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TMI Blog2023 (7) TMI 692X X X X Extracts X X X X X X X X Extracts X X X X ..... ich receives and treats persons suffering from illness or mental defectiveness or receives and treats persons during convalescence or those requiring medical attention or rehabilitation, and exist solely for philanthropic purposes and not for purposes of profit and is wholly or substantially financed by the Government. The exemption makes it clear that the grant should exceed such percentage of total receipts (and not total income) including voluntary contribution as may be prescribed. The explanation appended to Section 10(23C)(iiiac) was inserted via Finance Act 25 of 2014, with effect from 01.04.2015. The threshold has been pegged at 50%. Notably, the period we are concerned with is FY 2012-13 (AY 2013-14). In the instant case, upo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal concerns Assessment Year (AY) 2013-14. 5. The appeal is directed against the order dated 16.11.2021 passed by the Income Tax Appellate Tribunal [in short, Tribunal ]. 6. The short issue which arose for consideration, both before the Commissioner of Income Tax (Appeals) [in short, CIT(A) ] as well as the Tribunal was: whether the petitioner was wholly or substantially financed by the government. In this case, the government is the Government of National Capital Territory of Delhi [in short, GNCTD ] 7. The two provisions that were required to be considered by the statutory authorities were Section 10(23C)(iiiac) of the Income Tax Act, 1961 [in short, Act ] and Rule 2BBB of the Income Tax Rules, 1962 [in short, 1962 Rules ]. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... university or other educational institution, hospital or other institution referred therein, shall be considered as being substantially financed by the Government for any previous year, if the Government grant to such university or other educational institution, hospital or other institution exceeds fifty per cent of the total receipts including any voluntary contributions, of such university or other educational institution, hospital or other institution, as the case may be, during the relevant previous year. [Emphasis is ours] 8. The facts obtaining in the case show, that during the period under consideration i.e., Financial Year (FY) 2012-13 [AY 2013-14], the respondent/assessee had received a grant from GNCTD amounting to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. 11. Importantly, in relation to the aspect, as to whether or not the interest should be considered while quantifying the amount of grant received, the following findings of fact were returned by the Tribunal: 4.1.2 I have considered the assessment order and the submissions of the appellant. It is noted that the Assessing Officer has not taken into consideration the interest on capital grant for phase II building to be done by DMRC. In the audit conducted for Financial Year 2011-12, a specific para was raised regarding the interest income not being considered as a part of the grant with a direction that the amount is to be treated as part of the grant. The Assessing Officer has also noted that interest cannot be considered as a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Government grant to such institution exceeds the percentage as may be prescribed for the relevant previous year. It is to be noted that as per Rule 2BBB which was inserted by the IT (Thirteenth Amendment) Rules, 2014 prescribed the said percentage as 50%. Even if this percentage is considered, the grant received by the assessee including interest thereon which is to be included for the purpose of grant exceeds 50%. 12. It is evident, that the Tribunal has agreed that the interest is to be factored in while quantifying the grant-in-aid received by the respondent/assessee. 13. The Tribunal has also taken note of the fact, that if the interest was not factored while taking a decision with regard to grant-in-aid to be given to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AY 2013-14). 17. Notwithstanding the aforesaid position, in the instant case, upon reading the provisions of Section 10(23C)(iiiac) of the Act and Rule 2BBB of the Rules, it is clear that in the given period, the government had to either directly fund the concerned hospital or institute or seek adjustment by factoring in the interest earned on previous grants. 18. In case there was no adjustment, then, the interest, even according to Mr Maratha, would have to be returned to the concerned government for being credited to the Consolidated Fund of India. 18.1 That being the position, we are of the view that no interference is called for with the impugned order. 19. According to us, no substantial question of law arises for consider ..... X X X X Extracts X X X X X X X X Extracts X X X X
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