TMI Blog2015 (12) TMI 1071X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The Tribunal after appreciation of evidence correctly held that the Government was substantially financing and interested in the management of the respondent-assessee and, therefore, were eligible for exemption under Section 10(23C)(iiiab) of the Act. Karnataka High Court in Indian Institute of Management's case (2010 (8) TMI 890 - KARNATAKA HIGH COURT) held where there was financing of 37.85% by the Government held the assessee to be entitled to eligible for exemption under Section 10(23C)(iiiab) - Decided against revenue. - ITA No. 133 and 140 of 2014 (O&M) - - - Dated:- 17-9-2015 - MR. AJAY KUMAR MITTAL AND MR. RAMENDRA JAIN, JJ. For The Appellant : Mr. Inderpreet Singh, Advocate For The Respondent : Mr. Pankaj Jain, S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the exemption u/s 10(23C)(iiiab) of the Act to one of institutes run by the society viz. All India Jat Heroes Memorial College as this institute received grant of 45.95% of the gross aggregate receipts which fell far short of 'substantially' financed by the Government; the Hon'ble ITAT allowed the exemption u/s 10(23C)(iiiab) by relying upon the judgment of Hon'ble Karnataka High Court in ITA No. 1133 of 2008 wherein the grant of 34.33% was considered 'substantial' but the Revenue has not accepted this judgment and has filed appeal against the order in Hon'ble Supreme Court? 3. An application bearing CM No. 26348-CI of 2014 was filed by the learned counsel for the revenue for framing additional substantial q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct on the entire income as per the return of income. Accordingly, the assessee was assessed at an income of ₹ 93,25,443/-. Feeling aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [for brevity the CIT(A) ]. The CIT(A) vide order dated 10.3.2011 (Annexure A-II) dismissed the appeal holding that the assessee was not eligible for exemption under Section 10(23C)(iiiab) of the Act. Still dissatisfied, the assessee filed an appeal before the Tribunal who vide order dated 19.7.2013 (Annexure A-III) allowed the appeal by relying upon its earlier order in the case of the assessee for the assessment years 2003-04 and 2004-05. The Tribunal further, inter alia, held that the institution/society run by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner of Income Tax v. National Education Society, ITA No. 808 of 2009, Commissioner of Income Tax v. Indian Institute of Management (2011) 196 Taxman 276 (Kar.) against which Special Leave Petitions have been dismissed by the Supreme Court and Commissioner of Income Tax v. Deshiya Vidya Shala Samithi, ITA No. 1133 of 2008 decided on 8.2.2011 to urge that the assessee was substantially financed by the Government and was, therefore, entitled to benefit under Section 10(23C)(iiiab) of the Act. 10. The Karnataka High Court in Indian Institute of Management's case (supra) applying its earlier decision in National Education Society's case (supra) where there was financing of 37.85% by the Government held the assessee to be entitle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the company, is deemed to have substantial interest in the business of the company. Para 5. In the case of assessee itself, when the grant was more than 50 per cent, exemption has been extended to the assessee. It is in this context, in the absence of any definition for the word 'substantial' in the Act, what is to be seen is, what is the total receipts and from what source. In that context, we have to find out whether the grant of 36.42 per cent of total receipts constitutes substantial finance by the Government. 5. Applying the aforesaid law, in the instant case, the total income of the assessee from all sources is ₹ 20.61 lakhs. Out of which, a sum of ₹ 7.80 lakhs which represents only 37.85 per cent of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in aid with respect to total receipts are more than 34.33% considered by the Hon'ble Karnataka High Court to be substantial. Therefore, following the above judgment with respect to definition of substantial interest, we hold that the assessee/ institutions were substantially financed/aided by the Government and hence are eligible for exemption u/s 10(23C)(iiiab). 12. In view of the above, the Tribunal was right in holding that the aid given by the Government to the assessee constitutes substantial finance by the Government which had entitled the assessee to claim exemption under Section 10(23C)(iiiab) of the Act. 13. No infirmity or perversity could be pointed out by the learned counsel for the revenue in the findings recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X
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