MARIGOLD MEZZANINE INVESTMENT FUND, MUMBAI v. ITO WD 19(2)4, MUMBAI

ITA 6545/MUM/2009 | 2002-2003
Pronouncement Date: 09-09-2011 | Result: Dismissed

Appeal Details

RSA Number 654519914 RSA 2009
Assessee PAN AAATM1433B
Bench Mumbai
Appeal Number ITA 6545/MUM/2009
Duration Of Justice 1 year(s) 8 month(s) 16 day(s)
Appellant MARIGOLD MEZZANINE INVESTMENT FUND, MUMBAI
Respondent ITO WD 19(2)4, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 09-09-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted J
Tribunal Order Date 09-09-2011
Date Of Final Hearing 05-09-2011
Next Hearing Date 05-09-2011
Assessment Year 2002-2003
Appeal Filed On 23-12-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J MUMBAI BEFORE S/SHRI D.K.AGARWAL (JM) AND RAJENDRA SINGH(A .M ) ITA NO.6397 6398 AND 6399/MUM/2009 (ASSESSMENT YEAR:2001-02 2002-03 AND 2006-07) INCOME TAX OFFICER 19 (2)(4) ROOM NO.310 3 RD FLOOR PIRAMAL CHAMBERS LALBAUG PAREL MUMBAI-400012 V/S MARIGOLD MEZZANINE INVESTMENT FUND 201 SAI NARA NORTH AVENUE LINKING ROAD SANTACRUZ(W) MUMBAI-400054. PAN:AAATM1433B APPELLANT RESPONDENT ITA NO.6546 AND 6545/MUM/2009 (ASSESSMENT YEAR:2001-02 AND 2002-03) MARIGOLD MEZZANINE INVESTMENT FUND 201 SAI NARA JUNCTION OF NORTH AVENUE AND LINKING ROAD SANTACRUZ (WEST) MUMBAI-400054. PAN:AAATM1433B V/S INCOME TAX OFFICER 19 (2)(4) ROOM NO.310 3 RD FLOOR PIRAMAL CHAMBERS LALBAUG PAREL MUMBAI-400012 APPELLANT RESPONDENT DATE OF HEARING : 5.9.2011 DATE OF PRONOUNCEMENT : 9.9.2011 REVENUE BY : SHRI K.RAVI KIRAN ASSESSEE BY : SHRI RAKESH MILWANI O R D E R PER BENCH THESE CROSS-APPEALS BY THE ASSESSEE AND REVENUE IN ITA NO.6397 6546 6398 AND 6345/MUM/2009 ARE DIREC TED AGAINST THE ORDER DATED 15.10.2009 PASSED BY THE LD . CIT(A) FOR THE ASSESSMENT YEARS 2001-02 AND 2002-03. THE A PPEAL ITA NO.6397 6398 AND 6399/MUM/2009 ITA NO.6546 AND 6545/MUM/2009 (AY:2001-02 2002-03 AND 2006-07) 2 IN ITA NO.6399/MUM/2009 PREFERRED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 14.10.2009 PASSED BY THE LD. CIT(A) FOR THE ASSESSMENT YEAR 2006-07. SINCE F ACTS ARE IDENTICAL AND ISSUES INVOLVED ARE COMMON ALL THESE FIVE APPEALS ARE DISPOSED OF BY THIS COMMON ORDER FOR T HE SAKE OF CONVENIENCE. ITA NO.6397/MUM/2009 (AY-2001-02) (BY REVENUE) 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE A SSESSEE AN AOP ENGAGED IN THE BUSINESS AS ASSET MANAGEMENT COMPANY FILED RETURN DECLARING TOTAL INCOME AT RS .NIL WITH THE FOLLOWING NOTE: THE ASSESSEE IS A VENTURE CAPITAL FUND REGISTERED WITH SEBI HAVING REGISTRATION NO.IN/VC/97-98/002. THE ASSESSEE HAS FULFILLED THE CONDITIONS SPECIFIED BY SEBI. THE ASSESSEE IS OPERATING UNDER A TRUST DEED REGIST ERED UNDER THE PROVISIONS OF INDIAN REGISTRATION ACT 1908 THE AO NOTED THAT THE ASSESSEE HAS SHOWN THE NET IN COME AS PER THE PROFIT AND LOSS ACCOUNT AT RS.2 50 38 7 36/- AND HAS CLAIMED THE ENTIRE INCOME AS EXEMPT U/S 10(23FB ) OF THE INCOME TAX ACT 1961( IN SHORT THE ACT). THE AO ON PERUSAL OF THE PROFIT AND LOSS ACCOUNT OBSERVED THAT THE AS SESSEE HAS SHOWN INTEREST INCOME OF RS.6 88 740/- IN RES PECT OF THE DEPOSITS PLACED WITH BANKS. THE AO WAS OF TH E VIEW THAT AS PER THE PROVISIONS OF SECTION 10(23FB) OF T HE ACT THE EXEMPTION IS AVAILABLE ONLY IN RESPECT OF INC OME OF ITA NO.6397 6398 AND 6399/MUM/2009 ITA NO.6546 AND 6545/MUM/2009 (AY:2001-02 2002-03 AND 2006-07) 3 VENTURE CAPITAL COMPANY OR VENTURE CAPITAL FUND SE T UP TO RAISE FUNDS FOR INVESTMENTS IN A VENTURE CAPITAL UN DERTAKING. THE AO AFTER CONSIDERING THE ASSESSEES SUBMISSION S AND THE TRIBUNAL DECISION FOR THE ASSESSMENT YEAR 2003 -04 IN THE ASSESSEES OWN IN MARIGOLD MEZZANINE INVESTMENT F UND V/S ITO AND VICE VERSA IN ITA NO.3912/MUM/2006 AND IT A NO.4095/MUM/2006 (AY-2003-04) DATED 22.7.2008 WHIL E OBSERVING THAT THE DECISION OF THE TRIBUNAL IS NOT ACCEPTABLE FURTHER OBSERVED THAT THE ASSESSEE OUT OF TOTAL CO RPUS FUND OF RS.5.19 CRORE HAVE UTILIZED ONLY A SUM OF RS.1.5 0 CRORE FOR INVESTING IN VENTURE CAPITAL UNDERTAKINGS AND THE B ALANCE HAS BEEN INVESTED OTHER THAN IN VENTURE CAPITAL UNDERT AKING. HE FURTHER OBSERVED THAT THE ASSESSEE HAS BALANCE WIT H SCHEDULED BANK IN CURRENT ACCOUNT AND FIXED DEPOSIT S AMOUNTING TO RS.3.17 CRORE EARNING INTEREST INCOME OF RS.6 88 740/-. ANY BANK BY NO STRETCH OF IMAGINATIO N CAN BE TERMED AS VENTURE CAPITAL UNDERTAKING. ACCORDINGLY HE HELD THAT THE INTEREST INCOME SHOULD BE TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES AND HENCE THE ASSESSEE IS NOT ENTITLED FOR EXEMPTION U/S 10(23FB) OF THE ACT IN R ESPECT OF THE INTEREST INCOME EARNED RS.6 88 740/- AND TAXED THE SAME UNDER THE HEAD INCOME FROM OTHER SOURCES. ON APPEAL THE LD. CIT(A) FOLLOWING THE ORDER OF THE TRIBUNAL IN ITA NO.6397 6398 AND 6399/MUM/2009 ITA NO.6546 AND 6545/MUM/2009 (AY:2001-02 2002-03 AND 2006-07) 4 ASSESSEES OWN CASE (SUPRA) HOWEVER DELETED THE A DDITION MADE BY THE AO. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) THE REVENUE IS IN APPEAL BEFORE US TAKING FOLLOWING GR OUNDS OF APPEAL : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A) ERRED IN DIRECTING TO T REAT THE INTEREST ON FIXED DEPOSIT FROM BANK AMOUNTING TO RS.6 88 740/- AS THE INCOME OF THE VENTURE CAPITAL FUND ENTITLED TO EXEMPTION FROM INCOME U/S 10(23FB) OF THE ACT WITHOUT APPRECIATING THE FACT THAT THE DEPARTME NT HAS NOT ACCEPTED THE DECISION OF THE HONBLE ITAT IN TH E ASSESSEES OWN CASE FOR AY 2003-04; 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A ) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE AO BE RESTORED 4. AT THE TIME OF HEARING THE LD. DR SUPPORTS THE ORDER OF THE AO. 5. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE ASSESSEE WHILE RELYING ON THE ORDER OF THE LD. CIT( A) SUBMITS THAT THIS ISSUE IS SQUARELY COVERED IN FAV OUR OF THE ASSESSEE BY THE ORDERS OF THE TRIBUNAL (SUPRA) T HEREFORE THE ORDER PASSED BY THE LD. CIT(A) BE UPHELD. 6. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON REC ORD WE FIND MERIT IN THE PLEA OF THE LEARNED COUNSEL FOR THE ASSESSEE ITA NO.6397 6398 AND 6399/MUM/2009 ITA NO.6546 AND 6545/MUM/2009 (AY:2001-02 2002-03 AND 2006-07) 5 THAT THE ISSUE RAISED BY THE REVENUE IS SQUARELY C OVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBU NAL IN THE ASSESSEES OWN CASE (SUPRA) WHEREIN IN THE TRIBUNAL HAS HELD THAT THE INCOME UNDER CONSIDERATION WOULD FAL L UNDER THE RELEVANT PROVISIONS OF SECTION 10(23FB) OF THE ACT. THE ABOVE ORDER HAS BEEN FOLLOWED BY THE TRIBUNAL IN TH E ASSESSEES OWN CASE IN ITO V/S MARIGOLD MEZZANINE INVESTMENT FUND IN ITA NOS.257 AND 258/MUM/2009 (A YS- 2003-04 AND 2005-06) DATED 17.11.2009. IN THE ABSE NCE OF ANY DISTINGUISHING FEATURE BROUGHT ON RECORD BY THE REVENUE WE RESPECTFULLY FOLLOWING THE CONSISTENT V IEW OF THE TRIBUNAL HOLD THAT THE INTEREST INCOME OF RS.6 88 740/- IS EXEMPT UNDER SECTION 10(23FB) OF THE ACT AND NOT L IABLE TO TAX. ACCORDINGLY THE GROUNDS TAKEN BY THE REVENUE A RE REJECTED. ITA NO.6546/MUM/2009 (AY-2001-02) (BY ASSESSEE) ITA NO.6545/MUM/2009 (AY-2002-03) (BY ASSESSEE) 7. ALL THE GROUNDS TAKEN BY THE ASSESSEE ARE AGAINS T THE INITIATION AND COMPLETION OF PROCEEDINGS U/S 147 OF THE ACT. 8. AT THE TIME OF HEARING THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITS THAT HE DOES NOT WANT TO PRESS AL L THE GROUNDS TAKEN BY THE ASSESSEE WHICH WAS NOT OBJEC TED TO BY THE LD.DR. ITA NO.6397 6398 AND 6399/MUM/2009 ITA NO.6546 AND 6545/MUM/2009 (AY:2001-02 2002-03 AND 2006-07) 6 9. THAT BEING SO AND IN ABSENCE OF ANY SUPPORTING MATERIAL PLACED ON RECORD BY THE LEARNED COUNSEL FO R THE ASSESSEE THE COMMON GROUNDS TAKEN BY THE ASSESSEE FOR THE ASSESSMENT YEARS 2001-02 AND 2002-03 ARE REJE CTED BEING NOT PRESSED. ITA NO.6398/MUM/2009 (AY-2002-03) (BY REVENUE) ITA NO.6399/MUM/2009 (AY-2006-07) (BY REVENUE) 10. THE COMMON GROUNDS TAKEN BY THE REVENUE ARE AGAINST THE DELETION OF DISALLOWANCE OF EXEMPTION O F INTEREST U/S 10(23FB) OF THE ACT. 11. AT THE TIME OF HEARING BOTH THE PARTIES HAVE AGREED THAT THE FACTS OF THE ABOVE ISSUE ARE SIMILAR TO T HE FACTS OF THE CASE FOR THE ASSESSMENT YEAR 2001-02 THEREFORE THE PLEA TAKEN BY THEM IN THE REVENUES APPEAL FOR THE ASSESSMENT YEAR 2001-02 MAY BE CONSIDERED WHILE DEC IDING THE APPEALS FOR THE ASSESSMENT YEARS UNDER CONSIDER ATION. 12. AFTER HEARING THE RIVAL PARTIES AND PERUSING TH E MATERIAL AVAILABLE ON RECORD AND IN THE ABSENCE OF ANY DIST INGUISHING FEATURE BROUGHT ON RECORD BY THE PARTIES WE FOLLOW ING OUR FINDINGS RECORDED IN REVENUES APPEAL IN PARAGRAPH 6 OF THIS ORDER HOLD THAT THE ASSESSEE IS ENTITLED TO THE EX EMPTION OF ITA NO.6397 6398 AND 6399/MUM/2009 ITA NO.6546 AND 6545/MUM/2009 (AY:2001-02 2002-03 AND 2006-07) 7 INTEREST U/S 10(23FB) OF THE ACT AND ACCORDINGLY G ROUNDS TAKEN BY THE REVENUE ARE REJECTED. 13. IN THE RESULT THE REVENUES APPEALS AND ASSESS EES APPEALS STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH SEPTEMBER 2011. SD S D (RAJENDRA SINGH) (D.K .AGARWAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED 9TH SEPTEMBER 2011 SRL: COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH 6. GUARD FILE. TRUE COPY BY ORDER ASSTT. REGISTRAR ITAT MUMBAI