American Hotel And Lodging Association ... vs The Central Board Of Direct Taxes, ... on 24 November, 2006
"It is clear, therefore, that the Uttarakhand High Court has erred by quoting a
non-existent passage from an applicable judgment, namely, Aditanar and
quoting a portion of a property tax judgment which expressly stated at rulings
arising out of the Income Tax Act would not be applicable. Quite apart from
this, it also went on to further quote from a portion of the said property tax
judgment which was rendered in the context of whether an educational society
is supported wholly or in part by voluntary contributions, something which is
10 ITA No.4172 & 4181/Del./2014
completely foreign to Section 10(23C) (iiiad). The final conclusion that if a
surplus is made by an educational society and ploughed back to construct its
own premises would fall foul of section 10(23C) is to ignore the language of the
Sec 'on and to ignore the tests laid down in the Surat Art Silk Cloth case,
Aditanar case and the American Hotel and Lodging case. It is clear that when a
surplus is ploughed back for educational purposes, the educational institution
exists solely for educational purposes and not for purposes of profit.