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2022 (6) TMI 1459 - AT - Income TaxExemption u/s 10(23C) denied - AO observed that the total receipts of assessee were approximately Rs. 109 crores, out of which the grant received from Govt. was just Rs. 3.90 crores, thus exemption disallowed since the assessee does not meet the condition of “wholly or substantially financed by the Govt.” as prescribed in section 10(23C)(iiiab) - as submitted assessee is a University established under M.P. Vishwavidhalaya Adhiniyam,1973, an Act of the State Govt. of Madhya Pradesh, established to provide education, supervision and maintenance to various colleges and educational institutions as per regulations of the Govt. and to establish, maintain and manage colleges, teaching departments, school of studies, center of studies, to institute degree diplomas, certificates and other academic distinctions, etc. AO concluded that the receipts from government-grant are much less and therefore the assessee does not satisfy the requirement of “substantially financed by Govt.” - HELD THAT:- The component of government-grant received by the assessee is just 3.50% of the total receipts which is so less that by no stretch of understanding, the assessee can be said to be “substantially financed by the Govt”. Also looking at submission of Ld. AR that out of the total receipt of Rs. 109 crore, there is a receipt of examination fee of Rs. 58 crore from affiliated institutions and colleges who had in turn received grants from the Govt. as also from certain categories of students who have received grants and scholarships from the Govt. The Ld. AR submitted that the receipt of Rs. 58 crore should also be considered as receipt from Govt. We are afraid to accept this argument of Ld. AO. If the affiliated colleges / institutions / students have received grant or scholarship from Govt., it is those colleges / institutions / students who have been financed by the Govt. and not the assessee. Even otherwise although the Ld. AR has raised this point but there is no material or evidence produced before us to prove that such state of affairs actually exist. Therefore, we are not impressed by this argument of Ld. AR. Thus, assessee is not substantially financed by the Govt. and therefore not entitled to exemption u/s 10(23C)(iiiab). Alternative claim of exemption u/s 11 / 12 demanded by the assessee - can we entertain this new claim made by assessee for the first time before us? - HELD THAT:- A fresh claim before appellate authorities is not barred. It is constantly held in several decisions that a legal claim can be made by the assessee before appellate authorities even if the same was not claimed during assessment proceedings. We also observe that the provisions of section 11 / 12 grant exemption to the assessee and such exemption, if not allowed, would result in illegal collection of tax from the assessee, which is never an objective of the Income-tax Act, 1961. In view of this position of law, we do not find any difficulty in accepting the alternative claim of assessee to allow exemption u/s 11 / 12. However, the claim of exemption u/s 11 / 12 involves a different type of working based on application and accumulation of income. Therefore, we feel that it would be more appropriate to refer this matter back to Ld. AO who shall give an opportunity to the assessee to provide the necessary information for computation of exemption u/s 11 / 12. Appeal of assessee is allowed for statistical purpose.
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