American Hotel And Lodging Association ... vs The Central Board Of Direct Taxes, ... on 24 November, 2006
6.3.1 The totality of the circumstances narrated above
suggest that assessee is indulging into the activities which
are not as per the objects and is not existing solely for the
purpose of education as it has a profit motive. The advances
recoverable from PSIEC has not been explained by the
appellant. It has been held by Hon'ble Supreme Court in the
case of American Hotel & Lodging Association, Educational
Institute vs. CBDT 2008 (301) ITR 86 SC that in order to
ascertain whether the institute is carried on with the object
of making profit or not it is duty of the prescribed authority to
ascertain whether the balance of income is applied wholly and
exclusively to the objects for which the applicant is
6
established. The outstanding balance with PSIEC is in
violation of provision of section 10(23C) read with section
11(5) of the Act. During the assessment proceeding assessee
failed to explain the reason and purpose of these
advances and during appeal proceeding also it was not
established that these advances have been made as per the
objects of the institution. Therefore, assessing officer has given
reasoned finding that assessee is not eligible for exemption
u/s 10 (23C)(iiiab) of the Act and the same are upheld.
Grounds of appeal No. 2, 3, 4, 5 and 6 are dismissed."