• Cabinet permits foreign investment through automatic route in 'other financial services', if they are under regulators such as Sebi and RBI.
• Present regulations stipulate that FDI would be allowed on automatic route for only 18 specified NBFC activities after fulfilling prescribed minimum capitalisation norms mentioned therein.
• Besides commodity broking, foreign investment would also be allowed to come into asset finance companies, depository participants and infrastructure debt funds, sources said. Minimum capital requirements would be the same as fixed by the regulators.
• At present, 18 areas under NBFCs are allowed to attract 100 per cent foreign investment. These include merchant banking, underwriting, portfolio management services, investment advisory services, financial consultancy, stock  broking and asset management.
• Foreign investment can still come in to the activities not regulated by financial sector regulators, but only through the approved route. This means via the Foreign Investment Promotion Board or the Cabinet Committee on Economic Affairs.

Securities Appellate Tribunal, Mumbai held that where appellants utilized IPO proceeds for a propose other than purpose specified in IPO and had suppressed material information from investors in giving IPO proceeds as loan to subsidiary company, appellants had violated ICDR regulations and PFUTP Regulations.

The High Court of Calcutta held that where there was an arbitration agreement between parties, application for appointment of arbitrator could not have been disallowed simply because bank/
financial institution had filed a proceeding for recovery of debts before Debt Recovery Tribunal.

The Supreme Court of India held that the Arbitral proceedings will not come under expression 'other proceedings' of section 69(3) and, therefore, ban imposed under section 69 can have no application to Arbitral proceedings as well as Arbitration Award.

Securities Appellate Tribunal, Mumbai held that where company belatedly disclosed two contracts
entered into by it which constituted price sensitive information, Adjudicating Officer was justified
in imposing penalty against company and its directors for violation of PIT Regulations.

Retirement fund body EPFO may soon introduce a scheme to allow its over 4 crore subscribers to
pledge their provident fund to buy low-cost houses and use the account to pay equated monthly installments.

The High Court of Delhi held that where a CA sold his shares but continued to receive dividends declared by the Company by cheating upon transferee, such activity could not be said done in relation to practice as CA as such act of dishonesty was done in individual capacity. Thus, disciplinary committee's proposal to remove CA's name from registers of members of ICAI for 6 months was to be set aside.

Though the law sets a time limit for the arbitrator to pass an award, the period could be extended in one exceptional case, - when both parties consent to do so, the Supreme Court stated in its judgment in Electrical Manufacturing Co vs Power Grid Corporation.

A bench headed by Justice Dipak Mishra said that it would clarify within two weeks whether the new or the old arbitration law will apply to cases pending in the courts before commencement of the amended arbitration Act, which came into force on October 23, 2015. Under the unamended Act, if an application for setting aside an arbitral award was filed, such arbitral award could not be enforced until the application is refused. This prevented the award-holder from enjoying the fruits of his success merely because the unsuccessful party had filed an application against the award. However, after the amendment to Section 36, an arbitral award now becomes enforceable on expiry of three months from the date on which it is made irrespective of whether an application for setting aside the arbitral award has been filed unless the court grants stay of operation of the arbitral award.

The MCA has, in a craftily worded letter, sought the institute's views on whether the Government
should legalise the entry of foreign firms into India for taking up accounting services.

The ITAT Mumbai Bench held as follows:

• In terms of section 194A, TDS provisions will not apply to loan processing fees paid to any banking company to which Banking Regulations Act, 1949 applies
• Guarantee fee paid to bank is not in nature of commission or brokerage under ambit of section 194H as there exists no principal-agent relationship.

The ITAT Mumbai Bench held that loss in open derivative contracts due to valuation on basis of mark to market values was to be allowed.

The ITAT Ahmedabad Bench held that Software license expenditure which are valid for long term but are part and parcel of computer system are eligible for depreciation at rate of 60 per cent in
place of 25 per cent applicable for intangible asset.

The High Court of Delhi held that where in lieu of interest payable to financial institutions, assessee issued non-convertible debentures to such institutions it could not claim deduction of impugned amount of interest.

The High Court of Gujarat held that when a scheme of amalgamation had been sanctioned by High Court same would be from appointment date; claim of carried forward unabsorbed depreciation and loss of amalgamated company would be allowed from appointed date.

The Supreme Court of India held that where assessee company was having house property and its business as well as Main object was to lease out its property and to earn rent, income so earned
as rent should be treated as 'business income', and not as 'income from house property'.

Private equity (PE) investors and venture capital (VC) funds from Mauritius might have to negotiate terms to advance the dates of conversion of their instruments into equity before April 1, 2017, if they don't want to draw capital gains tax. This is so, because the government is likely to tax quasi-equity instruments, if these are converted into equity after April 1, 2017, under the revised India-Mauritius double taxation avoidance agreement (DTAA). However, if the Quasi equity (Convertible Debentures / Convertible Preference shares) are sold before conversion even as per revised DTAA with Mauritius, no capital gain tax will arise in India for Mauritius' companies. The only change brought out by Indo-Mauritius DTAA is imposing tax on transfer of equity shares of the Indian company by the Mauritius' company, which was earlier exempt

The CBDT has issued an order endorsing the legal validity on the e-declarations made under the ongoing domestic black money window, known as the Income Declaration Scheme(IDS).

The Union Cabinet, approved a revised Double Tax Avoidance Agreement (DTAA) between India
and Cyprus that provides for source-based taxation of capital gains on transfer of shares instead of one based on residence.

CBDT has directed the income-tax assessing officers (AO) to mention their email ID and telephone numbers in all the notices issued by them to the taxpayers, after several assesses complained that they were unable to communicate with taxmen over the internet in the absence of their contact details. The newly launched paperless system of e-assessment income tax cases, which is a "high priority" and
flagship programme for the CBDT does not want to leave any stone unturned in ensuring that the
scheme remains a hit and its procedures easy to comply with.

In a breather to the hotel industry, the Supreme Court stayed the income tax department's move to levy 10% tax on room tariffs, treating them as 'rent'. Federation Of Hotel & Restaurant Associations Of India had challenged the Delhi HC judgment on the ground that Section 194-I deals with TDS with respect to payments of rent and does not apply to the hotel industry since the charges for a room in a hotel is not 'rent' in terms of explanation of the provision.

The Securities and Exchange Board of India (SEBI) asked commodity exchanges to offer price dissemination facility to subscribers through SMS on a daily basis, a move that will help bring in transparency. The exchanges can provide this service through SMS or any other electronic communication facility - instant messengers and e-mail - for all commodities to all the registers in
commodities market who may opt for such option.

The exchanges will have to display the spot price polling mechanism adopted for every contract on its website from September 29. The move is aimed at maintaining the transparency of spot price polling process and dissemination of spot prices arrived at through spot price polling process.

Central Repository of Information on Large Credits (CRILC), which became functional in FY15, ascertains that banks and non-banking financial companies (NBFCs) need to furnish credit information on borrowers, who have an aggregate fund and non-fund based exposure of Rs 5 crore and above. This centralised database allows the banking regulator as well as the lender to have access to the bad loans of corporates in the system.

The Reserve Bank of India (RBI) directed credit information companies to provide one free full credit report, including score, once in a year to individuals whose credit history is available with
them. The credit report plays an important role in the loan application process. The score works
as a first impression for the lender-higher the score, better the chances of the loan being approved.
Further RBI said that the objective of providing the free credit report would not be fully met if this report includes details that figure in the full credit report that is accessed by the credit institutions while considering the request for fresh credit facilities.

Amid rising NPAs, RBI asked banks to put in place clear policies for sale of stressed assets. In order to attract a wide variety of buyers, the guidelines said the invitation for bids should preferably be publicly solicited. An open auction process, apart from attracting a larger set of borrowers, is expected to result in better price discovery. Banks should have clear policies with regard to valuation of assets proposed to be sold... However, in the case of exposures beyond Rs.50 crores, banks shall obtain two external valuation reports. Further, the discount rate used by banks in the valuation exercise should be spelt out in the policy. To enhance SC/RCs' ability to aggregate debt faster, a bank offering stressed assets for sale should offer the first right of refusal to an SC/ RC which has already acquired the highest and significant share of the asset by matching the highest bid.

RBI proposed to allow listed companies to lend money to banks through repo market mechanism,
essentially overnight money. The central bank also proposed allowing listed companies to lend longer tenure money to banks through the repo market mechanism. This will have an impact on interest rates, the bond market, and liquidity in the banking system.

New measures:-

• Allows banks to raise money through masala bonds
• Allows entities exposed to exchange rate risk hedge up to $30 million.
• Pushes firms to access bond market for their funding needs beyond a limit.
• Allows FPIs to trade on NDS-OS and directly in corp bond market.
• Proposes to accept corporate bonds in repo

The CESTAT, Mumbai Bench held that if tax- payable is available as credit to assessee itself, it
cannot be said that there is any intention to evade duty/tax and hence, extending period of limitation cannot be invoked and further, entire demand would be revenue neutral.

• Rebate of State Levies Scheme (ROSL)

The CESTAT, Mumbai Bench held that quarterly refund claim under rule 5 of the Cenvat Credit Rules, 2004 can be filed within 1 year from last date of quarter in which Foreign Inward Remittance Certificates (FIRCs) were received.

The Delhi High Court struck down the 2011 finance act provision whereby service tax was imposed on provision of short term accommodation. The provision was for levy of tax on a "hotel, inn, guest house, club or camp site by whatever name called, for providing of accommodation for continuous period of less than 3 months". The petition was filed by the federation of hotels and restaurants association of India. The federation argue that parliament had no power to impose such a levy, and it was the state legislature that had the competence under the constitution. The court party partially allow the petition. It rejected the challenge to another clause in the act that levied service tax on restaurants "having the facility of air conditioning in any part of the establishment, which has license to serve alcoholic beverages, in relation to serving food or beverage, in its premises".

In an effort to grease the tracks for foreign investments, India has decided to grant Permanent
Residency Status (PRS) to foreign investors who meet some set criteria in respect of minimum
investment and employment generation.
Push for foreign investment :-

• Minimum investment criteria of Rs.10 crore within 18 months or Rs.25 crore within 36 months.
• Minimum employment generation of 20 resident Indians every financial year.
• PRS granted for up to 20 years.
• Multiple-entry visa without any stay stipulation for PRS holder, spouse, dependants.
• Exemption from registration requirements.
• Allowed to purchase one residential property to live in.
• Spouse/dependants can work in private sector under relaxed salary stipulation.

In the case of Jaayaswals Neco Ltd. vs Union of India held by Delhi High Court that if a court or
an arbitration tribunal directs party to pay a sum with interest to the opposite party, the person
who has to pay cannot insist that she would pay the principal first and then the interest.

The Reserve Bank of India (RBI) initiated steps to regulate the nascent and hitherto unregulated
peer-to-peer (P2P) lending business. RBI has proposed registering P2P lending platforms as non-banking financial companies (NBFCs).The banking regulator put out a discussion paper on P2P on its website. Online P2P lending companies work as marketplaces that bring individual borrowers and lenders together for loan transactions without the intervention of traditional financial institutions
such as banks and NBFCs. RBI said it would be "prudent" to regulate the business because of "the
impact it can have on traditional banking channels" and NBFCs and its "potential to disrupt the
financial sector and throw up surprises". In 2015 alone, around 20 new online P2P lending companies were launched in India. At present, there are around 30 start-ups in the P2P lending business in India. The banking regulator sees a role for P2P lending, as evident in its paper, and its language seems to suggest the kind of light touch people prefer when a regulator sets out to define the rules for an emerging business.

S4A stands for scheme for sustainable structuring of stressed assets.
S4A Scheme 

• Under this, banks can convert a portion of loans they are owned into equity.
• The idea is that if the company does well in the years to come, banks should benefit.
• This lowers the overall debt burden.
• Terms for remaining loan amount,(sustainable debt) can't be changed.

The Reserve Bank of India (RBI) proposed that a customer should have zero liability in case of a
third-party fraud on the account or card, provided the customer notifies the bank within three working days of receiving the communication from the bank regarding an unauthorised transaction. In case of delay in reporting, the liability should be limited to not more than Rs 5,000, RBI said.

The RBI has proposed the capping of exposure of banks to each counter-party or group of connected counter-parties at 20 and 25 per cent of their eligible capital base, respectively. In exceptional cases, boards of banks can allow an extra 5 per cent (of the eligible capital base) exposure to a single borrower. There must be a board-approved policy in this regard. RBI has separately issued comprehensive guidelines for restricting additional exposure to large borrowers whose existing borrowings are more than Rs 25000 cr.

The Securities and Exchange Board of India (SEBI) increased the additional exposure limits provided for housing finance companies (HFCs) in financial services sector from 5 per cent to 10 per cent. However, sectoral exposure in debt- oriented mutual fund scheme continues to remain at 25 per cent at sector level in the financial services sector, such securities issued by HFCs are rated AA and above and these HFCs are registered with National Housing Bank (NHB) and the total investment/ exposure in HFCs shall not exceed 25 per cent of the net assets of the scheme.

Food regulator FSSAI has proposed new standards for frozen vegetables and processed fruit products, including commonly used canned tomatoes, frozen peas and jams.

The RBI would soon put in place a framework for accreditation of credit counsellors who are expected to serve as facilitators for small businesses. For bridging the information asymmetry on the MSME borrowers side, RBI is initiating a process for putting in place a framework for accreditation of credit counsellors who are expected to serve as facilitators and enablers for micro and small entrepreneurs. Since MSMEs are typically enterprises with little credit histories and with inadequate expertise in preparing financial statements, credit counsellors will assist the borrowers in preparing their project reports and also help banks make better informed credit decisions.

The Finance Ministry has come out with the fifth set of frequently asked questions providing clarifications for the Income Declaration Scheme.

• The FAQs provide clarification that fictitious liabilities in an audited balance-sheet can be disclosed under the scheme without linking it to the investment in any specific asset.
• Further, income declared under the scheme for an earlier assessment year can be taken into account to explain related transactions.