TaxTMI 
TaxTMI 
2013 (8) TMI 809
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.... been fulfilled even for the AY 2006-07. Accordingly, the AO held that there was an escapement of income and issued notice u/s 148 of the Act. 3. The assessee went on appeal before the CIT(A) agitating against the reopening of assessment on the ground that such reopening was based on fresh application of mind to the same set of facts. The CIT(A) confirmed the action of the AO by holding as follows: "5. I have gone through the facts of the case and the submissions of the appellant. It has been explained by the hHon'ble Apex Court that the phrase 'reason to believe' cannot be read to mean that the AO should have finally ascertained the fact by legal evidence or conclusion. It has been opined that if the AO has cause or justification to know or suppose the income has escaped assessment, it can be said that he has such 'reason to believe'. Considering the facts of the case, it is clear that in the light of the findings in the appellant's case for the AY 2007-08, the AO indeed have 'reason to believe' that income had escaped assessment. Accordingly, the reopening of the assessment completed originally on 03/11/2008 u/s 143(3) cannot be faulted with. Finding no infirmity in the action ....
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.... Regulations, 1996, regulating the formation and functioning of VCFs. They noted that a VSF has to satisfy the conditions laid in Regulation 2(m) for getting a certificate from SEBI, as required u/s 10(23FB)(b)(ii) of the IT Act, 1961. 6. After observing as above, the CIT(A) held if the case of the present appellant is examined in the light of the above decision of the Hon. ITAT, Ahmedabad Bench, it is clear that the appellant has been granted a certificate of registration under the Securities and Exchange Board of India Act, 1992 [15 of 1992], and Regulations made thereunder. It is also clear that the certificate of registration so granted by SEBI is very much in force as on date and has not been withdrawn till date. Under the circumstances, considering that such certificate was issued to the appellant after finding that it fulfils the conditions as have been specified in the regulations, it is clear that the appellant is a 'Venture Capital Company' as envisaged in sec. 10(23FB). 7. The CIT(A) observed that it is also the contention of the appellant that it has been making regular quarterly filings before the SEBI. Since, in view of such regular filings, the appellant continues ....
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....as been settled according to the consent terms and the fact remains that the approval granted by the SEBI has not been withdrawn. The ITAT Ahmedabad Bench in the Gujarat Information Technology Fund (supra) held as follows: "(5) Whether AO can look into whether venture capital fund fulfills conditions laid down in SEBI (Venture Capital Funds) Regulations, 1996. 24. In our considered view the AO is duty bound to enquire whether the assessee trust is registered under the Registration Act, 1908 and has been granted certificate of registration by SEBI under SEBI (Venture Capital Funds) Regulations, 1996. But his role is confined to satisfy himself with such certificates granted and not beyond. Sub-clause (i) and sub-clause (ii) of clause (b) under explanation-1 only requires to ensure that assessee trust has certificates as mentioned therein. Even if certificates are granted under mis-representation of facts then it is for the concerned authorities to look into the matter and take action under the provisions of the concerned statute under which certificates are granted. In this regard the observations of the Hon. Supreme Court in the case of Gestetner Duplicators P. Ltd. vs. CIT (supr....
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.... is to find out whether any action for default has been taken by SEBI under regulation -30 as referred to above for default committed by the assessee trust. So far as any violation of investment pattern as laid down in regulation 12(d) is concerned it is also covered under clause (a) of regulation-30 which shows that assessee trust can be penalized for contravention of any provision of this Act or these regulations. Thus, if assessee trust contravenes regulation-12 (d) then SEBI is competent to penalize assessee trust within the powers given under regulation 30. So long as SEBI does not find any default of any contravention of the provisions of the SEBI Act or SEBI (VCF) Regulation 1996 then it can be inferred that assessee trust fulfills the conditions laid down under these regulations. The AO, however, can look into the issue whether assessee trust fulfills such conditions as laid down in regulation 12 (d) (and not under regulation-8) and report the matter to SEBI taking a protective view under I.T. Act, 1961. If finally SEBI does not find any default on the part of the assessee trust then view of the AO that there is violation cannot survive. In other words fulfillment of condit....
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....come 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). 15. In the result, the appeal filed by the revenue is dismissed." 13. The above view is also supported by CBDT Circular of 2008 which clarifies the position as under :- "The CBDT Circular No.3 of 2008 this case has been clarified. Exemption for certain income of a venture capital company or venture capital fund. 14.2 Clause (23FB) of section 10 provides exemption in respect of any income of a venture capital company or venture capital fund set up to raise funds for investment in a venture capital undertaking. Such Venture capital undertaking has been defined in clause(c) of explanation 1 to clause (23FB) to mean a venture capital undertaking referred to in the Securities and Exchange Board of India (Venture Capital funds) Regulations, 1996, made under the Securities and Exchange Board of India Act, 1992, and notified as such in the Official gazette by the Board for the purposes of the clause. With a view to mak....