Venture Capital Company and Venture Capital Fund (VCF) are given status of pass through vehicles for purpose of treatment of income received on account of investment made in venture capital undertaking. Therefore, assessee, which invests in a VCF, would be entitled to book expenditure incurred by VCF as if same had been incurred directly by assessee.
a) The assessee-company received interest in respect of investment made in SARA fund, a SEBI registered VCF.
b) It offered interest to tax on net basis after claiming the deduction of its share of expenditure incurred by SARA fund.
c) Assessing Officer (AO) taxed interest income received by assessee from VCF on gross basis without giving deduction of assessee’s share of expenses incurred by VCF for earning said income.
d) The contention of the AO was that the said expenses were incurred by VCF and not by assessee.
e) The Commissioner (Appeals) confirmed the order of the AO. Aggrieved assessee filed the instant appeal before the tribunal.