M/S SUTLEJ KHADI MANDAL, JALANDHAR V. DEPUTY COMMISSIONER OF INCOME TAX, (EXAMPTION) CIRCLE-1, CHANDIGARH

ITA 582/ASR/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7777 (ITAT-AMRITSAR)
• Duration Of Justice: 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 28-05-2018
• Assessment Year: 2014-2015
• Appeal Filed On: 11-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ADITYA SHARMA LD
• Keywords: Charitable institution
• Section: 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER ITA NO.582 (ASR)/2017 ASSESSMENT YEAR:2014-15 M/S SUTLEJ KHADI MANDAL NAKODAR DISTT. JALANDHAR PAN:AADTS7839Q VS. DY. CIT (EXEMPTIONS) CIRCLE-1, CHANDIGARH (APPELLANT) (RESPONDENT) APPELLANT BY: SH. ADITYA SHARMA (LD. CA) RESPONDENT BY: SH. CHARAN DASS (LD. DR) DATE OF HEARING: 28.05.2018 DATE OF PRONOUNCEMENT: 18.07.2018 ORDER PER N.K.CHOUDHRY, JM: THE INSTANT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE/APPELLANT, ON FEELING AGGRIEVED AGAINST THE ORD ER DATED 07.06.2017, IMPUGNED HEREIN, PASSED BY THE LD. CIT(A) -2, JALANDHAR, U/S 250(6) OF THE I.T. ACT, 1961 (HEREINAF TER CALLED AS THE ACT). 2. THE FOLLOWING GROUNDS OF APPEAL RAISED BY THE ASSESSEE. 1. THAT ON FACTS AND THE CIRCUMSTANCES OF THE CASE AND THE PROVISIONS OF LAW, DENYING EXEMPTION AVAILABLE TO T HE ASSESSEE SOCIETY UNDER SECTION 10(23B) OF THE INCOME TAX ACT , 1961 IS INCORRECT. 2. THAT ON FACTS AND THE CIRCUMSTANCES OF THE CASE AND THE PROVISIONS OF LAW, TREATING INTEREST EARNED BY THE ASSESSEE FROM BANKS AS CHARGEABLE TO TAX UNDER INCOME FROM OTHER SOURCES IS WRONG AND UNJUSTIFIED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A REGISTERED SOCIETY UNDER THE PROVISIONS OF THE SOCIETY ITA NO.582 (ASR)/2017 M/S. SUTLEJ KHADI MANDA, JALANDHAR VS. DCIT 2 REGISTRATION ACT, 1860 AND HAS BEEN CARRYING ON THE BUSI NESS OF PRODUCTION AND SALE OF KHADI AND SALE OF GRAMUDYOG (V ILLAGE INDUSTRY) AND WAS CLAIMING INCOME EXEMPT FROM TAX U/S 1 0(23B) OF THE ACT, 1961. THE ASSESSING OFFICER WHILE MAKING THE ASSESSMENT NOT ONLY DENIED THE EXEMPTION AVAILABLE TO T HE ASSESSEE U/S 10(23B) OF THE ACT BUT ALSO TREATED THE INTER EST ON DEPOSITS IN BANK, EARNED BY THE ASSESSEE AS TAXABLE UNDER THE HEAD INCOME FROM OTHER SOURCES. THE ASSESSING OFFICER ALSO MADE AN ADDITION OF RS.2,00,000/- ON ACCOUNT OF LESS TAX PAID ON LONG TERM CAPITAL GAIN. THE SAID ACTION OF THE ASSESSING OFFICER WAS CHALLENGED BEFORE THE LD. CIT(A)-2, JALANDHAR WHO ALSO UPHELD THE ACTION OF THE ASSESSING OFFICER. 4. ON FEELING AGGRIEVED AGAINST THE ORDER PASSED BY THE LD. CIT(A), THE ASSESSEE PREFERRED THE INSTANT APPEAL. 5. HAVING HEARD THE PARTIES AT LENGTH AND ALSO PERUSING TH E RELEVANT MATERIAL ON RECORD, IT EMERGES THAT THE ASSESSEE TRUST WAS FORMED WITH A VIEW TO PROMOTE KHADI PRODUCTS AND A SSESSEE IS CONTROLLED BY THE KHADI AND VILLAGE INDUSTRIES COMM ISSION, WHO GRANTS PERMISSION AND DURING THE RELEVANT YEAR THE ASSESSEE HAS CLAIMED EXEMPTION U/S 10 (23B) OF THE ACT AS THE ASSE SSEE WAS HAVING APPROVAL OF CHAIRMAN KHADI AND VILLAGE I NDUSTRIES COMMISSION, MUMBAI VIDE NO.NZCC(PUNJAB) 2869 04.01.2 012, 31 ST MARCH, 2016, MEANING THEREBY, THE APPROVAL WAS IN EXISTENCE IN FAVOUR OF THE ASSESSEE DURING THE RELEVANT ASSESSMENT YEAR UNDER CONSIDERATION. DURING THE ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE ASSESSING OFFICER THAT T HE ASSESSEE IS HAVING HUGE INTEREST OF FDR I.E., 20,47,349/- DURING THE ASSESSMENT YEAR 2014-15 WHICH IS UNDER CONSIDERATION. I T ITA NO.582 (ASR)/2017 M/S. SUTLEJ KHADI MANDA, JALANDHAR VS. DCIT 3 WAS OBSERVED BY THE ASSESSING OFFICER THAT THE ASSESSEE IS EARNING HUGE INTEREST INCOME YEAR BY YEAR, WHICH SHOWS T HAT THE ASSESSEES EARNING PROFIT EACH YEAR AND NOT FULFILLING T HE CONDITIONS OF PROVISIONS OF SEC.10(23B) OF THE ACT BECA USE THE ASSESSEE HAS NOT SPENT ANY EXPENDITURE FROM THIS EARNING AND ALSO NOT SPENDING THE SAME ON THE OBJECTS OF THE SOCIETY A ND ACCUMULATED FOR THE SAME FOR THE YEAR BY YEAR, THEREFO RE, THE ASSESSING OFFICER ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE AS TO WHY THE INTEREST INCOME SHOULD NOT BE TREATED AS INCO ME AND TAXED ACCORDINGLY. THE ASSESSEE SUBMITTED ITS REPLIES ON DAT ED 7 TH JUNE, 2016 AND 27 TH JUNE, 2016, WHICH ARE ENUMERATED IN PARA NO.3.1 OF THE ASSESSMENT ORDER. THE ASSESSEE IN THE WRITTEN SUBMISSIONS ALSO EMPHASIZED ON THE JUDGMENT PASSE D BY THE APEX COURT IN THE CASE OF CAMBAY ELECTRIC SUPPLY I NDUSTRIAL COMPANY LIMITED VS. COMMISSIONER OF INCOME TAX, GUJRAT , [113 ITR 84 (SC)] AND CIT VS. MEGHALAYA STEELS LIMITED IN (CIVIL APPEAL NO.7622 OF 2014) AND SUBMITTED THAT THERE IS A DISTINCTION BETWEEN THE TERMS DERIVED FROM & ATTRI BUTABLE TO WHICH HAS BEEN INTERPRETED AND DEFINED BY THE APEX CO URT IN THE AFORESAID CASES. FURTHER, IT WAS ALSO SUBMITTED THAT THE A SSESSEE IS NOT CARRYING ON ANY OTHER BUSINESS, HOWEVER, THE ASSE SSING OFFICER DID NOT ACCEPT THE REPLY OF THE ASSESSEE AND DISALL OWED THE INTEREST INCOME OF RS.20,47,349/- EARNED DURING TH E ASSESSMENT YEAR AS TAXABLE. FURTHER, IT WAS ALSO OBSERVED B Y THE ASSESSING OFFICER THAT THE ASSESSEE HAS SHOWN LONG TERM CAPITA L GAINS OF RS.5,43,79,179/- AND PAID THE CAPITAL GAIN ON THE SAME. ON PERUSAL OF THE DETAILS FILED BY THE ASSESSEE REGARDING THE CAPITAL GAIN, IT WAS FOUND THAT THE ASSESSEE HAS SHOWN LESS LONG TERM CAPITAL GAIN OF RS.2,00,000/- WHICH WAS ALSO ADDED IN THE INCOME OF THE ASSESSEE. IN ADDITION TO THE MAKING ADDIT IONS, ITA NO.582 (ASR)/2017 M/S. SUTLEJ KHADI MANDA, JALANDHAR VS. DCIT 4 UNDER THE HEAD OF INTEREST INCOME AS WELL AS DIFFERENCE IN THE LONG TERMS CAPITAL GAIN, THE ASSESSING OFFICER ALSO ISSUED A LETTER NO.530 DATED 30.06.2016 TO THE CHAIRMAN OF KHADI AN D VILLAGE INDUSTRIES COMMISSION, MUMBAI FOR WITHDRAWAL OF THE EX EMPTION CERTIFICATE GRANTED U/S 10(23B) TO THE ASSESSEE. THE ASSESSMEN T ORDER WAS CHALLENGED BEFORE THE LD. CIT(A) WHO ALTHO UGH CONSIDERED THE SUBMISSIONS OF THE ASSESSEE, HOWEVER, JUSTIF IED THE ACTION OF THE ASSESSING OFFICER IN DENYING THE BENEFI T OF SECTION 10(23B) OF THE ACT TO THE APPELLANT. THE MOOT COURT QUESTION ARISES IN THE INSTANT CASE AS TO WHETHER THE INT EREST INCOME CAN BE TAKEN INTO ACCOUNT AS DERIVED FROM OR ATTRIBUTABLE TO. LET US TO PERUSE THE CONTENTS OF SECT ION 10(23B) OF THE ACT. SECTION 10(23B) (23B) 2 ANY INCOME OF AN INSTITUTION CONSTITUTED AS A PUBL IC CHARITABLE TRUST OR REGISTERED UNDER THE SOCIETIES REGISTRATION ACT, 1860 (21 OF 1860), OR UNDER ANY LAW CORRESPOND ING TO THAT ACT IN FORCE IN ANY PART OF INDIA, AND EXISTING SOL ELY FOR THE DEVELOPMENT OF KHADI OR VILLAGE INDUSTRIES OR BOTH, AND NOT FOR PURPOSES OF PROFIT, TO THE EXTENT SUCH INCOME IS AT TRIBUTABLE 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 F OR THE PURPOSE OF THIS CLAUSE BY THE KHADI AND VILLAGE IND USTRIES COMMISSION: PROVIDED FURTHER THAT THE COMMISSION SH ALL 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 . EXPLANATION.- FOR THE PURPOSES OF THIS CLAUSE,- (I) ' KHADI AND VILLAGE INDUSTRIES COMMISSION' MEANS T HE KHADI AND VILLAGE INDUSTRIES COMMISSION ESTABLISHED UNDER THE KHADI AND VILLAGE INDUSTRIES COMMISSION ACT, 19 56 (61 OF 1956 ); ITA NO.582 (ASR)/2017 M/S. SUTLEJ KHADI MANDA, JALANDHAR VS. DCIT 5 (II) ' KHADI' AND' VILLAGE INDUSTRIES' HAVE THE MEANING S RESPECTIVELY ASSIGNED TO THEM IN THAT ACT;] FROM THE CONTENTS OF SEC. 10(23B) ITSELF THE WORD ATTRIBUTABLE TO THE BUSINESS HAS BEEN ENUMERATED, WH ICH UNDOUBTEDLY HAVING WIDER MEANING THAN DERIVED FROM . FURTHER ACCORDING TO THE PROVISIONS OF SEC.10(23B), THE ASSESSEE IS ENTITLED TO APPLY ITS INCOME, OR ACCUMULATES IT FOR APPL ICATION SOLELY FOR THE DEVELOPMENT OF KHADI AND VILLAGE INDU STRIES OR BOTH. IN THE INSTANT CASE, IT IS UNDISPUTED FACT THAT THE ASSESSE E IS NOT CARRYING ON ANY OTHER BUSINESS EXCEPT BUSINESS OF PRODUCTION OF SALE AND KHADI AND SALE OF GRAMUDYOG AN D DURING THE RELEVANT ASSESSMENT YEAR THE ASSESSEE HAS NOT VIOLATED ANY OF THE CONDITIONS ENGRAFTED IN SEC.10(23B) OF THE ACT. UNDOUBTEDLY, THE SOCIETY IS REGISTERED UNDER THE SOCIETY OF REGISTRATION ACT AND ENTITLED TO GET EXEMPTION U/S 10 (23B) OF THE ACT AND EXEMPTION CAN BE ATTRIBUTED TO ANY INCOME OF THE ASSESSEE WHICH IS ATTRIBUTABLE TO THE BUSINESS OF PRODUCTION, SALE, OR MARKETING OF KHADI PRODUCTS AND VILLAGE INDUST RIES PROVIDED THAT THE INSTITUTION APPLIES ITS INCOME, OR ACCU MULATES FOR APPLICATION FOR SOLELY FOR THE DEVELOPMENT OF KHA DI OR VILLAGE INDUSTRIES OR BOTH. THE APEX COURT IN THE CASE OF CAMB AY ELECTRIC SUPPLY INDUSTRIAL COMPANY LIMITED VS. COMMISSIONER OF I NCOME TAX, GUJRAT II (113 ITR 84 SC) HAS HELD AS UNDER: THE HON'BLE SUPREME COURT HAS OBSERVED IN THE JUDG MENT THAT THE EXPRESSION 'ATTRIBUTABLE TO' IS CERTAINLY WIDER IN IMPORT THAN THE EXPRESSION 'DERIVED FROM'. EXTRACT OF THE RELEV ANT PARAGRAPH OF THE JUDGMENT IS REPRODUCED HEREUNDER: (PAGE 93 OF I TR VOLUME 113) AS REGARDS THE ASPECT EMERGING FROM THE EXPRESSION 'ATTRIBUTABLE TO' OCCURRING IN THE PHRASE 'PROFITS AND GAINS ITA NO.582 (ASR)/2017 M/S. SUTLEJ KHADI MANDA, JALANDHAR VS. DCIT 6 ATTRIBUTABLE TO THE BUSINESS OF' THE SPECIFIED INDU STRY (HERE GENERATION AND DISTRIBUTION OF ELECTRICITY) ON WHIC H THE LEARNED SOLICITOR-GENERAL RELIED, IT WILL BE PERTIN ENT TO OBSERVE THAT THE LEGISLATURE HAS DELIBERATELY USED THE EXPRESSION 'ATTRIBUTABLE TO' AND NOT THE EXPRESSION 'DERIVED FROM'. IT CANNOT BE DISPUTED THAT THE EXPRESSION ATTRIBUTABLE TO 'IS CERTAINLY WIDER IN IMPORT THAN THE EXPRESSION DERIVED FROM' . HAD THE EXPRESSION 'DERIVED FROM' BEEN USED, IT COULD HAVE WITH SOME FORCE BEEN CONTE NDED THAT A BALANCING CHARGE ARISING FROM THE SALE OF OL D MACHINERY AND BUILDINGS CANNOT BE REGARDED AS PROFI TS AND GAINS DERIVED FROM THE CONDUCT OF THE BUSINESS OF GENERATION AND DISTRIBUTION OF ELECTRICITY. IN THIS CONNECTION, IT MAY BE POINTED OUT THAT WHENEVER THE LEGISLATURE WANTED TO GIVE A RESTRICTED MEANING IN THE MANNER SUGGESTED BY THE LEARNED SOLICITOR-GENERAL, IT HAS USED THE EXPRESSION ' DERIVED FROM', AS, FOR INSTAN CE, IN SECTION 80J. IN OUR VIEW, SINCE THE EXPRESSION OF W IDER IMPORT, NAMELY, 'ATTRIBUTABLE TO', HAS BEEN USED, THE LEGISLATURE INTENDED TO COVER RECEIPTS FROM SOURCES OTHER THAN THE ACTUAL CONDUCT OF THE BUSINESS OF GENERATI ON AND DISTRIBUTION OF ELECTRICITY. FURTHER, THE APEX COURT IN CIVIL APPEAL NO.7622 OF 2014 (CIT VS. MEGHALAYA STEELS LIMITED), ANALYZED THE DECISI ON IN THE CASE OF CAMBAY ELECTRIC SUPPLY INDUSTRIAL COMPANY LIMIT ED VS. CIT (SUPRA) , AND HELD AS UNDER: 'AN ANALYSIS OF ALL THE AFORESAID DECISIONS CITED O N BEHALF OF THE REVENUE BECOMES NECESSARY AT THIS STAGE. IN THE FIRST DECISION, THAT IS IN CAMBAY ELECTRIC SUPPLY INDUSTRIAL COMPANY LIMITED V COMMISSIONER OF INCOME TAX, GUJARAT II, THIS COURT HELD THAT SINCE AN EXPRESSION OF WIDER IMPORT HAD BEEN USED, NAMELY 'ATTRIBUTABLE TO ' INSTEAD OF 'DERIVED FROM', THE LEGISLATURE INTENDED TO COVER RECEIPTS FROM SOURCES OTHER THAN THE ACTUAL CONDUCT OF THE BUSINESS OF GENERATION AND DISTRIBUTION OF ELECTRIC ITY. IN SHORT, A STEP REMOVED FROM THE BUSINESS OF THE INDUSTRIAL UNDERTAKING WOULD ALSO BE SUBSUMED WITHIN THE MEANING OF THE EXPRESSION 'ATTRIBUTABLE TO' . SINCE WE ARE DIRECTLY CONCERNED WITH THE EXPRESSION 'DERIVED FROM', THIS JUDGMENT IS RELEVANT ONLY INSOFAR AS IT MAKES A DIS TINCTION BETWEEN THE EXPRESSION 'DERIVED FROM', AS BEING SOM ETHING DIRECTLY FROM, AS OPPOSED TO 'ATTRIBUTABLE TO', WHI CH CAN BE SAID TO INCLUDE SOMETHING WHICH IS INDIRECT AS WELL ' ITA NO.582 (ASR)/2017 M/S. SUTLEJ KHADI MANDA, JALANDHAR VS. DCIT 7 THE CO-ORDINATE BENCH AT AMRITSAR IN THE CASE OF PUNJAB KHADI MANDAL VS. INCOME TAX OFFICER, 265(ASR)/2016 DECID ED ON 29 TH JUNE, 2016 DEALT WITH THE SAME SITUATION AND ALLOWED THE EXEMPTION U/S 10(23B) OF THE ACT TO THE ASSESSEE. RELEVAN T PART OF THE ORDER IS REPRODUCED HEREIN BELOW FOR THE SAKE O F CONVENIENCE AND BREVITY. 14. IN CIT VS. MEGHALAYA STEELS LIMITED, RECENTL Y RENDERED BY THE HONBLE SUPREME COURT IN CIVIL APPEAL NO.7622 O F 2014, THE HONBLE SUPREME COURT HAS AGAIN, HELD TO THE EFFECT THAT AN ANALYSIS OF ALL THE DECISIONS CITED ON BEHALF OF TH E REVENUE BECOMES NECESSARY, THAT IN THE CASE OF CAMBAY ELECTRIC SUP PLY INDUSTRIAL COMPANY LIMITED VS. CIT, GUJRAT (SUPRA), THE SUPRE ME COURT HELD THAT SINCE AN EXPRESSION OF WIDER IMPORT HAD BEEN U SED, NAMELY ATTRIBUTABLE TO, INSTEAD OF DERIVED FROM, THE LE GISLATURE INTENDED TO COVER RECEIPTS FROM SOURCES OTHER THAN THE ACTUA L CONDUCT OF THE BUSINESS OF GENERATION AND DISTRIBUTION OF ELECTRIC ITY; THAT IN SHORT, A STEP REMOVED FROM THE BUSINESS OF THE INDUSTRIAL UN DERTAKING WOULD ALSO BE SUBSUMED WITHIN THE MEANING OF THE EXPRESSI ON ATTRIBUTABLE TO; THAT SINCE IN THAT CASE (AMITABH BAEHAN), THE COURT WAS DIRECTLY CONCERNED WITH THE EXPRESSION D ERIVED FROM , THIS JUDGMENT WAS RELEVANT ONLY INSOFAR AS IT MAKES A DISTINCTION BETWEEN THE EXPRESSION DERIVED FROM, AS BEING SOM ETHING DIRECTLY FROM, AS OPPOSED TO 'ATTRIBUTABLE TO, WHICH CAN BE SAID TO INCLUDE SOMETHING WHICH IS INDIRECT AS WELL. 15. IN THE LIGHT OF THE ABOVE, CLEARLY, THE ASSESS EE IS ENTITLED TO THE EXEMPTION CLAIMED UNDER SECTION 10(23B) OF THE ACT. IT NEEDS TO BE EMPHASIZED HERE THAT 1 HE PROVISIONS OF SECTION 10(23B) CALL FOR ACCUMULATION AND APPLICATION SOLELY FOR THE PROMOTI ON OF KHADI OR VILLAGE INDUSTRIES, OR BOTH. FURTHER, THE SCOPE OF EXEMPTION BY ALLOWING ACCUMULATION OF INCOME AND STIPULATES THAT THE ACCUMULATED FUNDS SHOULD BE USED FOR DEVELOPMENT OF KHADI AND VILLAGE INDUSTRIES. THE INTENTION OF THE LEGISLATUR E IS CLEAR WHEN IT ALLOWS ANY INCOME OF THE ASSESSEE TO BE EXEMPT. I N THE PRESENT CASE, THE VACANT SPACE AVAILABLE, WHICH WAS EARLIER USED FOR KHADI RELATED ACTIVITIES, WERE EMPLOYED TO GENERATE THE R EVENUE FOR THE ASSESSEE SOCIETY TO SUPPORT ITS FLAGGING FINANCIAL POSITION. THE LETTING OUT WAS SOLELY TO GENERATE INCOME, WHICH WA S TO BE AND WAS INVESTED IN THE BUSINESS OF PROMOTION OF KHADI AND VILLAGE INDUSTRIES. THUS, THERE WAS NO UTILIZATION OF FUNDS BEYOND THE OBJECTS SPECIFIED IN THE INCOME TAX ACT, 1961. TOO, THE ASSESSEE IS DULY REGISTERED WITH THE KHADI & VILLAGE INDUSTRIES COMMISSION, ENSURING THE CARRYING ON OF THE OBJECTS OF DEVELOPM ENT OF KHADI AND ITA NO.582 (ASR)/2017 M/S. SUTLEJ KHADI MANDA, JALANDHAR VS. DCIT 8 VILLAGE INDUSTRIES AND ALSO ENSURING THAT NO OTHER ACTIVITIES ARE PURSUED. IN THIS DIRECTION, IT IS RELEVANT THAT THE ASSESSEE HAS RECEIVED APPROVAL OF KVIC. 16. IN VIEW OF THE ABOVE, IN OUR CONSIDERED OPINION , THE EXEMPTION CLAIMED IS AVAILABLE TO THE ASSESSEE AND THE ASSESSEE IS WHOLLY ENTITLED FOR SUCH EXEMPTION UNDER SECTION 10 (23B) OF THE ACT. THE SAME IS ALLOWED TO THE ASSESSEE. THE ORDER UNDE R APPEAL IS REVERSED AND THE GRIEVANCE OF THE ASSESSEE IS ACCEP TED. THE CO-ORDINATE BENCH AT LUCKNOW IN THE CASE OF ACIT V S. CENTRAL CIRCLE -1, KANPUR VS. SWATANTRA GRAMUDYOG SAN STHAN, KANPUR (ITA NO.430 & 431(LUK)/2012, (ITAT LUCKNOW) A LSO HELD THAT IN CASE OF AN INSTITUTION REFERRED TO IN CLAUSE 23B OF SEC.10, THE ASSESSING OFFICER CANNOT COMPLETE THE ASSESSMENT WITHOU T GIVING EFFECT TO THE PROVISIONS OF SEC.10 UNLESS THE ASSESSI NG OFFICER HAS COMMUNICATED THE PRESCRIBED AUTHORITY REGARDI NG THE CONTRAVENTION OF THE PROVISIONS OF CLAUSE-23B OF SEC.10 OF SUCH INSTITUTION AND THE APPROVAL GRANTED TO SUCH INSTITUTIO N HAS BEEN WITHDRAWN BY THE AUTHORITY. IN THE INSTANT CASE, THE ASSESSING OFFICER HAS ONLY COMMUNICATED THE WITHDRAWAL OF THE EXEMPTION VIDE IT S LETTER DATED 19 TH JULY, 2016 VIDE LETTER NO.LA/445/ITE/2016-17/ PART -II DATED 19.07.2016 KVIC AND BEFORE TO THAT ISSUING THE LETTER ITSELF THE ASSESSING OFFICER DID NOT ALLOW EXEMPTION AVAILABLE TO THE ASSESSEE WITHOUT WAITING FOR THE CANCELLATION OF CERTIFICA TE FROM THE KVIC, WHICH ALSO IMPUGN THE ASSESSMENT ORDER. AS IT IS WELL SETTLED BY THE HONBLE SUPREME COURT THAT THE EXPRESSIO N OF ATTRIBUTABLE TO IS CERTAINLY WIDER IN IMPORT THAN T HE EXPRESSION DERIVED FROM. THAT SAID PROPOSITION WAS FOLLOWED BY THE CO- ORDINATE BENCH IN THE CASE OF PUNJAB KHADI MANDAL VS. INCOME TAX OFFICER, RANGE-IV(1), JALANDHAR, IN ITA NO.265(A SR)/2016 (ITAT AMRITSAR), THEREFORE, WE DO NOT FIND ANY REASON ITA NO.582 (ASR)/2017 M/S. SUTLEJ KHADI MANDA, JALANDHAR VS. DCIT 9 AND/MATERIAL TO DECIDE CONTRARY AGAINST THE ORDER PA SSED BY THE CO-ORDINATE BENCH AS STATED ABOVE. EVEN OTHERWISE, AS WE REALIZED THAT THE LD. CIT(A) W HILE CONSIDERING THE APPEAL OF THE ASSESSEE IN PARA NO.4.11 O BSERVED THAT IN THIS CASE A REFERENCE WAS MADE BY THE AO TO THE STATE KVIC AND A REPLY RECEIVED FROM THE KVIC DATED 26.08. 2016, WHICH HAS BEEN FILED BY THE APPELLANT IN THE COURSE OF PRESENT PROCEEDINGS, CLEARLY STATED AT POINT NO.3 THIS OFFICE HA S NOT GIVEN THE EXEMPTION CERTIFICATE U/S 10(23B) OF THE I. T. ACT, 1961 FOR THE ASST. YEAR: 2014-15. WE HAVE PERUSED THE AFORESAID LETTER AND REALIZED THA T IN THE LAST PARA, IT IS SPECIFICALLY WRITTEN THAT THEREFOR E, IT IS REQUESTED TO CONSIDER THE ABOVE FACTS AND ALLOW THE INSTI TUTION TO AVAIL THE FACILITY OF EXEMPTION U/S. 10(23B). EVEN VI DE LETTER DATED 19 TH MARCH, 2018 STATE KVIC RECOMMENDED THE CASE OF THE ASSESSEE FOR THE PURPOSES OF GRANTING EXEMPTION OF T OTAL INCOME DURING THE YEAR 2013-14 RELEVANT TO THE A.Y.2 014-15, WHICH GOES TO SHOW THAT EVEN AS ON DATE, THE APPROVAL OF THE SOCIETY BY THE KVIC VIDE CERTIFICATE NO.NZCC/PUNJAB/286 9 DATED 30.11.2012 RELEVANT TO THE PERIOD FROM 04 TH APRIL, 2012 TO 31 ST MARCH, 2016 HAS NOT BEEN WITHDRAWN AND VIDE LETTER DA TED 19 TH MARCH, 2018 (SUPRA) FURTHER RECOMMENDED THE INCOME OF T HE ASSESSEE AS EXEMPT FOR THE YEAR UNDER CONSIDERATION UNDER THE PROVISIONS OF SEC 10(23B) OF THE I.T. ACT. HENCE, IN VIEW OF THE PROPOSITION LAID DOWN BY THE APEX COURT AND RESPECTFULL Y FOLLOWING THE JUDGMENTS PASSED BY THE CO-ORDINATE BENCH ES, WE ARE INCLINED TO SET ASIDE THE ORDER IMPUGNED HEREIN P ASSED BY THE LD. CIT(A) AND FURTHER TO HOLD THAT THE ASSESSEE SOCI ETY IS ITA NO.582 (ASR)/2017 M/S. SUTLEJ KHADI MANDA, JALANDHAR VS. DCIT 10 ENTITLED TO CLAIM EXEMPTION U/S 10(23B) OF THE ACT. FU RTHER THE INTEREST EARNED BY THE ASSESSEE IS ALSO LIABLE TO BE EXEMP TED. THE ASSESSEE HAS NOT CHALLENGED THE ADDITION OF RS.2,00,000/- QUA LESS TAX PAID ON LONG TERM CAPITAL GA IN, HENCE, NO ADJUDICATION IS REQUIRED. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLO WED. ORDER PRONOUNCE IN THE OPEN COURT ON 18.07.2018 SD/- SD/- (SANJAY ARORA) (N.K.CHOUDHRY) ACCOUNTANT MEMBER J UDICIAL MEMBER DATED:18.07.2018 /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) M/S SUTLEJ KHADI MANDAL, JALANDHAR (2) THE DY. CIT (EXEMPTION), CIRCLE-1, CHANDIGAR H (3) THE CIT(A)-2, JALANDHAR (4) THE CIT CONCERNED (5) THE SR DR, I.T.A.T., AMRITSAR TRUE COPY BY ORDER