Visvesvaraya Technological University (VTU), Belgaum, will now have to pay Income Tax dues of Rs 250 crore with the High Court dismissing its appeal on Friday.
Ravi Raj, advocate for VTU, told Express, “We have not yet got the copy of the judgment and we hope to get it in the next 10 days. But the judgment has been pronounced and the question of law has been answered.”
However, it is left to the I-T Department officials to take further action. They may seize the accounts or ask VTU to pay it, the advocate said. Officials of VTU were not available for comment.
For the last seven years, VTU had not paid income tax amounting to Rs 250 crore on it is earnings. The case first went to the Income Tax tribunal which ruled in favour of the I-T Department. Following this, VTU filed an appeal before the High Court. During preliminary hearing, the HC had issued an interim stay which was vacated last week.
Documents available with Express show that VTU has deposited over Rs 400 crore in bank accounts and had not paid income tax on the interest earned.
Counsel for the I-T Department submitted before the High Court that the interest earned by VTU is liable for tax.
“The assessee university is self-sufficient and generating surplus funds from the financial year 1998-99 itself by collecting different kinds of fees - viz registration fee, e-learning fee, sports fee, sports development fee, career guidance and service fund, university development fund, cultural activities, teachers development fee, student development fees, NSS fee, CET fee through KEA, examination fee, challenge valuation fee. The VTU is depositing huge sums in banks for earning profit instead of spending it on objectives of the university.
Thus, the VTU failed to prove that it is a non-profit organisation, set up for the sole purpose of education. It was also noticed that the assessee university is neither approved under Section 10 (23c) nor registered under Section 12AA of IT Act, 1961,” the I-T Department contended.
As per Section (10)(23)(c) of the I-T Act, all state universities must get I-T exemption. But VTU has not sought such exemption. This issue was raised even in the executive council meeting held at VTU’s Belgaum campus on September 21, 2012.