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2011 (3) TMI 387 - ITAT, MUMBAIDisallowance - Exemption u/s. 10(23FB) - Interest on temporary investments and profit on sale Units of Mutual fund - Since, there is no restriction or requirement regarding the source of income for grant of exemption u/s. 10(23FB) - It is only by Finance Act, 2007, w.e.f. 1st April, 2008, an amendment to section 10(23FB) was brought about restricting the exemption under that section to income from Investment by the Venture Capital Fund in a venture capital undertaking. For this purpose, the said clause (c) of Explanation 1 has also been amended to define "Venture Capital Undertaking" - This amendment was made effective from 1.4.2008. By no stretch of imagination can this amendment can be considered as clarificatory applicable to earlier Assessment Year - The memorandum explaining the amendment to the Finance Bill, 2007 as well as the CBDT circular explaining the provisions of the Finance Act, 2007 clarify that the amendment proposed to section 10(23FB) was to restrict the scope of income for which exemption under that section was available - Hence this amendment cannot be considered as clarificatory but must be considered as prospective in effect - It is not in dispute that the assessee is otherwise eligible for exemption u/s. 10(23FB). Hence for the year under appeal, as per the provisions of section 10(23FB) as applicable to the assessment year, any income of the venture capital Fund is exempt - Hence we confirm the order of the CIT(A) and uphold his direction that that interest on temporary investments of Rs.16,09,900/- and profit on sale Units of Mutual fund of Rs 1,00,91,000/- is entitled to exemption u/s. 10(23FB).
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