Substantial Government financing test under section 10(23C)(iiiab) requires grant receipts to exceed the prescribed threshold.

Exemption under section 10(23C)(iiiab) depends on the institution being substantially financed by the Government. Rule 2BBB applies a quantitative test requiring Government grant to exceed 50% of total receipts in the relevant previous year. On the stated facts, the grant did not cross that threshold, so the statutory condition was not met. Government ownership or administrative control could not override the express receipt-based benchmark, because the rule makes that threshold mandatory for the exemption.

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Issues: Whether the assessee was entitled to exemption under section 10(23C)(iiiab) of the Income-tax Act, 1961 on the footing that it was substantially financed by the Government.

Analysis: The exemption under section 10(23C)(iiiab) depends on the institution being substantially financed by the Government. Rule 2BBB of the Income-tax Rules prescribes a quantitative test, under which Government grant must exceed 50% of the total receipts of the institution during the relevant previous year. On the facts, the assessee's Government grant was Rs. 60,00,000/- against total receipts of Rs. 1,71,65,150/-, which did not cross the prescribed threshold. The argument based on government ownership or administrative control could not override the express statutory benchmark, because the rule makes the receipt threshold a mandatory condition for the exemption.

Conclusion: The assessee failed to satisfy the statutory requirement of substantial financing and was not entitled to exemption under section 10(23C)(iiiab) of the Income-tax Act, 1961.

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