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 borr

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Q: 41 (IAS/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?

question_subject: 

Economics

question_exam: 

IAS

stats: 

0,10,16,6,3,7,10

The correct answer is option 4 which states that Statement-I is incorrect but Statement-II is correct.

Explanation: Statement-I is not correct. In the case of Infrastructure Investment Trusts (InvITs), both the interest income from the deposits distributed to their investors and the dividends are exempted from tax. Therefore, the part of the statement that states the dividend is taxable is inaccurate.

In Statement-II which is correct, InvITs are indeed recognized as borrowers under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. This Act provides the legal framework for securitization and empowers banks and financial institutions to enforce their security interests and recover dues without the intervention of the courts.

Hence, Statement-II does not provide an explanation for Statement-I as both are unrelated to each other.