Updated Return Can’t Kill Genuine Exemption – ITAT Allows Section 11 Relief Despite Delay

Indian Medical Association Vs DCIT (ITAT Pune)

Updated Return Can’t Kill Genuine Exemption – ITAT Allows Section 11 Relief Despite Delay

Pune ITAT held that exemption u/s 11 cannot be denied merely because it was claimed in an updated return or due to procedural delays in filing audit reports, for years prior to AY 2023-24.

The assessee, a charitable trust, filed an updated return u/s 139(8A) claiming exemption u/s 11 after declaring capital gains. The CPC denied exemption and taxed gross receipts, citing delay in filing return and audit report (Form 10B). The CIT(A) upheld this, holding that exemption requires strict compliance with timely filing conditions.

However, the ITAT reversed this view, noting that prior to the amendment effective from AY 2023-24, the law only required filing within time allowed u/s 139—which included belated returns u/s 139(4). The amendment restricting exemption only to returns filed u/s 139(1) or 139(4) was prospective and intended to exclude updated returns going forward.

Relying on CBDT circulars and judicial precedents, the Tribunal held that procedural lapses like delayed filing of Form 10B cannot defeat substantive exemption, especially when charitable activities and application of income are not disputed.

Accordingly, denial of exemption was set aside and the claim u/s 11 was allowed.

Bottom line:

For pre-AY 2023-24, even updated/belated returns can carry Section 11 benefits.

Procedural delay ≠ denial of substantive charitable exemption.

FULL TEXT OF THE ORDER OF ITAT PUNE