S. 10 (23C): An institution which regularly makes more than 10% – 15% surplus is existing for profit & is not eligible for exemption

Visvesvaraya Technological University vs. ACIT (Karnataka High Court)

In our opinion, “Surplus” cannot be more than 10% – 15% so as to meet contingencies or unforeseen expenditure. If an University or an educational institution under the guise of “surplus” start making huge profit, in our opinion, it would cease to exist for net making profit and in that event would not be entitled for exemption under this provision. On facts, the University collects huge sums which are 3-4 times more than the requirement. Such “surplus” which is invested in fixed deposits and fetches huge interest cannot be stated to be “incidental”