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2016 (1) TMI 1022 - ITAT LUCKNOW

2016 (1) TMI 1022 - ITAT LUCKNOW - TMI - Exemption claimed u/s.10(23B) denied - development of khadi or village industries or both (KVIC) - Held that:- In AY 2008-09 an identical issue was raised before the Tribunal and the Tribunal has adjudicated the issue in the light of the relevant provisions of the Act and has concluded that the assessee is not entitled for the benefit of exemption u/s 10(23B) of the Income Tax Act as the assessee could not furnish exemption certificate for the impugned as .....

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cannot be presumed or assumed that once recommendations are made, exemption certificate will certainly be granted to the assessee. Therefore, the contention of the ld. counsel for the assessee that the assessee has made best efforts for obtaining the exemption certificate and in the light of its efforts, exemption may be granted, cannot be accepted, as before allowing exemption, assessee must have exemption certificate as per provisions of section 143(3) of the Act. Moreover, this exemption cer .....

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COUNTANT MEMBER For The Appellant by Shri Rakesh Garg, Advocate For The Respondent by Shri Amit Nigam, DR ORDER PER SUNIL KUMAR YADAV, JM. 1. This appeal is preferred by the assessee against the order of the Ld. CIT(A)-II, Kanpur on the following grounds: 1. Because the QT(A) has erred in law and on facts in confirming the order of the AO in wrongly interpreting the provisions of See. 10{23B) of the Income Tax Act, 1961 thereby denying the exemption to the assessee. 2. Because the C1T(A) has err .....

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Rs,631,330/- which is contrary to the provisions of law. Hence the order passed be quashed, 5. Because in any case and in all circumstances of the case, the order passed is had in law and be quashed. 6. Because the CIT(A) has failed to appreciate that the assessee society was already enjoying exemption u/s.10(23B) of the Act upto Assit. Year 2007-08 and on expiry of the period had already applied for renewal on 14.09.2009 which renewal was forthcoming. 7. Because the CIT(A) has failed to appreci .....

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he order of the Tribunal against the assessee. Copy of the order of the Tribunal is placed on record. Ld. DR did not dispute this fact. 3. Having carefully examined the orders of the lower authorities, we find that in AY 2008-09 an identical issue was raised before the Tribunal and the Tribunal has adjudicated the issue in the light of the relevant provisions of the Act and has concluded that the assessee is not entitled for the benefit of exemption u/s 10(23B) of the Income Tax Act. The relevan .....

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required conditions prescribed in sub-section (23B) of section 10 of the Act, are entitled for exemption, if the institution is approved by the prescribed authority. The approval once granted can be withdrawn if the activities of the institution are found in contravention to the provisions of section 10(23B) of the Act. We have also examined the provisions of section 143(3) of the Act and we find that in the case of an institution referred to in clause (23B) of section 10 of the Act, which is re .....

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ng Officer is satisfied that the activities of the institution is not being carried out in accordance with all or any of the conditions subject to which such institution was approved, he may, after giving reasonable opportunity of showing cause against the proposed withdrawal to the concerned institution, recommend the Central Government to withdraw the approval and the Government may order for withdrawal of the approval and forward copy of the order to the concerned institution. Meaning thereby .....

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lely for the development of khadi or village industries or both, and not for purposes of profit, to the extent such income is attributable to the business of production, sale, or marketing, of khadi or products of village industries: Provided that - (i) the institution applies its income, or accumulates it for application solely for the development of khadi or village industries or both ; and (ii) the institution is, for the time being, approved for the purpose of this clause by the Khadi and Vi .....

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ntained in the first proviso ; or (ii) the activities of the institution are not being carried out in accordance with all or any of the conditions subject to which such institution was approved, it may, at any time after giving a reasonable opportunity of showing cause against the proposed withdrawal to the concerned institution, by order, withdraw the approval and forward a copy of the order withdrawing the approval to such institution and to the Assessing Officer. Explanation.- For the purpose .....

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n or institution referred to in clause (23A) of section 10; (d) institution referred to in clause (23B) of section 10 ; (e) fund or institution referred to in sub-clause (iv) or trust or institution referred to in sub-clause (v) or any university or other educational institution referred to in 10sub-clause (iiiad) or subclause (vi) or any hospital or other medical institution referred to in 10sub-clause (iiiae) or sub-clause (via) of clause (23C) of section 10 ; (f) trade union referred to in su .....

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on or trade union or body or authority or Board or Trust or Commission or infrastructure debt fund is assessable, without giving effect to the provisions of section 10, exceeds the maximum amount which is not chargeable to income-tax, furnish a return of such income of the previous year in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and all the provisions of this Act shall, so far as may be, apply as if it were a return .....

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ayable by the assessee on the basis of such assessment ; (ii) issued under clause (ii) of sub-section (2), or as soon afterwards as may be, after hearing such evidence as the assessee may produce and such other evidence as the Assessing Officer may require on specified points, and after taking into account all relevant material which he has gathered, the Assessing Officer shall, by an order in writing, make an assessment of the total income or loss of the assessee, and determine the sum payable .....

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ersity or other educational institution referred to in sub-clause (vi) or any hospital or other medical institution referred to in sub-clause (via) of clause (23C) of section 10, which is required to furnish the return of income under sub-section (4C) of section 139, no order making an assessment of the total income or loss of such scientific research association, news agency, association or institution or fund or trust or university or other educational institution or any hospital or other medi .....

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tion or institution or fund or trust or university or other educational institution or any hospital or other medical institution, where in his view such contravention has taken place ; and (ii) the approval granted to such scientific research association or other association 7or fund or trust or institution or university or other educational institution or hospital or other medical institution has been withdrawn or notification issued in respect of such news agency or fund or trust or institutio .....

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ng of Khadi or products of Village Industries, if it obtains approval from the Khadi and Village Industries Commission. 10. As per proviso below sub-section (23B) of section 10 of the Act, the Commission shall not grant approval for more than three assessment years beginning with the assessment year next following the financial year in which it is granted. As per third proviso, the approval once granted can also be withdrawn if the Commission is satisfied that the institution has not applied or .....

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t proviso to clause (d) of section 143(3), no order making an assessment to the total income or loss of such institution shall be made by the Assessing Officer without giving effect to the provisions of section 10(23B) of the Act. Meaning thereby, if an assessee obtains approval from the Commission under section 10(23B) of the Act, the Assessing Officer shall not make an assessment of the total income of the assessee without giving effect to the provisions of section 10 of the Act. But the benef .....

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such institution has been withdrawn or notification issued in this regard has been rescinded. Meaning thereby, during the course of assessment proceedings, the Assessing Officer is required to examine the activities of the assessee and to ascertain the fact whether the assessee/institution has been granted approval by the prescribed authority for the relevant assessment year. 11. Having read the aforesaid provisions of the Act together, we are of the considered view that while completing the as .....

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t that exemption certificate cannot be granted for more than three years. Therefore, from time to time the assessee is required to obtain exemption certificate from the prescribed authority. If it is not obtained for a particular relevant assessment year, the benefit of exemption cannot be granted to the assessee. The contention of the ld. counsel for the assessee that once exemption certificate is granted, the benefit of exemption cannot be denied without intimating the Central Government or th .....

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it is an admitted fact that during the course of assessment proceedings, the assessee could not place exemption certificate for the impugned assessment year. Similar was the position before the ld. CIT(A). Even before us, the assessee could not furnish exemption certificate for the impugned assessment year duly granted by the prescribed authority. He has simply placed reliance upon the earlier certificate granted for assessment year 2007-08. He has also placed reliance upon the recommendation o .....

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