The Central Board of Direct Taxes (CBDT) has said that since Cyprus has not been providing the
information requested by the Indian tax Authorities under the exchange of information provisions of
the agreement, it has been decided to notify Cyprus as a notified jurisdictional area under Section 94A of the Income Tax Act, 1961 through Notification No. 86/2013 dated 1st November, 2013 published in the official Gazette through SO 4625 GI/13. The implications of such a Notification are
summarized as under: -

• If an assessee enters into a transaction with a  person in Cyprus, then all the parties to the transaction shall be treated as associated enterprises.
• No deduction in respect of any other  expenditure or allowance arising from the transaction with a person located in Cyprus shall be allowed unless the assessee maintains and furnishes the prescribed information.
• If any sum is received from a person located  in Cyprus, then the onus is on the assessee to satisfactorily explain the source of such money in the hands of such person or in the hands of the beneficial owner.
• Any payment made to a person located in  Cyprus shall be liable for withholding tax at 30 % or a rate prescribed, whichever is higher.

The government has recommended inclusion of shipyards undertaking shipbuilding and repair
under the infrastructure category.

The Union Cabinet approved amendments to the power tariff policy that aims to tighten regulations
for setting rates and promote clean energy.

• Aims to ensure uninterrupted power supply to all by 2021-22
• New rules for setting rates and to promote clean energy
• Micro grids for remote villages and small power plants near coal washeries
• Allows sale of un-requisitioned power in the spot market
• Mandatory minimum purchase for clean energy
• Allows cost pass-through for use of imported and e-auctioned coal
• All new inter-state transmission projects through competitive bidding
• Smart meters compulsory for consumption over 200 units

The Reserve Bank of India had recently directed to Public Sector Banks as well as Private Sector
Banks to downgrade the asset classification of more than 150 borrower accounts, based upon Asset Quality review, to Non- Performing Assets (NPAs). The exposure of banking sector to such borrower accounts was in the range of Rs 1,50,000 Crores to Rs 2,00,000 Crores. Primarily RBI had recently issued advisory to downgrade specific large 150 identified accounts in following categories to
Non- performing assets:

• Accounts to be downgraded to NPA categories, with retrospective effect (in some cases going back to F.Y. 2012), although these were classified as Standard accounts till 31st March 2015.
• Diverges observed in case of existing NPAs
• Non achievement of DCCO (Date of Commencement of Commercial Operations)
• CDR-restructured accounts - Non fulfillment of conditions - Additional provision recommended in March 2016 Quarter and thereafter every quarter in FY 2017.

It is highly shameful that certain sections of the "Student" and "Academicians", openly held an event
in the JawaharLal Nehru University (JNU ) campus, against the hanging of parliament attack convict
Afzal Guru.  The student organisers of the event, pasted posters across the JNU campus, inviting the students together for a protest march against "judicial killing of Afzal Guru and Maqbool Bhatt ". The anti- social elements, shamefully misused the democracy and even shouted anti-India slogans and " Pakistan zindabad" to show their so called solidarity with "Struggle of Kashmir people for their democratic right to self- determination"

It is very important for us to retrospect, as to how such anti national element gets support from across the  borders. India is trying to improve its relations with Pakistan and neighboring countries and there seems to be a sincere attempt from the other side also. However there are several international conspirators, who need to be identified , who are against the peace process and create one unrest or the other. Stern and tough action is required to be taken against enemies of India . The real culprit may not only be Kanhaiya Kumar and his team but also the real people behind the show. Every Indian, including all political parties needs to support stern action. Even the left parties and Congress need to rise to the occasion and sideline the terrorist elements. It is important to kill any tendency to misuse the democracy by international enemies of India.

The CESTAT, Chennai bench held that processing fee paid to Foreign Banks for arranging External Commercial Borrowings, is liable to service tax under reverse charge under Banking and other Financial Services.

Sales promotion includes services by way of sale of dutiable goods on commission basis. The CENVAT credit of any duty shall not be utilised for payment of the Swachh Bharat Cess.

The High court of Bombay held that duty credit scrip benefit under Incremental Export Incentivisation Scheme (IEIS) under FTP 2009-14 can be claimed even for amount exceeding
Rs. 20 lakhs, but subject to greater scrutiny; clarification dated 23-9-2004 taking a contrary view was invalid and quashed accordingly.

The CESTAT, New Delhi bench held that where sale of study materials was shown separately in invoice, assessee was eligible for benefit of exemption in respect of said sale under Notification No. 12/2003-ST; hence, value of study material would not form part of value of coaching services.

The High Court of Punjab and Haryana held that where assessee, a landowner, received interest under section 28 of Land Acquisition Act, 1894, said interest was taxable under section 56 as income from other sources in year of receipt.

The High Couut of Delhi held that interest on FDRs which were under lien with Bank for facilitating letter of credit and bank guarantee facilities would qualify for deduction under section 10B.

The High Court of Delhi held that where it was alleged that on-money received in cash by real estate companies from flat purchasers was routed back in those companies in form of share capital/ unsecured loans, etc. using assessee as a conduit, unless identity and creditworthiness of concerned
fund owner were confirmed, addition made in hands of assessee could not be deleted.

The High Court of Calcutta held that where decision to abandon project was taken in relevant year, balance deferred revenue expenditure relating to said project would be deemed to arise in relevant year and would be allowed as such.

The High Court of Karnataka held that dis allowance made under section 14A, read with rule 8D, towards interest expenditure would not be tenable where Assessing Officer failed to establish a nexus between interest bearing funds and investment made.

The ITAT Delhi Bench held that in case of assessee providing engineering design and related services to its AE, companies having functional difference and company making payments towards use of established brand resulting in substantial increase in its operating profits, could not be accepted as valid comparable while determining ALP.

Mauritius will start automatic exchange of tax information with other nations only from September 2018.

The significant steps taken by CBDT include issue of a circular revising the monetary limits for filing
of appeals by the Department with the objective of reducing litigation as a part of its initiatives to reduce grievances of the taxpayers including withdrawal of appeals filed by the Department in cases involving tax effect above the revised monetary limit from the High Courts in cases where, no question of law is involved, the issue is considered settled by the Department, or the appeal is no longer relevant in view of subsequent amendment. Besides this, the CBDT has issued a number of Circulars for withdrawing or not pressing of appeals on settled issues.

Where a Mauritian Company, a 100 per cent subsidiary of parent company, proposed to transfer shares held by it in Indian company in favour of a company proposed to be incorporated in Singapore with an object of group re-organization, the transaction having begun almost 20 years back, it could not be said that it was for tax avoidance and, therefore profit arising from such transaction won't be subjected to tax in India in terms of Article 13 of of DTAA between India and Mauritius. Further, applicant would not be liable to pay Minimum Alternate Tax under provisions of section 115JB in absence of a PE in India. It was also held by the AAR that there will be no question of the applicability of section 92 to 92F and section 195 and since, proposed transfer of shares was not taxable in India, applicant was not required to file any return of income under section 139

Mutual Fund houses adopting ‘Dividend Stripping’ plan have come under the scanner of capital markets regulator SEBI for possible tax evasion. The dividend stripping typically involves an investor buying a dividend plan of a mutual fund scheme, book a loss on it and then set it off against capital gains from other sources.

On a consideration of the matter, the Council, with a view to bring uniformity in the manner of signing of certificates, has decided to require the members of the ICAI to include (in addition to any other requirements in this regard prescribed by the relevant law or regulation under which the certificate is being issued) the following details in their "Signatures" on the certificates issued by them:

1. Name of the CA firm*
2. Firm Registration Number (FRN)*
3. Name of the member
4. Designation (Partner/Proprietor)
5. Membership Number

All public sector and private banks have been asked by the RBI to conduct a "thorough internal audit" and put the report before their respective Audit Committees, as part of the central bank's efforts to check fraudulent foreign exchange transactions. A circular has been issued to all scheduled commercial banks, advising them to conduct a thorough internal audit and place the report before
audit committee of the board of the respective banks and to forward the summary of findings to RBI, the central bank said.

The Centre has announced the much-awaited road map for implementing the Indian Accounting Standards (Ind AS) by Banks, Insurers and Non-Banking Finance Companies (NBFCs) for accounting periods beginning April 1, 2018. This would have to be done with comparatives ending
March 31, 2018 or thereafter. The road map would also apply to all-India term-lending refinancing institutions, such as Exim Bank, NACAS, NHB and SIDBI.

Retirement fund body EPFO has removed the grace period of five days given to employers to deposit the Provident Fund (PF) contribution. Earlier, employers paid the PF contributions and administrative charges within 15 days of close of every month and had a grace period of five days. 

The Supreme Court has ruled that Life Insurance Corporation cannot object to transfer or assignment of policies, which is a global practice.

The Reserve Bank of India (RBI) has mandated Authorised Dealers (AD) category – I banks to file Advanced Remittance Form (ARF), Foreign Collaboration General Permission Route (FC-GPR) and Foreign Collaboration Transfer of Shares(FC-TRS) only through the online mode on e-biz portal starting from February 8. Physical filing of these forms will be discontinued.

The Supreme Court of India held that SARFAESI Act, 2002 prevails over the Sick Industrial Companies (Special Provisions) Act, 1985 to the extent of inconsistency therewith. Section 15(1)
proviso 3 of the Sick Industrial Companies (Special Provisions) Act, 1985. Covers all references pending before the BIFR, no matter whether such reference is at the inquiry stage, scheme stage, or winding up stage.

It is hereby clarified that a HUF or its Karta cannot become partner or designated partner in LLP.

The High Court of Delhi held that Director's grievance against company / co-director does not justify violation of his/her fiduciary duties under section 166 of the Companies Act,2013 by carrying on a business competing with that of the company. If he/she had any grievances, he/ she can avail the remedy but there is hardly any justification to start parallel/similar to the business of the company.

Capital markets regulator SEBI allowed bank stock brokers to have a greater exposure in the currency derivatives market, as compared to the limits permitted for the non-bank stock brokers. The gross open position limit for all brokers currently stands at up to 15 per cent of the total open interest or $100 million, whichever is higher. "However, for bank stock brokers, as authorized by RBI, the gross open position across all contracts shall not exceed 15 per cent of the total open interest or $1 billion, whichever is higher," SEBI said in a circular.

Banking units operating in International Financial Service Centres (IFSCs) can now open foreign currency current accounts of units operating in IFSCs and of non-resident institutional investors to facilitate their investment transactions, according to Reserve Bank of India.Hitherto, the IBUs (IFSC banking units) were not allowed to open any current or savings accounts.The RBI, in its notification, also clarified that the IBUs cannot raise liabilities from retail customers including High Net Worth individuals (HNIs). Also, no cheque facility will be available for holders of current accounts in the IBUs. All transactions through these accounts must be undertaken via bank transfers. Further, the RBI has prescribed exposure ceiling limits for IBUs. The exposure ceiling of IBUs has been pegged at 5 per cent of the parent bank’s Tier-I capital in case of a single borrower and 10 per cent in the case of a borrower group. According to the RBI, any financial institution or branch of a financial institution set up in the IFSC and permitted/recognised as such by the Government of India or a Regulatory Authority will be treated as a person resident outside India.A financial institution or branch of a financial institution can conduct such business in such foreign currency and with such persons, whether resident or otherwise, as the concerned Regulatory Authority may determine.

The maximum a debt scheme can invest in the securities of a company has been reduced from 15 per cent to 10 per cent of the corpus. Single sector exposure for a scheme has been reduced from 30 per cent to 25 per cent.The exposure to housing finance companies within the finance sector has been reduced to five per cent from the earlier 10 per cent.Assets under management of debt mutual fund schemes are nearly Rs 8 lakh crore.

In a major overhaul of its recruitment process, the government has introduced a centralised system for appointing consultants in all ministries, and in the NITI Aayog. It has also capped the tenure of such consultants at one year, which can be extended to a maximum of three.

The RBI said a central fraud registry, along with the existing early detection mechanisms for
frauds, has been operationalized with effect from January 20. Frauds of Rs 1 lakh and above will be
monitored by the respective regional office of RBI under whose jurisdiction the head office of the bank falls, but frauds of Rs 5 crore and above will be monitored by the Central Fraud Monitoring Cell of RBI at Bengaluru.

Particulars of creation, modification or satisfaction of security interest in immovable property by mortgage by way of deposit of title deeds, movable assets, intangible assets, under construction property shall be filed in Form I or Form II and shall be authenticated by a person specified in the Form for such purpose by use of a valid digital signature The following forms are to be filed with central registry:

Form No. I

• Particulars of creation or modification of security interest by way of mortgage by deposit of title deeds.
• Particulars of creation or modification of security interest by way of mortgage of immovable property other than by deposit of title deeds
• Particulars of creation or modification of security interest in hypothetical of plant and machinery, stocks, debt including book debt or receivables, whether existing or future.
• Particulars of creation or modification of security interest in intangible assets, being know- how, patent, copyright, trade mark, licence, franchise or any other business or commercial right of similar nature
• Particulars of creation or modification of security interest in any under construction residential or commercial building or a part thereof by an agreement or instrument other than by mortgage.

The RBI said banks can grant non-fund-based facilities, including Partial Credit Enhancement  PCE), to those customers, who do not avail any fund-based facility from any bank in India, subject to conditions. The central bank said banks should formulate a comprehensive Board-approved loan policy for grant of non-fund-based facility to such borrowers. Banks should undertake the same level of credit appraisal as has been laid down for fund-based facilities.The banks should ensure that the borrower has not availed any fund-based facility from any bank operating in India.However, at the time of granting non-fund-based facilities, banks have to obtain declaration from the customer about the non-fund-based credit  facilities already enjoyed by them from other banks.