From Our Special Correspondent

Daijiworld Media Network

Bengaluru, Dec 6: Karnataka has urged Union Finance Minister Arun Jaitely to extend the Income Tax
Exemption facility to the Visvesvaraya Technological University at Belagavi.

The Supreme Court of India had recently held that VisvesvarayaTechnological University, which exercises control over all theGovernment and Private Engineering Colleges within the State of Karnataka, is not entitled to get the benefit of exemption from IncomeTax under Section 10(23C)(iiiab) of the Income Tax Act.

The Assessing officer had rejected the claim of exemption by theUniversity and the challenge against the Demand Notice was alsodismissed by the High Court. The University then approached the Apex Court.

For claiming exemption under Section 10(23C)(iiiab), the educational institution or the University must be solely for the purpose ofeducation and without any profit motive and it must be wholly orsubstantially financed by the Government.

The Division Bench of the apex court comprising of Justices observed with reference toQueen’s Educational Society versus Commissioner of Income Tax, thefirst requirement of Section 10(23C) (iiiab), is that the Universityexists “solely for educational purposes and not for purposes of profit” is satisfied.

However, the Supreme Court held that the University isnot substantially financed by the Government so as to meet the secondrequirement to the claim exemption. The Court had observed thatcollection of fees by University does not amount to funding from Government.

“Receipts by way of fee collection of different kinds continue to amajor source of income for all Universities including PrivateUniversities. Levy and collection of fees is invariably an exercise
under the provisions of the Statute constituting the University. Insuch a situation, if collection of fees is to be understood to beamounting to funding by the Government merely because collection ofsuch fees is empowered by the Statute, all such receipts by way offees may become eligible to claim exemption under Section 10 (23c)(iiiab). Such a result which would virtually render the provisions of
the other two Sub-sections nugatory cannot be understood to have beenintended by the Legislature and must, therefore, be avoided,’’ the Apex Court had held.

The Supreme Court had said that the University is neither directly nor evensubstantially financed by the Government so as to be entitled toexemption from payment of tax under the Act.

Karnataka’s Higher Education Minister Basavaraja Rayareddy called on Union Finance Minister Arun Jaitley in New Delhi about the service motto of the Universityand appealed to extend the Income Tax exemption for the University.

Union Minister for Chemicals and Fertilizers H N Ananth Kumar, Member of Rajya Sabha Dr Prabhakar Kore, Members of Parliament in Lok Sabha Prahlad Joshi and B S Yeddyurappa, Vice-Chancellor of the Visvesvaraya Technological University Prof Karisiddappa, Additional Chief Secretary to Government in theDepartment of Higher Education Bharatlal Meena and the Resident Commissioner for Karnataka Bhavan Atul Kumar Tiwari were present onthe occasion.