Consider the following statements

2023

Consider the following statements :
Statement-I :
Interest income from the deposits in Infrastructure Investment Trusts(InvITs) distributed to their investors is exempted from tax, but the dividend is taxable.
Statement-II :
InvITs are recognized as borrowers under the ‘Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002’.
Which one of the following is correct in respect of the above statements?

(a)

Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-I

(b)

Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-I

(c)

Statement-I is correct but Statement-II is incorrect

(d)

Statement-I is incorrect but Statement-II is correct

Explanation

income from INVITS is subjected to income tax, does not matter whether you have earned interest or dividend. st1 is wrong so Thus, Statement is wrong and by elimination of options containing this statement, we arrive at the correct answer [D]. Statement-II is also correct because InvITs are recognized as borrowers under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). This means that InvITs can raise funds by issuing debt securities, and the lenders can take possession of the assets of the InvITs in case of default.