IN THE INCOME TAX APPELLATE TRIBUNAL “E” BENCH MUMBAI BEFORE SHRI ANIKESH BANERJEE, JUDICIAL MEMBER &

SHRI MAKARAND VASANT MAHADEOKAR, ACCOUNTANT MEMBER ITA No. 7439/Mum/2025 (Assessment Year: 2023-24)

Edelweiss Crossover ITO Ward 22(1)(1), Opportunities Fund Dr. SS Rao Marg, Edelweiss House, Off CST Vs. Parel, Mumbai-

Road, Kalina, Santacruz 400 012 east, Mumbai-400 098 PAN/GIR No. AAATE8456C (Applicant) (Respondent) Assessee by Shri Madhur Agarwal, Ld. AR Revenue by Shri Ritesh Misra, Ld. DR Date of Hearing 29.01.2026 Date of Pronouncement 03.02.2026 आदेश / ORDER PER MAKARAND VASANT MAHADEOKAR, AM:

This appeal by the assessee is directed against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”], dated 04.11.2025, arising out of the assessment order passed under section 143(3) read with section 144B of the Income-tax Act, 1961[hereinafter referred to as “the Act”], dated 18.03.2025, for the Assessment Year 2023–24.

Facts of the Case

2. The assessee is stated to be Edelweiss Crossover Opportunities Fund, described as a scheme of Edelweiss Alternative Investment Opportunities Trust. The assessee filed its return of income for A.Y. 2023–24 on 27.07.2023 declaring total income at Rs. 0/-. The return was filed in the status of Trust using PAN AAATE8456C. The trust registered with SEBI as Category II Alternative Investment Fund bears a different PAN, namely AAATE8412E. The return was processed under section 143(1) on 13.11.2023 accepting the returned income at Rs. 0/- and refund of Rs. 57,82,920/- was determined and issued on 15.11.2023. The case was selected for scrutiny under the Computer Aided Scrutiny Selection scheme.

3. During the course of assessment proceedings, the Assessing Officer noticed that the SEBI registration certificate as Category II AIF stood in the name of Edelweiss Alternative Investment Opportunities Trust and not in the name of the assessee scheme. The assessee had claimed exemption under section 10(23FBA) of the Act on income passed through to investors under section 115UB.The Assessing Officer further noticed from the Profit and Loss Account that the assessee had worked out a surplus of Rs. 4,68,22,29,447/- and had passed on income of Rs. 4,51,59,13,961/- to the investors. The difference of Rs.

16,63,15,486/- was treated by the Assessing Officer as taxable business income.

4. Before the Assessing Officer, the assessee submitted that it is a scheme launched under Edelweiss Alternative Investment Opportunities Trust, which is registered with the Securities and Exchange Board of India as a Category II Alternative Investment Fund under the SEBI (Alternative Investment Funds) Regulations, 2012. It was submitted that under the SEBI Regulations, a single AIF trust is permitted to launch multiple schemes and that separate PANs are obtained for each scheme for administrative and taxation purposes.

5. The assessee contended that, being a scheme of a SEBI registered AIF, it is inextricably linked with the Trust and, therefore, the exemption available under section 10(23FBA) read with section 115UB of the Act to the Trust should flow to the assessee scheme as well. It was also submitted that the income of Rs. 4,51,59,13,961/- had already been distributed to investors and taxed in their hands and that denial of exemption would result in double taxation.

6. It was further submitted that the difference of Rs. 16,63,15,486/- represented indexation benefit on long-term capital gains on sale of unlisted equity shares and did not constitute income chargeable to tax in the hands of the assessee.

7. The Assessing Officer did not accept the explanation of the assessee. It was held that the assessee scheme, having a separate PAN and a separate legal identity, did not itself possess registration as a Category I or Category II Alternative Investment Fund under the SEBI (AIF) Regulations, 2012 and, therefore, did not qualify as an “investment fund” with