Report No. 275
5.61 In the case of CIT v. Desia Vidyashala Samiti Shimoga,138 the Karnataka High Court, held that the Government grant to the extent of 34.33% amounts to substantial financing and consequently, exemption under section 10(23C)(iiiab) of the Income Tax Act, 1961, is allowable.
5.62 In the case of The Hindu Urban Cooperative Bank case, it was held by the Punjab & Haryana High Court that, in the larger context of public interest, the funds which the Government deal with, are public funds. They belong to the people. The Court added: In that eventuality, wherever public funds are provided, the word 'substantially financed' cannot possibly be interpreted in narrow and limited terms of mathematical, calculation and percentage (%). Wherever the public funds are provided, the word 'substantial' has to be construed in contradistinction to the word 'trivial' and where the funding is not trivial to be ignored as pittance, then to me, the same would amount to substantial funding coming from the public funds.
Therefore, whatever benefit flows to the petitioner-institutions in the form of share capital contribution or subsidy, land or any other direct or indirect funding from different fiscal provisions for fee, duty, tax etc. as depicted hereinabove would amount to substantial finance by the funds provides directly or indirectly by the appropriate Government for the purpose of RTI Act in this behalf.
5.63 In the case of Munish Kumar Seth v. Public Information Officer,139 it was observed by the Punjab State Consumer Disputes Redressal Commission (PSCDRC), that the words, "substantially financed, directly or indirectly by funds provided by appropriate Government" are wide enough to bring within its sweep not only direct fund outflow from State exchequer, but also indirect monetary benefit which may have been facilitated by Governmental action.
The PSCDRC added that, the word "funds" occurring in sub-clause (d) of Section 2 (h) have to be interpreted to include not only a direct cash outflow from Government to non- Government organization, but also indirect "funds" such as a financial concession or benefit or subsidy or remission of what was otherwise due to Government under any law or levy. Going by the dictionary meaning of the word "fund", it includes not only money received or collected but also money saved.[emphasis added]
The 'Cambridge Dictionary online' defines the word fund as: a sum of money saved, collected or provided for a particular purpose; money needed or available to spend on something; a lot of something. Therefore, if a private organisation saves money by avoiding payment of what was otherwise due from it to Government under any law, rule or regulation, it would amount to a financial benefit to that organization.
5.64 In the case of Mother Dairy Fruit and Vegetable Private Limited v. Hatim Ali & Ors.,140the Delhi High Court held that it is relevant to note that the expression "substantially financed" is suffixed by the words "directly" or "indirectly". Thus, the finances indirectly provided by an appropriate Government would also have to be considered while determining whether a body has been substantially financed by an appropriate Government. The test to be applied is whether funds provided by the Central Government, directly or indirectly, are of material or considerable value to the body in question.
5.65 In the case of R.K. Jain & Ors. v. lndian Bank Association (lBA),141the CIC referred to its earlier observations made in the case of Shikha Singh v. Tuberculosis Association of India,142 as follows: While considering the question of substantiality of finance, the aspect of public interest cannot be overlooked because the funds, which the Government deal with, are public funds.
They belong to the people. In that eventuality, wherever public funds are provided, the word 'substantially financed' cannot possibly be interpreted in narrow and limited terms of mathematical, calculation and percentage). Wherever the public funds are provided, the word 'substantial' has to be construed in contradistinction to the word 'trivial' and where the funding is not trivial to be ignored as pittance, then to me, the same would amount to substantial funding coming from the public funds.
Therefore, whatever benefit flows to the respondent organization in the form of any grant, donation, subsidy, land or any other direct or indirect funding would amount to substantial finance by the funds provided directly or indirectly by the appropriate Government for the purpose of RTI Act in this behalf.
5.66 The CIC in this case held that 43% public sector resource, tax concessions, publicity funding, accommodation in twenty cities without rent makes the IBA totally dependent upon the Government and public-sector banks for survival and functioning.143
5.67 In the case of Darbari v. PIO, Willington Gymkhana Club,144 the CIC observed that the fact that the Gymkhana Club, Ooty was enjoying the exclusive possession of land worth thousands of rupees, admeasuring 67 acres in a prime area of tourist destination city of Udakamandalam for a trifling lease of Rs. 220 per year, was enough to establish that the Gymkhana Club Ooty was directly and substantially funded by Government, and hence it had to be answerable and accountable for its activities. Consequently, the club was held to be a public body and public authority under section 2(h) of the RTI Act.
5.68 In the case of National Stock Exchange of India Limited v. Central Information Commission &Ors.,145 the Delhi High Court observed that financing in terms of percentage vis-à-vis total budget is not important and it is not necessary that it should be 'majority' financing. What amounts to "substantial financing" cannot be put in a straight-jacket formula of universal application and has to be adjudged on a case-to-case basis.
5.69 On the same lines, in the case of Manju S. Kumar v. Sanskriti School146, the CIC while reviewing the scope of the term 'substantial financing', held that it is not necessary that the grant be "continuous or current".
5.70 In the case of Shri Subhash Chandra Aggarwal & Shri Anil Bairwal v. Indian National Congress/All India Congress Committee & Ors.,147the CIC held that political parties such as INC/AICC, BJP, CPI(M), CPI, NCP and BSP have been substantially financed by the Central Government and are, therefore, public authorities under section 2(h) of the RTI Act. The rationale of the Commission was that thirty per cent of their income that would have otherwise paid by way of income tax was been given up in their favour by the Central Government.
The Commission added that it is undisputed that this is substantial financing, though indirectly. In addition to this, the concessional allotment of land and buildings in prime locations in the national capital, State headquarters and/or District level, amounted to a considerable sum by way of direct and indirect financing.