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2012 (7) TMI 579 - AT - Income TaxDenial of exemption u/s.80P(2)(a)(vi) - A.O. found that some of the members of the society had no actual link with the actual business affairs of the society and there by the collective disposal of labour specialized/skilled or manual for all the 61 members of the society for this year never happened – Held that:- AO has also not even made out any material on record either by examining the President/Members of the assessee-society regarding the way in which the assessee has executed the contracts - issue in favour of the assessee basing on the remand report given by the predecessor of the Assessing Officer, the Assessing Officer in order to deviate from that finding has to necessarily examine this aspect by examining the aspect as to how the assessee was carrying out the contract with reference to the contractees or the President of the Society or the Members of the Society - only on assumption and presumptions of his choice, the Assessing Officer has inclined to disallow the claim of the assessee u/s.80P(2)(a)(vi) of the I.T.Act - finding of the AO without bringing any material on record is not sustainable for legal scrutiny - rejection of the claim of the assessee u/s.80P(2)(a)(vi) of the I.T.Act is not correct Disallowance u/s.40A(3) of the I.T.Act – Held that:- Assessing Officer has not made out on record as to whom the payments were made, whether they are members of the assessee society who are executing the contract works or not - He has not even examined the aspect as to who are the persons executing the contracts on behalf of the assessee, whether its members or else - The genuine and bonafide transactions are not to be disallowed under this Section - addition made u/s.40A(3) is not sustainable for legal scrutiny Addition on account of provision for Roller - assessee’s books of account are audited by competent authority as authorized by the Government of Orissa and it was not the case of the AO that the auditors who audited the accounts of the assessee has raised any objection for the financial activities of the assessee – Held that:- Assessee has not claimed any deduction of this provision though shown as provision for Roller - When the assessee has not claimed any deduction, addition of such amount to the total income of the assessee is not tenable under law – In favor of assessee
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