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2012 (12) TMI 1011

it was held that in case 40% of assets were deployed by way of loans and advances then the business of money lending has to be considered as substantial part of the business of the assessee. - CIT(A) also relied on the judgment in the case of Indian Institute of Management (2010 (8) TMI 890 - KARNATAKA HIGH COURT), in which it was held that when 37.85% of total income was financed by Central Government it had to be considered as substantially financed by the government. In case of the assessee 57.46% of gross receipts is financed by the government. Further in the earlier orders similar financing by the government had been considered as substantially financed and exemption allowed to the assessee. We, therefore see no infirmity in the o .....

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ch fees collected from unaided institutions was ₹ 99,22,325/-. The assessee had received salary grant of ₹ 3,17,17,305/-. Besides fee collection of ₹ 17,90,884/- included in tuition fee was also part of salary grant. Thus grant received by the assessee was 61% of gross receipts. It was also pointed out that surplus generated was not profit. It was further submitted that in earlier years there were deficits. Therefore, surplus only covered the deficit of earlier years. The assessee also argued that it had been granted exemption u/s. 10(23C)(iiiab) in the past accepting the claim of the assessee that it had been substantially financed by government grants. 2.1 The AO however did not accept the contentions raised. It was obse .....

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al used in section 2(22)(e)(ii), it was held that the expression substantial part did not connote an idea of being a major part. The assessee also referred to the judgment of Hon'ble High Court of Karnataka in the case of CIT vs. Indian institute of Management (196 Taxmann 276) in which the High Court referred to provisions of Banking Regulations Act 1949 as per which a person who had beneficial interest of more that 10% of total capital subscribed has been held to have substantial interest in the company. Similarly, it was pointed out that substantial interest had also been defined in Explanation 40A(2)(a) where a person having voting power of not less than 20% is deemed to have substantial interest in the business of the company. It w .....

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f ₹ 3,17,17,305/- was financed from government grant. Thus 57.46% of gross receipts was financed by the government. The AO took the view that only when at least 75% of expenditure is met by government grant it can be considered as substantially financed by the government. The AO followed the provisions of Comptroller and Auditor General s (Duties, Powers and Conditions) of Service Act 1971, as per which any body or authority in which case 75% of total expenditure is met by government is deemed to be substantially financed by the government. In our view CIT(A) has rightly held that provisions of Comptroller and Auditor General s (Duties, Powers and Conditions) of Service Act 1971, are not applicable as in that case what constitutes sub .....

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