LLP Income from Mutual Funds Exempt from Tax: ITAT Orders Verification
The tribunal remanded the matter to the Jurisdictional Assessing Officer (JAO) for fresh verification of the claim.
The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) restored the matter for verification of the LLP’s mutual fund income exemption from tax claim after considering the documents submitted by the assessee. Light Ray Advisors LLP (assessee) is a limited liability partnership engaged in the business of investment advisory services. The assessee filed an Income Tax Return...
The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) restored the matter for verification of the LLP’s mutual fund income exemption from tax claim after considering the documents submitted by the assessee.
Light Ray Advisors LLP (assessee) is a limited liability partnership engaged in the business of investment advisory services. The assessee filed an Income Tax Return declaring an income of Rs. 27,68,74,140.
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The Centralized Processing Center (CPC) issued notices proposing adjustments of ₹51.83 lakh for AY 2018-19 and Rs. 52.61 lakh for AY 2019-20, disallowing the exemption claim for dividend income.
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The assessee filed a detailed response to the notice of the CPC. However, the CPC disallowed the claim of the assessee.
Aggrieved by the CPC's action, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. The assessee argued before the CIT(A) that the dividend income was received from mutual funds, not companies, and thus qualifies for exemption under Section 10(35).
However, the CIT(A) dismissed the appeal, stating that the assessee had failed to provide documentary evidence. Aggrieved by the order of the CIT(A), the assessee filed an appeal before ITAT.
The counsel for the assessee drew the attention of the tribunal to various papers filed before CIT(A) and CPC. The counsel for the assessee also submitted that the CIT(A) was erred in observing that the assessee failed to file any documentary evidence.
The two-member bench, comprising Shri Waseem Ahmed (Accountant Member) and Shri Prakash Chand Yadav (Judicial Member) the lower authorities had not fully examined the documentary evidence submitted by the LLP.
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Therefore, the tribunal remanded the matter to the Jurisdictional Assessing Officer (JAO) for fresh verification of the claim. The tribunal also directed the exemption claim to be allowed if the assessee was able to establish that the dividend income was earned from the mutual funds.
Therefore, the tribunal restored the matter to the AO for verification of the exempt claim. Thereby the appeal of the assessee was allowed for statistical purposes.
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