2D. (1) For the purposes of clause (23F) of section 10, the prescribed
authority shall be the Director of Income-tax (Exemptions) having jurisdiction
over the venture capital fund or the venture capital company who makes
application for approval under sub-rule (2).
(2) An application for
approval shall be made in Form No. 56A by a venture capital fund or a venture
capital company to the Director of Income-tax (Exemptions) referred to in
sub-rule (1).
(3) Every application
under sub-rule (2) may be made in any previous year in which any income by way
of dividend or long-term capital gains of a venture capital fund or a venture capital
company from investments made by way of equity shares in a venture capital
undertaking shall not be included in computing the total income of such venture
capital fund or venture capital company.
(4) Every application
for approval under sub-rule (2) shall be accompanied by the following
documents, namely :—
(a)
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a copy of trust deed or certificate of incorporation under
the Companies Act, 1956 (1 of 1956);
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(b)
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balance sheets and profit and loss account for three
previous years immediately preceding the previous year in which the
application is made;
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(c)
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Forms 56B and 56C duly filled in and signed by the
applicant; and
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(d)
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a copy of the certificate of registration issued by the
Securities and Exchange Board of India.
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(5) The Director of
Income-tax (Exemptions) shall approve the venture capital fund or the venture
capital company, as the case may be, subject to the following conditions,
namely :—
(a)
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the venture capital fund or the venture capital company,
as the case may be, is registered with the Securities and Exchange Board of
India established under section 3 of the Securities and Exchange Board of
India Act, 1992 (15 of 1992);
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(b)
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[* * *]
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(c)
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[* * *]
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(d)
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a venture capital fund or a venture capital company, as
the case may be, shall not invest more than [twenty] per cent of its total
monies raised or total paid-up share capital in one venture capital
undertaking;
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(e)
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a venture capital fund or a venture capital company, as
the case may be, shall not make investment of more than forty per cent in the
equity capital of one venture capital undertaking;
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(f)
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every venture capital fund and venture capital company,
shall maintain books of account and get such books audited by an accountant,
as defined in Explanation to
sub-section (2) of section 288 and furnish the report of such audit duly
signed and verified by such accountant to the Director of Income-tax
(Exemptions) before the due date of filing of the return under sub-section
(1) of section 139.
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(6) The Director of
Income-tax (Exemptions) shall pass an order in writing granting approval or
refusing approval to the venture capital fund or venture capital company, as
the case may be :
Provided that the Director of Income-tax
(Exemptions) shall not refuse the approval except in concurrence with the
Director-General of Income-tax (Exemptions):
Provided further that every venture capital fund or
venture capital company, as the case may be, shall be given an opportunity of
being heard before passing an order under this rule.
(7) The Director of
Income-tax (Exemptions) shall withdraw the approval granted under sub-rule (6)
in the following circumstances, namely :—
(a)
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if the venture capital fund or the venture capital
company—
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(i)
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fails to make investments in the manner specified in
sub-rule (5);
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(ii)
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invests more than [twenty] per cent of the monies raised
by a venture capital fund or [twenty] per cent of paid-up share capital of
the venture capital company, as the case may be, in one venture capital
undertaking;
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(iii)
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makes an investment of more than forty per cent in the
equity capital in one venture capital undertaking;
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(iv)
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fails to maintain books of account and get such accounts
audited by an accountant or fails to file the audit report required in clause
(f) of sub-rule (5);
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(v)
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violates the provisions of the Act or rules made
thereunder;
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(b)
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if the certificate of registration granted under section
12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), to a
venture capital fund or a venture capital company is suspended or cancelled
by the Securities and Exchange Board of India.]
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