9911796707
TMI Blog2025 (1) TMI 611X X X X Extracts X X X X X X X X Extracts X X X X ..... r dated 11.07.2023 passed u/s. 143(1)(a) of the Act denied the exemption u/s. 10(23C)(iiiab) on the ground that the assessee institution is not substantially financed by the Government and therefore not eligible for the exemption claimed by it. Accordingly, the income of the institute was assessed at Rs. 26,13,473/-. 3. Aggrieved assessee preferred appeal before the ld. Addl/JCIT(A) but failed to succeed. The ld. Addl/JCIT(A) observed that the assessee is not recognized as a university by the University Grants Commission and that the assessee has not received any Government grant during the year and therefore not eligible for the exemption u/s. 10(23C)(iiiab) of the Act. 4. Now the assessee is in appeal before the Tribunal challenging the impugned order. 5. The ld. Counsel for the assessee at the outset submitted that the case of the assessee is squarely covered by the decision of Coordinate Bench, Jodhpur in the case of IMC of ITI vs. ITO reported in (2017) 82 taxmann.com 120 (Judhpur-Trib) dated 16.09.2016 wherein also the assessee institute was financed by Central Government and the interest received on such grant from the Government was utilized for the purpose of the Instit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and which is wholly or substantially financed by the Government'. Admittedly, the interest received on such grant from the Central Government was utilized by the assessee institute for the purpose of the Institute as per the Memorandum of Association and Rules and Regulations of Society. 9. So far as the aspect of substantially financed by the Government, I notice that ostensibly the assessee received grant of Rs. 2.50 crore during the period 2008-09 to 2011-12 and the said Grant received by the institute from the Central Government was utilized making Fixed Deposit. So far as the gross receipts during the year is concerned, out of total gross receipts of Rs. 26,13,473/- the institute has received Rs. 19,32,473/- on account of Interest from Fixed Deposit made from Govt. Grant and Saving Bank Account and the same accounts for more than 50% of Grant receipts during the year. These facts reveal that the assessee institute is substantially funded by the Central Government and the assessee would be entitled to exemption by virtue of provisions of section 10(23C)(iiiab) of the Act. 10. I find the Jodhpur Bench of the Tribunal in the case of IMC of ITI vs. ITO (supra) had an occasion to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der: (1) CIT v. National Law School of India University (IT Appeal No. 483 of 2009, dt. 18th July, 2016) (Karnataka H.C.). The Hon'ble Karnataka High Court in this case observed as under: "4. In that view of the matter, the findings of the Tribunal that the assessee is subsequently financed by the Government and therefore, the assessee is entitled to the benefit of exemption under s. 10(23C)(iiiab) of the IT Act, cannot be found fault with. Therefore, the substantial question of law is answered in favour of the assessee and against the Revenue." (2) Akali Baba Phool Singh Educational Trust v. Dy. Director of IT (Exemption) [2011] 43 SOT 700/9 taxmann.com 59 (Delhi). The Tribunal Delhi Bench in this case observed as under: "(6) We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below. We find that penalty in the present case was imposed by the AO under s. 272A(e). As per the provision of s. 273B, any penalty' imposed by the AO under sub-s. (2) of s. 271A is not imposable if the assessee proves that there was reasonable cause for the said failure. Penalty under s. 272A(2)(e) is imposable if the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee is carrying on its activities of imparting education. It is not existing for the sake of profit-making. When 25 per cent, of the finance to the assessee institutions flows from the Government it constitutes the substantial finance and, therefore, it has satisfied all the legal requirements provided under s. 10(23C)(iiiab) of the Act. In fact, this Court had an occasion to consider the said question in the case of CIT v. Indian Institute of Management [2015) 275 CTR (Kar) 424: [2015] 115 DTR (Kar) 251: [2015] 370 ITR 81 (Kar) and a finance to the extent of more than 10 per cent of the total finance would constitute substantial finance and, therefore, the finding recorded by the Tribunal that the assessee is entitled to the benefit exempted under s. 10(23C) (iiiab) of the Act cannot be found fault with 6. In the light of the aforesaid findings, in our view, it is unnecessary to go into the question whether the assessing authorities were justified in reopening the assessment and there was sufficient reasons and whether the assessee is entitled to the benefit under s. 11 of the Act also. Accordingly, we pass the following order: Appeals are dismissed. (5) Ganapathy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion leads to some surplus but the said profit is accumulated or ploughed back for the purpose and objects of the institution, it is deemed as existing not for the purpose of profit. He argued that the Serampore College fulfils wholly, both these requirements as existing solely for the purpose of education and not for the purpose of profit. According to him therefore, the College is covered and entitled to exemption under s. 10(23C)(iiiab) of the IT Act, 1961 as the provisions of s. 10(23C)(iiiab). provides that any university or other institution education existing solely for educational purpose and not for the purpose of profit, and which is wholly or substantially financed by the Government. We are of the view that the argument of learned counsel that "The Serampore College" will fall under the category of 'other educational institution under s. 10(23C) and will be exempt under cl. (iiiab), since it exists solely for educational purpose and not for the purpose of profit, as no part of the profit or surplus is diverted for private gain. But only, condition to be examined factually is that, whether, on consolidation of the income expenditure accounts of 4 units of the Serampor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se case laws and also any other case law of Hon'ble Supreme Court or any High Court available at the point of decision, and decide the same, whether the assessee's case falls in the category of 'wholly or substantially financed by the Government. In terms of the above, these two appeals of assessee are set aside to the file of the AO. Appeals of assessee are allowed for statistical purposes." 2.7 Considering the entirety of the facts and circumstances of the case, it is noted that the assessee institute is financed by the Central Government, and the amount granted by the Government is deposited in the nationalized bank. The interest so received by the institute from the bank is utilised for the purpose of institute as per memorandum of association and rules and regulation of the society. Taking into consideration of the above decisions as well as facts of the case, it is observed that the assessee institute is covered and entitled to exemption under s. 10(23C)(iiiab) of the IT Act, 1961 as the provisions of s. 10(23C)(iiiab) provides that any income received by any university or other institution education existing solely for educational purpose and not for the purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X
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