TMI Blog2017 (6) TMI 286X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal of Revenue for AY 2007-08 is dismissed. For AY 2008-09 and 2009-10 there is an ammendment in section 10(23FB) of the Act and there are certain specified business eligible for exemption under this provision. Assessee s case does not fall under exemption category and hence, out of the purview of this provision of section 10(23FB) of the Act. Therefore, the assessee has to be assessed under normal provisions of law and hence, the business loss has to be set off against the other incomes. We find no infirmity in the orders of CIT(A) for both the years and hence the same are confirmed. - Decided against revenue Addition u/s 14A r.w.r. 8D - Held that:- We find that this issue is covered by the decision of the Hon ble Delhi High Court in the case of Joint Investment [2015 (3) TMI 155 - DELHI HIGH COURT ] as held that by no stretch of imagination can Section 14A or Rule 8D be interpreted so as to mean that the entire tax exempt income is to be disallowed. The window for disallowance is indicated in Section 14A, and is only to the extent of disallowing expenditure incurred by the assessee in relation to the tax exempt income . This proportion or portion of the tax exempt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uity related and other permitted investments in India. The intention of the trust was to invest in entities engaged in the real estate and development. During the year under consideration the assessee earned interest on fixed deposits invested out of surplus funds at ₹ 66,07,975/- and short term capital gain from sale of mutual funds at ₹ 1,45,85,081/-. The assessee also incurred business loss. The assessee claimed that the interest income and gain on sale of mutual funds being short term capital gain in the hands of ventured capital fund during AY 2007-08 is not taxable in view of the provision of Section 10(23FB) and claimed exempt. The AO, in view of the assessment framed in assessee s case for AY 2009-10, noted that the loss claimed by assessee being not forming a part of total income, since the same is covered under section 10(23FB) of the Act. The above interest income and short term capital gain is not allowed to be set off against the said business loss exempted under section 10(23FB) of the Act. Accordingly, the AO reopened the assessment and disallowed the claim of deduction by observing as under: - As per the provisions of- section 10 (23 FB), exemption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned Sr. DR heavily relied on the assessment order. On the other hand, the learned Counsel for the assessee first of all drew our attention to the bare provisions of section 10(23FB) of the Act as applicable in AY 2007-08, she referred to the provision as under: - Section 10 (23FB) Any income of a venture capital company or venture capital fund set up to raise funds for investment in a venture capital undertaking. 6. In view of this provision, the learned Counsel for the assessee argued that section 10(23FB) is broaden to claim the exemption base and does not specify or restricted the exemption to any particular nature or source of income. She argued that it exempts income of a venture capital fund which fulfills the conditions relating to the purpose for which it is set up i.e. raising of funds for investment in venture capital undertakings. The learned Counsel for the assessee drew our attention to the intention of the legislation in the case of section 10(23FB) of the Act was to extend the exemption to entire income of ventured capital fund which is set up to raise funds for investment in venture capital undertakings. She referred to the speech of the Fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Other sources (Interest income) Rs.1,06,92,460/- Business loss (-)Rs.23,37,10,742 Similarly, in AY 2009-10 also the assessee has earned the following income: - Short Term Capital Loss (-)Rs. 19,36,82,780 Other sources (Interest income) Rs.1,53,95,292/- Business loss (-)Rs.17,06,17,779/- In view of the above facts, the learned Counsel for the assessee stated that with effect from 01-04-2008 there is an ammendment and the word from investment is substituted for setup to raise funds for investment by the Finance Act 2007. She referred to the following: - Section 10(23FB) any income of a venture capital company or venture capital fund from investment in a venture capital undertaking She argued that by the The Finance Act, 2007 has, with effect from the A.Y. 2008-2009 provided a new definition of venture capital undertaking, where the investment of a Venture Capital Company or Venture Capital Fund would be exempt from tax. Thus, ventur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Brief facts are that in AY 2009-10, the assessee has earned dividend income of ₹ 18,80,102/- and voluntarily disallowed the expenses relatable to exempt income at ₹ 18,80,102/- i.e. the entire exempt income under section 14A of the Act read with Rule 8D of the Rules. Similarly, in AY 2010-11, the assessee has earned tax fee dividend income of ₹ 16,421/- and voluntarily disallowed the expenses relatable to this exempted income at ₹ 16,421/- equivalent to exempt income. The AO in AY 2009-10 disallowed under section 14A of the Act read with Rule 8D of the Rules at ₹ 6,09,82,348/- and in AY 2010-11 a sum of ₹ 3,14,86,290/- being estimated expenses relatable to exempted income in both the years. The learned Counsel for the assessee before us argued that no further disallowance is called for and she relied on the proposition settled by Hon ble Delhi High Court in the case of Joint Investment Pvt. Ltd vs. CIT (2015) 372 ITR 694 (del), wherein it is held as under : - 7.During the course of hearing, counsel for the petitioner had relied upon a decision of this Court in Commissioner of Income Tax VI v. Taikisha Engineering India Ltd., (ITA 115/2014 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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