Consider the following statements : 1. 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. 2. 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?

1. Statement-I deals with the tax treatment of income distributed by Infrastructure Investment Trusts (InvITs) to investors. Generally, interest income received by the InvIT from the underlying Special Purpose Vehicles (SPVs) and distributed to unitholders is taxable in the hands of the unitholders. Dividend income received by the InvIT from SPVs (if the SPV has not opted for the concessional tax regime under Section 115BAA) is generally exempted from tax in the hands of the unitholders. The statement claims the opposite (interest exempt, dividend taxable). Therefore, Statement-I is incorrect. 2. Statement-II states that InvITs are recognized as borrowers under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002. The definition of 'borrower' under the SARFAESI Act was amended (e.g., in 2016) to be more inclusive. InvITs, structured as trusts, can borrow funds. The Act's definition includes entities that have been granted financial assistance by any bank or financial institution. As InvITs can borrow, they fall under the definition of 'borrower' for the purposes of the SARFAESI Act. Therefore, Statement-II is correct. 3. Since Statement-I is incorrect and Statement-II is correct, option (D) is the correct choice.