In an important decision in the case of Scope (P) Limited ("Scope" or "the taxpayer"), the Mumbai Bench of the Income Tax Appellate Tribunal ("Tribunal") has ruled that income received by an investor from a Venture Capital Fund ("VCF") is taxable in the hands of the investor. Implicitly, the Tribunal also held that even notional income pursuant to an in-specie distribution of an asset by a VCF is also taxable in the hands of its investors. We have summarized the key aspects of the decision in relation to the above issue.
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