Tag Archives: LexCounsel

ILN Today Post

Government to Implement Advance Pricing Arrangements

The Government of India (“GoI”) has decided to give a breather to various multinational companies having business in India, from the aggressive tax administration in transfer pricing matters. The GoI has confirmed that it will soon notify guidelines for Advance Pricing Arrangements (“APAs”).

In common parlance, APAs are agreements executed in advance between tax payers and the tax authorities with respect to pricing of transactions between the foreign and local entities of the same group, operative for a specific period. Transfer pricing norms seek to prevent manipulation of prices in transactions between related parties, which manipulation may lead to transfer of income from high tax jurisdictions to lower tax jurisdictions. In the process, the high tax jurisdiction tends to lose on tax collections. Administration of transfer pricing norms leads to tax disputes and transfer pricing adjustments.

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ILN Today Post

AICTE Clears Way for CFA

The 5 years long legal tussle between the All India Council for Technical Education (AICTE) and the US-based CFA Institute, over the conduct of CFA examinations in India without AICTE approval, is finally nearing conclusion. At the hearing held on April 17, 2012 at the Delhi High Court, the AICTE declared that its executive committee had concluded that the existing AICTE regulations do not apply to the CFA program, thus drawing the curtains on this long drawn legal battle.

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ILN Today Post

“Control” Redefined

The Supreme Court of India (“SC”) disposed of an appeal by the Securities and Exchange Board of India (“SEBI”) challenging the decision of the Securities Appellate Tribunal (“SAT”) in the case of SEBI Vs. Subhkam Ventures (I) Pvt. Ltd, without giving any rest to the question as to whether veto rights and/or negative rights in a company constitutes ‘control’ or not.

The SC went on to state that, “the impugned order passed by the SAT will not be treated as a precedent”, consequently the question of law relating to what constitutes ‘control’ still remains open.

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ILN Today Post

Investment Friendship with Pakistan

DIPP has sent a proposal to the Ministry of Finance, on February 16, 2012, to relax the current FDI norms to allow FDI from Pakistan. In terms of the present FDI norms, a non-resident entity other than a citizen of Pakistan or an entity incorporated in Pakistan can invest in India. Pakistan is the only country expressly debarred from investing into India. An individual or an entity incorporated in Bangladesh can invest only under the FIPB approval route. Although Pakistan allows FDI from India, the Government of India has always had security concerns in reciprocating Pakistan’s stance.

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ILN Today Post

Indian Aviation Industry in High Spirits

Excessive lobbying by major domestic carriers like Kingfisher Airlines and GoAir urging the Government of India to allow Foreign Direct Investment (“FDI”) by foreign airlines has finally borne fruit. The Ministry of Civil Aviation has reportedly forwarded its recommendations to the Department of Industrial Promotion and Policy, Ministry of Commerce, Government of India (“DIPP”) which is in the process of formulating a Cabinet note allowing upto 49% FDI in domestic airlines by foreign airlines via the Foreign Investment Promotion Board (“FIPB”) approval route.

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ILN Today Post

New Rule for Furnishing of Annual Statement by a Liaison Office

In terms of Section 285 of the Income Tax Act, 1961, every non-resident who has a liaison office in India set up in accordance with the guidelines issued by the Reserve Bank of India under the Foreign Exchange Management Act, 1999 is obliged to prepare and deliver or cause to be delivered, a statement in respect of its activities in a financial year (“Annual Statement”) within sixty (60) days from the end of such financial year in the form and containing such particulars as may be prescribed. The Central Board of Direct Taxes (“CBDT”) has on February 6, 2012 prescribed such form and procedure to file the Annual Statement.

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ILN Today Post

VODAFONE VINDICATED

In much needed respite to Vodafone and other such offshore deals under the Income Tax Department’s (“IT Department”) scanner, such as GE-Genpact, Mitsui-Vedanta Group, Idea-AT&T, SABMiller-Foster and Sanofi Aventis-Shanta Biotech, the Supreme Court (“SC”), on January 20, 2012, set aside the judgment of the Bombay High Court in the Vodafone-Hutch deal.

As discussed in our newsletter of September 10, 2010 (copy available here), the Bombay High Court had upheld the Indian tax authorities’ assessment of Vodafone to capital gains tax liability in India, resulting from its acquisition in Cayman Islands of controlling stake of mobile phone operator Hutchison Essar (“Hutch”) in 2007.

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ILN Today Post

ILN-terviews: Dimpy Mohanty, LexCounsel Law Offices

Welcome to ILN-terviews, a series of profiles of ILN member firm attorneys, designed to give a unique insight into the lawyers who make up our Network. For our latest interview, we chose ILN member, Dimpy Mohanty of our member firm LexCounsel Law Offices in New Delhi, India.

In one sentence, how would you describe your practice?
Responsive and business-oriented.

Who would be your typical client?
One looking for advice which is well-rounded and covers diverse practice areas.

What would you like clients and potential clients to know about you?
That we at LexCounsel offer practical solutions based on, but not bogged down by a narrow reading of, law. 

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ILN Today Post

The Government of India has on January 10, 2012 relaxed the Foreign Direct Investment (“FDI”) policy to allow 100% FDI in single brand retail trading activities.

A.   Policy Revision:In terms of the press note issued in this regard, FDI of upto 100% is now permitted in single brand retail trading activities. The policy now creates two categories of investment in single brand retail:

(i)     FDI upto 51% (permitted since October 2006): All investments require prior Government approval, with conditions such as the products being branded during manufacturing, sold internationally under the same brand, the investor being owner of the brand.

The current press note does not seek to change FDI conditions for upto 51% investment category.

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ILN Today Post

IRDA notifies the Issuance of Capital by Life Insurance Companies Regulations, 2011

The Insurance Regulatory and Development Authority (“IRDA”) on December 1, 2011 notified the IRDA (Issuance of Capital by Life Insurance Companies) Regulations, 2011 (the “Regulations”) for life insurance companies/firms to raise capital from the capital market via public offerings. The Regulations have been formulated in consultation with the Securities and Exchange Board of India (“SEBI”).It would appear that the Regulations were implemented to give effect to section 6AA of the Insurance Act, 1938 (“Insurance Act”) which requires promoters of Indian life insurance companies, holding more than 26% (twenty six percent) to divest the share capital in excess of 26% (twenty six percent), in a phased manner after a period of 10 (ten) years from the date of commencement of the business.
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