No deduction of tax from medical allowances paid to employees along with salary before incurring of

IT: Employer was not at fault for not deducting tax at source from medical allowances paid to its employees before incurring of actual medical expenditure. It couldn't be deemed to be in default for non-deduction of tax on medical reimbursements if it has made bona fide estimate of taxable salary of its employees

Repair exp. isn't capital in nature merely because it increases life of an existing asset

IT : Increase in life of existing assets beyond their original estimated economic life by repairs and maintenance could not be taken as ground for treating such expense as capital in nature

Sec. 80-IB benefit allowed as developer bore risk of development and had dominant control over proje

IT: Benefit of section 80-IB(10) would be available if developer had dominant control over project and had developed land at its own cost and risk

No tax on a club working for its members on principle of 'mutuality' even if it receives other incom

IT: Where assessee-club provided its facilities only to its members and their families, simply because some professionals/contractors were engaged in organizing club activities from whom club derived royalty/commission at fixed rate, it could not be said that club was not eligible for exemption on principles of mutuality

Facilitating online exams is liable to service tax under 'Business Auxiliary service'

ST : Activities in relation to conduct of online examination and evaluation by a foreign company in relation to certifying professional competence of candidates in various spheres of software skill are, prima facie, Business Auxiliary Services

No concealment penalty if assessee offered additional income to buy peace and to avoid prolonged lit

IT: Where assessee offered amount in question as additional income to buy peace and to avoid prolonged litigation, addition made on basis of such offer of assessee did not call for levy of penalty under section 271(1)(c)

Not punishing an alleged one won't allow another to seek pardon; no immunity if SEBI didn't act agai

SEBI: If appellant has been found to be guilty of violating regulatory framework, it cannot claim exoneration on ground that no action has been initiated by SEBI against another person who has been found guilty for violating Regulations

RBI/2013-14/192 A. P. (DIR Series) Circular No.29 dated 20-08-2013

Reserve Bank Of India

A. P. (DIR Series) Circular No.29

August 20, 2013

To

All Category-I Authorised Dealer Banks

Madam / Sir,

Investments by Non-resident Indians (NRIs) under Portfolio Investment Scheme (PIS) Liberalisation of Policy

Attention of Authorised Dealers Category-I (AD Category - I) banks is invited to Schedule 3 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 (hereinafter referred to as Notification No. FEMA 20), as amended from time to time in terms of which, NRIs can invest under PIS on repatriation and/or non-repatriation basis in shares and convertible debentures of listed Indian companies on a recognized stock exchange in India through a registered stock broker. Further, NRIs may purchase and sell shares/convertible debentures under the PIS through a branch designated by an Authorised Dealer for the purpose and duly approved by the Reserve Bank of India.

2. As a measure of further liberalisation, it has been decided to
   

   i) allot Unique Code number only to Link office of the AD Category - I bank; and

   
   

   ii) dispense with the allotment of Unique Code number to each branch designated by that AD Category - I bank administering the Scheme. Accordingly, henceforth in accordance with the policy approved by the Board, AD Category - I bank shall be free to permit its branches to administer the Portfolio Investment Scheme for NRIs subject to the following:

   
   

   a) the AD Category - I bank while granting permission to NRI for investment under PIS shall allow them to operate the scheme as per the terms and conditions are as Annex-A;

   
   

   b) the designated link office shall continue to report on a daily basis PIS transactions undertaken on behalf of NRIs for their entire bank to the Reserve Bank under the Online Report Filing System (ORFS) in form LEC (NRI) as per present practice in vogue web site (https://secweb.rbi.org.in/ORFSMainWeb/Login.jsp).;

   
   

   c) the AD Category - I bank shall provide to the Reserve Bank the complete contact details of such link office in advance before commencing operations;

   
   

   d) the AD Category - I bank shall sensitise the branches administering the Scheme to ensure that NRIs are not allowed to invest in any Indian company which is engaged or proposes to engage in the business of chit fund, Nidhi company, agricultural or plantation activities, real estate business (does not include development of townships, construction of residential / commercial premises, roads or bridges, educational institutions, recreational facilities, city and regional level infrastructure, townships), construction of farm houses, manufacturing of cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes and trading in Transferable Development Rights (TDRs) and in sectors/ activities as specified in terms of Notification No. FEMA.1/2000-RB dated May 3, 2000 , as amended from time to time; and

   
   

   e) ensure compliance with instructions issued through A.D.(M.A. Series) Circulars, EC.CO.FID circulars annexed as Annex-B and the regulatory requirements under FEMA, 1999. It may be noted that Overseas Corporate Bodies( OCBs) have been derecognized as an eligible ‘class of investor’ under various routes/scheme available under the extant Foreign Exchange Management Regulations in terms of the Foreign Exchange Management [withdrawal of General Permission to Overseas Corporate Bodies( OCBs)] Regulations, 2003 notified vide Notification No. FEMA.101/2003-RB dated October 3, 2003 .

   
   


3. AD Category - I banks may bring the contents of the circular to the notice of their customers/constituents concerned.


4. Reserve Bank has since amended the Regulations and notified vide Notification No. FEMA.261/2013-RB dated February 27, 2013 vide G.S.R. 515(E) dated July 30, 2013.


5. The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully,

(Rudra Narayan Kar)

Chief General Manager-in-Charge

RBI/2013-14/192

Profits derived from transmission or distribution of power through new lines is eligible for sec. 80

IT : Profit derived from transmission of distribution of power through network of new transmission or distribution lines is eligible for deduction under clause (b) to section 80-IA(4)(iv)

Exemption can be claimed on services only if tax hasn't been collected by assessee from recipients

ST/ECJ : An exemption may be claimed, a posteriori, by assessee if he : (1) has claimed benefit of exemption when he submitted his tax return and (2) has not invoiced tax to recipients of his services

RBI/2013-14/191 A.P. (DIR Series) Circular No.28 dated 19-08-2013

Reserve Bank Of India

A.P. (DIR Series) Circular No.28

August 19, 2013

To

All Banks Authorised to Deal in Foreign Exchange

Madam/Sir,

Foreign Investments in Asset Reconstruction Companies (ARC)

Attention of Authorized Dealers is invited to the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 notified by the Reserve Bank of India vide Notification No.20 dated 3^rd May 2000 as amended from time to time and A.P.(DIR Series) Circular No.16 dated November 11, 2005 .

2. In terms of the aforesaid circular :
   
   
   
   1. Foreign Direct Investment (FDI) upto 49% in the equity capital of Asset Reconstruction Companies (ARCs) was permitted subject to certain conditions. However, investment by Foreign Institutional Investors (FIIs) in the equity capital of ARCs was not permitted; and
   
   
   2. general permission was granted to Foreign Institutional Investors (FIIs) to invest in Security Receipts (SRs) upto 49 per cent of each tranche of scheme of Security Receipts subject to condition that investment of a single FII in each tranche of scheme of SRs shall not exceed 10 per cent of the issue.
   
   
   
   
   


3. A review of the policy was undertaken and it has been decided as under:
   

   The ceiling for FDI in ARCs has been increased from 49% to 74% subject to the condition that no sponsor may hold more than 50% of the shareholding in an ARC either by way of FDI or by routing through an FII. The foreign investment in ARCs would need to comply with the FDI policy in terms of entry route conditionality and sectoral caps.

   
   

   The foreign investment limit of 74% in ARC would be a combined limit of FDI and FII. Hence, the prohibition on investment by FII in ARCs will be removed. The total shareholding of an individual FII shall not exceed 10% of the total paid-up capital.

   
   

   The limit of FII investment in SRs may be enhanced from 49% to 74% of the paid up value of each tranche of scheme of Security Receipts issued by the Asset Reconstruction Companies. Further, the individual limit of 10% for investment of a single FII in each tranche of SRs issued by ARCs may be dispensed with. Such investment should be within the FII limit on corporate bonds prescribed from time to time, and sectoral caps under the extant FDI Regulations should be complied with.

   
   


4. A copy of Press Release dated December 21, 2012 issued in this regard by Department of Financial Services, Ministry of Finance Government of India is as per Annex.


5. Reserve Bank of India has since amended the Regulations and notified vide Notification No. FEMA.254/2013-RB dated January 07, 2013 vide G.S.R.No.344(E) dated May 29, 2013.


6. Authorised Dealer banks may bring the contents of this circular to the notice of their constituents and customers concerned.


7. The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions/approvals, if any, required under any other law.

Yours faithfully,

(Rudra Narayan Kar)

Chief General Manager-in-Charge

RBI/2013-14/191

Sum received on sale of business is a capital receipt if it results in loss of profit earning appara

IT-I: Where assessee sold its merchant banking business in form of employees, customer and client relationship and certain know-how related to said business, there being loss of enduring trading assets, amount received in respect of same was to be regarded as capital receipt not chargeable to tax