Court directs respondents to approve exemption application under Income-tax Act, emphasizing compliance with legal principles.

The court granted the writ petition, directing the respondents to approve the petitioner's exemption application under Section 10(23C)(vi) of the Income-tax Act for the relevant assessment years. The court emphasized the importance of complying with legal principles and procedures, particularly in considering the third proviso conditions for approval. It highlighted discrepancies in the CBDT's interpretation of the Supreme Court decision, leading to the rejection of the impugned order. The Assessing Officer was instructed to review compliance with the third proviso conditions and make appropriate orders accordingly.

---

---

Issues:
1. Rejection of application for exemption under Section 10(23C)(vi) of the Income-tax Act, 1961.
2. Influence of assessment orders on CBDT's decision.
3. Failure of CBDT to follow directions of the court.
4. Interpretation of the Supreme Court decision in American Hotel and Lodging Association case.
5. Consideration of third proviso conditions for grant of approval.

Analysis:
1. The case involved a writ petition against the rejection of an application for exemption under Section 10(23C)(vi) of the Income-tax Act, 1961 for assessment years 1999-2000, 2000-01, and 2001-02 by the Central Board of Direct Taxes (CBDT).

2. The CBDT's decision was influenced by the findings of the Assessing Officer in the assessment orders, which had been set aside by the Income Tax Appellate Tribunal. The court found that the CBDT did not adhere to the directions given by the court and the Bombay High Court, leading to the rejection of the impugned order.

3. The CBDT failed to follow the court's directions and the Supreme Court decision in the American Hotel and Lodging Association case. The court noted discrepancies in the CBDT's interpretation of the Supreme Court decision, leading to a lack of compliance with legal principles and procedures.

4. The court emphasized the importance of considering the third proviso conditions for the grant of approval under Section 10(23C)(vi). It clarified that the Assessing Officer could examine whether the conditions stipulated in the third proviso and the 13th proviso to Section 10(23C)(vi) had been met for the assessment years in question.

5. Ultimately, the court issued a writ of mandamus directing the respondents to grant approval to the petitioner under Section 10(23C)(vi) for the relevant assessment years. It allowed the writ petition, specifying that the Assessing Officer could review compliance with the third proviso conditions and make appropriate orders in accordance with the law.

---