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2020 (11) TMI 309 - AT - Income TaxExemption u/s 10(23C)(iiiab) - As per AO grants received during the year were not received wholly from Government but from other sources also - institutions receiving substantial grant less than 50% of the total contribution by the Government - HELD THAT:- From gross receipts if we deduct the receipt on account of interest, rent and sale of tender from which are not exactly in the shape of grant/fees the remaining amount will be ₹ 5,48,47,957/-. The Government grant for the year was ₹ 2,71,00,000/- which in percentage will be 49.40%. Thus the Government grant is almost (though not exact) 50% of the total receipt of fee and grant during the year. Undoubtedly the Government grant is substantial looking to the quantum of contribution as well as the control of the State Government in the functioning of the society as well as the movement of funds. We, therefore held that the assessee society has been rightly held by Ld. CIT(A) to be eligible for exemption u/s 10(23C)(iiiab) of the Act since almost 50% of the grants were given by Ministry of Human Resources Department of Madhya Pradesh and for the year under appeal this grant has been received for 20 poly technical colleges and thus the assessee educational institute running society solely for educational purposes and not for the purpose of earning profits and is substantially financed by the Government is therefore eligible for exemption u/s 10(23C)(iiiab) - Ground No.1 & 2 of revenue’s appeal are dismissed. Claim of incidental expenditure u/s 57(iii) - Allowability of the expenses claimed in the return of income - HELD THAT:- Assessee society is a registered under the Madhya Pradesh Society Registration Act 1959 since 26.06.1962 wth the sole purpose of establishing and running institution to impart technical education in Civil, Mechanical and Electrical and such other branches of Engineering. The assessee institute runs solely for educational purposes and not for the purpose of earning profits. Most of the grants are received from Government of Madhya Pradesh. Irrespective of the fact that the assessee is eligible for exemption u/s 10(23C)(iiiab) of the Act or not even if the revenue authorities wanted to tax receipts during the year as income under the head income from other sources, they were not justified in grossly denying the benefit of genuine claim of incidental expenditure u/s 57(iii) of the Act being the expenditure (not been in the nature of capital expenditure) laid out by the assessee institution wholly or exclusively for the purpose of making or earning such income. We thus confirm the finding of Ld. CIT(A) to this effect and allow the claim of expenses u/s 57(iii) of the Act and dismiss revenue’s Ground No.3.
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