Delhi High Court in the matter of Equity Intelligence AIF Trust Vs Central Board of Direct Taxes & Anr. In a significant judgment that could shape the future of tax treatment for India's hedge funds, the Delhi High Court has read down a 2014 circular issued by the CBDT, offering long awaited relief to Category III Alternative Investment Funds (AIFs).
These funds, known for their complex investment strategies including leverage, short selling, and hedging, had long suffered from a lack of tax clarity due to conflicting interpretations of the circular. While courts in Karnataka and Tamil Nadu had offered some respite, other jurisdictions, notably Delhi, remained bound by the strict application of the circular. That has now changed.
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