https://www.taxtmi.com/caselaws?id=791900 FEMA penalty proceedings were analysed on whether funds received as FDI against equity and preferential capital could be treated as borrowing under the Borrowing and Lending in Rupees Regulations, 2000. The tribunal found that the regulations presuppose an actual rupee borrowing transaction and that equity inflows do not become borrowing merely because the funds were later used onward. It also noted that downstream investment, Regulation 14 and Section 6(3)(e) could not sustain the penalty where the show cause notice did not properly plead those bases and the alleged onward deployment was to a society, not an Indian company. The penalty orders were therefore set aside. en-us Mon, 20 Apr 2026 00:00:00 +0530 Wed, 20 May 2026 08:31:02 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=791900 FEMA penalty proceedings were analysed on whether funds received as FDI against equity and preferential capital could be treated as borrowing under the Borrowing and Lending in Rupees Regulations, 2000. The tribunal found that the regulations presuppose an actual rupee borrowing transaction and that equity inflows do not become borrowing merely because the funds were later used onward. It also noted that downstream investment, Regulation 14 and Section 6(3)(e) could not sustain the penalty where the show cause notice did not properly plead those bases and the alleged onward deployment was to a society, not an Indian company. The penalty orders were therefore set aside. Case-Laws FEMA Mon, 20 Apr 2026 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=791900