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2019 (3) TMI 1619 - BOMBAY HIGH COURTExemption u/s. 10(23C) (iiiab) - assessee is not wholly or substantially financed by the Govt. in view of explanation to sub section (1) of section 14 of the CAG Act as the total Govt. grant during the year is less that 75% of the total expenditure of the assessee - assesses state that it was solely for educational purposes and the grants from the Government is in excess of over 50% of the total expenditure - scope of explanation inserted by Finance Act, 2014 w.e.f. 1st April, 2015, prospective or retrospective - HELD THAT:- The meaning of the words 'substantially financed' in the CAG Act could never have been invoked to understand the meaning of the words 'substantially financed' in Section 10(23C)(iiiab). Thus, no fault can be found with the impugned order of the Tribunal ignoring the meaning of substantially financed by Government as given in the CAG Act. The Assessing Officer had found on facts that the Respondent had received in the previous year relevant to the subject Assessment Year grant from the Government which were 56% of the total receipts of the institution i.e. in excess of 50%. Besides, it was also found that the Institution received grants from the Government of ₹ 12.79 crores out of the total expenditure of ₹ 22.49 crores. This was undisputedly in excess of 50% but less that 75% of the total expenditure. Therefore, on both tests i.e. percentage of Government grant in context of total receipts was in excess of 50% and percentage of Government grant in the context of total expenditure was also in excess of 50%. Thus, the respondent satisfies the requirement now introduced by the explanation. Explanatory Notes to the provisions of Finance (No.2) Act, 2014 and the Circular No.1 of 2015 dated 21st July, 2015 issued by the Central Board of Direct Taxes, the raison detre to introduce the Explanation to Section 10(23C)(iiiab) was that in the absence of definition of the phrase 'substantially financed by the Government' therein has led to litigation and varying decision of various judicial fora, leading to uncertainty in this regard. Thus, it is clear that the Explanation to Section 10(23C)(iiiab) of the Act was to clarify the position/meaning of the words 'substantially financed by the Government'. In the present facts, the same measure as has been clarified by the Explanation introduced by the amendment viz. grant from Government is in excess of 50% of its total receipts, it is substantially financed by the Government could be taken as the exposition of the Parliamentary intent of the unamended Section. Thus, without holding the Explanation to Section 10(23C)(iiiab) of the Act, inserted into the Act w.e.f. 1st April, 2015, is retrospective, the same is being used as an aid in construing the ambiguous provision. Therefore, in the present facts the Revenue's appeal is required to be dismissed.
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