Section 115UB(7)

Section 115UB(7) — the law in short

What the courts have decided on section 115UB(7), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• DCIT v Sundaram Alternative Opportunities Series High Yield Secured Debt Fund — an Assessing Officer cannot re-label a Category II AIF's investment income as business income without enquiry ITATHelps taxpayerValidity unconfirmed
  The Assessing Officer has re-characterised my Category II AIF's interest, gains and processing fees as business income and denied the section 10(23FBA) exemption on the whole lot. What is the answer?
  The Chennai Tribunal dismissed the Revenue's appeals. Income of a Category I or Category II AIF becomes business income only where the nature of the activities shows a systematic and organised commercial venture undertaken with the dominant intention of earning trading profits rather than making investments, tested by the ordinary badges — frequency and volume, holding period, intention at acquisition, treatment in the books, infrastructure and manner of execution — and here the re-characterisation had been made with no enquiry, no rejection of books, no show-cause notice on that head, and on the further erroneous footing that the assessee was a venture capital fund governed by section 10(23FB) and section 115U.
• Statutory position — rule 12CA and rule 12CB with s.115UA(4) and s.115UB(7): the two pass-through statements, Forms 64A to 64D, and the 15 June and 30 June dates CBDT Circulars & InstructionsCuts both waysValidity unconfirmed
  Our REIT has to give unit holders a statement of distributed income and file one with the department. Which form goes where, by when, and is the machinery the same for an Alternative Investment Fund?
  There are two parallel sets and they are not interchangeable. For a business trust, section 115UA(4) requires the person responsible for paying the distributed income to furnish a statement to the unit holder and to the prescribed authority, and rule 12CA prescribes it: Form No. 64A, verified by an accountant and filed electronically under digital signature with the Principal Commissioner or Commissioner within whose jurisdiction the principal office of the business trust is situated, by 15 June of the financial year following the previous year in which the income is distributed; and Form No. 64B to the unit holder by 30 June of that financial year, generated and downloaded from the departmental web portal. For an investment fund, section 115UB(7) requires the same thing and rule 12CB prescribes Form No. 64C to the unit holder by 30 June and Form No. 64D to the Principal Commissioner or Commissioner by 15 June, on the same electronic footing.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.