2023 (11) TMI 117

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....e assessee has raised the following grounds of appeal: "1. The learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre erred in concluding that the Appellant invested in Category II funds which turn invest in funds or distressed Assets, real estate funds, debt funds and also funds of funds and the income generated on such is not exempt under Section 10(38) of the Income Tax Act for Conventional Tax Workings. 2. The learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre erred in concluding that exemption under Section 10(38) is available where income of mutual funds investing directly in equity in Stock exchange. 3. The learned Commissioner of Income Tax ought to have al....

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....ellate order, dated 12.03.2022, rejected arguments of the assessee and sustained additions made by the AO towards long-term capital gains derived from sale of mutual funds, on the ground that when the assessee is invested in Alternative Investment Fund (AIF), gain derived from sale of any investments by said venture capital fund is not exempt u/s. 10(38) of the Act. Aggrieved by the CIT(A) order, the assessee is in appeal before us. 4. The Ld. Counsel for the assessee, referring to Form No. 64C issued by Paragon Partners Growth Fund, in terms of Rule 12CB(1)(i) of Income Tax Rules, 1962, and also referring to provisions of section 115UB of the Act, submitted that income of a person being investor in a AIF (Alternative Investment Fund) ou....

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....ong-term capital asset and income from said sale is taxable under the head long-term capital gains. As per the provisions of section 115UB of the Act, any income accruing or arising to, or received by, a person, being a unit holder of an investment fund, out of investment made in investment fund, shall be chargeable to income-tax in the same manner as if it were the income accruing or arising to, or received by such person had the investments made by the investment fund been made directly by him. In other words, as per provisions of section 115UB of the Act, Alternative Investment Fund is a pass through entity for investors and whatever gain or loss derived by such fund is assessable in the hands of unit holders. To this effect, the assesse....