Delay in Form 10B Filing No Bar to Section 11 Exemption: Bangalore ITAT

Anasuya Foundation Vs ITO (ITAT Bangalore)

Bangalore ITAT : Belated Filing of Form 10B Cannot Defeat Section 11 Exemption – Audit Report Filed During Appeal Proceedings Held Sufficient

The Bangalore ITAT granted relief to a charitable trust by holding that mere delay in electronically uploading Form 10B cannot be a ground to deny exemption under sections 11 and 12 when the audit report was ultimately filed during appellate proceedings. The assessee trust had obtained the audit report before the due date, but due to oversight failed to upload it electronically along with the return. CPC while processing return u/s 143(1) denied both application of income and accumulation benefits, resulting in taxation of the entire income.

The Tribunal relied heavily on the Gujarat High Court ruling in CIT (Exemptions) v. Laxminarayan Dev Shrishan Seva Khendra and held that filing of Form 10B during pendency of appellate proceedings was sufficient compliance for granting exemption. It observed that the Supreme Court ruling in Wipro Ltd. dealing with section 10B declarations was distinguishable and had “no connection whatsoever” with delayed filing of audit report under section 12A(1)(b).

While the ITAT acknowledged that CPC and CIT(A) were technically correct in denying exemption at the processing stage in absence of Form 10B on record, it nevertheless held that equitable and judicial considerations required granting the benefit once the audit report was available before appellate authorities. Accordingly, the Tribunal directed the AO to allow both deduction for application of income and accumulation of income to the trust.