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TMI Blog2015 (10) TMI 2232X X X X Extracts X X X X X X X X Extracts X X X X ..... s.3660 & 3661/Mum/2013 - - - Dated:- 16-9-2015 - SHRI VIJAY PAL RAO, JUDICIAL MEMBER and SHRI N.K.BILLAIYA, ACCOUNTANT MEMBER, JJ. For The Appellant : S/Shri Manjunatha Swamy, CIT(DR) Sumit Kumar. For The Respondent : Shri Anil J.Sathe (AR) ORDER Per VIJAY PAL RAO, JM: These two appeals by the revenue pertain to assessment years 2004-05 and 2006-07 arising from the respective orders of the CIT(A), Mumbai. Common grounds have been raised by the revenue in these appeals. The grounds raised for the assessment year 2004-05 are as under: 1. That on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in holding that the reopening the assessment was bad in law on the basis of the decision o f the Hon'ble ITAT for A Y 2003-04, when the assessment for A Y 200304 was reopened after 4 years and whereas in the concerned year, the case was assessed u/s 143(1) and there was no requirement of showing any failure to disclose material facts fully and truly. 2. That on the facts and circumstances of the case and in law, the Ld. C/T(A) erred in holding that the reopening the assessment was bad in law on the ground that the A O has not d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT(A) has allowed the claim of the assessee by following the decision of the Tribunal in the assessee s own case for assessment year 2003-04. The CIT(A) has also held that the reopening of assessment by the AO is also not sustainable and by following the finding of this Tribunal for the assessment year 2003-04, the same was held to be bad. 4. Before us, the revenue has challenged the impugned order of the CIT(A) on both the grounds i.e. (i) reopening of the assessment as well as the exemption allowed u/s 10(23C)(iiiab). 5. We have heard the learned Departmental Representative as well as the learned AR and considered the relevant material on record. At the outset, we not that an identical issue has been considered and decided by this Tribunal in assessee s own case for the assessment year 2003-04 as well as for assessment year 2007-08 vide two separate orders both dated 26/9/2012. The issue of reopening was considered and decided by this Tribunal in assessee s own case for assessment year 2003-04 in ITA No.5685/Mum/2011 in paragraphs 10 to 19 as under: 10. We have heard the arguments and have perused the orders of the Revenue authorities. We find that the AO underto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as urged that the Assessing Officer applied his mind specifically to both the aspects of the case noted earlier and to the explanation furnished by the assessee during the course of assessment proceedings. It has been urged that there was no tangible material before the Assessing Officer on the basis of which he could have formed a reason to believe that income chargeable to tax had escaped assessment. Consequently, it has been urged that the assessment is sought to be reopened on a mere change of opinion, which is not permissible. During the course of submission, counsel appearing on behalf of the assessee assisted the court in perusing the entire record before the court, including in particular the disclosures which were made during the course of assessment. In order to obviate a repetition it would be proper to refer to the relevant aspects of the record while dealing with the submissions which have been urged on behalf of the assessee.. 12. The Hon ble Bombay High Court, in this case, held (head note), The power to reopen an assessment is conditional on the formation of a reason to believe that income chargeable to tax has escaped assessment. The power is not akin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relevant assessment year,- [(a) if four years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b) Explanation.-In determining income chargeable to tax which has escaped assessment for the purposes of this subsection, the provisions of Explanation 2 of section 147 shall apply as they apply for the purposes of that section. Explanation 2 to section 147 Explanation 2.-For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely :- (a) where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to incometax ; (b) where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return ; (ba) where the assessee has failed to furnish a report in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recorded by the Assessing Officer for reopening the assessment show that reliance is placed on a commencement certificate which it is now common ground before the court was already on record before the Assessing Officer when the original order under section 143(3) was passed. The reasons disclosed to the assessee state that copies of the commencement certificates were made available by the Joint Commissioner of Income-tax subsequent to the order of assessment under section 143(3). Since the documents on the basis of which assessment was sought to be reopened had already been furnished to the Assessing Officer in the course of the proceedings under section 143(3), it cannot possibly be contended that the assessee had failed to disclose documents or the material facts. Moreover, it is also common ground before the court that a deduction has been granted under section 80IB(10) to the assessee for the assessment year 2002-03. This statement of fact by the counsel appearing on behalf of the assessee has not been controverted by counsel for the Revenue during the course of submissions. We would, while concluding once again clarify that in the present case, we are not concerned with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the Revenue authorities. The issue before us is whether the exemption under section 10(23c)(iiiab) would be available to the assessee. Section 10(23c)(iiiab) reads as under: any university or other educational institution existing solely for educational purposes and not for purposes of profit, and which is wholly or substantially financed by the Government . 15. From the fact emerging from the assessment order is that the assessee being a Registered Society, is devoting its objects towards social services and Research Institution. In the year under consideration assessee received Government grant to the tune of ₹ 12,79,13,233/- and it incurred expenses to the tune of ₹ 22,49,72,584/-. According to the AO since the grant received from the Government was less than 75%, which, according to the AO should be ₹ 16,87,29,438/-, would not come within the parameters of substantially financed by the Government , hence, the exemption would not be available to the assessee. 16. In the assessment order, the AO has taken refuge of section 14(1) of the Comptroller and Auditor General s (Duties, Powers and conditions of Service) Act, 1971, which defines the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Conditions of Service) Act, 1971. We, therefore, hold that the AO erred in importing the section of another legislature, that too partly, to negate the exemption under section 10(23C)(iiiab). 20. Coming back to the expression, substantially financed by the Government and what exactly it should mean, so far as, Income Tax Act is concerned. The CIT(A) in the impugned order has referred to the case of Hon'ble Karnataka High Court in National Education Society, ITA No. 808 of 2009, wherein the Hon'ble High Court held: Para 4 The word substantial has not been defined under the Income Tax Act. However, it has been the subject matter of interpretation by various Courts in various contexts. The authorities in deciding what constitutes a substantial portion of the finance have taken note of the statutory provisions contained in the Banking Regulation Act, 1949, where, a person has beneficial interest of more than 10% of the total capital subscribed by all the partners of the firm has been held to be having substantial interest. Para 5 In the case of assessee itself when the grant was more than 50%, exemption has been extended to the assessee. It is in thi ..... 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