ITAT allowed the appeal and directed the AO to grant exemption...

ITAT allowed the appeal and directed the AO to grant exemption u/s 10(23C)(iiiab) to the university established by State Legislature Act. The Tribunal held that government financing constitutes "substantial financing" based on judicial precedents establishing thresholds: Karnataka HC determined 37.85% financing qualifies as substantial in one case and 25% in another, while Punjab & Haryana HC concurred with 44.52% threshold. Following these precedents, ITAT concluded the assessee was substantially financed by government and eligible for the claimed deduction. The denial of exemption was overturned, with AO directed to allow the benefit under the relevant provision.