TaxTMI 
TaxTMI 
2024 (7) TMI 1432
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....e assessee can claim fresh claim of exemption u/s. 10(38) of the Act after filing 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 ....
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....f Registration on 10th October, 2008 - 2,40,838 shares Investment made after granting of Certificate of Registration (From Nov. 2008 to Sep, 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 w....
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....ing thereby, the disallowance so made by CPC has attained finality. In the impugned assessment order passed u/s 143(3) of the Act, the AO has only repeated the disallowance 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 ....
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....vided that the income by way of long-term capital gain of a company shall be taken into account in computing the book profit and income-tax payable under section 115JB : Provided also that nothing contained 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, mad....
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....fication reads as under:- "S.O. 1789(E).-In exercise of the powers conferred by third proviso to the clause (38) of section 10 of the Income-tax Act, 1961 (43 of 1961) hereinafter referred to as the Income-tax Act, the Central Government hereby notifies all transactions of acquisition 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 ....
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....o to clause (a) or clause (b)]. (c) acquisition of equity share of a company during the period beginning from the date on which the company is delisted from a recognised stock exchange and ending on the date immediately preceding the date on which the company is again listed on a recognised stock exchange in accordance with the Securities Contracts (Regulation) Act, 1956 read with Securities and Exchange 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 i....
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.... the last condition. As discussed above, it is a fact on record that the Appellant Trust acquired the equity shares on Dixon through an issue when Dixon was unlisted and no STT was paid at the time of acquisition. Such mode of acquisition triggers clause (b) of Notification as it covers the transaction of acquisition which has not been entered through a recognized stock exchange of India. However, nine exceptions have been laid down to clause (b) where the first exception (sub-clause (i)) covers the acquisition through 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....
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....essee would be covered by the main part of the notification and hence, even if the STT was not paid at the time of acquisition, the assessee would be entitled to claim exemption of LTCG u/s 10(38) of the Act. Accordingly, we confirm the final decision taken by Ld CIT(A) on the above said reasoning. 23. In Grounds No.6 and 7 , the revenue is contending that the assessee, being a Venture Capital Fund, is a pass through entity and hence the exemption u/s 10(38) of the Act could be claimed only by the investors as per sec. 115U of the Act and not by the assessee. 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....