RNM Alert VOL LXIX SEPTEMBER 2014 - Final Alert VOL LXIX SEPTEMBER...There he gave a presentation on ... September 2014 quarter, ... acquisition is to be taxed in year of receipt instead

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ISSUE NO.69 SEPTEMBER, 2014

RNM ALERT

Thinking of the Bottom Line – Think of Us

Dear Readers, The GGI World Conference was held in Cape Town, South Africa from 16-19 October 2014 and CA. Raghu Marwah, Partner represented RNM at the said Conference. There he gave a presentation on “Key Strategic Issues faced when negotiating / considering a Joint Venture in India” to the M&A Practice Group which was much appreciated. Special emphasis was laid on the recent policy changes in the REIT’s sector, which offers huge upside to Foreign Investors. On the sidelines of the Conference meetings were also held with the

representative of the South African National Association of Automotive Component & Allied Manufacturers (NAACAM) to explore business opportunities for India Inc. looking to go global in the Auto component space. A very kind invitation was also received to attend the South African Automotive Week (SAAW) in Johannesburg from the Executive Director of the NAACAM, however, due to prior engagements RNM was unable to attend the same. Back home, the Indian economy is improving with media reports that during the July-September 2014 quarter, companies have received fresh orders worth ~USD 11.2 Bn, up 45% QoQ and the highest in the past four quarters. According to India Ratings, the government’s decision to deregulate diesel prices is likely to improve India’s finances as the oil subsidy will come down by USD 2.5 Bn. The S&P BSE Sensex in the meantime has hit all time highs during October 2014, with a YTD returns of 31.62%. China's economy grew 7.3% YoY between July-September 2014, slightly above expectations. However, it slowed from 7.5% YoY in Q2CY2014, the weakest in nearly 6 years. The Ministry of Corporate Affairs ('MCA') has extended the validity of CLSS Scheme to November 15, 2014. MCA has clarified that for those companies who have filed their financial statements or annual returns after April 1, 2014, but before the announcement of the CLSS scheme, the directors will also get immunity with regard to disqualification. The Committee for Capacity Building of CA Firms and Small & Medium Practitioners of Institute of Chartered Accountants of India (ICAI) has initiated the Revision of Minimum Recommended Scale of Fees for the professional assignment done by its members. The recommendation is about the fee to be charged as per the work performed for various professional assignments.

Regards, CA U.N. Marwah

For and behalf of the RNM Alert Editorial Board

Issue No. 69: September, 2014 Page 2 of 23

CONTENTS Direct Tax

- Case Laws - Agriculture Income 4 - Expenditure incurred in relation to exempt Income 4 - Income from House Property 4 - Profit & Gain from Business & Profession 4 - Capital Gain 5 - Cash Credit 5 - Unexplained Investment 5 - Deduction 6 - Search & Seizure 6 - Procedure for Assessment 6 - Tax Deduction at Source 6 - Revision by the Commissioner 6 - Penalties 6 - Miscellaneous 7

Indirect Tax Service Tax

- Case Laws - TMT bars used in erection of raw mill project are eligible for credit 8 - Providing buses for dropping clients’ staff at Door step are Tour operator services 8 - Contractee validly reimbursed only ST paid in cash as contract 8 - Course relating to ‘digital & animiation effects’ ; exempt from service tax 8 - Credit of work contract services could be taken on or after 1-4-11 8 - Data procession for foreign clients relating to reservation system located outside India 8 - Development of land for township isnt taxable under ‘Constuction of Complex’ or 9 ‘Work Contracts’ services - Employer couldn’t avail of credit for catering servicing after recovering for its employees 9 - HC grants reasonalbe time to dept. for pursuing revisional remedy against Tribunal 9 - HC reduces pre-deposit amount of Sub-Contractor as entire tax paid by main contractor 9 - Imparting training to students of Nautical Science & Marine Engg. liable to service tax 10 - Input service credit was available even when service provider had deposited belatedly 10 - No denial of refund that assessee could have used credit by making exports on payment 10 - No input on credit if supplier had confirmed non delivery of goods 10 - No suppression of facts if nature of input service couldn’t be disclosed 10 - Sum collected for various services couldn’t be considered 10-11 - Tribunal had rightly directed full pre deposit of ST as assess failed to deposit ST 11 - Tribunal had to follow principal of consistency in its interim order, says CESTAT 11


DIRECT TAX DIRECT TAX

Company Law Updates - Circular

- Amendment of Cos. Rules, 2014 12 - Clarification with regard to provisions of CSR u/s 135 of Cos. Act’2013 12 - Amendment of Cos. Rules 2014 13 - Constitution of National Advisory Committee on Accounting standards 13

RBI Updates - Circular

- ECB in Indian Rupee 14 - FDI in India- issue of equity shares under the FDI scheme against Legitimate dues 14

Corporate Finance - Latest News

- Private Equity 15-16 - Mergers & Acquisition 17- 19 - Venture Capital 19- 22


DIRECT TAX Case Laws Agriculture Income Sec. 10(1) - A.O could not treat agriculture income as income from other sources when assessee had filed Revenue records. [Source: ACIT vs. Manoj Narain Aggarwal, [2014] 48 taxmann.com 283 (Delhi - Trib.)/[2014] 160 TTJ 416 (Delhi - Trib.)]

Expenditure incurred in relation to exempt income Sec. 13(2)(c) – Reasonable remuneration paid to the secretary of trust, who is also a trustee is allowable. [Source: PNR Society for Relief & Rehabilitation of the Disabled Trust Vs. DDIT (ITAT Ahmedabad), ITA No. 2729/Ahd/2010.]

Sec. 14A - Amount of expenditure disallowable under section 14A has to be added back while computing book profit under clause (f) of Explanation 1 to section 115JB. [Source: Godrej Consumer Products Ltd. vs. ACIT, (2014) 48 taxmann.com 293 (Mumbai - Trib.)]

Sec 14A - If AO not satisfied with correctness of expenditure claimed, he has to proceed in manner prescribed in Rule 8D(2). [Source: Dhampur Sugar Mills Ltd.Vs. Commissioner Of Income Tax (Allahabad High Court), Income Tax Appeal No. 131/2014]

Income from House Property Sec. 26 - Differential treatment cannot be meted out to another co-owner while making assessment of same property. Co-owner property cannot be valued at a value different from value accepted in case of another co-owner. [Source: ACIT Vs. Shri Mahesh Chunilal Shah (ITAT Ahmedabad), ITA No. 210/Ahd/2011]

Profit & Gain from Business & Profession Sec. 32 – Brought forward unabsorbed depreciation can be set off against Unexplained Income U/s. 68. [Source: ACIT Vs. M/s. Shree Raghupati Fibres Pvt. Ltd. (ITAT Ahmedabad), ITA. No. 256/Ahd/2011]

Sec. 36 - Where interest paid on borrowers utilized for investments in a foreign company was not in course of assessee's business, its claim for deduction under section 36(1)(iii) was to be rejected [Source: Crescent Organics P. Ltd v. DCIT, (2014) 49 taxmann.com 128 (Bombay)]

Sec. 44AD - In case of loss, since there is no income, therefore it does not exceed the maximum amount not chargeable to tax and so the second condition mandating tax audit u/s 44AB r/w section 44AD is not satisfied and therefore the assessee is not required to get the accounts audited u/s 44AB. [Source: F.No.153/53/2014-TPL (Pt.I) dated 26.09.2014]


Captial Gains Sec. 45 – Merely change in the flat without determining any consideration for the old flat cancelled and new flat transferred, it cannot be said that the old flat was sold and new flat was purchased on the date of change. [Source: ITO Vs. Smt. Tripta Shahani (ITAT Lucknow) , ITA No. 459/LKW/2009]

Sec. 45 - Shares cannot be treated as stock instead of investment for mere non-receipt of dividend. [Source: CIT Vs. CNB FINWIZ LTD (Delhi High Court), ITA. No. 1241/2011]

Sec. 45 - Compensation on Compulsory Acquisition - Additional compensation on compulsory acquisition is to be taxed in year of receipt instead of in year of transfer of capital asset. [Source: CIT vs. Sharda Kochhar (2014) 49 taxmann.com 120 (Delhi)]

Cash Credit Sec. 68 – Purchases cannot be treated as bogus for mere non traceability of suppliers. [Source: CIT vs. Nangalia Fabrics Pvt. Ltd (Gujarat High Court), TAX APPEAL NO. 689 of 2010 ]

Unexplained Investment Sec. 69 – Addition for cash deposited in bank after long period of withdrawal not justified. [Source: ITO Vs. Mrs. Deepali Sehgal (ITAT Delhi), ITA No. 5660/Del/2012]


Deductions Sec. 80-IB – Deduction u/s 80-IB available on additional income offered u/s 132(4) in return filed u/s 153A. [Source: Malpani Estates Vs. ACIT (ITAT Pune) , ITA Nos. 2296 to 2298 of 2012]

Search & Seizure Sec. 132 - Department is legally obligated to preserve the goods seized and return in the same condition to the assessee or pay equivalent compensation. [Source: Ashupatinath Dhandania Vs. Union of India [2014 (9) TM! 578- Calcutta High Court]

Procedure of Assessment Sec. 143(2)(ii) - Fact that case is selected for scrutiny under CASS does not mean s. 143(2) notice & assessment order are void for non-application of mind by AO. [Source: U.P State Industrial Development Corp (UPSIDC) vs. DCIT (ITAT Lucknow), ITA No.448/LKW/2012]

Sec. 148 – Reopening of assessment beyond a period of 4 years without approval of Joint Commissioner as per Sec. 151(2) not valid. [Source: Dr. Neeta Rajan Modi vs. ITO (ITAT Mumbai), ITA No. 370/M/2014]

Sec. 148 – Reopening based on information received from Investigation Wing, without application of mind not sustainable. [Source: ITO Vs. M/s Comero Leasing & Financial (ITAT Delhi) , ITA No. 4281/Del/2010]

Tax Deducted at Source Sec. 194J - TDS not deductible on payment to non-resident translator. The payment made by the assessee to the non-resident translators would not fall within the scope of “fees for technical, managerial or consultancy service” as the translator is not contributing anything technical to the text to be translated. Therefore no disallowance to be made on the same u/s 40(a)(i). [Source: M/s Cosmic Global Ltd. Vs. ACIT (ITAT Chennai), ITA No. 744/Mds/2014]

Revision by the Commissioner Sec. 263 –TPO’s acceptance of ALP shows two views are possible & CIT has no jurisdiction to revise assessment. [Source: CIT vs. SAP Labs Pvt. Ltd. (Karnataka High Court), ITA No. 842/2008]

Penalty Sec. 271(1)(c) – Penalty u/s 271(1)(c) leviable on Bogus gifts. [Source: Kamal Kant Jain v. CIT (Punjab & Haryana High Court), ITA No. 369 of 2013]

Sec. 271(1)(c) - No penalty is to be levied under section 271(1)(c) for setting off brought forward loss and depreciation on wrong advice of counsel. [Source: Sigma Steel Industries vs. ITO, (2014) 48 taxmann.com 286 (Chandigarh - Trib.)]


Miscellaneous NOTIFICATIONS- CIRCULARS

1. Govt. notifies comprehensive DTAA with Colombia. [Source: Notification No. 44/2014 Income Tax, Dated- 23.09.2014]

2. India enters DTAA with Bhutan. [Source: Notification No. 42/2014 Income Tax, Dated- 05.09.2014]

3. The CBDT has extended the “due-date” for furnishing return of income from 30th September, 2014 to 30th November, 2014 for the assessment year 2014-15 for all purposes of the Act, in case of an assessee, who, (i) is required to file his return of income by 30th September, 2014 and (ii) is also required to get his accounts audited under section 44AB of the Act or is a working

partner of a firm whose accounts are required to be audited under section 44AB of the Act. [Source: F.No.153/53/2014-TPL (Pt.I) dated 26.09.2014]

4. Excess TDS Deposited in One Section/ AY can be adjusted in another Section/ AY, as clarified by TDS (CPC).

5. Nil TDS intimation to Department – The Department has introduced a new functionality in the TRACES site wherein the persons who are not required to submit a return of TDS due to non-applicability in any particular quarter shall have to submit a Declaration for the same on TRACES.


INDIRECT TAX

Service Tax

Case Law TMT bars used in Erection of Raw Mill Project Are Eligible for Credit M.S. Angles, M.S. Beams, M.S. Channels and TMT bars used in erection of raw mill project, additional flyash handling system, crusher etc. in a cement factory are eligible for capital goods credit as 'components and parts' [Source: Comm. of Cent. Ex. & Ser. Tax, Cent. Ex. Comm. v. India Cements Ltd.[2014] 48taxmann.com 275 (Madras)]

Providing Buses for Dropping Client’s staff at Door Step are ‘Tour Operator Services’ Providing buses to clients for dropping of staff is covered under Tour Operator Services; and further renting of hired cabs amounts to 'rent-a-cab operator services' and liable to service tax accordingly [Source: Friends Tour & Travels v. Comm. of Cent Ex., Noida [2014] 48 taxmann.com 339 (New Delhi - CESTAT)] Contractee validly reimbursed only ST paid in cash as contract provides for reimbursement on proof of payment Where contract provides for reimbursement of taxes only on production of evidence of 'payment', then, view of contractee that only service tax paid in cash will be reimbursed and not that paid through credit, cannot be faulted [Source: Dhansar Engineering Co. (P.) Ltd. v. Bharat Coking Coal Ltd. [2014] 48 taxmann.com 396 (Jharkhand)] Courses relating to ‘digital and animation effects’ amounts to ‘vocational training’; exempt from service tax Course in "Digital and Animation Effects" involving drawing, clay modelling, Matte Printing, Animation and Visual Effects, Motion Photography and Acting, prima facie, amounts to 'vocational training' and is exempt from service tax [Source: Digital Magic Visual India Ltd. v. Cust, Ex. & Ser. Tax Appellate Tribunal, Chennai[2014] 48taxmann.com 370 (Madras)] Credit of works contract services could be taken on or after 1-4-2011 if construction was completed prior to that Works Contract Services used for construction of cement plant/factory are eligible for credit, if construction completed prior to 1-4-2011 even if invoices are received and credit is taken on or after 1-4-2011 [Source: KCP Ltd. v. Commissioner of Central Excise, Guntur [2014] 48 taxmann.com 98 (Bangalore – CESTAT)] Data processing for foreign clients relating to reservation system located outside India was export of service Computer data processing for foreign clients in relation to client's Computer Reservation System (CRS)/computer software and database located outside India amounts to Business Auxiliary Services, but, it amounts to Export of Service under Export of Services Rules, 2005 and not liable to service tax [Source: Acquire Services (P.) Ltd. v. Comm. of Ser. Tax, Delhi [2014] 48 taxmann.com 269 (New Delhi - CESTAT)]


Development of land for township isn’t taxable under ‘construction of complex’ or ‘works contract’s’ services Development of land for township (involving levelling, demarcation of plots, boundaries, underground cabling/pipelining, etc.) is not taxable under 'construction of residential complex services' and 'works contract services' [Source: Alokik Township Corporation v. Comm. of Cent. Ex. & Ser. Tax, Jaipur [2014] 48 taxmann.com 169 (New Delhi - CESTAT)]

Employer couldn’t avail of credit for Catering services after recovering cost of such services from its employees Cenvat Credit : Where it was found that assessee was recovering amount from beneficiaries/its own employees while running canteen, assessee was not entitled to Cenvat Credit claimed by it in respect of catering services [Source: Cema Electric Lighting Products India (P.) Ltd. v. Comm. of Cent. Ex. [2014] 48 taxmann.com 232 (Gujarat)] HC grants reasonable time to department for pursuing revisional remedy against order of Tribunal Service Tax : Where Tribunal set aside order of penalty imposed upon petitioner and Department decided to file revision against order of Tribunal, reasonable time was to be allowed to department to pursue revisional remedy [Source: Viswambaran v. Intelligence Inspector, Squad No. III [2014] 48 taxmann.com 394 (Kerala)] HC reduces pre-deposit amount of sub-contractor as entire tax had been paid by main contractor Service Tax : When tax on entire value has been paid by main contractor, prima facie, sub-contractor was not liable to service tax and accordingly, pre-deposit payable by sub-contractor was liable to be reduced [Source: Mohabir Enterprises v. Comm. of Ser. Tax, Chennai Comm. [2014] 48 taxmann.com 371 (Madras)]


Imparting training to students in Nautical Science and Marine Engineering was liable to service tax Service Tax : Imparting training to students in Nautical Science and Marine Engineering and conducting short term courses like Oil Pollution and Response Course, Fire Prevention and Fire Fighting Course, Personal Survival Technique Course, Tanker Familiarization Course, Personal Safety and Social Responsibility Course for sea men and students is liable to service tax under Commercial Training or Coaching Services [Source: Academy of Maritime Education & Training Trust v. Comm. of Ser. Tax, Chennai [2014] 48 taxmann.com 272 (Madras)] Input service credit was available even when service provider had deposited the service tax belatedly Cenvat Credit : Cenvat credit of input service is available after payment of value of input service (along with tax) and there is no requirement that service tax should have been deposited by service provider before availment of credit; if service provider has not deposited service tax, revenue's remedy lies at end of service provider [Source: General Manager, BSNL v. Comm. of Cent. Ex., Lucknow [2014] 48 taxmann.com 35 (New Delhi - CESTAT)] No denial of refund on ground that assessee could have used credit by making exports on payment of duty Cenvat Credit : Claim for refund of input credit under rule 5 of CENVAT Credit Rules, 2002/2004 on exports under bond without payment of duty, cannot be rejected on ground that assessee could have exported goods on payment of duty utilizing credit. [Source: Poornam Beverages (P.) Ltd. v. Comm. of Cent. Ex. [2014] 48 taxmann.com 268 (Chennai - CESTAT)]

No input credit if supplier had confirmed non-delivery of goods even when assessee had made payments by cheques Cenvat Credit : Even if assessee had made payments by cheque, if supplier and transporter had specifically deposed that there was no actual delivery of inputs to assessee, credit taken by assessee is liable to be reversed with penalty and extended period of limitation is available for such fraud. [Source: Singla Forgings (P) Ltd. v. Comm. of Cent. Ex., Delhi-III [2014] 48 taxmann.com 214 (New Delhi – CESTAT)]

No suppression of facts if nature of input services couldn’t be disclosed in excise return in absence of any column Cenvat Credit : In absence of any column in returns requiring nature of input or input services to be disclosed, non-disclosure of same cannot attribute any malafide to assessee and, therefore, extended period of limitation cannot be invoked [Source: Ultra Tech Cement Ltd. v. Comm. of Cent. Ex., Jaipur-II [2014] 48 taxmann.com 99 (New Delhi - CESTAT)]

Sum collected for various services couldn’t be considered as inclusive of ST; CESTAT denied benefit of cum-duty Service Tax : Activity of receiving goods, warehousing them, receiving dispatch orders, arranging dispatch, maintaining records of incoming shipments and deliveries, etc. amounts to Clearing and


Forwarding Agents Services even if : (a) warehouse, (b) computers and software; and (c) transports are provided/arranged by client Service Tax : Where amount collected is for various components of services, amount collected cannot be considered as including Service Tax; hence, benefit of cum-duty cannot be extended [Source: Talera Logistics (P.) Ltd. v. Comm. of Cent. Ex, Pune-III [2014] 48 taxmann.com 233 (Mumbai - CESTAT)]

Tribunal had rightly directed full pre-deposit of ST as assessee failed to deposit ST collected from customers: HC Service Tax : Where service tax has been collected from customers, assessee could be directed to make full pre-deposit of service tax while waiving pre-deposit of interest and penalty [Source: Om Sakthi Travels (P.) Ltd. v. Comm. of Ser. Tax, Ser. Tax Comm., Chennai [2014] 48 taxmann.com 162 (Madras)] Tribunal had to follow principle of consistency in its interim order, says CESTAT Cenvat Credit : Where Tribunal has granted stay in matter relating to same assessee for earlier period, Tribunal must follow consistency in rendering judgments or passing interim orders to ensure legal propriety and judicial discipline and stay must be granted in subsequent matters as well [Source: Tata Steel Ltd. v. Commissioner of Central Excise, Mumbai [2014] 48 taxmann.com 70 (Mumbai - CESTAT)]


COMPANY LAW UPDATES Circular/Notification/Guidance Amendment of Companies (Corporate Social Responsibility Policy) Rules, 2014 In exercise of the powers conferred under Section 135 and sub-sections (1) and (2) of Section 469 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules to amend the Companies (Corporate Social Responsibility Policy) Rules, 2014, namely:— 1. (1) These rules may be called the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2014. (2) They shall come into force on the date of their publication in the Official Gazette. 2. In the Companies (Corporate Social Responsibility Policy) Rules, 2014, in rule 4, in sub-rule (6), after the words “but such expenditure” the words and comma “including expenditure on administrative overheads,” shall be inserted. [Source: Notification No. G.S.R. 644 (E) dated 12th September, 2014]

Clarification with regard to provisions of Corporate Social Responsibility (CSR) under section 135 of the Companies Act, 2013. In continuation of the General Circular No. 21 of 2014 dated 18.06.2014, the following clarifications are hereby issued: (i) Rule 4(6) of the Companies (Corporate Social Responsibility Policy) Rules, 2014 as notified on 27.02.2014 has been amended by notification dated 12.09.2014; and (ii) Consequently, clarification (iv) in General Circular No. 21 of 2014 dated 18.06.2014, stands omitted. [Source: General Circular No. 36/2014 dated 17th September, 2014]


Amendment of Companies (Appointment and Qualification of Directors) Rules, 2014 In exercise of the powers conferred by second proviso to sub section (1), sub section (4) and clause (f) of sub section (6) of section 149, sub sections (3) and (4) of section 150, section 151, sub section (5) of section 152, section 153, section 154, section 157, section 160, sub section (1) of section 168 and section 469 of the Companies Act, 2013, the Central Government hereby makes the following rules to amend the Companies (Appointment and Qualification of Directors) Rules, 2014, namely:— 1. (1) These rules may be called the Companies (Appointment and Qualification of Directors) Amendment Rules, 2014. (2) They shall come into force on the date of their publication in the Official Gazette. [Source: Notification No. G.S.R. ….. (E) dated 18th September, 2014] Constitution of National Advisory Committee on Accounting Standards In exercise of the powers conferred by sub-section (1) of section 210A of the Companies Act, 1956 (1 of 1956), the Central Government hereby constitutes an Advisory Committtee to be called the National Advisory Committee on Accounting Standards to advise the Central Government on the formulation and laying down of accounting policies and accounting standards for adoption by companies or class of companies under the said Act. The Chairperson and members shall hold office for a period of one year from the date of publication of the notification in the Official Gazzete or till the constitution of National Financial Reporting Authority under section 132 of the Companies Act 2013 (18 of 2013) whichever is earlier. This notification to come into force on 18th September 2014 [Source: Notification No. S.O. 2425(E) dated 18th September, 2014]


RBI UPDATES Circular/Notification/Guidance External Commercial Borrowings (ECB) in Indian Rupees 1. With a view to providing greater flexibility for structuring of ECB arrangements, it has been decided

that recognised non-resident ECB lenders may extend loans in Indian Rupees subject to the following conditions:

a. The lender should mobilise Indian Rupees through swaps undertaken with an Authorised Dealer Category-I bank in India.

b. The ECB contract should comply with all other conditions applicable to the automatic and approval routes as the case may be.

c. The all-in-cost of such ECBs should be commensurate with prevailing market conditions. 2. For the purpose of executing swaps for ECBs denominated in Indian Rupees, the recognised ECB

lender, if it desires, may set up a representative office in India following the prescribed laid down process

3. It may be noted that the hedging arrangement for ECBs denominated in Indian Rupees extended by non-resident equity-holders shall continue to be governed by the provisions of AP (DIR Series) Circular No. 63 dated December 29, 2011.

[Source: RBI/2014-15/207 A.P. (DIR Series) Circular No.25 dated 3rd September, 2014] Foreign Direct Investment (FDI) in India - Issue of equity shares under the FDI Scheme against legitimate dues The extant guidelines for issue of shares/convertible debentures under the automatic route have been reviewed in consultation with the Government of India and, accordingly, it has been decided to permit issue of equity shares against any other funds payable by the investee company, remittance of which does not require prior permission of the Government of India or Reserve Bank of India under FEMA, 1999 or any rules/ regulations framed or directions issued thereunder, provided that:

(i) The equity shares shall be issued in accordance with the extant FDI guidelines on sectoral caps, pricing guidelines etc. as amended by Reserve bank of India, from time to time; Explanation: Issue of shares/convertible debentures that require Government approval in terms of paragraph 3 of Schedule 1 of FEMA 20 or import dues deemed as ECB or trade credit or payable against import of second hand machinery shall continue to be dealt in accordance with extant guidelines;

(ii) The issue of equity shares under this provision shall be subject to tax laws as applicable to the funds payable and the conversion to equity should be net of applicable taxes.

[Source: RBI/2014-15/234 A.P. (DIR Series) Circular No.31 dated 17th September, 2014]


CORPORATE FINANCE

Latest News Private Equity IDFC Alternatives sells IT parks in Noida & Pune to Blackstone for $178M IDFC Alternatives, the private equity arm of IDFC Ltd, has signed a share purchase agreement with real estate funds managed by global investment giant Blackstone for selling its entire holding in its subsidiaries Galaxy Mercantiles Limited and Neopro Technologies Private Limited. [Source:VCCircle, SEPT 29,2014] Tata Capital managed funds picking 17.36% in Standard Greases Tata Capital managed private equity funds are investing an undisclosed amount to pick 17.36 per cent stake in Mumbai-based Standard Greases & Specialties, which is into greases and lubricating oils, through issue of fresh securities. [Source:VCCircle, SEPT 23,2014] NephroPlus is expanding from cash raised recently; eyes $30M more next year Hyderabad-based dialysis chain Nephrocare Health Services Pvt Ltd, which runs a dialysis chain under the brand NephroPlus and raised $10 million in its Series B round of funding earlier this year led by International Finance Corp. [Source:VCCircle, SEPT 19,2014] India Life Sciences Fund II raises $143M, to deploy $40M in 12 months Life sciences-focused private equity fund manager InvAscent has raised Rs 875 crore ($143.2 million) to make a final close of its second fund India Life Sciences Fund II and is now looking to deploy Rs 250 crore or over a quarter of it in the next twelve months [Source:VCCircle, SEPT 18,2014] Global Environment Fund investing $7.4M in Shakti Pumps Global Environment Fund (GEF), an alternative asset investment management firm, is investing Rs 45 crore (approximately $7 million) in submersible water pumps manufacturer Shakti Pumps India Ltd through an issue of compulsory convertible preference shares (CCPS) [Source:VCCircle, SEPT 18,2014] Hyperlocal street view search engine WoNoBo in advanced talks to raise $15M Genesys Virtual World Limited, the company behind hyper-local search engine providing 360 degree street views underWoNoBo.com, is in advanced talks with a few strategic and PE investors to raise $15 million in funding. [Source:VCCircle, SEPT 17,2014] Logistics services provider Vrrddhi Freight looking to raise over $2M Chennai-based Vrrddhi Freight Pvt Ltd, an integrated logistics services provider, is looking to raise over $2 million for meeting working capital expenditure. [Source:VCCircle, SEPT 16,2014]


Singapore's distressed assets fund SSG Capital buys 49% of Asset Care Asset Care and Reconstruction Enterprise has sold 49 per cent stake to Singapore-based SSG Capital Management Pte Ltd. [Source:VCCircle, SEPT 12,2014] Former Essel Financial CEO raises $65M realty fund, planning another fund The former chief executive officer of Essel Financial Services Amit Goenka has raised a residential real estate focused fund with a corpus of $65 million (Rs 400 crore). [Source:VCCircle, SEPT 11,2014] Mumbai-based developer Acme looking to raise $33M from private investors Mumbai-based real estate developer Acme Group is looking to raise $33 million (Rs 200 crore) through a mixture of equity and debt from private institutional investors. [Source:VCCircle, SEPT 9,2014] GE Capital clocks almost 2x as Biocon buys back its stake in Syngene for $35M Drug maker Biocon today acquired GE Capital's entire 7.69 per cent stake in its research services subsidiary Syngene International for Rs 215.38 crore. [Source:VCCircle, SEPT 9,2014] Carlyle raises $3.9B for Asia fund Private equity firm Carlyle Group LP has closed its fourth Asia fund Carlyle Asia Partners IV (CAP IV) at $3.9 billion, the second-largest private equity fund ever raised for Asia investments. [Source:VCCircle, SEPT 8,2014] Hathway Cable raising $50M from global asset manager Capital Group India’s largest cable service operator by revenues Hathway Cable & Datacom is raising around Rs 300 crore ($50 million) through a preferential allotment of shares to a couple of funds managed by Capital Research and Management (Capital Group) [Source:VCCircle, SEPT 5,2014] General Atlantic scores over 2x on $66M part exit from IndusInd Bank Private equity firm General Atlantic has partially exited its three-year-old investment in Hindujas-promoted IndusInd Bank by selling around one-fourth of its total holding for Rs 397.8 crore ($65.5 million). [Source:VCCircle, SEPT 3,2014] Chinese solar panel maker Hareon partners Nereus Capital for projects in India Chinese solar panels manufacturer Hareon Solar Technology Co Ltd (Hareon) is partnering private equity firm Nereus Capital (Nereus) to develop over 150 MW of solar power projects in India over the next two years. [Source:VCCircle, SEPT 2,2014] Brigade Group forms $247M JV with Singapore’s GIC for residential realty projects Bangalore-based Brigade Group has entered into a Memorandum of Understanding (MoU) with Singapore's sovereign wealth fund GIC to jointly invest up to Rs 1,500 crore ($247 million) in residential developments in select cities of South India.


[Source:VCCircle, SEPT 1,2014]

Merger & Acquisition Praj Industries hikes stake in water treatment subsidiary to 80% for $3.3M Process and project engineering firm Praj Industries Ltd has raised its holding in its water treatment subsidiary Praj HiPurity Systems Ltd (earlier Neela Systems Ltd) by acquiring an additional 10 per cent stake for Rs 20.40 crore ($3.3 million). [Source:VCCircle, SEPT 30,2014] Valecha to sell road assets to US-based New Generation for $50M Mumbai-based civil engineering firm Valecha Engineering Ltd is selling three road assets to US-based New Generation Infrastructure Inc, a subsidiary of New Generation Holdings Inc, for Rs 309 crore ($50.3 million). [Source:VCCircle, SEPT 29,2014] Emami to buy edible oil brand of Rasoi Group for $2M Emami Biotech Ltd, the edible oil and bio-diesel arm of Rs 8,000 crore Emami Group, has entered into an agreement with Kolkata-based Rasoi Group, to buy Rasoi brand of vanaspati and edible oil, for Rs 13 crore ($2.1 million). [Source:VCCircle, SEPT 26,2014] Sagar Cements to acquire BMM Cements at an enterprise value of $90M Hyderabad-based cement manufacturer Sagar Cements Ltd is buying BMM Cements Ltd at an enterprise value of Rs 540 crore ($90 million). Sagar Cements' board has given its in-principle approval for the proposed acquisition. [Source:VCCircle, SEPT 25,2014] DLF in talks with Shriram Properties to sell land parcel in Chennai for $20M DLF Ltd, the top real estate developer by market value, is in talks with southern realtor Shriram Properties to sell a land parcel in Chennai for Rs 120 crore ($19.6 million). [Source:VCCircle, SEPT 24,2014] Pidilite acquiring adhesive business of Blue Coat for $43M Pidilite Industries Ltd, a Mumbai-based adhesives maker, has got the board approval to acquire adhesive business of Blue Coat Pvt Ltd on a slump sale basis for Rs 263.57 crore ($43.3 million) [Source:VCCircle, SEPT 23,2014]


Engineering services firm Everstar scouting for strategic investor in India Indian expats owned Everstar Engineering and Services Pte Ltd., a Singapore-based firm running engineering services units in South East Asia, is scouting for strategic investor in India. [Source:VCCircle, SEPT 19,2014] SAP to acquire Cleartrip backer Concur Technologies for $8.3B German enterprise software major SAP has entered into an agreement to acquire Nasdaq-listed Concur Technologies Inc., a travel and expense management solutions firm co-founded by its Indian origin chief Steve Singh, for approximately $8.3 billion. Concur is a key investor in Indian online travel agency Cleartrip.com. [Source:VCCircle, SEPT 19,2014] Apollo to acquire Hetero Med's retail pharmacy stores business for $24M Apollo Hospitals Enterprise Ltd, country’s largest healthcare services provider by market capitalisation and the top pharmacy chain operator under Apollo Pharmacy banner, is acquiring pharmacy stores operated by Hyderabad-based Hetero Med Solutions Ltd (HMSL), for up to Rs 146 crore ($23.8 million). [Source:VCCircle, SEPT 17,2014] Bosch buying JV partner in ZF Steering, makes open offer to buy 26% more for $17M Robert Bosch GmbH has struck a deal to acquire the stake held by its equal equity joint venture partner in ZF Lenksysteme GmbH, the promoter of public listed auto parts maker ZF Steering, and has made an open offer to take a controlling stake in the Indian firm. [Source:VCCircle, SEPT 16,2014] JSW Steel is in race to acquire Italy's Lucchini for around $100M Private steel major JSW Steel is planning to acquire Italy's Lucchini SpA for less than USD 100 million and start operations in the current calendar year. [Source:VCCircle, SEPT 15,2014] Cognizant to buy out US-based healthcare IT services firm TriZetto for $2.7B IT services major Cognizant Technology Solutions Corp has signed a definitive agreement to acquire the US-based privately held healthcare IT services provider TriZetto Corp for $2.7 billion. [Source:VCCircle, SEPT 15,2014] Fortis selling Singapore-based diagnostics arm RadLink to Malaysia's IHH for $109M Fortis Healthcare has struck a deal to sell its entire holding in Singapore-based healthcare services unit RadLink-Asia Pte Ltd and its subsidiaries to Medi-Rad Associates Ltd (Medi-Rad), an indirect wholly-owned subsidiary of IHH Healthcare Berhad, for S$137 million ($108.6 million) [Source:VCCircle, SEPT 12,2014] Spice Digital acquires 26% stake in SMS-based search engine Txtbrowser maker Vavia


Spice Digital Ltd (formerly Cellebrum Technologies), a subsidiary of public listed Spice Mobility (formerly S Mobility), has acquired 26 per cent stake in Bangalore-based tech solution firm Vavia Technologies Pvt Ltd. [Source:VCCircle, SEPT 10,2014] Cipla buying two plants owned by promoter's private firm Okasa for $17M Medispray Laboratories Private Limited, a wholly owned subsidiary of Mumbai-based drugmaker Cipla Ltd, is acquiring two manufacturing units of private firms associated with Hamieds, the promoter of Cipla, for Rs 101 crore ($16.7 million). [Source:VCCircle, SEPT 5,2014] Sanlam ups stake in Shriram Capital for $68M South African financial services firm Sanlam has acquired additional stake in Shriram Capital Ltd, the privately held holding arm for various financial services businesses of Shriram group, for around Rs 415 crore ($68 million). [Source:VCCircle, SEPT 4,2014] NTT hiking stake in Netmagic to 81.6% for $95M The proposal of data centre solutions firm Netmagic Solution to increase the stake of its parent company Japan-based NTT Communications in it to up to 81.6345 per cent for Rs 575 crore [Source:VCCircle, SEPT 4,2014] Airtel to acquire over 2.7M subscribers of Essar-owned Kenyan telco YuMobile Airtel Networks Kenya Ltd (Airtel Kenya), a wholly-owned subsidiary of Bharti Airtel International Netherlands BV, has signed a definitive agreement with Essar Telecommunications Kenya Ltd, which operates under the brand of yuMobile, to acquire its over 2.7 million subscribers. [Source:VCCircle, SEPT 1,2014]

Venture Capital Fashion e-tailer Yepme secures additional funding from existing investors including Helion Yepme.com has raised funding from existing investors, including Helion Venture Partners. [Source:VCCircle, APRIL 30,2014] 5ideas Startup Superfuel invests in live TV interaction and engagement app WooMe


Delhi-based Telefusion Mobile TV Pvt Ltd, the company behindWooMe.mobi, a mobile-based live TV interaction and engagement app, has secured an undisclosed amount in funding from 5ideas Startup Superfuel, an early-stage venture capital initiative launched by Pearl Uppal and Gaurav Kachru who earlier headed the e-commerce ventures of the Delhi-based Smile Group. Uppal and Kachru also invested in their personal capacity. [Source:VCCircle, SEPT 26,2014] Canaan Partners' Rahul Khanna floats $50M venture debt fund for India Rahul Khanna, managing director of India- and US-based VC firm Canaan Partners, has launched a Rs 300 crore (around $50 million) debt fund, which will seek to back early-stage and established technology ventures in India. [Source:VCCircle, SEPT 23,2014] Cubito pivots to employee transport solutions; raising under $165K in angel round Bangalore-based online shared-cab service Cubito has pivoted its business model and has now become a provider of employee transportation solutions. [Source:VCCircle, SEPT 23,2014] NewsHunt owner raises $18M from Sequoia, Matrix, Omidyar Bangalore-based Ver Se Innovation Pvt Ltd, owner of the mobile news aggregation platform NewsHunt among other mobile applications, has scooped up $18 million (around Rs 110 crore) in its Series B round of funding from Sequoia Capital, with participation from existing investors Matrix Partners India and Omidyar Network. [Source:VCCircle, SEPT 22,2014] Pearson infuses $260K more into science education startup Experifun Pearson Affordable Learning Fund (PALF), an education fund run by UK-based education company Pearson Plc, has invested Rs 1.6 crore (over $260,000) in Bangalore-based Experifun Learning Solutions Pvt Ltd, which designs next generation science learning aids. [Source:VCCircle, SEPT 19,2014] Mobile messaging concierge service Haptik raises $1M from Kalaari Capital Mumbai- and San Francisco-based Haptik Inc., a startup that offers a mobile-based chat platform that enables users to get help with their products and services, has secured $1 million in its first round of equity funding from Kalaari Capital. [Source:VCCircle, SEPT 18,2014] Events discovery app Nearify raises funding from Seedfund, India Quotient & Bedrock Ventures Gurgaon-based Novelroots Internet Pvt Ltd, a startup that operates under the brand Nearify, an events discovery app, has secured an undisclosed sum in seed funding from Seedfund Advisors and India Quotient, with participation from Bedrock Ventures, a seed- and early-stage investor. [Source:VCCircle, SEPT 16,2014]


Grocery e-tailer BigBasket raises $32.8M from Helion, Zodius, others Online grocery retailer BigBasket.com, owned and operated by Bangalore-based SuperMarket Grocery Supplies Pvt Ltd, has secured Rs 200 crore ($32.8 million) in its Series B round of funding from Helion Venture Partners and Mumbai-based Zodius Capital. [Source:VCCircle, SEPT 12,2014] MakeMyTrip floats $15M innovation fund to back travel-related startups NASDAQ-listed online travel services firm MakeMyTrip (MMT) has created an innovation fund worth $15 million (around Rs 90 crore), which will seek to invest in early-stage ventures operating in the travel and tourism space, with a focus on mobile and IP-based startups. [Source:VCCircle, SEPT 11,2014] Nexus Venture discloses $1.23M investment in online healthcare startup Lybrate Venture capital firm Nexus Venture Partners has disclosed that it recently invested $1.23 million in India- and US-based Lybrate Inc., the company behind Lybrate.com, an online platform for patients to book appointments with doctors. [Source:VCCircle, SEPT 10,2014] Canadian startup accelerator Ryerson Futures to launch $5M seed fund in India Ryerson Futures Inc (RFI), a Toronto-based technology startup incubator, is planning to launch a seed fund worth $5 million in India, a top executive of the firm told VCCircle. The fund will seek to invest between $50,000 and $500,000 each in 12-15 startups every year. [Source:VCCircle, SEPT 9,2014] Ecom Express raises over $16.5M from Peepul Capital Delhi-based e-commerce logistics solutions provider,Ecom Express Pvt Ltd, has raised more than Rs 100 crore ($16.5 million) from Peepul Capital. [Source:VCCircle, SEPT 9,2014] E-tailer PrettySecrets raises $2M in Series A from Orios, India Quotient, IAN Mumbai-based MTC Ecom Pvt Ltd, owner of online lingerie shop PrettySecrets, secured its Series A round of funding from Orios Venture Partners, a VC fund run by angel investor Rehan Yar Khan, besides Indian Angel Network (IAN) and early-stage investor India Quotient. [Source:VCCircle, SEPT 8,2014] Tamil Nadu-based IT services provider MercuryMinds looking to raise $5M Tamil Nadu-based IT services and solutions provider MercuryMinds Technologies Pvt Ltd is looking to raise around $5 million (Rs 30 crore) for its product development and growth. [Source:VCCircle, SEPT 5,2014] myNoticePeriod.com bags $330K from IDG Ventures, others Bangalore-based Abhiman Technologies Pvt Ltd, which operates under the name myNoticePeriod.com, an online recruitment platform, has secured Rs 2 crore (over $330,000) in seed funding from IDG Ventures India, with participations from a group of individuals including Prashant Kirtane, CTO and co-


founder of travelmob.com; Shamsunder Talreja, owner of JetSet Capital; Raghu Krishnananda, former senior director (product engineering) at Yahoo; and Ravi Gururaj of Frictionless Ventures. [Source:VCCircle, SEPT 4,2014] Unitus Seed Fund gets additional commitment; corpus moves to $20M Seed-stage impact investor Unitus Seed Fund has secured an additional commitment of $7 million from new investors taking the total corpus to $20 million for its India-focused micro VC fund [Source:VCCircle, SEPT 3,2014] Payment solutions firm ItzCash raises under $15M in Series C funding Mumbai-based ItzCash Card Ltd, a provider of pre-paid card and payment solutions, has raised under $15 million in funding from a group of unnamed strategic Asian investors [Source:VCCircle, SEPT 2,2014]


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RNM Alert VOL LXIX SEPTEMBER 2014 - Final Alert VOL LXIX SEPTEMBER...There he gave a presentation on ... September 2014 quarter, ... acquisition is to be taxed in year of receipt instead