TaxTMI 
TaxTMI 
1996 (2) TMI 567
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....ions : (i) Whether the applicant would be entitled to exemption under section 10(22) of the Income-tax Act, 1961, in respect of its various amounts of income from the following sources in India : (a) Conducting various courses and certification programmes in hospitality management and operations. (b) Providing educational and training materials. (c) Conducting seminars, workshops and other programmes. (d) Providing training, course materials and instructional resources to the in-house faculty of various institutions. (ii) Whether the applicant would be entitled to exemption under section 11 of the Income-tax Act, 1961 ? The applicant, "Educational Institute of American Hotel and Motel....
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....oftware programs utilised in the Institute's Hospitality Management Diploma ; (c) provide a comprehensive faculty development program to upgrade the professionalism and instructional ability of those teaching hospitality management courses in India ; (d) offer a comprehensive certification and registration program for individuals currently employed in the hospitality industry in India ; (e) develop an accreditation system to permit the National Council to qualify and recognise proprietary schools ; (f) develop through grant support, an entrance test to identify individuals best qualified to enter the hospitality industry ; (g) establish an office in India to implement and co-ordinate the Inst....
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....equirements of section 10(22) of the Income-tax Act. To support this view reliance was placed on the statement of purposes enclosed with the articles of association to which reference will be made later. Stress was laid on the fact that the Institute was not organised for pecuniary profit and no part of its net earnings enure to the benefit of any member or director or to any other individual other than those who shall properly benefit from carrying out its purposes. Even in the event of dissolution or liquidation, the assets of the applicant can only be distributed exclusively to other entities created or organised exclusively for educational purposes similar to that of the applicant. The Commissioner of Income-tax appearing on behalf o....
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.... be said that the educational institution exists for profit ; (d) an entity may be having income from different sources but if a particular income is from an educational institution which exists solely for educational purposes and not for purposes of profit, then that income would be entitled to exemption and further the income should be directly relatable to the educational activity. Keeping in view these criteria, the activities of EI in India have to be examined to determine the applicability of section 10(22) to the income enumerated in question (i). The main thing to be seen is the objects of the institution and the source and utilisation of its income. An examination of the "Statement of purposes" becomes essential at t....
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....e Institute. '' Other aspects which assume importance are that when the section says that the institution should not exist for purposes of profit, it does not mean that in the framing of objectives of the institution the item of surplus of receipts over expenses should be completely absent. There can be no doubt, that the purpose of making profits is not the real purpose where the articles of association of the institution clearly provide that its net earnings shall not enure to the benefit of any member or director or to any other individual. Further, even in the event of dissolution no member, trustee, officer of the applicant or any private individual shall be entitled to a share in its corporate assets. The tax exempt status ....
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.... provision of educational facilities. Thus, the applicant fulfils the conditions precedent enumerated above to the applicability of section 10(22) of the Act. The objects and purposes also show that there is no profit motive in the activities of EI as even upon liquidation EI's assets do not inure to the benefit of any individual. So far as the activities in India are concerned if the letter of the Reserve Bank of India granting permission to EI to open a liaison office dated July, 1994, and letter of the Reserve Bank of India to upgrade it to a branch office under section 29(1)(a) of the FERA dated February 10, 1995, are closely seen, paragraphs 3(ii), (iii) and (vi) put certain restrictions on the applicant regarding any new trading, ....