For computing 'substantial government aid' so as to avail section 10(23C) exemption, receipts of individual institution are to be considered, not aggregate receipts of various institutions run by a society; 45 per cent government aid is substantial for such purpose.
In the instant case, two issues came for consideration before the Tribunal as under:
a) Whether the aggregate gross receipts of various institutions run by the assessee-society or the individual receipts of each institution run by the assessee were to be considered for the purpose of section 10(23C)(iiiab)?
b) Whether the assessee was substantially aided by Government for 10(23C)(iiiab) exemption?
On first issue, it held as under:
For purpose of applying provisions of section 10(23C), receipts of individual institution are to be considered, and not aggregate gross receipts of various institutions run by assessee.
On second issue, it held as under:
1) The percentage of grant was within the range of 41% to 82% if considered individually for each institution. If the percentage was considered for the society as a whole even then the percentage was 44.52% and 45.15% in the two years;
2) The Hon'ble Court in case of CIT v. Deshiya Vidyashala (I.T.A. No.1133 of 2008, dated 8.2.2011) has considered 34.33% as substantial aid for the purpose of eligibility under the above said sections;
3) 3) In the instant case the percentage of grants in aid with respect to total receipts were more than 34.33%. Thus, following the case of Deshiya Vidyashala (supra) with respect to definition of substantial interest, aid of more than 34. 33% was to be considered as substantial aid. Therefore, the assessee’s institutions were substantially aided by the Government and, hence, were eligible for exemption under section 10(23C)(iiiab) - JAT EDUCATION SOCIETY V. ITO (2013) 37 taxman 187 (Delhi - Trib.)
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