Appeal allowed for tax exemption under section 10(23C)(iiiac) for society funded by government.

The appeal was allowed, directing the Assessing Officer to grant exemption under section 10(23C)(iiiac) of the Income Tax Act. The society, substantially funded by the Government of India/State Govt. of Karnataka, met the criteria for exemption based on funding received. The decision of the Coordinate Bench was followed, as no distinguishing facts were presented by the Revenue, leading to the allowance of the appeal and the grant of exemption to the assessee.

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Issues:
- Eligibility of the assessee under section 10(23C)(iiiac) of the Income Tax Act.

Analysis:
The appeal was filed against the order of the Ld. CIT (A) for the assessment year 2009-10. The grievance of the assessee was that the Ld. CIT(A) failed to recognize the assessee's eligibility under section 10(23C)(iiiac) of the Act. The assessee, a district level society under the Department of Health & Family Welfare, Govt. of Karnataka, formed for implementing the National Rural Health Mission Programme, filed a return claiming exemption under section 11 of the Act. The Assessing Officer denied the claim, stating that the assessee did not prove eligibility under section 10(23C) and that the application for registration under section 12AA was rejected. The Assessing Officer treated interest income from bank deposits as income from other sources. The assessee then approached the Ld. CIT(A) without success.

The counsel for the assessee referred to a decision of ITAT, Bangalore Bench in a similar case and argued that the society should be eligible for exemption under section 10(23C)(iiiac) based on the funding received from the Government. As the assessee was substantially funded by the Government of India/State Govt. of Karnataka, it was concluded that the assessee met the criteria for exemption under section 10(23C)(iiiac). Since no distinguishing facts were presented by the Revenue, the decision of the Coordinate Bench was followed, directing the Assessing Officer to allow the assessee exemption under the mentioned section.

In conclusion, the appeal filed by the assessee was allowed, and the Assessing Officer was directed to grant exemption under section 10(23C)(iiiac) of the Act. The order was pronounced in the open court on 8.6.2015.

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