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ISSUE NO.85 FEB, 2016

RNM ALERT

Thinking of the Bottom Line – Think of Us

Dear Readers, The Parliament has passed a crucial reform which has been pending since long in the form of the Real Estate (Regulation and Development) Bill. The Bill which protects consumers, should instill confidence in Investors in the hitherto fragmented real estate market of India with the establishment of a Real Estate Regulatory Authority (RERA) to bring accountability of the developers. The biggest trasparency being ushered

would be the end of the ‘Super Area’ basis of sale of residential space as against the ‘Carpet Area’ mandated under the Bill. The recent amendment in the provisions of the Buy-Back norms permit the calculations to be done on the basis of un-audited financial statements where the audited financials are more than six months old. Team RNM feels that this is a step in the right direction for enhancing the Ease of Doing Business in India. The recent clamour for a roll-back of the excise duty of 1% imposed on the Jewellery trade, which has been met by a stone walling by the Government, has led to an estimated loss of approx US$150 mn per day. The strike has entered its 14th day with both sides mantaining their position. On the ground, business of stressed asset recoveries or special opportunity funds seems to be the flavour of the season. Our Corporate Finance Division is running various mandates in this area successfully. 31st March is fast approaching, which means that all tax payers who have not yet filed their tax returns for AY 2014-15 have the last chance to quickly get their house in order and contact Team RNM to meet the deadline. We wish all our readers a very Colorful and Happy Holi, the festival of colors on 24th March and pray that the festivities would bring greater inspiration to close the fiscal year on a high!

Regards,

CA U.N. Marwah For and behalf of the RNM Alert Editorial Board

Issue No. 85: FEB, 2016 Page 2 of 20

CONTENTS

Events 4

Direct Tax

-Case Laws

- Basic Of Charge 5

- Expenses related to Exempt Income 5

- Profit & Gain from Business and Profession 5-6

- Capital Gain 6

- Set Off, Carry forward & Set Off 6

- Minimum Alternative Tax 6

- Assessment Proceedings 6-7

- Tax Deducted at Source 7

- Penalties 7

- CBDT 8

Indirect Tax

-Service Tax

-Case Laws

- Agents procuring orders and exploring potential customers for principal

aren't C&F agents 9

- An 'endorsed bill of entry' is also a valid document for taking credit 9

- Flying training services provided by an approved flying training institute are

not liable to service tax 9

- Partial recovery of rent of leased vehicles from employees couldn't be

chargeable to ST under 'renting services' 9

- Credit of input and input service available if assessee paid ST on full price of

works contract 9

-

Issue No. 85: FEB, 2016 Page 3 of 20

DIRECT TAX

DIRECT TA

Indirect Tax

-Service Tax

-Case Laws

- No credit on cascades which are used to transport CNG to filling station 9-10

- SEZ Units have to file refund claim before Customs authorities, not before

SEZ authorities 10

- Special CVD should be refunded in cash even if same was paid using DEPB scrip 10

RBI Updates

- Circular

- Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Second Amendment) Regulations, 2016 11

- Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Amendment) Regulations, 2016 11

- Foreign Exchange Management (Possession and Retention of Foreign Currency) Regulations, 2015 11

- Foreign Exchange Management (Realisation, repatriation and surrender of foreign exchange) Regulations, 2015 11-12

- Foreign Exchange Management (Export and Import of Currency) Regulations, 2015 12 - Foreign Exchange Management (Foreign currency accounts by a person resident in

India) Regulations, 2015 12 - Foreign Exchange Management (Acquisition and Transfer of Immovable

Property outside India) Regulations, 2015 12-13 - Foreign Direct Investment –Reporting under FDI Scheme, Mandatory filing of

form ARF, FCGPR and FCTRS on e-Biz platform and discontinuation of physical filing from February 8, 2016 13-14

Corporate Finance

- Latest News

- Private Equity 15-16

- Mergers & Acquisition 17-18

- Venture Capital 18-19

Issue No. 85: FEB, 2016 Page 4 of 20

RNM Organizes Post –Budget Interactive Session at Indo-American Chamber Of Commerce on 4th of March 2016, at New Delhi on “How the Budget Will Impact Indo-US Economic Growth”. The event was attended by top Government officials from both the countries, Industrialists’, Entrepreneurs’, Advocates and Professional’s to discuss how the Union Budget proposals by Honorable Finance Minister, Mr. Arun Jaitley proposed in Parliament on 29th of February 2016 would effect Indo-US relations. USA is a key participant in the Indian economic growth and plays a major supportive role with approx.. US$ 28 billion FDI inflow in 2015 into India. 100% FDI through FIPB route in food products produced and marketed in India was announced in the Budget which shall provide a huge potential for US retail chains to invest in this sector. To provide a fillip to the ‘Make in India’ campaign of the Government, the proposal for new manufacturing companies which are incorporated on or after 01.03.2016 to be given an option to be taxed at 25% without other deductions is likely to be viewed very favourably by US companies which are looking for certainty in tax. How this budget impacts the FDI inflow and effects sun-rise sectors to flourish more and generate more employment into the economy was discussed. The positive impact of the newly announced Guidelines for Renegotiation of PPP Contracts on reviving stalled projects funded by USA under the PPP model was also discussed. The two hour Debate with the invited speakers including Ms. Rani Singh Nair, IRS, Member -Central Board of Direct Taxes, Mr Alok Shukla, Joint Secretary- Central Board of Excise and Customs and other government officials ended with Q & A session with participants resolving their query and technical aspects on the corporate tax proposed in the Union Budget 2016.

Issue No. 85: FEB, 2016 Page 5 of 20

DIRECT TAX

� Case Laws

Basis of Charge Sec 4 - Where assessee engaged in generating electric power, kept margin money in form of fixed deposits for procurement of various capital goods for setting up of power project, interest earned on said deposits would be in nature of capital receipt not liable to tax [PCIT v. Facor Power Ltd. [2016] 66 taxmann.com 178 (Delhi)]

Sec 9 - Commission payments to the nonresident agents are not taxable in India, as the agents are remaining outside, services are rendered abroad and payments are also made abroad. the ratio of SC decision in G.E. India Technology's case would apply notwithstanding insertion of Explanation 4 to Section 9 (1) (i) of the Act with corresponding introduction of Explanation 2 to Section 195 (1) of the Act, both by the Finance Act, 2012, with retrospective effect from 01.04.1962. [CIT V. Farida Leather Company, [2016] 66 taxmann.com 321 (Madras)]

Expenses Related to Exempt Income Sec 14A read with rule 8D -The disallowance of expenditure cannot exceed the amount of tax-free dividend [PCIT V.M/s Empire Package Pvt. Limited, ITA No. 415 of 2015 (O&M) (P&H HC)]

Sec 14A -Disallowance made u/s. 14A in accordance with Rule 8D is to be added while computing book profits u/s. 115JB of the Act, being expenditure in relation to the earning of exempt income in accordance with clause (f) to Explanation 1 to Section 115JB(2) of the Act. [DCIT vs. Viraj Profiles Ltd. [2015] 64 taxmann.com 52 (Mumbai-Trib.)]

Profit & Gain from Business & Profession

Sec 36 - There is a distinction between "setting up" and "commencement" of a business. A business is "set up" and expenditure is deductible even if assessee has no customers and no income. [M/s. Multi Act Realty Enterprises Pvt. Ltd. V. ITO, ITA no.7274/Mum/2011 (Mum. Trib.)]

Sec 37 - Expenditure in respect of a project which did not materialize has to be treated as revenue expenditure as no capital asset comes into existence. [CIT V.M/s. Manganese Ore India Limited, Income Tax Reference No S. 150 OF 199 (Bom. Trib.)]

Sec 37 -Penalties & fines paid to SEBI, BSE etc for breach of regulatory/ procedural requirements are "compensatory" in nature and not for any purpose which is an ‘offense’ prohibited by the law. [MangalKeshav Securities Limited V. ACIT, ITA NO.8047/Mum/2010 (Mum Trib.)]

Issue No. 85: FEB, 2016 Page 6 of 20

Sec 37 - While receiving of gifts by doctors is prohibited by MCI Guidelines, the giving of such gifts by Pharma companies is not prohibited by any law. CBDT Circular dated 01.08.2012 is prospective. [Syncom Formulations (I) Ltd. V. DCIT, ITA No.6429&6428/Mum/2012 (Mum Trib.)]

Sec 37 - Considering the restriction in the use of software, payment of Licence fees etc. to the foreign company has been considered as revenue expenditure and allowable deduction u/s 37(1). [GE Capital Business Process Management Services (P.) Ltd. vs. ACIT [2015] 64 taxmann.com 156 (Delhi-Trib.)]

Capital Gain Sec 46A -Buyback of shares u/s 77A of the Companies Act is not a reduction of capital u/s 100 - 104 of that Act. A buyback cannot be regarded as a "colourable transaction" and cannot be assessed as "deemed dividend" u/s 2(22)(d). [Goldman Sachs(India) Securities Pvt. Ltd V. ITO, .ITA No.3726/Mum/2015]

Sec 54EC -The period of "6 months" available for making investment means 6 calendar months & not 180 days. Payment by cheque dates back to date of presentation & not date of encashment. [Neela S. Karyakarte V. ITO, ITA No.7548/Mum/2012, (Mum. Trib.)]

Set off, Carry forward & set off Sec 74 - Where deemed short term capital gain arose on account of sale of depreciable assets that was held for a period to which long term capital gain would apply, assessee would be entitled to claim setting off said gain against brought forward long term capital losses and unabsorbed depreciation.

[Parrys (Eastern) (P.) Ltd. V. CIT, [2016] 66 taxmann.com 330 (Bombay)]

Minimum Alternative Tax Sec 115JB - While computing book profit under section 115JB, Assessing Officer has no power to embark upon a fresh enquiry with regard to entries made in books of account of assessee-company; he has to rely upon authentic statements of accounts of company, being scrutinized and certified by statutory auditors [Sri Hariram Hotels (P.) Ltd. V. CIT, [2016] 66 taxmann.com 233 (Karnataka)]

Assessment Proceedings Sec 147 - Reopening of assessment is not permissible in the absence of "fresh tangible material". Entire law on the subject reiterated. [M/s. Golden Tobacco Limited V. JCIT, ITA No.5858/Mum/2012 (Mum Trib.)]

Sec 147 -The reopening of the assessment is not valid if the reasons recorded are incoherent and do not indicate what the basis for reopening is. [Sabharwal Properties Industries Pvt. Ltd V. ITO, W.P.(C) 8994/2014 & CM 20547/2014 (Delhi HC)]

Issue No. 85: FEB, 2016 Page 7 of 20

Sec 148 - It is open to the assessee to challenge a notice issued u/s 148 as being without jurisdiction for absence of reason to believe even in case where the assessment has been completed earlier by Intimation u/s 143(1) of the Act. [Khubchandani Healthparks Pvt. Ltd. V. ITO, Writ Petition No. 3027 OF 2015 (Bom. HC)]

Sec 263 - An order of revision which does not show independent application of mind by the CIT is against the spirit of the Act and liable to be set aside. [Span Overseas Ltd. V. CIT, ITA No. 1223/PN/2013 (Pune Trib.)]

Tax Deducted at Source

Sec 201(3) - The amendment to s. 201(3) by FA 2014 to extend the time limit for passing s. 201 orders is prospective and does not apply to cases which are already time-barred. A show-cause notice involving a pure point of law can be challenged in a Writ Petition. [Tata Teleservices V. Union of India, Special Civil Application No. 1623 of 2015 (Guj HC)]

Sec 206AA -S. 90(2) overrides s. 206AA and so the assessee is required to deduct TDS as per the DTAA and not as per s. 206AA. The issue is debatable and so cannot be rectified by the AO u/s 200A. [M/s. Wipro Ltd. V. ITO, I.T.(I.T.) A. Nos.1544 to 1547/Bang/2013 (Bang Trib.)]

Penalties Sec. 271(1)(c)-Penalty is not leviable on income declared during survey and offered in return. [CIT V. Hiralal Doshi, Civil Appeal No. 2331 OF 2013 (Bombay HC)]

Sec. 271(1)(c)-Penalty cannot be levied on all issues in a "wholesale" manner. The AO has to give findings for each issue separately. He has to apply mind meticulously and carefully for each issue separately and establish precisely whether there was concealment of income or furnishing of inaccurate particulars of income. The assessee cannot be fastened with the liability of penalty without there being a clear or specific charge. Fixing a charge in a vague and casual manner is not permitted under the law. Fixing twin charges is also not permitted under the law. [Mangalam Drugs & Organics Ltd. V. DCIT, ITA NO.5454/Mum/2011 (Mum Trib.)] Sec. 271(1)(c)-If the notice is issued without application of mind (by striking out the relevant part in the notice), the penalty proceedings are invalid. [M/s. Safina Hotels Private Limited V. CIT, ITA No.240/2010 (Kar. HC)]

Sec 271C - The view adopted by the assessee based upon the certificate of the C.A., was one of the possible views and can be said to be based upon bona fide belief of the assessee. Therefore, under these circumstances it was held that there was reasonable cause as envisaged u/s. 273B for not deducting tax at source by the assessee on the aforesaid payments, and therefore, the assessee was not liable for levy of penalty u/s. 271C.[ADIT vs. Leighton Welspun Contractors (P.) Ltd. [2016] 65 taxmann.com 68 (Mumbai - Trib.)]

Issue No. 85: FEB, 2016 Page 8 of 20

� CBDT CIRCULARS

Circular No. 6/2016: Issue of taxability of surplus on sale of shares and securities - Capital Gains or Business Income while recognizing that no universal principal in absolute terms can be laid down to decide the character of income from sale of shares and securities (Le. whether the same is in the nature of capital gain or business income), CBDT realizing that major part of shares/securities transactions takes place in respect of the listed ones and with a view to reduce litigation and uncertainty in the matter, in partial modification to the aforesaid Circulars, further instructs that the Assessing Officers in holding whether the surplus generated from sale of listed shares or other securities would be treated as Capital Gain or Business Income, shall take into account the following:-

• Where the assessee itself, irrespective of the period of holding the listed shares and securities, opts to treat them as stock-in-trade, the income arising from transfer of such shares/securities would be treated as its business income

• In respect of listed shares and securities held for a period of more than 12 months immediately preceding the date of its transfer, if the assessee desires to treat the income arising from the transfer thereof as Capital Gain, the same shall not be put to dispute by the Assessing Officer. However, this stand, once taken by the assessee in a particular Assessment Year, shall remain applicable in subsequent Assessment Years also and the taxpayers shall not be allowed to adopt a different/contrary stand in this regard in subsequent years;

• In all other cases, the nature of transaction (i.e. whether the same is in the nature of capital gain or business income) shall continue to be decided keeping in view the aforesaid Circulars issued by the CBDT.

It is, however, clarified that the above shall not apply in respect of such transactions in shares/securities where the genuineness of the transaction itself is questionable, such as bogus claims of Long Term Capital Gain / Short Term Capital Loss or any other sham transactions.

Issue No. 85: FEB, 2016 Page 9 of 20

INDIRECT TAX

Service Tax

� Case Law

Agents procuring orders and exploring potential customers for principal aren't C&F

agents Agents procuring orders and exploring potential customers for their principal are more appropriately classifiable under 'Business Auxiliary Services' and not under 'Clearing and Forwarding Agent's services' [Raja Charity Trust v. Commissioner of Central Excise, Tirunelveli [2016] 66 taxmann.com 228 (Chennai - CESTAT)]

An 'endorsed bill of entry' is also a valid document for taking credit Where there is no dispute about receipt of material and payment of duty thereon, credit taken based on 'endorsed bill of entry' is valid [Suyash Chemicals v. Commissioner of Central Excise, Pune-I [2016] 66 taxmann.com 241 (Mumbai - CESTAT)]

Flying training services provided by an approved flying training institute are not liable

to service tax Flying training services provided by an approved flying training institute are not liable to service tax, as services fall within meaning of 'qualification recognized by law' [Ahmedabad Aviation & Aeronautics Ltd. v. Commissioner of Service Tax, Ahmedabad [2016] 66 taxmann.com 180

(Ahmedabad - CESTAT)]

Partial recovery of rent of leased vehicles from employees couldn't be chargeable to ST

under 'renting services' Where assessee had provided 'leased vehicles' to its officials and had merely recovered from officials excessive expenses incurred on 'leased vehicles' beyond entitlement of such officials, such recovery would not amount to 'vehicle renting services to officials' and cannot be charged to Service tax [Coca Cola India Inc. v. Commissioner of Service Tax, Delhi [2016] 66 taxmann.com 154 (New Delhi - CESTAT)]

Credit of input and input service available if assessee paid ST on full price of works

contract Where assessee has paid service tax on full contract price of a works contract and availed credit of inputs and services and there is no revenue loss to department, department cannot seek to deny credit relying upon valuation rule 2A [Commissioner of Central Excise, Customs & Service Tax, Vapi v. S.V. Jiwani, [2016] 66 taxmann.com 329 (Bombay)]

No credit on cascades which are used to transport CNG to filling station

Issue No. 85: FEB, 2016 Page 10 of 20

Where cascades were used to transport CNG at boosting station wherein it was re-compressed to be filled into the vehicles, cenvat credit was not admissible on cascades since these were used to mere transport already manufactured and marketable commodity [Mahanagar Gas Ltd. v. Commissioner of Central Excise[2016] 66 taxmann.com 320 (Mumbai - CESTAT)]

Credit won't be denied to taxable unit if exempted unit reversed the credit wrongly

booked by it Where cenvat credit of service tax paid by department providing input service was allocated to other two departments, one providing taxable service while other exempted service, cenvat credit allocated to department providing taxable service could not be disallowed on plea that department providing exempt service availed cenvat credit [Sify Technologies Ltd. v. Commissioner of Service Tax, LTU, Chennai [2016] 66 taxmann.com 244 (Chennai -

CESTAT)]

SEZ Units have to file refund claim before Customs authorities, not before SEZ

authorities Refund of customs duty paid by SEZ units is governed by section 27 of Customs Act; hence, said refund claim units would lie before Customs Authorities and not before SEZ authorities under the SEZ Act/rules [Roxul Rockwool Insulation India (P.) Ltd. v. Union of India [2016] 66 taxmann.com 271 (Gujarat)]

Special CVD should be refunded in cash even if same was paid using DEPB scrip Even if special CVD on imports was paid using balance lying in DEPB scrips, same is refundable "in cash" on resale of goods; Circulars denying/restricting refund of Special CVD in such cases are ultra vires Notification No. 102/2007-Cus. and are void. [Allen Diesels India (P.) Ltd. v. Union of India [2016] 66 taxmann.com 253 (Delhi)]

Issue No. 85: FEB, 2016 Page 11 of 20

RBI UPDATES

Circular/Notification/Guidance Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Second Amendment) Regulations, 2016 In exercise of the powers conferred by clause (b) of sub-section (3) of Section 6 and Section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), the Reserve Bank of India hereby makes the amendments in the Foreign Exchange Management (Transfer or issue of Security by a Person Resident outside India) Regulations, 2000 (Notification No. FEMA 20/2000-RB dated 3rd May 2000). These Regulations may be called the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Second Amendment) Regulations, 2016. They shall come into force from the date of their publication in the Official Gazette. [Source: Notification No. FEMA 362/2016-RB dated 15th February, 2016]

Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Amendment) Regulations, 2016 In exercise of the powers conferred by clause (b) of sub-section (3) of Section 6 and Section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), the Reserve Bank of India hereby makes the amendments in the Foreign Exchange Management (Transfer or issue of Security by a Person Resident outside India) Regulations, 2000 (Notification No. FEMA 20/2000-RB dated 3rd May 2000). These Regulations may be called the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Amendment) Regulations, 2016. They shall come into force from the date of their publication in the Official Gazette. [Source: Notification No. FEMA 361/2016-RB dated 15th February, 2016]

Foreign Exchange Management (Possession and Retention of Foreign Currency) Regulations, 2015 Foreign Exchange Management (Possession and Retention of Foreign Currency) Regulations, 2015 notified vide Notification No. FEMA. 11(R)/2015-RB dated December 29, 2015, c.f. G.S.R. No.1006 (E) dated December 29, 2015, which supersedes the Foreign Exchange Management (Possession and Retention of Foreign Currency) Regulations, 2000 and all amendments thereto. The new regulations have been notified vide Notification No. FEMA. 11(R)/2015-RB dated December 29, 2015, c.f. G.S.R. No.1006 (E) dated December 29, 2015 and shall come into force with effect from December 29, 2015. [Source: Notification No. RBI/2015-16/312 A.P. (DIR Series) Circular No. 47/2015-16[(1)/11(R)] dated 04th February,

2016]

Foreign Exchange Management (Realisation, repatriation and surrender of foreign exchange) Regulations, 2015 Foreign Exchange Management (Realisation, repatriation and surrender of foreign exchange) Regulations, 2015 notified vide Notification No. FEMA. 9(R)/2015-RB dated December 29, 2015, c.f.

Issue No. 85: FEB, 2016 Page 12 of 20

G.S.R. No.1005(E) dated December 29, 2015, which supersedes the Foreign Exchange Management (Realisation, repatriation and surrender of foreign exchange) Regulations, 2000 and all amendments thereto. The new regulations have been notified vide Notification No. FEMA. 9(R)/2015-RB dated December 29, 2015, c.f. G.S.R. No.1005 (E) dated December 29, 2015 and shall come into force with effect from December 29, 2015. [Source: Notification No. RBI/2015-16/311 A.P. (DIR Series) Circular No. 46/2015-16[(1)/9(R)] dated 04th February,

2016]

Foreign Exchange Management (Export and Import of Currency) Regulations, 2015 Foreign Exchange Management (Export and Import of Currency) Regulations, 2015 notified vide Notification No. FEMA.6(R)/ 2015-RB dated December 29, 2015, c.f. G.S.R. No.1004 (E) dated December 29, 2015, which supersedes the Foreign Exchange Management (Export and Import of Currency) Regulations, 2000 and all amendments thereto. The new regulations have been notified vide Notification No. FEMA. 6 (R)/2015-RB dated December 29, 2015, c.f. G.S.R. No.1004 (E) dated December 29, 2015 and shall come into force with effect from December 29, 2015. [Source: Notification No. RBI/2015-16/310 A.P. (DIR Series) Circular No. 45/2015-16[(1)/6(R)] dated 04th February,

2016]

Foreign Exchange Management (Foreign currency accounts by a person resident in India) Regulations, 2015 On a review it is felt necessary to revise the regulations issued under the Foreign Exchange Management (Foreign Currency Accounts by a person resident in India) Regulations, 2000, as amended from time to time. Accordingly, in consultation with the Government of India, the said regulations have been repealed and replaced by the Foreign Exchange Management (Foreign Currency Accounts by a person resident in India) Regulations, 2015. According to the regulations, a “Foreign Currency Account” means an account held or maintained in currency other than the currency of India or Nepal or Bhutan. These regulations seek to regulate opening and maintenance of foreign currency accounts in and outside India by a person resident in India. [Source: Notification No. RBI/2015-16/309 A.P. (DIR Series) Circular No. 44/2015-16[(1)/10(R)] dated 04th February,

2016]

Foreign Exchange Management (Acquisition and Transfer of Immovable Property outside India) Regulations, 2015 On a review it is felt necessary to revise the regulations issued under the Foreign Exchange Management (Acquisition and Transfer of Immovable Property outside India) Regulations, 2000, as amended from time to time. Accordingly, in consultation with the Government of India, the said regulations have been repealed and replaced by the Foreign Exchange Management (Acquisition and Transfer of Immovable Property outside India) Regulations, 2015.

Issue No. 85: FEB, 2016 Page 13 of 20

In terms of these Regulations, acquisition or transfer of any immovable property outside India by a person resident in India would require prior approval of Reserve Bank except in the following cases:

a) Property held outside India by a foreign citizen resident in India; b) Property acquired by a person on or before 8th July, 1947 and held with the permission of Reserve

Bank; c) Property acquired by way of gift or inheritance from:

� persons referred to in (b) above; � persons referred to in section 6(4) of the Act;

d) Property purchased out of funds held in Resident Foreign Currency (RFC) account held in

accordance with the Foreign Exchange Management (Foreign Currency Accounts by a person resident in India) Regulations, 2015;

e) Property acquired jointly with a relative who is a person resident outside India provided there is no outflow of funds from India;

f) Property acquired by way of inheritance or gift from a person resident in India who acquired such property in accordance with the foreign exchange provisions in force at the time of such acquisition;

An Indian company having overseas offices may acquire immovable property outside India for its business and residential purposes provided total remittances do not exceed the following limits prescribed for initial and recurring expenses, respectively:

a) 15 per cent of the average annual sales/ income or turnover of the Indian entity during the last two

financial years or up to 25 per cent of the net worth, whichever is higher; b) 10 per cent of the average annual sales/ income or turnover during the last two financial years.

For the purpose of these regulations, 'relative' in relation to an individual means husband, wife, brother or sister or any lineal ascendant or descendant of that individual. [Source: Notification No. RBI/2015-16/308 A.P. (DIR Series) Circular No. 43/2015-16[(1)/7(R)] dated 04th February,

2016]

Foreign Direct Investment –Reporting under FDI Scheme, Mandatory filing of form ARF, FCGPR and FCTRS on e-Biz platform and discontinuation of physical filing from February 8, 2016 With a view to promoting the ease of reporting of transactions related to Foreign Direct Investment (FDI), the Reserve Bank of India, under the aegis of the e-Biz project of the Government of India has enabled online filing of the following returns with the Reserve Bank of India viz.

� Advance Remittance Form (ARF) which is used by the companies to report the FDI inflows to RBI; � FCGPR Form which a company submits to RBI for reporting the issue of eligible instruments to the

overseas investor against the above mentioned FDI inflow; and � FCTRS Form which is submitted to RBI for transfer of securities between resident and person

outside India

Issue No. 85: FEB, 2016 Page 14 of 20

It has been decided that beginning February 8, 2016 the physical filing of forms ARF, FCGPR and FC TRS will be discontinued and forms submitted in online mode only through e-Biz portal will be accepted. [Source: Notification No. RBI/2015-16/303 A.P. (DIR Series) Circular No. 40 dated 01st February, 2016]

Issue No. 85: FEB, 2016 Page 15 of 20

CORPORATE FINANCE

� Latest News

Private Equity

Craftsvilla acquires logistics enabler Sendd for $5M Kribha Handicrafts Pvt Ltd, which runs e-commerce marketplace for ethnic products Craftsvilla, has acquired on-demand logistics enabler Sendd. The all-equity deal values the Kae Capital-backed startup at close to $5 million (around Rs 34 crore). Kae will get stake in Craftsvilla as part of the acquisition deal. [Source: VC Circle, February 02, 2016]

Housejoy buys on-demand laundry services firm MyWash Housejoy, has acquired on-demand laundry services provider MyWash for an undisclosed amount. The deal would make Housejoy the largest player in India’s organised on-demand laundry services space, the company claims. The core team of MyWash would join Housejoy as part of the transaction. [Source: VC Circle, February 03, 2016]

Camlin Fine Sciences to buy 65% stake in Mexico's Dersen Speciality chemicals maker Camlin Fine Sciences Ltd said on Wednesday it has agreed to acquire a 65 per cent stake in Mexico's Dresen Quimica SA de CV, along with its group companies, for $7.8 million (Rs 53 crore) in cash. [Source: VC Circle, February 03, 2016]

Zodius-backed engineering startup Allygrow makes two global acquisitions Allygrow Technologies Pvt Ltd, an engineering services startup floated by Mahindra Engineering Services’ former CEO Prashant Kamat, has acquired Munich–based AE Automotive Elements GmbH, a specialised manufacturing engineering services firm. [Source: VC Circle, February

03, 2016]

RMZ Corp to buy Essar’s Equinox Business Park for $353M RMZ Corp has agreed to acquire Equinox Business Park in Mumbai from the realty arm of Essar Group for Rs 2,400 crore ($353 million) in the country’s biggest property deal in rupee terms. The asset sale is in line with Essar’s strategy to divest non-core assets. [Source: VC Circle, February 03, 2016]

Godrej Consumer to buy 75% stake in Kenyan homecare products firm GCPL's Africa business has annualised revenue of about $200 million. Godrej Consumer Products Ltd (GCPL) has agreed to acquire a 75 per cent stake in Kenya’s Canon Chemicals Ltd for an undisclosed amount. GCPL's Africa business has annualised revenue of about $200 million. The deal reflects GCPL’s commitment to scaling up its presence in Africa. [Source: VC Circle, February 04, 2016]

Issue No. 85: FEB, 2016 Page 16 of 20

Rallis India buys balance 19% stake in Metahelix Life for $10.8M After this transaction, Metahelix Life Science (MLS), seeds research company, has become the wholly owned subsidiary of the Rallis India. Prior to this transaction, the Tata group firm had 80.51 stake in Metahelix. Rallis India has acquired additional stake of 19.49 per cent in the Metahelix Life Science in all cash deal for Rs 73.33 crore. [Source: VC Circle, February 04, 2016]

LYCOS to acquire Austrian app maker TriTelA LYCOS Internet Ltd intends to acquire TriTelA Gmbh, an Austrian firm that owns cross-platform texting app mysms, for an undisclosed amount. As part of the all-stock deal, the Indian company would also acquire SPH Wien and Kika Social. LYCOS, a digital marketing and connected wearables firm, will issue 2.84 crore additional shares to pick 100 per cent stake in TriTelA. This would give shareholders of TriTelA around 5.6 per cent stake in LYCOS. [Source: VC Circle, February 08, 2016]

OYO buys Zo, Zostel in all-stock deal; Zo founders quit Budget hotel aggregator OYO Rooms has acquired Tiger Global-backed smaller rival Zo Rooms. OYO has also acquired Zostel, the standalone hostel booking platform run by Zo’s parent Zostel Hospitality Pvt Ltd, as part of this all-stock transaction. The deal consolidates the position of OYO (run by Delhi-based Oravel Stays Pvt Ltd) as India’s largest budget hotel aggregator. The seven co-founders of Zo will not be a part of the merged entity. [Source: VC Circle, February 10, 2016]

Apcotex buys out Omnova Solutions India for $5.3M

Apcotex Industries Ltd has acquired emulsion polymers maker Omnova Solutions India Pvt Ltd (OSIPL), for Rs 36 crore ($5.3 million) in an all-cash deal funded entirely through internal accruals. The acquisition of Omnova Solutions will help Apcotex become the largest manufacturer of NBR and HSR in the country. [Source: VC Circle, February 10, 2016] Amazon to buy 26% in Tatas-owned publisher Westland E-commerce giant Amazon Inc has struck a deal to buy a 26 per cent stake in Westland Ltd for Rs 9.4 crore ($1.4 million), valuing Westland at Rs 36.15 crore. The US firm will get one seat on Westland’s board and will also have the right to eventually buy out Trent. [Source: VC Circle, February 11, 2016]

IL&FS Transportation sells 49% in Gurgaon's rapid metro rail for $75M

IL&FS Transportation Networks Ltd said on Thursday the company and its units have sold a 49 per cent stake in Rapid MetroRail Gurgaon Ltd for Rs 509.90 crore (about $75 million). The company didn’t give any details in a stock market disclosure. [Source: VC Circle, February 11, 2016]

Issue No. 85: FEB, 2016 Page 17 of 20

Merger & Acquisition

Edtech startup Oust Labs receives seed funding from Mohandas Pai Edtech startup Oust Labs Inc., a platform that helps students prepare for competitive exams using mobile gaming technology, has raised an undisclosed amount in seed funding from former Infosys director T V Mohandas Pai and Aarin Capital. [Source: VC Circle, February 02, 2016]

Snapdeal’s Chandrasekaran invests in Teewe maker CREO CREO, the maker of HDMI media streaming device Teewe, has secured angel funding from Snapdeal’s chief product officer Anand Chandrasekaran. Chandrasekaran’s investment is part of the recently concluded $3 million (Rs 20.4 crore) funding round that was led by Sequoia Capital India, Beenext Ventures and India Quotient. [Source: VC Circle, February 02, 2016]

Dental clinic chain Smile Merchants gets follow-on funding from Unitus Free3 Healthcare Pvt Ltd, which runs a dental clinic chain under the Smile Merchants brand, has received an undisclosed amount in follow-on investment from impact investor Unitus Seed Fund. The money will be used to expand operations in Tier II and III cities. [Source: VC Circle, February 02, 2016]

Perfumery gets seed funding from Oranda Global, others Perfumery, an e-commerce platform that sells perfumes, has raised an undisclosed amount in its seed round of funding led by Delhi-based Oranda Global. The company will use the funds to expand and create a specialised marketplace for luxury perfumes.

[Source: VC Circle, February 04, 2016]

NDTV’s health food e-store Smartcooky raises funding from VLCC’s Vandana Luthra Smartcooky, media group NDTV’s yet-to-launch e-commerce marketplace for health foods and personal care products, has received an undisclosed amount in funding from Vandana Luthra, founder of health and wellness firm VLCC Health Care Ltd. [Source: VC Circle, February 05, 2016]

Optical network startup American Vision gets angel funding

American Vision Pvt Ltd, a Pune-based startup that aggregates optical stores, has raised Rs 55 lakh ($81,000) in its first external round of funding from two angel investors. The company is also at an advance stage of discussion with a VC firm to raise nearly $3 million (about Rs 20 crore). [Source: VC Circle, February 05, 2016]

Dawailelo gets seed funding, plans to raise $3M in March DL Lifecare Pvt Ltd, a healthcare startup which helps people connect with medical stores, doctors, pathology labs through its website and app, has raised Rs 35 lakh (around $52,000) in seed funding from two angel investors. [Source: VC Circle, February 05, 2016]

Issue No. 85: FEB, 2016 Page 18 of 20

Kae Capital raises $30M second fund, backs five startups Early-stage investor Kae Capital has raised $30 million (Rs 203 crore) from existing and new investors as part of its second fund to invest in Indian startups. The firm is likely to raise an additional $10 million soon, but didn’t name the investors. [Source: VC Circle, February 05, 2016]

Luxury pet products firm Heads Up For Tails raises $1M seed funding Heads Up For Tails (HUFT), which runs a portal that sells luxury pet products, has raised $1 million in angel funding from a number of undisclosed investors. [Source: VC Circle, February 05, 2016]

Weight loss coaching site LiveNutriFit gets seed funding LiveNutriFit HeathTech Pvt Ltd, an online preventive healthcare startup that provides weight loss-related coaching, has raised an undisclosed amount in seed funding from Omaxe CEO Mohit Goel, Magppie Retail MD Vinod Jain and a clutch of angel investors. This round of funding would be used for marketing, brand building and customer acquisition. [Source: VC Circle, February 05, 2016]

Product customisation platform Gingercrush gets funds from Saha Fund, others Gingercrush, an on-demand platform for customising licensed products, has raised a little under $1 million in a pre-Series A round led by Saha Fund. Ankita Vashistha, the founder of Saha Fund, has joined the board as part of the transaction. [Source: VC Circle, February 05, 2016]

Venture Capital Creador part-exits Cholamandalam Investment Creador, a private equity firm focused on South and Southeast Asia, has part-exited its four-year-old investment in Murugappa Group’s N BFC Cholamandalam Investment & Finance Co Ltd. The PE firm

Issue No. 85: FEB, 2016 Page 19 of 20

has divested a stake of about 1.5 per cent for around Rs 140-150 crore ($22 million). [Source: VC Circle, February 01, 2016]

InvAscent aims to complete exit from first fund this year

It has four firms in its portfolio from the maiden fund. InvAscent India, a healthcare-focused private

equity advisory firm that is currently investing out of its second fund, expects 2016 to be a busy year with

a plan to exit its remaining portfolio under the maiden fund.

[Source: VC Circle, February 02, 2016]

Baring PE India exits Marico Baring Private Equity Partners India (Baring PE India) has exited its under four-year-old investment in public listed consumer products company Marico Ltd, as it continues to liquidate its past portfolios. [Source: VC Circle, February 02, 2016]

KKR to invest $22M in Sunteck’s two Mumbai projects KKR & Co Ltd has agreed to invest Rs 150 crore ($22.4 million) in two projects of Mumbai-based developer Sunteck Realty Ltd, as the alternative investment giant ramps up its bets on the Indian real estate sector. [Source: VC Circle, February 04, 2016]

Religare’s fund backs Ghaziabad project Oxy Homez Religare Credit Opportunities Fund, a Religare Credit Advisors-managed debt fund with focus on real estate, has invested in a residential project of Ghaziabad-based developer Super Realtech, people close to the development. [Source: VC Circle, February 08, 2016]

Goldman Sachs to pick significant stake in Amber Enterprises

They will also acquire 36 per cent equity stake in the company. As part of the transaction, BSIPL and MBD, the two affiliates of Goldman Sachs, will subscribe to compulsorily convertible preference shares of Amber pursuant to a primary infusion in Amber. [Source: VC Circle, February 08, 2016]

Issue No. 85: FEB, 2016 Page 20 of 20

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