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TMI Blog2019 (5) TMI 279X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 1,95,493/- under Section 14A read with Rule 8D. 4. Ld. CIT(A) further erred in confirming addition of Rs. 1,917/- made by AO based on reconciliation difference between books and report in 26AS. The Appellant craves leave to add to, alter or amend any of the grounds of appeal." 3. Brief facts of the case are the assessee is engaged in the manufacture of engineering goods and filed the return of income on 29.09.2011 disclosing total income of Rs. 10,05,10,019/- and the Return of income was processed u/s. 143(1) and subsequently the case was selected for scrutiny and notice u/s. 143(2) of the Act was issued and ld. AR of assessee appeared and produced Books of account and other details. The Assessing Officer on verification of the financial statements and P&L account found that the assessee has paid fees for professional and technical services to nonresident M/s. Intelliquip LLC, USA without deduction of TDS and the Assessing Officer applied the provisions of section 40(a)(i) of the Act. The assessee filed explanations on 29.01.2014 and on 13.03.2014 referred at page nos. 2 to 5 of the assessment order. The AO was not satisfied with the submissions for non-deduction of tax and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the same manner and to the same extent as to the beneficiaries and there is no liability in the hands of the investor. Whereas in respect of disallowance u/s. 14A made by the Assessing Officer the assessee has not incurred any expenditure for earning such dividend income and no establishment expenditure is incurred for managing investments and in respect of difference is reconciliation as per Form 26AS and as per books of account the ld. AR of assessee submitted that the assessee has accounted the interest income based on the bank certificate and prayed for allowing the appeal. 6. Contra, the ld. DR of the revenue supported the orders of CIT(A) and referred to the findings of CIT(A) at page no. 4 of the order in respect of disallowance for non-deduction of TDS on payments to non-residents and supported the orders of the lower authorities. 7. We heard the rival submissions and perused the record. On the first disputed issue of disallowance u/s. 40(a)(ia) for non-deduction of TDS, the ld. AR of assessee made submissions that the assessee company has selected Intelliquip LLC to develop software for selection of pumps and the nonresident company has developed similar software for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . During the year the assessee received Rs. 5,47,627/- towards investment from said fund and claimed exempt u/s. 10(23FB) and we considered necessary to refer to the provisions of section 115U of the Act and the provisions of section 10(23FB) which are as under. "Tax on income in certain cases. 115U. (1) Notwithstanding anything contained in any other provisions of this Act, any income accruing or arising to or received by a person out of investments made in a venture capital company or venture capital fund shall be chargeable to income-tax in the same manner as if it were the income accruing or arising to or received by such person had he made investments directly in the venture capital undertaking. (2) The person responsible for crediting or making payment of the income on behalf of a venture capital company or a venture capital fund and the venture capital company or venture capital fund shall furnish, within such time as may be prescribed, to the person who is liable to tax in respect of such income and to the prescribed income-tax authority, a statement in the prescribed form and verified in the prescribed manner, giving details of the nature of the income paid or credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of a venture capital company or venture capital fund, being an investment fund specified in clause (a) of the Explanation 1 to section 115UB, of the previous year relevant to the assessment year beginning on or after the 1st day of April, 2016. Explanation.-For the purposes of this clause,- (a) "venture capital company" means a company which- (A) has been granted a certificate of registration, before the 21st day of May, 2012, as a Venture Capital Fund and is regulated under the Securities and Exchange Board of India (Venture Capital Funds) Regulations, 1996 (hereinafter referred to as the Venture Capital Funds Regulations) made under the Securities and Exchange Board of India Act, 1992 (15 of 1992); or (B) has been granted a certificate of registration as Venture Capital Fund as a sub-category of Category I Alternative Investment Fund and is regulated under the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 (hereinafter referred to as the Alternative Investment Funds Regulations) made under the Securities and Exchange Board of India Act, 1992 (15 of 1992), and which fulfils the following conditions, namely:- (i) it is not listed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of income which is of the same nature as income chargeable under the head "Profits and gains of business or profession". Explanation.-For the purposes of clauses (23FBA)and (23FBB), the expression "investment fund" shall have the meaning assigned to it in clause (a) of the Explanation 1 to section 115UB;" 9. While reading the provisions, we found that the income received from the Venture Capital Fund is exempted. We found that the assessee has made investments into the Venture Capital fund and received profits which are exempted. The ld. CIT(A) though considered the aspects of Joint venture but dealt only on the findings of the Assessing Officer by treating the same as income of the assessee and the observations of the ld. CIT(A) that the assessee could not satisfy with evidence i.e. how the assessee is entitled to claim exemption; Even before us the assessee has not filed any information in respect of investment made in Joint Venture and no material filed, we found that this issue has to be verified and examined and accordingly we restore this issue for limited purpose to the file of Assessing Officer and allow the ground of appeal for statistical purposes. 10. In respect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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