VTU gets I-T exemption from paying dues, interest of Rs 127 crore

The department had earlier issued a notice to the university to pay the interest on income tax dues (Rs127 crore).
Image for representational purpose only.
Image for representational purpose only.

BENGALURU: In a major relief to Visvesvaraya Technological University (VTU), Belagavi, which has been facing a financial crisis — the Income Tax department has exempted the university from paying dues and interest amounting to Rs 127 crore. The I-T Department also plans to release the Rs 441-crore corpus fund in phases, which it had seized during a raid six years ago.

The department had earlier issued a notice to the university to pay the interest on income tax dues (Rs127 crore). Even the Supreme Court had passed an order in favour of the I-T Department, which was challenged by VTU at the I-T Tribunal. Highly placed sources in the department told The New Indian Express that the hearing has now been concluded and the order was in favour of VTU. Sources told The New Indian Express that this order will be applied retrospectively.

As per the information available with TNIE, the university has got exemption from paying I-T under Sec 12 (A) of the I-T Act, which reads, “An educational institution is entitled to exemption of its income if it is registered as a charitable trust or institution under Section 12-AA (originally section 12-A) of the Income Tax Act, 1961.”

When the department seized the university’s accounts earlier, it is said that the amount which VTU was getting as interest on the corpus fund was liable for taxation. The notice by I-T department had then stated, “The assessee university is self-sufficient and generating surplus funds from the financial year 1998-99 itself by collecting different kinds of fees...The VTU is thus depositing huge deposits in the bank accounts for earning a profit on account of interest on these, instead of spending for the objects of the university. Thus, the VTU failed to prove that it is a non-profit organisation set for the sole purpose of education. It was also noticed that that the assessee university is neither approved under Section 10 (23c) nor registered under Section 12AA of IT Act 1961.”

Under the I-T Act’s Section (10) (23) (c), all state universities must get I-T exemption but, VTU was not exempted all these years since its inception in 1998-99.VTU was in a financial crisis and had even struggled to pay staff salaries. The varsity had to take bank loans as the state government did not respond to its request for financial assistance. However, VTU officials refrained from reacting.

Related Stories

No stories found.
The New Indian Express
www.newindianexpress.com