TMI Blog2020 (5) TMI 164X X X X Extracts X X X X X X X X Extracts X X X X ..... nvestment, make exit at appropriate time, park surplus money in bank FDR and distributes fund amongst contributors. Assessee had earned exempt income against which it has offered disallowance u/s 14A in terms of Rule 8D. However, by implication, it could not be said that rest of the expenditure was incurred to earn the interest income. It is quite evident form assessee s own submissions before Ld. CIT(A) that the prime objective of the assessee was to make investment as venture capital fund. The income earned therefrom was assessed as capital gains. Only the surplus money held by the assessee was kept as fixed deposits in the bank. The management / trusteeship fees other expenditure was primarily directed towards venture capital inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uggest any nexus of expenditure vis- -vis interest income, the expenditure thus claim would not be allowable to the assessee - we set aside the impugned order and restore the computations made by Ld. AO. - Decided in favour of revenue. - I.T.A. No.7671/Mum/2016 - - - Dated:- 12-3-2020 - Hon ble Shri Mahavir Singh, JM And Hon ble Shri Manoj Kumar Aggarwal, AM For the Assessee : Shri Nitesh Joshi-Ld. AR For the Revenue : Ms. Kavita P. Kaushik-Ld. DR ORDER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. Aforesaid appeal by revenue for Assessment Year [in short referred to as AY ] 2012-13 contest the order of Ld. Commissioner of Income-Tax (Appeals)-8, Mumbai, [in short referred to as CIT(A) ], Appeal No. CIT(A)-8/IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eveal that the assessee being resident assessee was assessed for year under consideration u/s 143(3) on 28/03/2015 wherein the income was determined at ₹ 102.32 Crores after certain adjustment as against returned income of ₹ 99.51 Crores filed by the assessee on 28/09/2012. The assessee is stated to be closeended venture capital fund registered with SEBI and invest in shares and debentures of unlisted companies with a view to earn long-term capital appreciations. Pending suitable opportunities, available funds are parked by the assessee in fixed deposits with the bank which give rise to interest income. 3.2 During assessment proceedings, it transpired that the assessee earned exempt dividend income of ₹ 9.34 Lacs and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d out or expended wholly or exclusively for the purposes of earning such income and therefore, the deduction of the expenditure was not allowable. In defense, the assessee submitted that since venture capital fund generates both exempt as well as taxable income, a disallowance u/s 14A r.w.r. 8D has already been made and balance portion of expenditure which is incurred to earn the non-exempt income has been claimed as deduction. However, going by the provisions of Sec.57(iii), the submission was rejected and the deduction of expenditure of ₹ 281.19 Lacs was disallowed. 4. Before, Ld. CIT(A), the assessee, inter-alia, submitted that the assessee acts only through investment manager and trustees. The investment managers were appoint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt that the assessee had earned exempt income against which it has offered disallowance u/s 14A in terms of Rule 8D. However, by implication, it could not be said that rest of the expenditure was incurred to earn the interest income. It is quite evident form assessee s own submissions before Ld. CIT(A) that the prime objective of the assessee was to make investment as venture capital fund. The income earned therefrom was assessed as capital gains. Only the surplus money held by the assessee was kept as fixed deposits in the bank. The management / trusteeship fees other expenditure was primarily directed towards venture capital investments. No borrowing costs have been incurred by the assessee. In our considered opinion, the claim of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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