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TMI Blog2014 (11) TMI 274X X X X Extracts X X X X X X X X Extracts X X X X ..... ge Industries Commission - This recommendation was made in June 2009 and till date exemption certificate has not been granted to the assessee - it cannot be presumed or assumed that once recommendations are made, exemption certificate will certainly be granted to the assessee - the contention of 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 - the exemption certificate is to be granted for a particular AY, therefore, it cannot be used for other AY for which it was not granted – thus, CIT(A) has rightly denied the benefit of exemption u/s 10(23B) of the Act – Decided against assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment proceedings, the assessee was required to furnish the copy of exemption certificate on the basis whereupon it claimed exemption under section 10(23B) of the Act. But the certificate was not furnished before the Assessing Officer. Having carefully examined the provisions of section 10(23B) of the Act, the Assessing Officer was of the view that as per provision (ii) below section 10(23B) of the Act, the institution must be approved for the purpose of this clause by the Khadi and Village Industries Commission and as per second proviso such approval shall not be granted by the Commission for more than three assessment years and such approval is subject to withdrawal by the Commission in case it is found that 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, after reasonable opportunity of being heard have been provided to the assessee. During the course of assessment proceedings, the assessee was reportedly asked to furnish the Certificate of exemption from the Khadi and Village Industries Commission, but it was not furnished before the Assessing Officer. Vide letter da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra, the ld. D.R., besides placing reliance upon the orders of the authorities below, has contended that benefit of section 10(23B) of the Act can only be granted on production of exemption certificate from the prescribed authority, but the assessee could not produce exemption certificate either before the Assessing Officer or before the ld. CIT(A) or the Tribunal. He has also placed reliance upon the second proviso to section 10(23B) of the Act with the submission that the Commission shall not at any one time grant such approval for more than three assessment years beginning with the assessment year next following the financial year in which it is granted. Therefore, exemption once granted does not mean that it is granted forever. He has also invited our attention to the exemption certificate dated 19.11.2008 appearing at last page of the compilation of the assessee, which was issued for one assessment year i.e. 2007-08 only. Thereafter no exemption certificate was issued to the assessee for the assessment year under consideration. Therefore, assessee is not entitled for any exemption under section 10(23B) of the Act in the absence of exemption certificate. 8. Having heard the riv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Village Industries Commission: Provided further that the Commission shall not, at any one time, grant such approval for more than three assessment years beginning with the assessment year next following the financial year in which it is granted: Provided also that where the institution has been approved by the Khadi and Village Industries Commission and subsequently that Commission is satisfied that- (i) the institution has not applied or accumulated its income in accordance with the provisions contained 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... day specified in the notice,- (i) issued under clause (i) of sub-section (2), or as soon afterwards as may be, after hearing such evidence and after taking into account such particulars as the assessee may produce, the Assessing Officer shall, by an order in writing, allow or reject the claim or claims specified in such notice and make an assessment determining the total income or loss accordingly, and determine the sum payable 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 by him or refund of any amount due to him on the basis of such assessment. Provided that in the case of a- (a) scientific research association referred to in clause (21) of section 10 ; (b) news agency referred to in clause (22B) of section 10 ; (c) association or ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 accumulated its income in accordance with the provisions contained in the first proviso or 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, after affording reasonable opportunity of showing cause against the proposed withdrawal to the concerned institution. The return filed by the institution under section 139(4C) of the Act is to be processed under section 143(3) of the Act and as per first 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cate for a particular assessment year. If the assessee does not have exemption certificate for a particular assessment year, the benefit of exemption for that year cannot be granted to the assessee. 12. Turning to the facts of the case, 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 of the U.P. Khadi and Village Industries Board, Planning Division, Lucknow vide letter dated 16.6.2009 to the State Director, Khadi and Village Industries Commission. This recommendation was made in June 2009 and till date exemption certificate has not been granted to the assessee. Therefore, it 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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