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2012 (10) TMI 255 - AT - Income TaxPenalty u/s 271(1)(c) - dis allowing exemption u/s 10(22) - CIT (A) deleted the levy by allowing the claim - A.Y. 1997-98 - Held that:- CIT(A) has rightly allowed the assessee’s claim after a detailed discussion that the assessee is an Educational Institution existing solely for the that purpose and not for the purpose of profit and thus fulfilled the conditions of section 10(22) of the Act. The CIT(A) has rightly deleted the addition which was made in the hands of the assessee on protective basis as the addition in the hands of Shri S. Anwar Saeed has been added on substantive basis. Even on merit, the CIT(A) found that merely because the employee has gained personal benefit, it cannot change the character of the Institution as a whole from non-profit Institution to a profit making Institution - as the additions made by the A.O. have been deleted there is no question of levy of penalty under section 271(1)(c) Disallowance under section 40A(3) - Held that:- As CIT(A) has deleted the addition holding that the income of the Institution is exempt under section 10(22) the disallowance under section 40A(3) became academic - appeal decided in favour of assessee.
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