AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (1) TMI 790
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....(A.Y. 2014-15) C.O. No. 92/MUM/2023 (A.Y. 2018-19) 3. Brief facts of the case are, Assessee filed its return of income on 24.09.2014 along with the Income & Expenditure Account, Balance Sheet and Audit Report in Form No. 10B declaring total income at Rs.. Nil. The case was selected for scrutiny and notices u/s. 143(2) and 142(1) of Income-tax Act, 1961 (in short "Act") were issued and served on the assessee. In response Authorised Representative of the assessee attended and submitted the relevant information as called for. 4. During the course of the assessment proceedings, Assessing Officer observed that the assessee has claimed exemption under section 10(23D) of the Act and observed that the section 10(23D) of the Act itself confirms that the Mutual Fund should be registered with Securities and Exchange Board of India (SEBI). In this regard, he observed that assessee submitted copy of Certificate of Registration received from SEBI. However, the Certificate of Registration submitted by the assessee is for UTI Mutual Fund and not for assessee Trust. Further, vide order sheet dated 15.12.2016, the assessee was informed that conditions laid down u/s 10(23D) of the Act are not fu....
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....ndia Fund Unit Scheme 1986 was launched in June 1986. There are other offshore schemes of UTI Mutual Fund also, UTI India Pharma Fund Unit Scheme and India Debt Opportunities Fund Unit Scheme which were launched in March 2005 and January 2006 respectively. For the UTI India Fund Unit Scheme 1986, necessary permissions of the RBI was received by letter dated 17th June 1986 (including approval of Government of India, as mentioned therein) (Copy of the RBI approval letter is enclosed as Annexure IV) SEBI by its letter dated 20 September 2004 provided its approval for the jogher offshore schemes of UTI Mutual Fund, UTI India Pharma Fund Unit Scheme and India Debt Opportunities Fund Unit Scheme (Copy enclosed as Annexure V. The UTI India Fund Unit Scheme 1986 was launched prior to the SEBI (Mutual Funds) Regulation 1996, hence no SEBI approval is applicable for this offshore scheme of UTI Mutual Fund. 8) The following is very clearly provided in clause 2 of the SEBI approval letter dated 20 September 2004: "UTI Mutual Fund shall launch two schemes for investment in India and the units issued by these schemes shall be subscribed by the respective offshore funds only". Thus, all ....
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....8646 Income from Other Source Misc. Income 221 TOTAL Income 735178867 Rounded Off to 735178870 8. Accordingly, he assessed the income under section 143(3) of the Act at Rs.. 73,51,78,870/-. 9. Aggrieved assessee preferred appeal before the Ld. CIT(A) and before Ld. CIT(A) assessee has raised various grounds of appeal and filed detailed submissions which is reproduced in the appellate order. After considering the submissions of the assessee, Ld. CIT(A) allowed the appeal of the assessee by observing as under: - "5. Finding & Decisions: - 5.1 Ground 1 is generic in nature and does not require any specific adjudication. Ground 2 to 5 5.2 I have gone through the assessment order and the grounds of appeal raised by the appellant The mood point of appeal by the appellant is that the learned AO has contested that the appellant does not satisfy the conditions prescribed under section 10(23D) of the IT Act because the appellant has not obtained a specified registration from SEBI and thereby contested that appellant is a separate mutual fund therefore no deduction under section 10(23D) is permissible. Accordingly, the learned AO det....
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....ved RBI scheme. 5.13 The appellants also submitted financial statements which were signed as UTI asset Management Company limited and not as UTI India fund unit scheme 1986. 5.14 Having regard to above detailed finding in appellant submission it is to be mentioned that the appellant is duly recognised scheme as per SEBI and the registration granted to UTI mutual fund is also valid for appellant scheme Nearly opting separate PAN for statutory requirement under Income Tax Act shall not lead to a conclusion that the appellant is a separate legal entity vis a vis its originator mutual fund. 5.15 In view of the above and having regard to the finding that when the appellant has valid SEBI approval and RBI approval, the findings of learned AO that the appellant is not eligible for deduction under section 10(23D) are not acceptable. Therefore the addition made by learned AO to determined total income at sum of Rs. 73,51,78,870/- is deleted in entirety. 5.16 Accordingly ground 2 to ground 5 are allowed. Ground 6 & 7 5.17 The appellant contested that the learned AO erroneously taxed the income from unrealised gain for sum of Rs. 54,04,75,289/- and dividend income of Rs. 6,9....
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....ellant u/s 32 of UTI Act, r.w.s. 18 of the Repeal Act and the notification issued there under." 2) Without to the above grounds and without admitting any liabilities it is submitted that in view of the facts of the present case and in law the appellant could even otherwise be not assessed for the income in reference" 12. At the time of hearing, Ld. DR submitted that assessee is a separate legal entity. He brought to our notice Page Nos. 2 to 4 of the assessment order and brought to our notice detailed findings of the Assessing Officer. He vehemently argued that the assessee has a separate PAN and not a same entity for which SEBI has granted Certificate of Registration. It clearly shows that assessee does not have any registration to get exemption under section 10(23D) of the Act and as per section 10(23D) of the Act it is mandatory to have the Certificate of Registration with the SEBI and in absence of the same assessee is not eligible to claim exemption under section 10(23D) of the Act. Further, he brought to our notice Page No. 7 of the Ld. CIT(A) order and objected to the findings of the Ld. CIT(A) that the assessee is part of the UTI Mutual Fund. He prayed that the order o....
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....btained for UTI India Fund Scheme 1986, to facilitate foreign remittance. UTI India Fund Scheme 1986 was launched by UTI as one of the schemes under section 21 of Unit Trust of India Act 1963. It would be relevant to note that though the PAN was obtained for its Scheme named UTI India Fund Scheme, 1986 launched in 1986. date of establishment (date of Birth) is taken as 1 February, 1964 which is the date when the Unit Trust of India was established by Unit Trust of India Act, 1963. (Copy of the same (PAN Card) is attached for ready reference and record. (Ref. Page No. 101) Since the UTI India Fund Scheme, 1986 was an offshore fund, approval from the Central Government and also from Reserve Bank of India was required and were obtained, and that the copies of approval from Central Government as well as RBI obtained for UTI India Fund Scheme, 1986 are attached. (Ref. Page No. 102 to 105) Since the UTI India Fund Scheme 1986 was established under the UTI Act, 1963, the income earned therefrom was always exempt and claimed so pursuant to the provisions of section 32 Unit Trust of India Act, 1963. The relevant provision is given here under: Section 32 in The Unit Trust Of I....
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....namely UTI Trustee Company Private Limited a company incorporated under The Companies Act, 1956 having its registered office 13, Sir Vitthaldas Thackersey Marg, New Marine Lines, Mumbai - 400020, in its capacity as Trustee of the UTI Mutual Fund and by notification dated 15th January, 2003 issued by Department of Economic Affairs, the Company was notified as specified company being a Trustee of UTI Mutual Fund. (Ref. Page No. 124) (b) Pursuant to the restructuring of the UTI, all the Schemes of the UTI were transferred to and vested in its above mentioned two successors with effect from 01st February 2003. The Schemes listed in the Schedule I of the Repeal Act were transferred to and vested in the SUUTI and the Schemes listed in Schedule II of the Repeal Act were transferred to and vested in the UTI Mutual Fund, with effect from 01st February 2003. (Ref. Page No. 115 to 119) (c) The UTI India Fund Scheme 1986 is one of the Schemes listed in Schedule II U/Sr. No. 37 of the Repeal Act and was, therefore, also vested, by statute, with UTI Mutual Fund, as per the provisions of the Repeal Act, with effect from 1st Feb 2003. (Ref. Page No. 118) (d) UTI Mutual Fund is a trust est....
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....on is granted to Mutual Fund and not the scheme as such, Other regulation like Regulation 3, 10, 14, 17 etc. also clearly depict that schemes are part of a mutual fund and the registration certificate is applied and issued to a mutual fund and not to schemes individually. Thus, the offshore schemes including the UTI India Scheme, 1986 is the Scheme of UTI Mutual Fund. Further post SEBI approval In compliance to the SEBI requirements the then Chairman had written to SEBI a letter dated 3rd February, 2003 and also sent draft of general notice to be published in news paper COPY OF THE LETTER written by the UTI- Chairman to SEBI and Central Govt. of India along with UTI MF BULLETIN- February 2003 and copy of the News Paper Indian Express Dated 07.02.2003 where the general notice was published for the knowledge of general public. ((Ref. Page No. 130 to 144) (h) Since, the PAN was issued in the name of UTI India Fund Scheme 1986, the appellant was asked to furnish return of income and in view of the same the appellant had filed the return of income claiming the deduction under section 10(231) of the Income Tax Act, 1961. (i) The appellant's case was selected for scrutiny ....
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....ights to manage assets held by them to any third party complying with the statutory requirements including protecting the interest of the employees Sponsors will be indemnified for a period of 3 years in respect of any liability, loss or damage that may be incurred by the sponsors, for actions pertaining to the period prior to the Appointed Day Interest of the employees/officials will be protected by complying with Section 6 of the Act. This operationalises the UTI (Transfer of Undertaking and Repeal) Act, 2002. The undertaking specified in Scheme 1 of the UTI will be transferred and shall vest in an Administrator, Simultaneously undertakings specified in Schedule II would vest in a specified company from the Appointed Day In accordance with the Act, State Bank of India, Punjab National Bank, Bank of Baroda and the Life Insurance Corporation of India have set up a mutual fund named UTI Mutual Fund, a Trustee Company called the UTI Trustee company. and also established the UTI Asset Management Company, in accordance with SEBI (Mutual Fund) Regulations Government notification regarding handing over the undertaking to this new Mutual Fund from the Appointed Day has also been ....
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....ion or notification by specified company or Administrator in place of Trust In every Act, rule, regulation or notification in force on the appointed day, for the words "Unit Trust of India", wherever they occur, the words, brackets and figures "specified company referred to in the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 or "Administrator of the specified undertaking of the Unit Trust of India referred to in the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002" as the case may be, shall be substituted." (Ref. Page No. 112) Similarly, para 5 of the Chapter II of the Repeal Act also provides that the undertaking of the Trust which is transferred to and which vests in the specified company or specified undertaking of the trust under section 4 shall be deemed to include all the business, assets, rights, powers, authorities and privileges....... etc. (Ref. Page No. 108) Therefore, section 32 of the UTI Act 1963, read with para 5 of the Chapter II of the Repeal Act, and para 18 of the Chapter V of the Repeal Act, clearly mandates that the benefit of the UTI Act, 1963 would be available to the specified company. Further, referring to....
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....stitution as per provisions of section 4A of the Companies Act, 1956. May it be so it is not in dispute that UTI India Fund Scheme,1986 did not have any independent identity de-horse the erstwhile Unit Trust of India when it was launched and there after UTI Mutual Fund in which this Scheme was vested by Unit Trust Of India (Transfer of Undertaking and Repeal) Act 2002. Therefore when the UTI Mutual Fund is registered as a whole along with all the schemes vested in it with SEBI then none of its scheme (including UTI India Fund Scheme,1986) have any independent existence and can not be dissociated from the entity i.e. UTI Mutual Fund. Therefore, the action of the AO in treating the Scheme independent/separate of UTI Mutual fund is far fetched imagination of the AO. it is also pertinent to note that even the PAN issued for the Scheme is shown to have come into existence in 1964 i.e. the day on which UTI 1964 came into existence itself clearly indicate that UTI India Fund Scheme, 1986 was an integral part of the erstwhile Unit Trust of India and thereafter by virtue of the Unit Trust of India (Transfer of Undertaking and Repeal) Act 2002, the scheme is vested in UTI Mutual Fund and ....
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.... these offshore funds were approved by Central Government as well as Reserve Bank of India and the income earned therefrom was always exempt and so pursuant to the provisions of section 32 Unit Trust of India Act, 1963. 16. The Securities and Exchange Board of India (SEBI) was established as a statutory body in the year 1992 which came into force on 30th January, 1992. After establishment of SEBI, all the securities came under the regulations formulated by SEBI. Subsequently, UTI Act 1963 was repealed by the Government of India by The Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 and as per the notifications issued, UTI was succeeded, by two (2) undertakings w.e.f 01st February, 2003, (1) The Administrator of the Specified Undertaking of the Unit Trust of India (SUUTI), and (2) UTI Trustee Company Pvt. Ltd., 17. Further, we observe that after Repeal Act, specified company was formed by State Bank of India, Punjab National Bank, Bank of Baroda and Life Insurance Corporation of India subscribing in equal proportion to the share capital of the specified company namely UTI Trustee Company Private Limited, a company under The Companies Act, 1956. Pursuant to t....