If a venture capital fund is investing not only in specified undertaking but also elsewhere, then income from both the sources will get exemption upto 31 March 2008. After the amendment w.e.f. 1 April 2008, an exemption is now restricted to one source only, ie investment in specified undertakings. From this it follows that prior to 1 April 2008, if a venture capital fund has invested in FD in bank and earned interest income therefrom, then such interest income would be exempt as per the existing provision.
A venture capital fund is required to invest 66.67 per cent of investible funds, ie corpus of the fund net of expenditure for administration and management of the fund for claiming exemption under s 10(23FB).
Joint Venture — The AO is duty bound to enquire whether the assessee trust is registered under the Registration Act, 1908 and has been granted a certificate of registration by SEBI under SEBI (Venture Capital Funds) Regulations, 1996 and not beyond that.
Interest income earned by joint venture FDRs prior to 1 April 2008 is exempt under s 10(23FB) — as held by AhdTrib in ITO v Gujarat Information Technology Fund — In favour of: The Assessee ; ITA Nos. 2264/Ahd/2007, 2773/Ahd/2008 and 245 to 247/Ahd/2009 and CO Nos. 222/Ahd/2008 and 24 to 26/Ahd/2009 : Assessment Years: 2001–2002 to 2005–2006
Decided on: 27 May 2011
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