• Fund-raising through ADRs may get easier
• Exim Bank window offers 50% capital support to MSMEs
• SC turns down I-T dept plea against Escorts on tax evasion
• I-T dept directs full use of new powers to reopen old cases
• No regulatory hurdles in MTN deal: Pranab
• Coke wins landmark service tax case
• According to sources, govt is examining a proposal to relax rules governing American depository receipts (ADRs) to allow Indian companies access the US market through more liberal offerings. The finance ministry is deliberating on whether Indian companies should be allowed to issue level-I ADRs, which need very few regulatory disclosures. Level-1 issues do not involve issue of fresh capital, but allow overseas companies to diversify their investor base and build a presence in the US market that may help them raise capital later. India currently allows only level-III ADR/GDRs, which involve capital raising and listing on regular overseas exchanges and greater disclosure levels, including costly compliance with US laws. The view against allowing such ADRs has been that it allows the export of Indian equities abroad and does not generate any value for the country. The alternate view is that since the overall regime is inclined towards further liberalisation, it may be time to do away with this restriction. (ET)
• Export Import Bank of India (Exim Bank) has opened a special funding window for micro, small and medium enterprises (MSMEs) planning to export their products to support export marketing initiatives taken up by MSMEs. The bank has also mobilised the Grassroots Business Fund, a US-based not-for-profit organisation, to offer seed capital to MSMEs for building export units. The initiatives are in sync with the country’s thrust on MSMEs. Exim Bank will reimburse 50% of the project cost. The corpus of the new facilityhowever has not been specified. (ET)
• Supreme Court, while dismissing the Income-Tax Department’s petition against Escorts Asset Management Ltd, which had alleged that the assessee had furnished inaccurate particulars to evade tax, has said the assessee was not carrying the business of sale of shares of other companies but was having the shares as investments, thus the loss suffered on the sale of investments was therefore be treated as long-term capital loss.
• Central Board of Direct Taxes ( CBDT) has directed re-opening of all cases under the search and seizure label, income-escaping assessments and deductions claimed from profits and gains on all eligible businesses, now allowed due to amendments to relevant sections Sections 80A, 80IB,132 and 147 which provide for reopening of cases much beyond the present stipulated limit of eight years. The amendments have been made with retrospective effect, from financial year 2003, 2000, 1998 and 1989. CBDT feels its departments across India should reopen all such cases which attract provisions where amendments have been made in the Finance Bill, 2009, with retrospective effect. The plan also requires the companies to furnish complete details of the latest balance sheet and bank accounts during their tax assessment, instead of the current practice of providing details pertaining to only that assessment year. (BS)
• In a strong signal that the $23-billion cash-cum-share swap deal between Bharti Airtel and South Africa’s MTN is in the last lap of being finalised, finance minister Pranab Mukherjee, referring to the meeting Bharti Airtel chairman and managing director Sunil Mittal and MTN president and CEO Phuthuma Nhleko, has said that “There are no regulatory hurdles in the proposed deal.” According to analysts, the minister’s statement puts to rest speculations that the two extensions in the time period of exclusive negotiations between the two companies were due to regulatory hurdles. It also reflect the deal would be sealed by the two sides within the next couple of weeks. (FE)
• In a judgment that stands to benefit contract manufacturers like fast moving consumer goods (FMCG), pharmaceutical and cosmetic majors, the Bombay High Court has ruled that beverage major Coca-Cola could avail of tax credit on the service tax it pays for advertising and promotions. Soft drink manufacturers can now avail of the service tax rebate as CenVat credit against their excise duty liability on concentrates they supply to their contract manufacturers. The ruling stands to benefit companies from other sectors, too, like cosmetics and pharmaceuticals, since they follow the contract manufacturing model and advertise and promote the end-products.
