Rani Channamma University Vs Under Secretary (ITA-1) (Karnataka High Court)
The petitioner-University challenged the communication dated 12.12.2023 issued by the first respondent rejecting its application for issuance of notification under Section 10(46) of the Income Tax Act, 1961. The University, established under Section 3(1E) of the Karnataka State Universities Act, 2000, is engaged in imparting higher education and is a non-profit institution statutorily prohibited from carrying on commercial activities. Its income comprises State Government grants, student fees, examination fees, interest on deposits, and other incidental receipts connected with its educational objects. It had earlier obtained registration under Section 12AA and exemption under Section 10(23C)(vi) of the Act.
On 27.03.2021, the petitioner applied for issuance of notification under Section 10(46). It submitted detailed explanations as required by the Department. However, by the impugned communication dated 12.12.2023, the application was rejected without affording an opportunity of hearing and without examining the merits of eligibility under Section 10(46). The petitioner contended that it satisfied all statutory conditions and that the rejection was arbitrary, non-speaking, and violative of principles of natural justice. It was further argued that registration under Section 12AA or exemption under Section 10(23C)(vi) does not bar consideration of an application under Section 10(46). Reliance was placed on the Telangana High Court decision in Telangana State Pollution Control Board v. Central Board of Direct Taxes, which held that Section 10(46) operates in a distinct field and that an assessee is entitled to claim the more beneficial exemption when two provisions apply.
