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2021 (12) TMI 534 - AT - Income TaxExemption u/s 11 - Denial of exemption as assessee society had made the interest free advances to its Members which transaction was covered under the provisions of Section 13(1)(c) and 13(1)(d) read with Section 13(3) and the assessee Society had paid excessive salary to its Members having contravened the provisions of Section 13(2)(c) - CIT(A) deleted the disallowance so made by the AO - HELD THAT:- In our view, it is not a case of any undue favour by the assessee to its members. In this case, the ld. CIT(A) has discussed that the Members of the Society had already offered their land for the construction of building for technical activities of the assessee Society. The assessee Society, as per its convenience, paid the sale consideration in installments, which were spread over a period and ultimately the Sale Deeds have been executed at the Collector rate. We, therefore, do not find any infirmity in the order of the ld. CIT(A) on this issue - in the case in hand, it is duly proved on the file that the payments were made to the members for the purchase of land and such payments were made at arms length price. Therefore, in view of the above, we do not find any infirmity in the order of the CIT(A) and the same is upheld on this issue. Payment of salary to certain members of the society - only objection by the AO was that the payment during the year was increased to large extent as compared to the payments made in earlier years - The total percentage of expenses incurred by the society on account of payments made to these persons constitute less then 1% of the total expenses incurred by the society. Further the total payments made by the society on account of salaries to these persons are less then 2.5% of the total expenditure incurred on account of salaries. These facts and figures have not been considered by the AO before making the disallowance. Also, find that no adverse material has been brought on record by the AO to hold that services have not been rendered by these persons and payments made to these specified persons are excessive and unreasonable. We hold that there is no justification in the action of the AO for making a disallowance under this head. Accordingly, this ground of appeal is allowed. - Decided against revenue.
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