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2017 (6) TMI 286 - ITAT MUMBAIEligibility to exemption u/s 10(23FB) - Interest income earned from Fixed Deposit and STCG arising on investment in Mutual fund - whether the assessee has not earned any income from venture capital undertaking? - CIT-A deleted the addition - Held that:- assessee is entitled to claim exemption on any nature of income of a venture capital fund, which fulfill the conditions relating to the purpose for which it is set up i.e. raising of funds for investment in venture capital undertakings - The intention of the legislature is clear to treat any income of venture capital fund as exempt from tax u/s 10(23FB) of the Act irrespective of its nature. There is a reason for this that this income will be taxed in the hands of investors at the time of distribution u/s 115U of the Act on a pass through basis. Accordingly, we are of the view that the CIT(A) rightly deleted the addition. For this we are also relying on the co-ordinate Bench decision of Kshitij Venture Capital Fund (2011 (3) TMI 387 - ITAT, Mumbai). Accordingly, the appeal of Revenue for AY 2007-08 is dismissed. For AY 2008-09 and 2009-10 there is an ammendment in section 10(23FB) of the Act and there are certain specified business eligible for exemption under this provision. Assessee’s case does not fall under exemption category and hence, out of the purview of this provision of section 10(23FB) of the Act. Therefore, the assessee has to be assessed under normal provisions of law and hence, the business loss has to be set off against the other incomes. We find no infirmity in the orders of CIT(A) for both the years and hence the same are confirmed. - Decided against revenue Addition u/s 14A r.w.r. 8D - Held that:- We find that this issue is covered by the decision of the Hon’ble Delhi High Court in the case of Joint Investment [2015 (3) TMI 155 - DELHI HIGH COURT ] as held that by no stretch of imagination can Section 14A or Rule 8D be interpreted so as to mean that the entire tax exempt income is to be disallowed. The window for disallowance is indicated in Section 14A, and is only to the extent of disallowing expenditure “incurred by the assessee in relation to the tax exempt income”. This proportion or portion of the tax exempt income surely cannot swallow the entire amount as has happened in this case. - Decided against revenue
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