It is a well-established principle of law that treatment given by the Assessee in its books of account is not decisive/conclusive for determining the taxable income under the Act.

15. Kedaara Captial Fund II LLP vs. Assessment Unit, National Faceless Assessment Centre (NFAC), Delhi and Ors.

[Writ Petition no. 2684 of 2025 dated: 09/09/2025 (Bom) (HC)]

It is a well-established principle of law that treatment given by the Assessee in its books of account is not decisive/conclusive for determining the taxable income under the Act.

The Petitioner is registered with SEBI as a Category II AIF – closed ended fund under the SEBI (AIF) Regulations, 2012. For the purposes of the Act, the Petitioner is regarded as an ‘investment fund’ as defined under Section 115UB. Resultantly, any income from investment activities earned is exempt under Section 10(23FBA). Such income is, however, taxable in the hands of the unit holders of the Petitioner. In other words, assessees like the Petitioner are granted a pass-through status under the Act.

During the year, the Petitioner implemented investments aggregating to ₹1,300.27 Crores using the capital raised from its unit holders. The total portfolio investments of the Petitioner as on 31st March 2022 was ₹8,665.75 Crores. It was an undisputed fact that the Petitioner neither sold any of the investments during the year nor did it earn any income from such investment activities. The only inc