1st January, 2014. As per amended proviso where assesse has paid a total service tax of Rupees one lakh (Rs. 100,000) or more including the amount paid by utilization of CENVAT credit, in the preceding financial year 2012-13, he shall deposit the service tax liable to be paid by him electronically, through internet banking. [Source: Notification No 16 /2013-Service Tax dated22nd November, 2013]

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Issue No. 59: November, 2013 Page 10 of 19

COMPANY LAW UPDATES Circular/Notification/Guidance Clarification with regard to applicability of provision of Section 372A of the Companies Act, 1956 This Ministry has received number of representations consequent upon notifying Section 185 of the Companies Act, 2013 dealing with loans to directors which is corresponding to Section 295 of the Companies Act, 1956. Section 186 of the Companies Act, 2013 is yet to be notified. It is clarified that Section 372A of the Companies Act, 1956 dealing with inter-corporate loans continue to remain in force till section 186 of the Companies Act, 2013 is notified. [Source: General Circular No. 18/2013 dated 19th November, 2013] Electoral Trust Notification In exercise of the powers conferred by sub-section (6) of section 25 of the Companies Act, 1956 (1 of 1956) (hereinafter referred to as the said Act), the Central Government hereby directs that the companies incorporated with the name containing the expression “electoral trust” and approved in accordance with the procedure laid down in the Electoral Trusts Scheme, 2013, notified vide number S.O. 309 (E), dated 31st January, 2013, and to which licence is granted under section 25 of the said Act, shall be exempt from the provisions of clause (b) of sub-section (1) and sub-section (2) of section 293A of the said Act which has since been replaced by sub-section (1) of the section 182 of the Companies Act, 2013 (18 of 2013) and notified vide number S.O. 2754 (E) dated 12th September, 2013. [Source: Notification No. S.O. dated 07th November, 2013]

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Issue No. 59: November, 2013 Page 11 of 19

RBI UPDATES Circular/Notification/Guidance Foreign investment in India - participation by SEBI registered FIIs, QFIs and SEBI registered long term investors in credit enhanced bonds It has been decided to allow SEBI registered Foreign Institutional Investors (FIIs), Qualified Foreign Investors (QFIs) and long term investors registered with SEBI – Sovereign Wealth Funds (SWFs), Multilateral Agencies, Pension/ Insurance/ Endowment Funds, foreign Central Banks - to invest in the credit enhanced bonds, as per paragraph 3 and 4 of A.P. (DIR Series) Circular No. 120 dated June 26, 2013, up to a limit of USD 5 billion within the overall limit of USD 51 billion earmarked for corporate debt. [Source: RBI/2013-14/368 A.P. (DIR Series) Circular No.74 dated 11th November, 2013] Foreign Direct Investment in Financial Sector – Transfer of Shares In terms of Regulation 10(A) (v) of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 notified vide Notification No. FEMA.20/2000-RB dated May 3, 2000, as amended from time to time and Para 2(B)(iv) of A.P.(DIR Series) Circular No.43 dated November 4, 2011, for transfer of shares from Residents to Non-Residents where the investee company is in the financial services sector, No Objection Certificate (NoC) is required to be obtained from the respective financial sector regulator/regulators of the investee company as well as transferor and transferee entities and such NoC(s) are to be filed with the form FC-TRS to the AD bank. On a review, it has now been decided that the requirement of NoC(s) will be waived from the perspective of Foreign Exchange Management Act, 1999 and no such NoC(s) need to be filed along with form FC-TRS. However, any 'fit and proper/ due diligence' requirement as regards the non-resident investor as stipulated by the respective financial sector regulator shall have to be complied with. [Source: RBI/2013-14/366 A.P. (DIR Series) Circular No.72 dated 11th November, 2013] Amendment to the “Issue of Foreign Currency Convertible Bonds and Ordinary shares (Through Depository Receipt Mechanism) Scheme, 1993” It has now been decided to allow unlisted companies incorporated in India to raise capital abroad, without the requirement of prior or subsequent listing in India, initially for a period of two years, subject to conditions mentioned below. This scheme will be implemented from the date of the Government Notification of the scheme, subject to review after a period of two years. The investment shall be subject to the following conditions:

a) Unlisted Indian companies shall list abroad only on exchanges in IOSCO/FATF compliant jurisdictions or those jurisdictions with which SEBI has signed bilateral agreements;

b) The ADRs/ GDRs shall be issued subject to sectoral cap, entry route, minimum capitalisation norms, pricing norms, etc. as applicable as per FDI regulations notified by the Reserve Bank from time to time;

c) The pricing of such ADRs/GDRs to be issued to a person resident outside India shall be determined in accordance with the captioned scheme as prescribed under paragraph 6 of Schedule 1 of Notification No. FEMA.20 dated May 3, 2000, as amended from time to time;

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Issue No. 59: November, 2013 Page 12 of 19

d) The number of underlying equity shares offered for issuance of ADRs/GDRs to be kept with the local custodian shall be determined upfront and ratio of ADRs/GDRs to equity shares shall be decided upfront based on applicable FDI pricing norms of equity shares of unlisted company;

e) The unlisted Indian company shall comply with the instructions on downstream investment as notified by the Reserve Bank from time to time;

f) The criteria of eligibility of unlisted company raising funds through ADRs/GDRs shall be as prescribed by Government of India;

g) The capital raised abroad may be utilized for retiring outstanding overseas debt or for bona fide operations abroad including for acquisitions;

h) In case the funds raised are not utilized abroad as stipulated above, the company shall repatriate the funds to India within 15 days and such money shall be parked only with AD Category-1 banks recognized by RBI and shall be used for eligible purposes ;

i) The unlisted company shall report to the Reserve Bank as prescribed under sub-paragraphs (2) and (3) of Paragraph 4 of Schedule 1 to FEMA Notification No. 20.

[Source: RBI/2013-14/363 A.P. (DIR Series) Circular No.69 dated 08th November, 2013] Foreign Direct Investment (FDI) in India – definition of ‘Group Company’ The extant FDI policy has been reviewed and it has been decided to incorporate the definition for ‘Group Company’ as under: ‘Group Company’ means two or more enterprises which, directly or indirectly, are in position to:

(i) exercise twenty-six per cent, or more of voting rights in other enterprise; or (ii) appoint more than fifty per cent, of members of board of directors in the other enterprise.

[Source: RBI/2013-14/356 A.P. (DIR Series) Circular No.68 dated 01st November, 2013]

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Issue No. 59: November, 2013 Page 13 of 19

CORPORATE FINANCE

Latest News Private Equity Elephant Capital Partially Exits Mahindra Forging Elephant Capital has made a partial divestment by selling 65.1% of its holding in Mahindra Forging and booking a loss of R16.89 Cr. The PE firm sold the shares for a total of R14.13 Cr by participating in the open offer of CIE Automotive, which is picking up stake in Mahindra’s components business pursuant to a global alliance of Mahindra and CIE. [Source: Deal Curry, November 1, 2013] Landmark Divests Stake In Wave Group's Project Landmark, the property investment arm of the Dalmia Group, has divested its entire stake in the Ghaziabad township project of Wave Infratech for a consideration of R350 Cr. The deal earned Landmark an IRR of 22% for its investment of R111.26 Cr in January 2007. Gaurav Dalmia-promoted Landmark, a real estate-focused investment company, is making exits with decent returns from its realty investments in an otherwise tough environment for real estate in India. [Source: Business Line, November 1, 2013] IDFC Alternative Buys Minority Stake In NCDEX IDFC Alternative has purchased a minority stake in India’s agri-commodity exchange market NCDEX from Jaypee Capital Services for R45.6 Cr. [Source: Deal Curry, November 6, 2013] Sequoia, Info Edge Invest In Zomato Sequoia Capital along with existing investor and majority shareholder Info Edge, has invested $37 Mn in Zomato, taking Zomato’s total funding till date to $53 Mn. With this round of funding Info Edge's holding in Zomato stands just over 50%. The funds would be utilized for international expansion and hiring of people in about 22 overseas markets such as Brazil, Turkey, Indonesia and parts of Europe. [Source: Deal Curry, November 6, 2013] Dwarka Project Gets Investment From Aditya Birla Realty Fund Aditya Birla Realty Fund has invested R125 Cr in a residential housing project being developed jointly by Tata Housing and Sidhartha Group on the Dwarka Expressway in Gurgaon, where the realty fund will acquire 49% stake in the JV. [Source: Economic Times, November 8, 2013] Kedaara Capital Achieves Closure Of Maiden Fund Former Temasek India head, Manish Kejriwal and Ex-MD of General Atlantic India, Sunish Sharma led Kedaara Capital has closed its first fund at $540 Mn, crossing its initial target of $500 Mn. The major

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Issue No. 59: November, 2013 Page 14 of 19

investors in the fund include some of the largest pension funds like Canada’s Ontario Teachers’ Pension Plan (OTPP) and Abu Dhabi Investment Authority (ADIA). [Source: Times of India, November 8, 2013] Indiareit Achieves Target For Domestic Fund V Indiareit, the real estate PE arm of Piramal Enterprises has raised R800 Cr for its Domestic fund V crossing the basic fund size of R750 Cr. The firm exercised the green shoe option to achieve the target fund size of R1000 Cr. Indiareit has also been extremely active on both vintage fund exits as well as new transactions. [Source: Deal Curry, November 12, 2013] Matrix Partners, Tiger Global Invest In Olacabs Matrix Partners and existing investor Tiger Global has invested around $20 Mn in car rental e-commerce startup, Olacabs. The funds would be utilized towards market expansion and scaling up technology infrastructure. The Mumbai based startup which recently forayed into Chennai will expand operations in other cities, including a few tier-2 cities and non-metros. [Source: Next Big What, November 13, 2013] Girnar Software Raises Funds From Sequoia Girnar Software Private Limited has raised $15 Mn from Sequoia Capital to fund its portal, Cardekho.com’s expansion plans. Founded in 2007, by brothers Amit and Anurag Jain, both IIT-Delhi alumni, Jaipur-based Girnar Software is engaged in website and mobile application development, testing and Q&A services. It operates three internet portals Cardekho.com, Bikedekho.com and Pricedekho.com. Apart from offering consumers with an online platform to list their used cars on a freemium model, Cardekho.com offers a variety of research tools, expert reviews, user reviews, on road prices in all cities along with pictures and list of dealers. [Source: Deal Curry, November 27, 2013] India Value Fund To Invest In Trivitron Healthcare India Value Fund Advisors is investing around R150 Cr for a 15-16% stake in Trivitron Healthcare. The investment is likely to fuel its expansion plans as it is considering acquisitions for building presence in the imaging and lab diagnostics subsets. Trivitron was founded in 1997 by G S K Velu. It focuses on manufacturing and distribution. Its key segments include cardiology and implantable devices, imaging sciences, diagnostics, critical life support solutions and ophthalmology and also have a range of offerings in the value and premium segments. [Source: Livemint, November 29, 2013] ICICI Ventures Invests In BTI Payments ICICI Ventures, through its India Advantage Fund Series III has invested R140 Cr in BTI Payments - an ATM management company and a subsidiary of Banktech Group, Australia. The investment in addition to promoters R140 Cr infusion would be used to branch out into setting 'white label' ATMs in India. [Source: Times of India, November 29, 2013]

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Issue No. 59: November, 2013 Page 15 of 19

Merger & Acquisition Lodha Group Acquires Canadian High Commission Building In UK Mumbai-base Lodha Group has purchased the Canadian high commission's building in central London for R3120 Cr making its first international acquisition. The initial amount has already been paid by the company and the rest will be paid in two or three tranches. The building is a 0.67 acre property, known as McDonald House will be converted into super-luxury residences for the ultra-rich. The property is believed to have a total saleable area of 1.6 lakh square feet. [Source: Economic Times, November 29, 2013] Piramal Enterprises Buys Caladryl Brand From Valeant Pharmaceuticals Piramal Enterprises has acquired OTC brand – Caladryl in India from Valeant Pharmaceuticals Inc. The acquisition enables Piramal Enterprises to widen its customer product portfolio in the skin care segment. Caladryl is an anti-pruritic solution known for dermatosis application for minor skin irritations and itching. [Source: BSE Filings, November 1, 2013] Sona Koyo Steering Exits European JV Sona Koyo Steering Systems has exited its investment in the European JV, Fuji Autotech Europe S.A.S., by selling its holding of close to 49.3 lac shares to its JV partner Fuji Kiko Europe S.A.S., for a consideration of Eur7.75 Mn. Sona Koya Steering Systems Ltd, with a market Share of 50% is the largest manufacturer of Steering gears in India. [Source: BSE Filings, November 5, 2013] Ajay Piramal To Invest In Shriram Capital Ajay Piramal is set to acquire 20% stake in Shriram Capital for R1,900 Cr to strengthen his presence in financial services. The deal will provide Piramal Enterprises access to businesses spanning transport finance, consumer finance, asset management as well as life and general insurance. [Source: Economic Times, November 12, 2013]

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Issue No. 59: November, 2013 Page 16 of 19

Future Lifestyle Exits BIBA, AND Kishore Biyani led Future Group’s Future Lifestyle Fashion Limited has exited its investment in ethnic wear firm BIBA apparel and Anita Dongre owned AND for R450 Cr. The firm took a mature exit from its five year old investments making a profit of R190 Cr from the sale of stake in BIBA. [Source: BSE Filings, November 12, 2013] EnerSys Acquires Energy Leader Batteries India Stored energy solutions provider, EnerSys has acquired the remaining 49.5% stake in its Indian JV company Energy Leader Batteries India. The acquisition of the remaining ownership is to accelerate Enersys’ regional growth strategy. [Source: Deal Curry, November 20, 2013] Dabur Acquires Northern Aromatics' Uttarakhand Unit Dabur India has acquired Northern Aromatics' Pantnagar manufacturing facility, with all assets and liabilities related to the particular facility, on a slump sale basis for R15 Cr, BSE filing states. The acquired facility will be used to manufacture its food products, ayurvedic medicines and cosmetics. Northern Aromatics, Dabur’s third party vendor manufactures glucose, shampoos and shilajit for Dabur. [Source: BSE Filings, November 22, 2013] Celio Raises Stake In Future Group JV French menswear brand Celio has raised its stake to 65% in the 50:50 Future Group JV. The company plans to invest nearly R40 Cr to open new stores. Celio is a 50:50 JV between Celio International and Indus-League Clothing Limited. Celio International is a leader in men’s wear in France and has an international presence through 1000 stores in 66 countries. It operated through 30 exclusive brand outlets and 100 multi-brand outlets. [Source: Business Standard, November 25, 2013] Omnivore Partners Acquires Stake In Eruvaka Technologies Omnivore Partners has acquired a minority stake in Eruvaka Technologies Pvt. Ltd for an undisclosed amount. Founded in 2012, Eruvaka Technologies develops on-farm diagnostic equipment for aquaculture farmers to reduce their risk and increase productivity. It integrates sensors, mobile connectivity and decision tools for affordable aquaculture monitoring and automation. [Source: Live Mint, November 27, 2013] Air Water Inc Buys Majority Stake In Ellenbarrie Industrial Gases Air Water Inc, a Japanese industrial gas maker has acquired a 51% stake in Kolkata-based Ellenbarrie Industrial Gases Ltd for around R100 Cr. Ellenbarrie Industrial Gases Limited incorporated in 1973, is an established industrial gases company. The company manufactures and supplies industrial oxygen, nitrogen, argon, acetylene, carbon dioxide and other speciality gases from its plants in Uluberia and Kalyani in West Bengal and Visakhapatnam in Andhra Pradesh. [Source: Business Line, November 29, 2013]

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Issue No. 59: November, 2013 Page 17 of 19

Venture Capital Ananya Finance Raises Funds From WWB ISIS Ahemdabad-based institutional lender to MFI, Ananya Finance for Inclusive Growth Private Limited has raised Series A funding from WWB ISIS Fund. Ananya Finance For Inclusive Growth, a professionally driven company, is promoted by Indian Foundation For Inclusive Growth, which is a SPV floated by Friends of Women's World Banking, considered an apex institution supporting budding MFIs in India. [Source: Next Big What, November 5, 2013] Google Invests In Ten Indian Organizations Google is investing a total of R21 Cr in 10 Indian not for profit organizations as a part of the Google Impact Challenge program. The four winners of the program would receive R3 Cr and the remaining six would receive a seed funding of R1.5 Cr from Google. The program which was started in August this year looked for organization that used technology for a social impact. [Source: Next Big What, November 5, 2013] Voice Biometric Startup InCights Mobile Raises Angel Funding InCights Mobile Solutions, a provider of voice biometrics software and delivery systems has raised R1 Cr angel funding led by a group of investors including Anand Lunia of India Quotient. The company plans to use the funds to expand outside India and it is also looking to shift to US. The fund will also be utilized launch new services in the gaming and entertainment sector. [Source: Iamwire, November 13, 2013] Online Portal ApartmentADDA Raises Angel Funding Bangalore-based ApartmentADDA, an online housing society accounting and management software startup has raised an angel funding from a group of Silicon Valley and Indian investors. The financial details of the deal are not disclosed. Founded by Venkat Kandaswamy and Sangeeta Banerjee, ApartmentADDA is the product of 3Five8 Technologies Pvt. Ltd., with offices in Bangalore and Mumbai. It provides a private online portal for apartments and villa communities which can be used for facility management, maintenance billing

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Issue No. 59: November, 2013 Page 18 of 19

and accounting. It has tied-up with More than 3600 apartment & villa communities and has a user base of 1.6 home owners. [Source: Next Big What, November 14, 2013] JustEat.in Gets Investment From Axon Capital, Forum Synergies Bangalore-based online food ordering service Justeat.in has raised funds from two PE firms, Forum Synergies and Axon Capital. The PE firms have bought a minority stake in the company for an undisclosed amount. The company plans to utilize the funds to increase its team size, accelerate growth and expand presence into other metros of India. The online portal allows users to book tables and order food, via website, and phones. JustEat provides over a 2000 restaurants to order the food online from or book a table in with over 52 cuisines. [Source: Economic Times, November 18, 2013] Blume Ventures Funds VoxPopClothing Mumbai based, Voxpopclothing.com has raised $400000 from Blume Ventures accompanied by others investors from India and the US. The company, founded by Siddharth Taparia in September this year, offers limited edition T-shirts of brands and themes. Its website has a collection from popular TV shows like Dexter and has received licensee of character T-shirts for brands like Disney, Marvel, DC Comics and Star Trek. [Source: Economic Times, November 21, 2013] Hive Technologies Invests In Flutura Hive Technologies, an incubator-cum-fund of Patni Brothers has made its first investment in Flutura, a Bangalore based startup which provides technology to oil and gas majors. Founded in 2012 Flutura is a Decision Sciences Company that focuses on M2M (machine to machine) and Big Data Analytics. It was founded by Derick Jose, Krishnan Raman and Srikanth Muralidhara, who quit MindTree in December – have made it clear that Flutura would focus on providing a platform for companies to analyse huge amounts of data and make use of this for better business outcomes. [Source: Deal Curry, November 21, 2013] Google India Head Rajan Anandan Invests In TravelKhana Google India head, Rajan Anandan along with associates of Pushpinder Singh, has invested R3 Cr in meal booking platform, TravelKhana for a minority stake. The platform which provides food delivery service for railway passengers was was launched in 2012 by Pushpinder Singh. The platform is operated by Delhi based Duronto Technologies Private Limited. [Source: Business Standard, November 26, 2013] Nazara Launches Seed Fund For Game Developers Indian mobile games company Nazara Technologies has launched a R5 Cr seed fund for game developers in India in order to grow the gaming ecosystem in the country. [Source: Medianama, November 29, 2013]

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Issue No. 59: November, 2013 Page 19 of 19

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