Karnataka High Court
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Service tax cannot be imposed on expense amount retained by venture capital funds: Karnataka High Court
The Court reasoned that since a venture capital fund has not been recognised as a “person” under the Finance Act for the purpose of taxation, it cannot be saddled with such a service tax burden.
The Karnataka High Court recently held that service tax cannot be imposed on the amount retained by venture capital funds (VCFs) as expenses before the distribution of returns to investors [ICICI Econet International and Technology Fund v. Commissioner of Central Tax].