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Issues: Whether the assessee was entitled to exemption under Section 10(23-B) of the Income-tax Act despite the absence of a finding that its income was applied or accumulated solely for the development of khadi or village industries.
Analysis: The exemption under Section 10(23-B) is subject to cumulative conditions. Approval by the Khadi and Village Industries Commission is not enough by itself; the institution must also satisfy the condition that it applies its income, or accumulates it for application, solely for the development of khadi or village industries or both. The Tribunal had found the approval requirement satisfied, but no finding was recorded on the separate and essential requirement under clause (i) of the proviso. In the absence of such a finding, the exemption could not be granted.
Conclusion: The assessee was not entitled to succeed without satisfaction of the condition that its income was applied or accumulated solely for the prescribed development purpose. The Tribunal's order was set aside and the matter remanded for reconsideration on that issue.
Ratio Decidendi: Exemption under Section 10(23-B) is available only when all statutory conditions are satisfied, including the requirement that the institution applies or accumulates its income solely for the specified object.
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