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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 ..... ,60,00,000/- as per the accounts as under : Investment in unquoted equity shares Rs.5,55,68,550/- Investment in quoted equity shares Rs. 1,60,000/- Investment in convertible debentures Rs.1,79,83,900/- Rs.7,37,12,450/- The balance corpus fund along with the retained earnings of Rs.1,28,21,680/- has been either invested in deposit account or current account along with advances etc. Out of the corpus fund of Rs.21.60 crores the assessee has invested only part amount and the balance amount has been kept bank on which interest of Rs.96,61,421/- has been earned by the assessee fund. After deducting the business loss of Rs.26,65,471/-, net income of Rs.69,95,950/- was claimed exempt u/s. 10(23FB). 3. The Assessing Officer after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e directions of the ITAT is reproduced as under: "9. We see substance in Shri Bhatt's plea. The expression 'investible funds' is a neatly defined expression under Rule 2(hh) 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-àvis investible funds computed in the light of the above directions of the investment pattern at the end of the life cycle an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .20 111,639.29 69.17 6. In this background it was submitted on behalf of the assessee that position regarding investible funds was accepted by the CIT(A)-II, Pune, in assessee's own case while disposing off the appeal filed for A.Y. 2005-06 and 2006-07, and the above working is same working as was submitted during appellate proceedings before CIT(A)-II, Pune, for above mentioned assessment years. It was further pleaded that having achieved stipulated percentage of investment when its life cycle of 7 years as per SEBI Regulation, the assessee be granted exemptions u/s.10(23FB) as claimed. 7. The CIT(A) observed that matter was remitted to CIT(A) by ITAT for the limited purpose of verifying investment pattern vis-à-vis correct inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Accordingly, it has been explained by the assessee that when management and administration expenses as per Profit and Loss Account are reduced from the corpus of Rs.21.60 crores, the net figure of Rs.20,95,19,760/- becomes the Investible funds for the purpose of Regulation 12(d)(i). Therefore, considering the investment of Rs.14,02,99,580/- in the prescribed Venture Capital Undertaking (other than quoted equity shares), the investment percentage arrived at is 66.96%, which meets the requirements of Regulation 12(d)(i). 5.1 It is further noticed that as per the Explanation given below SEBI Regulation 12(d), the investment conditions and restrictions stipulated in clause (d) of Regulation 12 was to be achieved by the Venture Capital Fund by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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." 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, allowed." 8. From this it was observed by CIT(A) that above observation of CIT(A) for A.Y. 2005-06, the prescribed percentage of 66.67% of the investible funds have been achieved during the previous year relevant to the A.Y. 2005-06 and therefore, condition laid down under Regulation 12(d)(1) of the SEBI Regulations is also satisfied in the case of the assessee. In view of this categorical finding of the CIT(A) for immediately succeeding year and also considering the factual position that further excluding expenditure for administration and management of the funds, assessee had achieved prescribed limit of 66.67% of investible funds during lifecycle of 7 years or 10 year, it was held that assessee is eligible for exemption u/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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