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TMI Blog2012 (8) TMI 494X X X X Extracts X X X X X X X X Extracts X X X X ..... as ‘investible funds’ means corpus of the fund net of expenditure for administration and management of the fund;’ and taking into consideration the same if the working is made as has been done herein above, it can be seen that the assessee had already achieved the conditions prescribed - Following this decision of CIT (A)-II for the Assessment Year 2004-2005, it is held that the exemption u/s.10 (23FB) is available to any income of the assessee, be it interest, dividend, etc. - in favour of assessee. - I.T.A. No. 354/PN/2011 - - - Dated:- 29-6-2012 - SHRI SHAILENDRA KUMAR YADAV, AND SHRI R.K.PANDA, JJ. Appellant by: Ms. Ann Kapthuama Respondent by: Shri Lalit Agarwal Jayant Bhatt ORDER PER SHAILENDRA KUMAR YADAV, JM This appeal by the assessee is directed against the order of the CIT(A)-II, Pune dated 02/11/2007 for the assessment year 2004-05 on the ground of entitlement of u/s.10(23FB) of the Income Tax Act. 2. Assessee is engaged in the business of providing venture capital by way of investment in equity capital. The assessee has total corpus fund of Rs.21,60,00,000/- as per the accounts as under : Investment in unquoted equity shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and it connotes corpus net of expenses for administration and management of funds. To arrive at investible funds, therefore, trust management and administration expenses are to be reduced from the corpus amount. The CIT(A), thus, was clearly in error in his computations extracted earlier in his order. We deem it fit and proper to remit the matter to the file of the CIT(A) for the limited purpose of verifying investment pattern vis- vis investible funds computed in the light of the above directions of the investment pattern at the end of the life cycle and in the light of the above observations, satisfy SEBI guidelines, he will grant exemption u/s.10(23FB). 5. In set aside proceedings, the Ld. Counsel for assessee furnished a chart showing investible fund available with the assessee and investment made in listed securities and stressed that trust has achieved stipulated percentage of 66.67% of investment out of investible funds as per Rule 2(hh) in 3 years which year ended on 31.03.2005, 31.03.2007 and 31.03.2008 which are extracted below: Year ended Cor-pus MGT Fee Administration expenses Total Investible funds Investme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns corpus of funds net of expenditure for administration and management of the funds. In case of the assessee as per details furnished in the table reproduced herein above, the prescribed percentage of 66.67% was achieved during Financial Year relevant to A.Y. 2005-06 i.e., within life cycle of Venture Capital Fund. This position was already accepted by CIT(A), Pune, in assessee s own case for A.Y. 2005-06 by observing as under: Now, it is noticed that the condition for granting exemption u/s.10(23FB) of the Act for a Venture Capital Fund has been mentioned in the SEBI guidelines under Regulation 12(d)(i) which stipulates that a Venture Capital Fund was to make investment of atleast 66.67% of the Investible Funds in unlisted equity shares or equity linked instruments of Venture Capital undertakings. Further, Investible Funds have been defined in the SEBI regulations 2(hh) which states that Investible funds means corpus of the fund net of expenditure for administration and management of the fund. The term equity linked instruments is defined by SEBI Regulation 2(ee) to include instruments convertible into equity shares or share warrants, preference shares, debentures compul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me if the working is made as has been done herein above, it can be seen that the assessee had already achieved the conditions prescribed. 5.3. On going through the appellate order No.PN/CIT(A)- II/DCIT.Cir.6/773/2006-07, of the CIT(A)-II, dated 02.11.2007 it is noticed that the appellant s contention is correct. In the CIT(A) s order also the prescribed percentage of 66.67% was calculated on the corpus amount of Rs.21.60 crores, as against the calculation to be made on the investible funds , for which administration and management expenditure was to be reduced from the corpus. However, in Assessment Year 2004-05 even after this calculation is made on investible funds, the percentage comes to only 35.15% as also seen by the chart submitted by the appellant in its submission. However, the prescribed percentage has been achieved in Assessment Year2005-2006 which is under appeal as also in two subsequent years as mentioned above. In the result, the grounds of appeal (revised) Nos.1 to 4 are allowed. 5.4. So far as the other grounds of appeal Nos.5 and 6 are concerned, as mentioned above the Assessing Officer had rejected the claim of deduction u/s.10(34) amounting to Rs.8,53,398/ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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