DCIT, CHENNAI V. Gopal Srinivasan, CHENNAI

ITA 1423/CHNY/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4991 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 08-01-2018
• Assessment Year: 2008-2009
• Appeal Filed On: 20-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R VIJAYARAGHAVAN
• Assessee Lawyers: N MADHAVAN CIT
• Keywords: Capital asset

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI . , , BEFORE SHRI ABRAHAM P.GEORGE, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER ./I.T.A. NO. 948/MDS/2016 / ASSESSMENT YEAR : 2008-2009 GOPAL SRINIVASAN, NO.14, BOAT CLUB ROAD, RAJA ANNAMALAIPURAM, CHENNAI 600 028. VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 6(2) CHENNAI 600 034. ./I.T.A. NO. 1423/MDS/2016. / ASSESSMENT YEAR : 2008-2009. THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 6(2) CHENNAI 600 034. VS. GOPAL SRINIVASAN, NO.14, BOAT CLUB ROAD, RAJA ANNAMALAIPURAM, CHENNAI 600 028. [PAN AADPG 9543P] ( / APPELLANT) ( /RESPONDENT) ASSESSEE BY : SHRI. R. VIJAYARAGHAVAN, ADV !'# $ % /RESPONDENT BY : SHRI. N. MADHAVAN, ADDL.CIT & ' $ () /DATE OF HEARING : 08-01-2018 *+ $ () /DATE OF PRONOUNCEMENT : 11-01-2018 / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER: THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND REVENUE RESPECTIVELY DIRECTED AGAINST AN ORDER DATED 10.02. 2016 OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-15, CHENNAI. ITA NO.948 & 1423/MDS/2016 :- 2 -: 2. APPEAL OF THE ASSESSEE IS TAKEN UP FIRST FOR DISPO SAL. ASSESSEE HAS TAKEN TWO GROUNDS OF WHICH FIRST GRO UND ASSAILS REOPENING DONE FOR THE IMPUGNED ASSESSMENT YEAR. LD . AUTHORISED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT HE W AS NOT PRESSING THIS GROUND. ACCORDINGLY, GROUND NO.1 OF THE ASSES SEE IS DISMISSED. 3. THIS LEAVES US WITH THE SOLITARY GROUND LEFT, WHI CH ASSAILS TAXING OF SHORT TERM CAPITAL GAINS OUT OF SALE OF S HARES AT 30%. LD. AUTHORISED REPRESENTATIVE IN SUPPORT OF THIS GROUND SUBMITTED THAT ASSESSEE HAD RETURNED SHORT TERM CAPITAL GAINS OF @ 71,85,696/- ON WHICH HE PAID TAX AT THE RATE OF 10%. IT SEEMS ASS ESSEE HAD APPLIED THE RATE OF 10% BASED ON SECTION 111A OF THE INCOM E TAX ACT, 1961 (IN SHORT THE ACT). HOWEVER, LD. ASSESSING OFF ICER WAS OF THE OPINION THAT TRANSACTION STATEMENT OF M/S. STOCK HOLDING CO RPORATION OF INDIA LTD, FURNISHED BY THE ASSESSEE, REFLECTED PURCHAS E AND SALE OF SHARES IN ONE M/S. ACCEL FRONTLINE LTD ON 19.04.2007, 20.0 4.2007, 24.04.2007 AND 25.04.2007. AS PER THE LD. ASSESSING OFFICER, ASSESSEE HAD CERTAIN OTHER SHARE TRANSACTIONS ALSO DONE, THROUGH ROLLI NG MARKET LOT AND INTER DEPOSITORY TRANSFERS. LD. ASSESSING OFFICER NOTED THAT SOME OF THESE TRANSACTIONS HAD TAKEN PLACE ON THE VERY SAME DAY OR WITHIN A SHORT SPAN OF THREE TO FOUR DAYS. ACCORDING TO HIM , ASSESSEES CLAIM OF STCG COULD BE CONSIDERED ONLY IF THE PERIOD OF HOLDING OF SHARES ITA NO.948 & 1423/MDS/2016 :- 3 -: WAS ASCERTAINABLE. FURTHER ACCORDING TO HIM, ASSES SEE COULD NOT SHOW THAT THE SUM OF @71,85,696/- SHOWN BY IT AS SHORT TERM CAPITAL GAINS WAS CORRECT. AS PER THE LD. ASSESSING OFFICER, WHET HER THE TRANSACTIONS GIVING RISE TO THE SURPLUS RELATED TO ANY INVESTMEN TS REQUIRED VERIFICATION. HE THUS HELD THAT ASSESSEE COULD NOT CLAIM CONCESSIONAL TAX OF 10% ON THE AMOUNT OF @71,85,696/-. HE HELD THAT ASSESSEE WAS LIABLE TO PAY TAX AT THE NORMAL RATE OF 30% ON SUCH AMOUNT. 4. AGGRIEVED, ASSESSEE MOVED IN APPEAL BEFORE THE L D. COMMISSIONER OF INCOME TAX (APPEALS). HOWEVER THIS DID NOT MEET WITH ANY SUCCESS. ACCORDING TO LD. COMMISSIONER OF INCOME TAX (APPEALS), ASSESSEE DID NOT GIVE ANY DETAILS REGARD ING ACTUAL DELIVERY OF THE SHARES WHICH WERE SOLD BY IT GIVING RISE TO THE CLAIM OF SHORT TERM CAPITAL GAINS. 5. NOW BEFORE US, LD. AUTHORISED REPRESENTATIVE STRONG LY ASSAILING THE ORDERS OF THE LOWER AUTHORITIES SUBMI TTED THAT THE SALE OF THE SHARES WHICH GAVE RISE TO SHORT TERM CAPITAL G AINS AROSE OUT OF TRANSACTIONS WHICH WERE CHARGED TO SECURITIES TRAN SACTION TAX (SET). ACCORDING TO HIM, SEC. 111A OF THE ACT CLEARLY APP LIED FOR SUCH TRANSACTIONS AND ASSESSEE WAS ELIGIBLE FOR LOWER RA TE OF TAX OF 10% ON THE CAPITAL GAINS ARISING FROM TRANSFER OF SUCH SHA RES. FURTHER, ITA NO.948 & 1423/MDS/2016 :- 4 -: ACCORDING TO HIM, NONE OF THE LOWER AUTHORITIES HA D FOUND THE CLAIM TO BE WRONG BUT HAD WENT BY MERE SURMISES. 6. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE STRONG LY SUPPORTING THE ORDERS OF THE AUTHORITIES BELOW SUBMITTED THAT ASSESSEE COULD NOT SHOW THE GENUINENESS OF THE CLAIM OF SHORT TERM CAP ITAL GAINS. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. CLAIM OF THE ASSES SEE IS THAT SHORT TERM CAPITAL GAINS AROSE ON ACCOUNT OF TRANSFER OF EQUITY SHARES AND SUCH TRANSACTIONS WERE CHARGED TO SECURITIES TRANSA CTION TAX. IN OTHER WORDS, AS PER THE ASSESSEE, THE TRANSACTIONS GIVING RISE TO SHORT TERM CAPITAL GAINS WERE DONE THROUGH RECOGNIZED STO CK EXCHANGE AND SECURITIES TRANSACTION TAX WERE PAID ON SUCH TRANSA CTIONS. SECTION 111A OF THE ACT IS REPRODUCED HEREUNDER:- (1 ) WHERE THE TOTAL INCOME OF AN ASSESSEE INCLUDES AN Y INCOME CHARGEABLE UNDER THE HEAD 'CAPITAL GAINS', A RISING FROM THE TRANSFER OF A SHORT-TERM CAPITAL ASSET, BE ING AN EQUITY SHARE IN A COMPANY OR A UNIT OF AN EQUITY OR IENTED FUND AND- (A) THE TRANSACTION OF SALE OF SUCH EQUITY SHARE OR UNIT IS ENTERED INTO ON OR AFTER THE DATE ON WHICH CHAPT ER VII OF THE FINANCE (NO. 2) ACT, 2004 COMES INTO FOR CE ; AND (B) SUCH TRANSACTION IS CHARGEABLE TO SECURITIES TRANSACTION TAX UNDER THAT CHAPTER, ITA NO.948 & 1423/MDS/2016 :- 5 -: THE TAX PAYABLE BY THE ASSESSEE ON THE TOTAL INCOM E SHALL BE THE AGGREGATE OF- (I) THE AMOUNT OF INCOME-TAX CALCULATED ON SUCH SHORT-TERM CAPITAL GAINS AT THE RATE OF FIFTEEN PER CENT. ; AND (II) THE AMOUNT OF INCOME-TAX PAYABLE ON THE BALANC E AMOUNT OF THE TOTAL INCOME AS IF SUCH BALANCE AMOUNT WERE THE TOTAL INCOME OF THE ASSESSEE : PROVIDED THAT IN THE CASE OF AN INDIVIDUAL OR A HIN DU UNDIVIDED FAMILY, BEING A RESIDENT, WHERE THE TOTAL INCOME AS REDUCED BY SUCH SHORT-TERM CAPITAL GAINS IS BELOW THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME-TAX, THEN, SUCH S HORT-TERM CAPITAL GAINS SHALL BE REDUCED BY THE AMOUNT BY WHI CH THE TOTAL INCOME AS SO REDUCED FALLS SHORT OF THE MAXIMUM AMO UNT WHICH IS NOT CHARGEABLE TO INCOME-TAX AND THE TAX ON THE BALANCE OF SUCH SHORT-TERM CAPITAL GAINS SHALL BE COMPUTED AT THE RATE OF TEN PER CENT. (2) WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE INC LUDES ANY SHORT-TERM CAPITAL GAINS REFERRED TO IN SUB-SECTION (1), THE DEDUCTION UNDER CHAPTER VI-A SHALL BE ALLOWED FROM THE GROSS TOTAL INCOME AS REDUCED BY SUCH CAPITAL GAINS. (3) WHERE THE TOTAL INCOME OF AN ASSESSEE INCLUDES ANY SHORT-TERM CAPITAL GAINS REFERRED TO IN SUB-SECTION (1), THE R EBATE UNDER SECTION 88 SHALL BE ALLOWED FROM THE INCOME-TAX ON THE TOTAL INCOME AS REDUCED BY SUCH CAPITAL GAINS. WE FIND THAT NONE OF THE LOWER AUTHORITIES HAD ADDR ESSED THE ISSUE WHETHER THE TRANSACTIONS OF SHARES CLAIMED BY THE A SSESSEE SATISFIED THE CONDITIONS SET OUT IN SEC. 111A OF THE ACT. T HOUGH THE LD. ASSESSING OFFICER HAS STATED IN THE ASSESSMENT ORD ER THAT ASSESSEE COULD NOT PROVE THE ACTUAL DELIVERY OF SHARES TO IT , HOW HE CAME TO SUCH A CONCLUSION IS NOT CLEAR. WE ARE THEREFORE O F THE OPINION THAT THE ISSUE REQUIRES A FRESH LOOK BY THE LD. ASSESSIN G OFFICER. WE SET ITA NO.948 & 1423/MDS/2016 :- 6 -: ASIDE THE ORDERS OF THE AUTHORITIES BELOW ON THIS ISSUE AND REMIT IT BACK TO THE LD. ASSESSING OFFICER TO CONSIDER THE C LAIM AFRESH, IN THE LIGHT OF THE CONDITIONS SPECIFIED SEC.111A OF THE ACT. GROUND NO.2 IS ALLOWED FOR STATISTICAL PURPOSE. 8. NOW WE TAKE UP THE APPEAL OF THE REVENUE. 9. GRIEVANCE OF THE REVENUE IS THAT LD. COMMISSIONER O F INCOME TAX (APPEALS) ALLOWED THE EXEMPTION CLAIMED BY THE ASSESSEE ON THE INCOME EARNED BY IT FROM TRANSACTIONS RELATING TO UNITS IN M/S. ICICI EMERGING SECTOR FUND. 10. FACTS APROPOS ARE THAT ASSESSEE HAD CLAIMED EXEMPT ION U/S.10(38) OF THE ACT IN RESPECT OF LONG TERM CAPIT AL GAINS AMOUNTING TO @1,36,16,621/-. AS PER THE ASSESSEE THE GAINS WERE ON PURCHASE AND SALE OF UNITS IN ICICI EMERGING SECTOR FUND AN D IN ACCORDANCE WITH FORM 64 ISSUED BY THE FUND MANAGER. CONTENT ION OF THE ASSESSEE WAS THAT THE TRANSACTIONS GIVING RISE TO THE LTCG HAD SUFFERED SECURITIES TRANSACTION TAX. HOWEVER, LD. ASSESSING OFFICER WAS OF THE OPINION THAT UNDER SECTION 115U R.W.S. 1 0(23FB) OF THE ACT, NO EXEMPTION WAS AVAILABLE FOR SUCH LONG TERM CAPI TAL GAINS. ACCORDING TO HIM, SECURITIES TRANSACTION TAX LIABIL ITY WAS BORNE BY CONCERNED VENTURE CAPITAL FUND AND NOT BY THE ASSE SSEE. FURTHER, ACCORDING TO HIM, SEC. 115U OF THE ACT ONLY SUPPLEM ENTED SEC. ITA NO.948 & 1423/MDS/2016 :- 7 -: 10(23FB) OF THE ACT. AS PER THE LD. ASSESSING OFFIC ER, SEC. 10(23FB) OF THE ACT WAS A SPECIFIC PROVISION CONCERNING VENTURE FUND WHEREAS SEC. 10(38) OF THE ACT WAS A GENERAL PROVISION. CLAIM O F EXEMPTION FROM LONG TERM CAPITAL GAINS WAS DISALLOWED. AN ADDITIO N OF @1,36,16,621/- WAS MADE. 11. AGGRIEVED, ASSESSEE MOVED IN APPEAL BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS). ARGUMENT OF T HE ASSESSEE WAS THAT BY VIRTUE OF SEC. 115U OF THE ACT, INVESTMENTS MADE BY THE ASSESSEE IN VENTURE CAPITAL FUND, HAD TO BE TREATED AS THOUGH IT WERE INVESTMENTS DIRECTLY MADE BY THE ASSESSEE. ACCORDI NG TO THE ASSESSEE, VENTURE CAPITAL FUND AUTHORITY, THROUGH FORM NO.64 ISSUED BY THEM, IN ACCORDANCE WITH RULE 12C OF INCOME TAX RULES, 1962 , HAD ADVISED WHAT WAS THE SHARE OF INCOME OF THE ASSESSEE, WHIC H ACCRUED DURING THE RELEVANT PREVIOUS YEAR. THUS, ACCORDING TO HIM, ASSESSEE WAS ELIGIBLE FOR THE CLAIM ON ACCRUAL BASIS AS CERTIFIE D BY THE VENTURE CAPITAL FUND. LD. COMMISSIONER OF INCOME TAX (APPEA LS), AGREED WITH THE ABOVE CONTENTIONS OF THE ASSESSEE. ACCORDING TO HIM, ASSESSEE WAS JUSTIFIED IN SHOWING THE INCOME FROM ITS INVESTM ENT THROUGH VENTURE CAPITAL FUND ON ACCRUAL BASIS SINCE ASSESSEE WAS A LL ALONG FOLLOWING SUCH ACCOUNTING METHOD IN EARLIER YEARS AND LD. AS SESSING OFFICER HAD ITA NO.948 & 1423/MDS/2016 :- 8 -: ACCEPTED SUCH METHOD. LD. COMMISSIONER OF INCOME T AX (APPEALS) DIRECTED THE LD. ASSESSING OFFICER TO ALLOW THE CLA IM OF THE ASSESSEE. 12. NOW BEFORE US, LD. DEPARTMENTAL REPRESENTATIVE STR ONGLY ASSAILING THE ORDER OF THE LD. COMMISSIONER OF INCO ME TAX (APPEALS) SUBMITTED THAT SEC. 115U R.W.S.10(23FB) OF THE ACT WAS INTRODUCED ON 01.04.2001 PRIOR TO THE INTRODUCTION OF SEC.10(3 8) OF THE ACT WHICH CAME INTO STATUTE ONLY ON 01.04.2005. AS PER THE L D. DEPARTMENTAL REPRESENTATIVE FROM 01.04.2005 THERE WAS NO EXEMPT ION AVAILABLE FOR SUCH TRANSACTIONS, SINCE SECURITIES TRANSACTION TAX LIABILITY WAS BORNE BY THE VENTURE CAPITAL FUND AND NOT BY THE ASSESSEE . FURTHER, ACCORDING TO HIM, WHETHER INVESTMENTS WERE MADE BY THE VENTURE CAPITAL FUND IN ACCORDANCE WITH SEBI REGULATIONS AN D WHETHER THEY HAD EXCLUDED THE INVESTMENTS IN LISTED SECURITIES HAD TO BE VERIFIED BEFORE ALLOWING THE CLAIM. AS PER THE LD. DEPARTMEN TAL REPRESENTATIVE, LD. COMMISSIONER OF INCOME TAX (APPEALS) FELL IN ER ROR IN ALLOWING THE CLAIM. 13. PER CONTRA, LD. AUTHORISED REPRESENTATIVE STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 14. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. IT IS NOT DISPUTE D THAT LONG TERM ITA NO.948 & 1423/MDS/2016 :- 9 -: CAPITAL GAINS OF @1,36,16,621/-, ON WHICH ASSESSE E HAD CLAIMED EXEMPTION, AROSE FROM ITS INVESTMENTS IN A VENTURE CAPITAL FUND CALLED ICICI EMERGING SECTOR FUND. SEC. 115U OF THE ACT WHICH DEALS WITH INCOME ACCRUING OR ARISING OR RECEIVED BY A PERSON OUT OF INVESTMENTS MADE IN A VENTURE CAPITAL FUND IS REPRODUCED HEREUN DER:- SECTION 115U :- 1) NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, ANY INCOME RECEIVED BY A PERSON OUT OF INVESTMENT MADE IN VENTURE CAPITAL COMPANY OR VENTURE CAPITAL FUND SHALL BE CHARGEABLE TO INCOME-TAX IN THE SAME MANNER AS IF IT WERE THE INCOME RECEIVED BY SUCH PERSON HAD HE MADE INVESTMENTS DIRECTLY IN THE VENTURE CAPITAL UNDERTAKING. (2) THE PERSON RESPONSIBLE FOR 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 RECEIVING 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 DURING THE PREVIOUS YEAR AND SUCH OTHER RELEVANT DETAILS AS MAY BE PRESCRIBED. (3) THE INCOME PAID BY THE VENTURE CAPITAL COMPANY AND THE VENTURE CAPITAL FUND SHALL BE DEEMED TO BE OF THE SAME NATURE AND IN THE SAME PROPORTION IN THE HANDS OF THE PERSON RECEIVING SUCH INCOME AS IT HAD BEEN RECEIVED BY, OR HAD ACCRUED TO, THE VENTURE CAPITAL COMPANY OR THE VENTURE CAPITAL FUND, AS THE CASE MAY BE, DURING THE PREVIOUS YEAR. (4) THE PROVISIONS OF CHAPTER XII-D OR CHAPTER XII- E OR CHAPTER XVII-B SHALL NOT APPLY TO THE INCOME ITA NO.948 & 1423/MDS/2016 :- 10 -: PAID BY A VENTURE CAPITAL COMPANY OR VENTURE CAPITAL FUND UNDER THIS CHAPTER. THE CASE OF THE REVENUE IS THAT ASSESSEE COULD NOT HAVE ACCOUNTED INCOME ON ACCRUAL BASIS AND INCOME OF VENTURE CA PITAL FUND COULD BE CONSIDERED U/S.10(23FB) OF THE ACT ONLY IF SUCH VENTURE CAPITAL FUND WAS GRANTED A REGISTRATION AND REGULATED UND ER SECURITIES AND EXCHANGE BOARD OF INDIA (VENTURE CAPITAL FUNDS) RE GULATIONS, 1996. 15. A READING OF THE SUB SECTION (1) OF SEC. 115U OF T HE ACT CLEARLY INDICATE THAT INCOME ACCRUING OR ARISING O R RECEIVED BY ANY PERSON OUT OF INVESTMENTS MADE BY HIM IN A VENTUR E CAPITAL FUND HAS TO BE TREATED ON PAR WITH INVESTMENTS DIRECTL Y MADE BY SUCH VENTURE CAPITAL UNDERTAKING. ONCE THE DEEMING PROV ISION COMES INTO PLAY, IN OUR OPINION IT HAS TO BE GIVEN FULL EFFEC T. SECTION 10(23FB) OF THE ACT GIVES EXEMPTION FOR INCOME OF A VENTURE CAP ITAL FUND IF CERTAIN CONDITIONS ARE SATISFIED. SAID SECTION REPRODUCE D HEREUNDER:- IN COMPUTING THE TOTAL INCOME OF A PREVIOUS YEA R OF ANY PERSON, ANY INCOME FALLING WITHIN ANY OF THE FOLLOWING CLAUSES SHALL NOT BE INCLUDED :- (1)................. (2)............... (3)................. ITA NO.948 & 1423/MDS/2016 :- 11 -: 23(FB) ANY INCOME OF A VENTURE CAPITAL COMPANY OR V ENTURE CAPITAL FUND SET UP TO RAISE FUNDS FOR INVESTMENT I N A VENTURE CAPITAL UNDERTAKING. EXPLANATION 1. FOR THE PURPOSES OF THIS CLAUSE, (A) VENTURE CAPITAL COMPANY MEANS SUCH COMPANY (I) WHICH HAS BEEN GRANTED A CERTIFICATE OF REGISTR ATION UNDER THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 199 2 (15 OF 1992), AND REGULATIONS MADE THEREUNDER ; (II) WHICH FULFILS THE CONDITIONS AS MAY BE SPECIFI ED, WITH THE APPROVAL OF THE CENTRAL GOVERNMENT, BY THE SECURITI ES AND EXCHANGE BOARD OF INDIA, BY NOTIFICATION IN THE OFF ICIAL GAZETTE, IN THIS BEHALF ; (B) VENTURE CAPITAL FUND MEANS SUCH FUND (I) OPERATING UNDER A TRUST DEED REGISTERED UNDER T HE PROVISIONS OF THE REGISTRATION ACT, 1908 (16 OF 190 8), OR OPERATING AS A VENTURE CAPITAL SCHEME MADE BY THE U NIT TRUST OF INDIA ESTABLISHED UNDER THE UNIT TRUST OF INDIA ACT, 1963 (52 OF 1963) ; (II) WHICH HAS BEEN GRANTED A CERTIFICATE OF REGIST RATION UNDER THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 199 2 (15 OF 1992), AND REGULATIONS MADE THEREUNDER ; (III) WHICH FULFILS THE CONDITIONS AS MAY BE SPECIF IED, WITH THE APPROVAL OF THE CENTRAL GOVERNMENT, BY THE SECURITI ES AND EXCHANGE BOARD OF INDIA, BY NOTIFICATION IN THE OFF ICIAL GAZETTE, IN THIS BEHALF ; AND (C) VENTURE CAPITAL UNDERTAKING MEANS SUCH DOMESTIC COMPANY WHOSE SHARES ARE NOT LISTED IN A RECOGNISED STOCK EXCHANGE IN INDIA AND WHICH IS ENGAGED IN THE (I) BUSINESS OF (A) NANOTECHNOLOGY ; (B) INFORMATION TECHNOLOGY RELATING TO HARDWARE AND SOFTWARE DEVELOPMENT ; (C) SEED RESEARCH AND DEVELOPMENT ; (D) BIO-TECHNOLOGY ; (E) RESEARCH AND DEVELOPMENT OF NEW CHEMICAL ENTITI ES IN THE PHARMACEUTICAL SECTOR ; (F) PRODUCTION OF BIO-FUELS ; (G) BUILDING AND OPERATING COMPOSITE HOTEL-CUM-CONV ENTION CENTRE WITH SEATING CAPACITY OF MORE THAN THREE THO USAND ; OR ITA NO.948 & 1423/MDS/2016 :- 12 -: (H) DEVELOPING OR OPERATING AND MAINTAINING OR DEVE LOPING, OPERATING AND MAINTAINING ANY INFRASTRUCTURE FACILI TY AS DEFINED IN THE EXPLANATION TO CLAUSE (I) OF SUB-SEC TION (4) OF SECTION 80-IA ; OR (II) DAIRY OR POULTRY INDUSTRY ; BY VIRTUE OF THE ABOVE, INCOME OF A VENTURE CAPITA L FUND IS EXEMPT PROVIDED IT SATISFIED THE CONDITIONS SET OUT IN CLA USE (B) OF EXPLANATION 1. BY VIRTUE OF THE DEEMING PROVISIONS (1) OF SE C. 115U OF THE ACT INCOME ACCRUING TO A PERSON OUT OF INVESTMENTS M ADE IN A VENTURE CAPITAL FUND ALSO GETS THE EXEMPTION U/S.10(23FB) OF THE ACT. THOUGH THE GROUNDS OF THE REVENUE SAY THAT COMPLIAN CE WITH SECURITIES AND EXCHANGE BOARD OF INDIA (VENTURE CAP ITAL FUNDS) REGULATIONS, 1996 HAS NOT BEEN ESTABLISHED, WHAT WE FIND IS THAT FORM NO.64 SPECIFIED IN RULE 12C WHICH IS TO BE FURNISHE D BY THE VENTURE CAPITAL FUND WAS FILED BY THE ASSESSEE. SAID FORM 64 BY NECESSARY IMPLICATION MEANS THAT AT THE VENTURE CAPITAL FUND HAD COMPLIED WITH THE CONDITIONS SET OUT IN EXPLANATION (1) TO SECTI ON 10(23FB). LD. ASSESSING OFFICER DID NOT FIND ANYTHING WRONG IN TH E SAID FORM NO.64 WHICH IS THE FORM SET OUT BY THE RULES UNDER SUB-S ECTION 2 OF SECTION 115U OF THE ACT. WE CANNOT ALSO SAY THAT THE INCOM E WHICH IS EXEMPT U/S.10(23FB) OF THE ACT HAD TO BE CONSIDERED ON REC EIPT BASIS AND NOT ON ACCRUAL BASIS SINCE SECTION 115U OF THE ACT TAKE S WITHIN ITS AMBIT ACCRUED INCOME ALSO. LD. COMMISSIONER OF INCOME TA X (APPEALS) IN ITA NO.948 & 1423/MDS/2016 :- 13 -: OUR OPINION WAS JUSTIFIED IN ALLOWING THE CLAIM OF THE ASSESSEE U/S.10(23FB) OF THE ACT READ ALONGWITH SECTION 115U OF THE ACT. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS). 16. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY A LLOWED FOR STATISTICAL PURPOSES, WHEREAS THAT OF REVENUE IS DISMISSED. ORDER PRONOUNCED ON THURSDAY, THE 11TH DAY OF JANU ARY, 2018, AT CHENNAI. SD/- ( ) (GEORGE MATHAN) /JUDICIAL MEMBER SD/- ( . ! ' ) (ABRAHAM P. GEORGE) $ % / ACCOUNTANT MEMBER - ' / CHENNAI . / DATED:11TH JANUARY, 2018. KV / $ !(0 1 2 1 ( / COPY TO: 1 . # / APPELLANT 3. & 3( ( ) / CIT(A) 5. 167 !(8 / DR 2. !'# / RESPONDENT 4. & 3( / CIT 6. 79 :' / GF