2026 (7) TMI 429

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....antum appeal ITA No.1183/Chandi/2025 which arises out of an order of learned Commissioner of Income Tax (Appeals), NFAC [CIT(A)] dated 07.07.2025 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s 147 r.w.s. 144B of the Act on 12.03.2024. The sole grievance of the assessee is denial of deduction u/s 10(23C)(iiiab) and consequential assessment of business income at Rs. 987.78 Lacs. 2. The Ld. Sr. Advocate, Shri Vishal Mohan advanced arguments with the help of various documents on record and assailed the denial of impugned deduction to the assessee. It has been stated that the assessee entity is fully funded by the state government / agencies. The Ld. CIT-DR also advanced arguments supporting the orders of lower author....

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....te government and therefore, it was eligible for exemption of income u/s 10(23C)(iiiab) which provide that any income received by any person on behalf of any university or other educational institution existing solely for educational purposes and not for purpose of profit and which is wholly or substantially financed by the government would be exempt from tax. The relevant Rule 2BBB of Income Tax Rules provide that the institution shall be considered as having been substantially financed by the government if the government grant to such institution exceeds 50% of the total receipts including voluntary contributions of such an institution during the previous year. The assessee contended that the requirement to claim the exemption was that fi....

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....ted funds for setting up of college. The said funds were given to the assessee for specific purposes i.e., for setting up engineering college. The grants from Government were also received for setting up of engineering college. The college was at under-construction stage during the year and no income was generated. The grants were received and prior to expanding the same, the funds were parked in FDR and interest income accrued to the assessee. The same was treated as part of the grants and as such, it was to be utilized for the said purpose only. Interest was to be treated as part of the grants only and could not be taxed separately. The attention was drawn to the fact that the case for AY 2018-19 was reopened for the same reasons, however....