The assessee, University of Mumbai, a Government University established in 1857 and engaged solely in educational activities, had claimed exemption under section 10(23C)(iiiab) for A.Y. 2018-19. The Assessing Officer denied the exemption on the ground that Government grants of Rs. 52.34 crore were less than 50 per cent of the total receipts of Rs. 250.21 crore and consequently brought the income over expenditure of Rs. 40,09,98,758 to tax. The Tribunal observed that under section 8 of the Maharashtra Public Universities Act, 2016, the State Government exercises pervasive control over the University, including restrictions on creation of posts, revision of pay, utilisation of earmarked funds and transfer of immovable property. It held that grants received through the University Grants Commission (UGC), being an intermediary for distribution of Central Government funds to Universities, are to be treated as Government grants for the purpose of Rule 2BBB. The Tribunal further held that the capital grant received in the form of land and the notional interest thereon could also be considered while determining the extent of Government financing, following the principle laid down by the Karnataka High Court in Indian Institute of Management (2014) 49 taxmann.com 136. The Tribunal noted that, after including the UGC grants and the notional interest on Government-granted land, Government grants constituted 50.76 per cent of the total receipts, thereby satisfying the threshold prescribed under Rule 2BBB. Accordingly, the assessee was held eligible for exemption under section 10(23C)(iiiab), and the Assessing Officer was directed to recompute its income after allowing the exemption.  Quantum deleted; consequential penalty cannot survive.  (AY. 2018-19) (ITA No. 5393/Mum/2025, dt. 16-10-2026)