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2022 (12) TMI 1089 - AT - Income TaxExemption u/s 11 - assessee could not produce its books of account during the assessment proceedings without appreciating that the books of account could not be produced before the Ld. AO as the same were impounded by the DGIT(Exemption) under section 131(3) - AO traversed beyond the direction of the Tribunal to verify whether expenses incurred by the assessee were utilized for the purpose of the Trust, and all other conditions relating to allowability of deduction under section 11 were satisfied or not which has been upheld by the Ld. CIT(A) - On examination of the books of account and comments/opinion of FSL, the Ld. AO came to the conclusion that books have not been written on day to day basis but in a few sittings - HELD THAT:- The above allegation alone is not sufficient to make ad hoc disallowances of 50% of expenses in the absence of any adverse finding even after examining the books duly supported by the bills and vouchers. Not even single instance has been brought on record to suggest that expenses were incurred for purposes other than the purposes to fulfill the objects of the assessee Trust. There is clear cut finding that payments were made through account payee cheques. No defect has been found in any item of receipts and expenditure. Explanation as to why income from all centers showed vast difference in comparison to expenditure was given by the assessee which explanation has not been considered nor adversely commented by the Ld. CIT(A). We, therefore, delete the ad hoc 50% disallowances out of the expenses in both the years. There is nothing in the order of the Ld. AO to show that the conditions for claiming exemption under section 11 have not been satisfied in the AYs under consideration. Moreover in CIT vs. Indian Institute of Engineering Society [2012 (11) TMI 1243 - ALLAHABAD HIGH COURT] and Indian Institute of Banking and Finance [2018 (4) TMI 197 - BOMBAY HIGH COURT] have held that benefit under section 11 cannot be denied on the ground that the assessee has not obtained exemption from prescribed authorities under section 10(23C) of the Act. Denial of exemption under section 11 of the Act to the assessee Trust in these two AYs is not justified. Exemption under section 11 of the Act deserves to be allowed to the assessse in both the years. Accordingly, the assessee succeeds in all its effective grounds of appeals in both the AYs involved i.e. AYs 2006-07 and 2008-09 relating to denial of exemption under section 11 and disallowances out of expenses claimed. - Decided in favour of assessee.
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