TMI Blog2012 (12) TMI 1011X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 order of CIT(A) in allowing the claim of the assessee - ITA No.5896/Mum/2011 - - - Dated:- 7-12-2012 - SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER Appellant by : Shri A.B. Koli Respondent by : Shri Pankaj M. Parikh ORDER PER RAJENDRA SINGH, AM: This appeal by the revenue is directed against the order dated 8.6.2011 of CIT(A) for the assessment year 2008-09. The only dispute raised by the rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficits. 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 observed by him that the phrase substantially financed meant that it should be almost fully financed. He referred to provisions of section 14(1) 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 grant is deemed to be substantially financed by such grant for the purpose of audit of all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest 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 was accordingly requested that the claim of the assessee in which more than 50% of the expenditure has been made through government grant should be eligible for deduction under section 10(23C)(iiiab). CIT(A) was satisfied by the explanation given in view of the judgment cited and held that the claim of the assessee was allowable as in this case grant received by the assessee was ₹ 57.46% on gross re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 substantially financed was defined which is not so in the present case. CIT(A) has followed the judgment of Hon'ble High Court of Bombay in case of CIT, Panaji-Goa vs. Parle Plastics Ltd. (supra) in which it was held that the substantial part did not connote an idea of being a major part i.e. more than 50%, in which in the context of section 2(22)(e)(ii)) it was held that in case 40% of assets wer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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