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TMI Blog2013 (5) TMI 635X X X X Extracts X X X X X X X X Extracts X X X X ..... f Karnataka way back in 2005-06 specifically for the implementation of the Central Government sponsored programme of NRHM which had, undoubtedly, the sole objective of providing accessible, affordable health care to the rural population. It is also an un-denying fact that the purpose of establishing the State and District level health societies as per NRHM norms was to act as nodal agency for implementation of the Central Government's programme of NRHM and, thus, there can be no profit motivation. Exemption under section 10(23C)(iiiac) is automatic for entities which are wholly or substantially funded by the Government and a Notification is not issued under this section. Therefore, no specific order/Notification in this regard can be iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raise the common additional grounds for both the AYs under dispute, namely:- "(i) that the assessee is one of the Society (sic) Societies formed by the Government of Karnataka under the directions of the Government of India for implementing Government of India's flagship scheme known as National Rural Health Mission (NRHM); (ii) that the NRHM envisages prevention, treatment and cure of diseases such as malaria, leprosy, T.B., Control of blindness etc., such prevention and control of diseases requires proactive and reactive measures. These measures are sought to be achieved through providing funds under the scheme by the Government to implementing agencies such as the assessee. Further, the scheme envisages creation of facilities from Di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e course of assessment proceedings, the AO had noticed from the statements of income that the assessee had received grants of Rs.5.07 crores from the Government of Karnataka. In addition, the assessee had an opening balance of unspent grant for the FY 2006-07 of Rs.1.58 crores etc., thus, the total grants in the possession of the assessee was around Rs.6.66 crores. It was the case of the AO that the balance funds available at its disposal were Rs.6.66 crores, out of which, it had applied for objectives of the assessee for various schemes at Rs.4.06 crores till the end of the FY 31.3.2008.Thus, at the end of the year, the assessee had an unutilised funds of Rs.2.59 crores which was claimed by the assessee as exempt u/s 11 of the Act. 3.2.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he status of AOP." 4. Aggrieved, the assessee has come up before us with the present appeals. The arguments put-forth by the learned AR are summed up as under: - -that the appellate authority erred in upholding the findings of the AO that the 'program advance' received by the assessee from the Government of India under its scheme of NRHM was income in the hands of the assessee within the meaning of s. 2 (24) of the Act. Further, having regard to the fact that such 'program advance' was not income of the assessee, the CIT (A) ought to have noticed that the provisions of sections 11,12 13 of the Act were inapplicable; - that the CIT (A) had failed to notice that the assessee was a society formed by the State Government for the express ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led to notice that the assessee was discharging its obligation under the Government of India's programme by utilizing the programme advance placed by the Government of India through State in its hands and that it had no right to use such funds in any manner other than the directions issued by the Government of India; - that without prejudice, in treating up-spent advance as income, the CIT (A) ought to have noticed that the activities of the assessee under the NRHM having been fully funded by the Government directly falls within the purview of section 10(23C) (iiiac) of the Act both in its intent and funding arrangement and the section neither envisaged approval by any prescribed authority nor any cap on amount of annual receipts; - t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rict Health Missions and integration of societies (Source: P 3 and 4 of PB AR}. As recently as in the month of March, 2012, the Finance Secretary, Ministry of Finance, Government of India, in his communication to the Chief Secretary of the Government of Karnataka, had explicitly clarified that "the provisions of s. 10(23C) (iiiac) of the Act, 1961 (reproduced for ready reference hereunder), exempt the following incomes of certain entities which are wholly or substantially funded by the Central or State Governments: Any income received by an (sic) any person on behalf of any hospital or other institution for the reception and treatment of persons suffering from illness or mental defectiveness or for the reception and treatment of persons d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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