Assessment of VC Fund constituted as a Private Trust

[sathyanayanank]

A Domestic VC Fund (Private trust) receives subscriptions from various investors to units issued by it. The funds are invested theough a Trustee company and returns distributed to the Holders of the Unit. The Fund is not eligible for pass through U/s.115U as it does not invest in the specified sectors. Neither is it eligible for Tax exemption U/s.10(23FB).

1) How will the Fund be taxed in respect of the surplus generated by it.

2) And how will the ultimate beneficiaries the investors in the Units issued by the Trust be taxed.

Sathya

[satyanveshi]

obviously the status of the trust is AOP as such the surplus in its hands should be taxed. Unfortunately, the share of each person contributing the units is again taxed in the  hands of the individuals as per sec. 67A of the ACT.