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TMI Blog2025 (1) TMI 611X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee institute for the purpose of the Institute as per the Memorandum of Association and Rules and Regulations of Society. So far as the aspect of substantially financed by the Government, as 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. Thus assessee institute is entitled for exemption u/s. 10(23C)(iiiab) - Decided in favour of assessee. - Dr. Manish Borad, Accountant Member For the Assessee : Shri Piyush Bafna and Shri Aakash Parakh For the Revenue : Shri Vinod Pawar ORDER PER DR. MANISH BORAD, A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to the Profit and Loss Account and Income and Expenditure Account stating that out of the total gross receipt of Rs. 26,13,473/- sum of Rs. 19,32,473/- is the interest on Fixed Deposit and Bank Account and the remaining is the Fees collected from the Students. Therefore, the Government Grant is more than 50% of the gross receipts and the assessee deserves to succeed for getting exemption u/s. 10(23C)(iiiab) of the Act. 6. On the other hand, the ld. Departmental Representative vehemently argued supporting the orders of the authorities below. 7. I have heard both the sides and perused the record placed before me. The only issue that arises for my consideration is whether the ld. Addl/JCIT(A) was justified in confirming the action of the CPC in denying exemption u/s. 10(23C)(iiiab) of the Act. Admittedly, the assessee institute is a Government Education Institute, and in the past received Grant of Rs. 2.50 crore from the Central Government, Ministry of Labour and Employment under the Institute Development Plan for Government ITI in the scheme Upgradation of 1396 Government ITIs through Public Private Partnership and the said Grant has been invested in Fixed Deposit with Sche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O thus observed that the interest income of Rs. 16,05,233 was wrongly claimed by the assessee as exempt income which escaped from assessment. In appellate proceedings, the learned CIT(A) confirmed the action of the AO. It is further noted from records available before me that this institution came into existence by memorandum of agreement signed by the Director/Joint Secretary for and on behalf of the President of India, Principal Secretary, Technical Education Deptt. of Government of Rajasthan, Chairman, IMC on behalf of the industrial partners. This agreement was executed on 20th Feb., 2008. This Memorandum/ agreement has a binding instruction which has to be followed by all the three pillars who had signed this agreement. It is further noted from, the records that the assessee is not free to utilize the funds allotted by the Government, but it is mandatory to follow the terms and Instructions as laid down in the memorandum of agreement. It is further noted that Rs. 2.50 crores was received from the Directorate General of Employment and training, Ministry of Labour and Employment, Government of India, New Delhi vide its letter dt. 12th March, 2008 and as per the terms of agreemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icable to the assessee. When we examine the provisions of sub-s. (4A) of s. 139, we find that there is no specific reference to those assessees who are covered by the provision of s. 10(23C)(iiiab). In this section, reference has been made to ss. 11 and 12, In addition to this reference was made to those assessees also, who have income from voluntary contributions referred to in subcl. (iia) of cl. (24) of s. 2 as has been pointed out by the learned Departmental Representative. When we examine the provisions of sub-s. (iia) of sub-s. (24) of s. 2, we find that reference has been made to various other clauses of sub-s. (23C) of s. 10. Under this factual position, we are of the considered opinion that it has to be accepted that there was reasonable cause on which the assessee might be having a bona fide belief that the provisions of s. 139(4A) are applicable to it and hence the penalty imposed by the AO is not justified. We, therefore, delete the same in both the years. (3) CIT v. Indian Institute of Management, [2015] 370 ITR 81/[2014] 226 Taxman 301/49 taxmann.com 136. The Hon'ble High Court in this case observed as under: (7) The facts of this case and the material on record c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee had applied for registration in the year 2002. nothing was communicated to the assessee regarding the rejection or allowing application of the assessee for registration. The assessee cannot be held responsible for the inaction of the Department, if the Department is in slumber, the assessee cannot be faulted. (19) Thus, in view of the aforesaid findings, the appeal of the assessee is partly allowed in the aforesaid terms. (6) Sikkim Manipal University v. Asstt. CIT [2013] 33 taxmann.com 663. In this case, Tribunal, Kolkata Bench observed as under: As the institution is substantially financed by the Government of Sikkim (Rs. 23.37 crores) and by the Deptt of North-Eastern Council of India to the extent of Rs. 4.78 crores, the case of the assessee is covered by the provisions of s. 10(23C)(iiiab) of the IT Act. The application in Form No. 56D seeking approval under s. 10(23C)(vi) is misconceived as assessees other than those mentioned in sub-cl. (iiiab) or sub-cl. (iiiad) only can apply. We find from the above order of Chief CIT, who has not granted approval under cl. (vi) only because he found that the assessee was substantially financed by the Government and therefore, its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e College will then legally be governed by s. 10(23C) (iiiab) of the Act for its entire income including income of 'Senate of Serampore College'. The CIT(A) as well as the AO has not examined the claim as regards to the source of finance i.e. substantially financing by the Government or not, so as to eligibility' of the claim of exemption under s. 10(23C)(imab) of the Act, even though Chief CIT rejected the application for registration under s. 10(23C)(via) of the Act. The CIT(A) as well as the AO both, totally failed to consider whether the assessee is covered under s. 10(23C)(iiiab) of the Act or not, as is both were duty- bound to consider the claim and examine the same. The mere rejection of application under s. 10(23C) (via) of the Act cannot be reason to reject the claim of exemption under s. 10(23C)(iiiab) of the Act. Learned counsel for the assessee relied on the proposition laid down by the Hon'ble Bombay High Court in the case of CIT v. Parle Plastic Ltd. [2010] 236 CTR (Bom) 382: (2010) 48 DTR (Bom)7: (2011) 332 ITR 63 (Bom)- Panaji Bench and referred the same for the meaning of 'Substantial'. He also relied on the, Bangalore Bench in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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