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TMI Blog2024 (7) TMI 1432X X X X Extracts X X X X X X X X Extracts X X X X ..... g the original return rather than filing the revised return? 3. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) is justified in holding that the assessee can claim fresh claim of exemption u/s. 10(38) of the Act when it is not claimed in the original return, when the statute required to do certain thing in certain way, the things must be done that way or not at all based on legal maxim "Expressiouniusest exclusio alterius? 4. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A)is justified in allowing the exemption u/s. 10(38) when it was claimed in original return u/s. 10(23FB) of the Act based on the above legal proposition? 5. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A)erred in deleting the addition made by the AO and allowing the exemption of Rs. 247,67,03,531 u/s. 10(38) of the Act, without considering facts that the assessee had acquired the shares from off the market which were not STT paid? 6. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition made by the assessing officer without appreciating the facts that the income has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2016) - 9,14,892 shares 11,55,730 shares All the above shares were sold by the assessee from September, 2017 to November, 2017. There is no dispute that all the shares qualify as Long term capital asset. Consequently, the assessee earned Long Term Capital Gain (LTCG) of Rs. 247.67 crores during the year relevant to assessment year 2018-19, i.e., the year under consideration. 6. In the return of income, the assessee claimed exemption of LTCG u/s 10(23FB) of the Act. The provisions of sec. 10(23FB) provides for exemption of any income of VCF from investments made in a venture capital undertaking. Besides the above, the assessee had also earned dividend income of Rs. 3,97,300/- and claimed the same as exempt u/s 10(35) of the Act. The return of income filed by the assessee was processed u/s 143(1)(a) of the Act, wherein the claim of exemption of Rs. 3,97,300/- u/s 10(35) of the Act was denied. The ld A.R fairly admitted that the assessee did not challenge the addition of Rs. 3,97,300/- made by the CPC while processing the return of income u/s 143(1)(a) of the Act. 7. Later, the Assessing officer took up the return of income filed by the assessee for scrutiny. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... already made while processing the return of income u/s 143(1)(a) of the Act. Hence, the cause of action in respect of denial of exemption u/s 10(35) of the Act would lie only in challenging the intimation issued u/s 143(1)(a) of the Act. Admittedly, the assessee has failed to challenge the same. Hence the Ld CIT(A) could not have granted relief in the appeal filed against the assessment order passed u/s 143(3) of the Act, when the addition made u/s 143(1)(a) remained unchallenged. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and restore the addition made by the AO on this issue. 11. We noticed earlier that the assessee had claimed exemption u/s 10(23FB) of the Act claiming itself to be a Venture Capital Undertaking. However, the said claim has been rejected by the AO and Ld CIT(A). We notice that the assessee has not challenged the rejection of exemption u/s 10(23FB) of the Act confirmed by Ld CIT(A). Hence, this issue has attained finality for this year. 12. The remaining grounds raised by the revenue relate to the decision of Ld CIT(A) in allowing exemption u/s 10(38) of the Act to the Long term capital gains earned by the assessee on sale of shares of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained in sub-clause (b) shall apply to a transaction undertaken on a recognised stock exchange located in any International Financial Services Centre and where the consideration for such transaction is paid or payable in foreign currency: Provided also that nothing contained in this clause shall apply to any income arising from the transfer of a long-term capital asset, being an equity share in a company, if the transaction of acquisition, other than the acquisition notified by the Central Government in this behalf, of such equity share is entered into on or after the 1st day of October, 2004 and such transaction is not chargeable to securities transaction tax under Chapter VII of the Finance (No. 2) Act, 2004 (23 of 2004): Provided also that nothing contained in this clause shall apply to any income arising from the transfer of long-term capital asset, being an equity share in a company or a unit of an equity oriented fund or a unit of a business trust, made on or after the 1st day of April, 2018. Explanation.-For the purposes of this clause,- (a)"equity oriented fund" means a fund-(i)where the investible funds are invested by way of equity shares in domestic companies to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of equity share entered into on or after the 1st day of October, 2004 which are not chargeable to securities transaction tax under Chapter VII of the Finance (No. 2) Act, 2004 (23 of 2004), other than the following, namely :- (a) where acquisition of existing listed equity share in a company whose equity shares are not frequently traded in a recognised stock exchange of India is made through a preferential issue: Provided that nothing contained in this clause shall apply to acquisition of listed equity shares in a company:- (i) which has been approved by the Supreme Court, High Court, National Company Law Tribunal, Securities and Exchange Board of India or Reserve Bank of India in this behalf; (ii) by any non-resident in accordance with foreign direct investment guidelines issued by the Government of India; (iii) by an investment fund referred to in clause (a) of Explanation 1 to section 115UB of the Income-tax Act or a venture capital fund referred to in clause (23FB) of section 10 of the Income-tax Act or a Qualified Institutional Buyer; (iv) through preferential issue to which the provisions of chapter VII of the Securities and Exchange Board of India (Issue of Capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge Board of India Act, 1992 (15 of 1992) and the rules made there under; Explanation,-For the purposes of this notification,- (a) "frequently traded shares" means shares of a company, in which the traded turnover on a recognised stock exchange during the twelve calendar months preceding the calendar month in which the acquisition and transfer is made, is at least ten per cent. of the total number of shares of such class of the company: Provided that where the share capital of a particular class of shares of the company is not identical throughout such period, the weighted average number of total shares of such class of the company shall represent the total number of shares. (b) "Listed" means listed in a recognised stock exchange in India in accordance with the Securities Contracts (Regulation) Act, 1956 and the rules made thereunder. (c) "preferential issue" and "Qualified Institutional Buyer" shall have the meanings respectively assigned to them in sub-regulation (1) of regulation (2) of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009. (d) "public financial institution" and "scheduled bank" shall have the mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh an issue of share by a company other than a case where preference issue is made by a company whose equity shares are not frequently traded in a recognized stock exchange of India. In my view, the present case is covered by sub-clause (i) to clause (b) of the Notification and hence, eligible for exemption under section 10(38) of the Act. In view of the above discussion, Ground No.3 is allowed." 20. The Ld A.R, however, submitted that even though the Ld CIT(A) has granted relief to the assessee, yet the fact would remain that the Ld CIT(A) has given relief by relying on wrong clauses of the Notification. The Ld A.R submitted that the above said notification can be divided into three parts, viz., (A) All transactions of acquisition of equity shares entered on or after the 1st day of October, 2004 which are not chargeable to Securities transaction tax under Chapter VII of the Finance (No.2) Act, 2004 (23 of 2004)" shall be covered by the Notification. (B) Those cases covered by Clause (a), Clause (b) and Clause (c) are not eligible for exemption if the STT was not paid. (C) Certain exceptions are given under Clause (a) and Clause (b), meaning thereby, those cases shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 24. We heard the parties on this issue. We noticed that the assessee was formed as a Trust under the Registration Act. Hence, as such, it is a "Person" under the Income tax Act. The assessee got registration as "Venture Capital Fund". The Ld A.R submitted that a Venture Capital Fund will acquire the character of "Pass through entity", only if it is granted exemption in terms of sec. 10(23FB) of the Act. As per the provisions of sec. 10(23FB) of the Act, the income earned by VCF on the investments made in the Venture Capital Undertaking is exempt and if the said exemption is given, then the income is liable to be assessed in the hands of investors in terms of sec. 115U of the Act. However, in the instant case, the assessee's claim for exemption u/s 10(23FB) has been rejected by the tax authorities, meaning thereby, the status of the assessee as a "pass through entity" has not been accepted by the tax authorities in this year. Hence the question of applying the provisions of sec. 115U will not arise in this year. 25. As noticed earlier, the assessee, being a trust is legal entity and would fall under the definition of "person" under the Income tax Act. Hence it is assessable und ..... X X X X Extracts X X X X X X X X Extracts X X X X
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