DCIT Vs University of Mumbai (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT), Mumbai, adjudicated multiple appeals filed by the Revenue against orders passed by the National Faceless Appeal Centre (NFAC)/CIT(A) for assessment years 2006–07 to 2011–12. Since the issues across these appeals were identical and pertained to the same assessee, they were consolidated, with AY 2006–07 treated as the lead case.
The core dispute revolved around the eligibility of the assessee, a university governed under the Maharashtra Universities Act, for exemption under Section 10(23C)(iiiab) of the Income Tax Act, 1961. The Revenue challenged the CIT(A)’s decision granting exemption, primarily on two grounds: (i) that the assessee was not “wholly or substantially financed by the Government,” and (ii) that the institution had a profit motive, evidenced by a surplus of ₹18.24 crore during the relevant year.
The Assessing Officer (AO) observed that the assessee received government grants amounting to approximately ₹16.92 crore, which constituted only 19% of its total expenditure of ₹91.12 crore. Relying on Section 14(1) of the Comptroller and Auditor General (CAG) Act, 1971, the AO applied a 75% benchmark to interpret “substantial financing,” concluding that the assessee did not meet this threshold. Consequently, exemption under Section 10(23C)(iiiab) was denied, though partial exemption under Section 11(1)(a) was allowed.
