Gajanan Maharaj Shegaon Mandir Vishwasth Mandal Vs Exemption Ward (ITAT Pune)
Pune ITAT: Section 11 Exemption Cannot Be Denied Merely for Belated Filing of Form 10B-Audit Report Filed During Appellate Proceedings Is Sufficient Compliance
The Pune ITAT granted Section 11 exemption to a charitable trust despite belated electronic filing of Form 10B, holding that where the audit report was available and was filed during the pendency of appellate proceedings, the exemption could not be denied merely on account of the procedural delay.
The assessee was a public charitable trust registered under Section 12A and the Bombay Public Trusts Act. It filed its return declaring nil income after claiming exemption under Section 11, including actual application of ₹86.93 lakh and accumulation of ₹47.91 lakh under Section 11(2). CPC, however, processed the return under Section 143(1) and assessed ₹1.43 crore, effectively taxing the entire voluntary donations credited to the Income & Expenditure Account.
The controversy arose because Form 10B, though signed by the auditor on 06.10.2016, was electronically filed only on 04.09.2018, while Form 10 for accumulation was filed on 21.06.2019. The Addl./JCIT(A) treated timely filing of Form 10B as a mandatory statutory condition and upheld denial of Section 11 exemption, relying upon the Supreme Court judgment in PCIT v. Wipro Ltd.
The ITAT disagreed. It relied upon the Pune Bench decision in Indian Medical Association, Pune Branch v. DCIT(E), which in turn followed the Gujarat High Court judgment in CIT v. Laxmanarayan Dev Shrishan Seva Khendra. The Gujarat High Court had held that where a charitable trust had filed Form 10B electronically during the pendency of appellate proceedings along with audited financial statements, the delay deserved to be condoned.
Significantly, the Tribunal noted that the Gujarat High Court had specifically distinguished the Supreme Court decision in Wipro Ltd. Thus, the CIT(A)’s reliance upon Wipro to treat the delayed filing of Form 10B as fatal to the charitable exemption was misplaced in the circumstances of the case.
Applying these principles, the Pune ITAT held that the Addl./JCIT(A) erred in denying Section 11 exemption merely because Form 10B had been filed belatedly. It set aside the appellate order and directed the AO/CPC to allow the assessee’s claim of exemption under Section 11.
Since Section 11 exemption itself was allowed, the assessee’s alternative contention that only net income and not gross receipts could be taxed became academic and was therefore not adjudicated. The appeal was partly allowed.
Key principle: Belated uploading of Form 10B is not necessarily fatal to Section 11 exemption where the audit has been completed and the audit report is furnished during the pendency of appellate proceedings. A substantive charitable exemption should not be denied merely because of such procedural delay; the Supreme Court ruling in Wipro does not automatically govern such cases.
Cases Discussed:
- Indian Medical Association, Pune Branch vs. DCIT(E) (ITAT Pune),ITA No.761 to 766/PUN/2025,dt.31-07-2025
- CIT vs. Laxmanarayan Dev Shrishan Seva Khendra (Gujarat High Court),(2024) 167 taxmann.com 548 (Guj)
- PCIT vs. Wipro Ltd. (Supreme Court),[2022] 446 ITR 1(SC)
- Sarvodaya Charitable Trust v. Income Tax Officer (Exemption) (Gujarat High Court),Special Civil Application No.6097 of 2020 decided on 09th December, 2020
- Social Security Scheme of GICEA (Gujarat High Court),supra
FULL TEXT OF THE ORDER OF ITAT PUNE
The appeal filed by the assessee is directed against the order dated 31-12-2025 of the Ld. ADDL/JCIT(A)-3, Ahmedabad, u/s. 250 of the Income Tax Act, 1961 (the “Act”), pertaining to Assessment Year (“AY”) 2016-17.
2. Briefly stated, the facts of the case are that the assessee is a public charitable trust registered u/s. 12A of the Act and under the Bombay Public Trusts Act, 1950. For AY. 2016-17, the assessee filed its return of income electronically on 24-11-2017 u/s. 139(4) of the Act, declaring total income of Rs. NIL, after claiming exemption u/s. 11 of the Act post application of funds [actual Rs. 86,93,205/- + 15% Rs. 7,18,661 + accumulation Rs. 47,91,079/- u/s. 11(2) of the Act]. The time limit to file the said return of income u/s. 139(4) of the Act with respect of the AY. 2016-17 was 31-03-2018. The Ld. Assessing Officer/CPC (“AO/CPC”), vide intimation u/s. 143(1) of the Act, dt. 30-05-2018, determined the income of the assessee at Rs. 1,43,91,810/- as against the returned income of Rs. NIL. While assessing the income of the assessee, the Ld.AO taxed the total amount of donations of Rs. 1,43,91,813/- credited to the Income and Expenditure Account.
3. Aggrieved by the said intimation order u/s. 143(1) of the Act, dt. 30-05-2018, the assessee filed an appeal before the Ld.ADDL/JCIT(A), who dismissed the appeal of the assessee by observing as under:
“7.2 Grounds No.1 to 3: The appellant has challenged the Intimation Order u/s 143(1) of the Act dated 30.05.2018 for A.Y. 2016-17 wherein the CPC has denied exemption u/s 11 by taxing voluntary contributions of Rs.1,43,91,813/- at Rs. 1,43,91,810/- on the ground that audit report in Form 10B u/s 12A(b) of the Act and Form 10 for accumulation u/s 11(2) of the Act were not filed along with the return filed on 24.11.2017 (within extended due date u/s 139(4) of the Act). The appellant contends that Form 10B was signed by auditor on 06.10.2016 (before original due date u/s 139(1) of the Act on 17.10.2016) and e-filed on 04.09.2018 (Ack No. 283856531040918), while Form 10 for Rs.47,91,079/- accumulation was e-filed on 21.06.2019, due to lack of scrutiny opportunity under section 143(3) of the Act; accumulation total application exceeded 85% (actual Rs.86,93,205 + 15% Rs.7,18,661 Rs.47,91,079). Therefore, the effective issue in appeal is whether, in law and on facts, the denial of exemption u/s 11 of the Act is sustainable where Forms 10B/10 were filed belatedly.
7.3 In the present case, the appellant filed Form 10B on 04.09.2018, which was beyond the prescribed statutory timeline of one month prior to the due date of furnishing the return u/s 139(1) of the Act wherein the appellant had filed the return of income on 24.11.2017. The statutory requirement u/s 12A(1)(b) of the Act read with Rule 178 mandated that the audit report in Form 10B must be furnished electronically one month prior to the date for furnishing the return of income under u/s 139(1) of the Act. The failure to comply with this mandatory condition disentitles the assessee from claiming exemption u/s 11 of the Act. At the time of processing under section 143(1) of the Act or during rectification u/s 154 of the Act, the AO was bound to apply the law strictly, and the assessee’s belated filing of Form 10/10B rendered it ineligible for exemption.
7.4 The Hon’ble Supreme Court in Principal Commissioner of Income Tax-III v. Wipro Limited (2022) categorically held that compliance with statutory preconditions for claiming deductions or exemptions is mandatory and not directory. In that case, the Court emphasized that filing of a declaration u/s 10B of the Act before the due date of filing the return was a sine qua non for availing the benefit, and belated compliance could not cure the defect. Applying the same ratio, the assessee’s failure to file Form 10B within the prescribed time is fatal to its claim. The Revenue’s action in denying exemption u/s 11 of the Act is thus fully justified, as the statutory mandate cannot be diluted by equitable considerations.
7.5 Therefore, in light of the facts and the binding precedent of the Hon’ble Supreme Court, the Revenue’s stand is legally sound. The exemption u/s 11 of the Act is a conditional benefit, available only upon strict adherence to procedural requirements. Since the appellant failed to comply with the mandatory timeline of filing the Form 10B, the denial of exemption u/s 143(1) of the Act is in accordance with law and consistent with the principle ratio decidendi by the Hon’ble Supreme Court, in the case of Principal Commissioner of Income Tax-III v. Wipro Limited. Hence, the grounds of the appeal no. 1 to 3 of the appellant are dismissed as per above discussion.
7.6 In relation to the additional ground that if section 11 of the Act is denied the appellant should be allowed the benefit of deduction u/s 57 of the Act while determining the taxable income, it is submitted that deductions u/s 57 of the Act are admissible when computing taxable income chargeable under the head “Income from Other Sources.” These deductions apply to specific expenses directly linked to earning such income, ensuring only net income is taxed and are allowed only for expenses incurred wholly and exclusively for earning the income, excluding capital or personal expenditures. They must relate to the relevant accounting year and cannot be claimed against exempt income. Charitable trusts whose income, on denial of section 11, is brought to tax under the normal provisions and where expenses are held not to satisfy the “wholly and exclusively for the purpose of making or earning such income” test u/s 57(iii) of the Act, particularly in situations where the so-called “application of income” for charitable purposes is treated as application (or appropriation) of income and not as an expenditure incurred to earn that income may lead to disallowance of deduction u/s 57 of the Act. During the appellate proceedings, as no material on record to show that the expenses were incurred directly linked to earning of income, hence, the ground no. 6 is also dismissed as per above discussion and material available.
8. In the result, the appeal of the appellant is Dismissed in the above terms.”
4. Aggrieved, the assessee is in appeal before the Tribunal raising the following grounds of appeal:
“1. On the facts and in the circumstances of the case, the learned Commissioner of Income-tax (Appeals) (CIT(A)) has erred in confirming the adjustments made by the centralized processing center (CPC) in the intimation under section 143(1) of the Act of INR 1,43,91,810, by denying benefits of section 11 and 12 of the Act on account of procedural lapse on the part of the Appellant of delay in filing form 10 and Form 10B, the said adjustment may be deleted and the income of the Appellant be assessed as NIL.
2. On the facts and in the circumstances of the case, the learned CIT(A) has erred in not directing the CPC/Jurisdictional Assessing Officer to admit and take on record Form No. 10B and Form No. 10 filed by the Appellant before the completion of the assessment proceedings and in not granting the consequential exemption under section 11 of the Act, despite the fact that the audit was completed within the prescribed time and the delay was only in electronic filing. The learned CIT(A) failed to follow settled judicial principles and CBDT Circular No. 14 (XL-35) dated 11.04.1955, which mandate that legitimate claims should not be denied on account of mere procedural lapses, thereby causing grave hardship to the Appellant.
3. On the facts and in the circumstances of the case, the learned CIT(A) has erred in upholding the action of the CPC in taxing the gross receipts of the Appellant trust as income, which is contrary to the settled principles of Income Tax Law that only real income and not gross receipts can be brought to tax, even under the head ‘Income from Other Sources’. Therefore, the impugned order is bad in law and should be set aside.
4. On the facts & circumstances of the case and in law, without prejudice to above grounds of appeal, the learned CIT(A) has erred in not allowing the expenditure incurred by the Appellant trust under section 57 of the Act of INR 1,07,54,286/- and taxed the entire receipt of appellant trust as income from other sources, the CIT(A) may be directed to allow the deduction of INR 1,07,54,286/- under section 57 of the Act while computing the total income.
5. The Appellant craves leaves to add/modify/amend/delete all/ any of the grounds of appeal and to lead and submit evidence/ additional evidences during the course of Appellate proceedings.”
5. The Ld.AR submitted that the assessee has been denied its claim of exemption u/s. 11 of the Act on the ground that the assessee filed audit report belatedly. The Ld.AR submitted that the audit report in Form-10B was filed electronically on 04-09-2018 (page 13 to 15 of the paper book refers). He submitted that since the assessee has filed the audit report in Form-10Bduring the appellate proceedings and the return of income was furnished on 24-11-2017 (which is filed within the due date for AY. 2016-17 i.e. 31-03-2018) before the intimation order was passed by the CPC and Form-10 was also filed electronically on 21-06-2019 (page 30-31 of the paper book refers), therefore, the claim of exemption u/s. 11 should not be denied.
5.1. In support of his above contention, the Ld.AR relied on the decision of the Co-ordinate Bench of the Pune Tribunal in the case of Indian Medical Association, Pune Branch vs. DCIT(E) in ITA No.761 to 766/PUN/2025,dt.31-07-2025 wherein the Tribunal in turn relied on the decision of the Hon’ble Gujarat High Court in the case of CIT vs. Laxmanarayan Dev Shrishan Seva Khendra (2024) 167 taxmann.com 548 (Guj) and allowed the appeal of the assessee, condoning the delay in filing of Form-10B.
5.2. The Ld.AR further submitted that delay in filing of Form-10B is merely a procedural lapse and relying on the settled judicial principles, and CBDT Circular No. 14(XL-35), dt. 11-04-1955 submitted that the assessee’s claim of exemption u/s. 11 should be allowed.
6. The Ld.DR supported the order of the Ld.ADDL/JCIT(A) and the Ld.AO.
7. We have heard the Ld. Representatives of the Parties and perused the material available on record. It is an admitted fact that the assessee filed its return for AY. 2016-17 u/s. 139(4) of the Acton 24-11-2017, declaring total income of Rs. NIL, after claiming exemption u/s. 11 of the Act. The return of the assessee was processed by the Ld.AO/CPC and an intimation order u/s. 143(1) of the Act was passed on 30-05-2018, determining the income of the assessee at Rs.1,43,91,810/- as against the returned income of Rs. NIL due to non-filing of Form-10B/10 by the assessee. We find that the Ld.ADDL/JCIT(A) has dismissed the appeal of the assessee for the reasons which we have already reproduced in the preceding paragraphs. Before us, the Ld. Counsel for the assessee has taken a plea that since the assessee has filed the audit report during the appellate proceedings and the return of income was furnished before the intimation order was passed by the CPC, therefore, the claim of exemption u/s. 11 of the Act should not be denied. There is also no dispute to the fact that the assessee filed the audit report in Form-10B on 04-09-2018 and Ld.ADDL/JCIT(A) has passed the impugned order on 31-12-2025. Admittedly, Form-10B was filed after intimation order u/s.143(1) of the Act was passed, but before the appellate proceedings were completed.
7.1. We find that an identical issue had come up before the Co-ordinate Bench of the Pune Tribunal in the case of Indian Medical Association, Pune Branch vs. DCIT(E) (supra), where the Tribunal relied on the decision of the Hon’ble Gujarat High Court in the case of CIT vs. Laxmanarayan Dev Shrishan Seva Khendra (supra) and allowed the assessee’s claim of exemption u/s. 11 of the Act. In the case of CIT vs. Laxmanarayan Dev Shrishan Seva Khendra (supra), the Hon’ble High Court has held that –
“where assessee, a public charitable trust, did not upload audit report in Form 10B along with its return of income and CPC processed return under section 143(1) denying benefit of section 11, since assessee had already filed audit report in Form 10B electronically during pendency of appellate proceedings along with copy of audited financial statements, delay in filing said form was to be condoned”.
7.2. The Hon’ble High Court while holding so, has also distinguished the decision of the Hon’ble Supreme Court in the case of PCIT vs. Wipro Ltd. [2022] 446 ITR 1(SC), which has been relied by the Ld.ADDL/JCIT(A) in his impugned order to dismiss the appeal of the assessee. The relevant extract of the order of the Tribunal in the case of Indian Medical Association, Pune Branch vs. DCIT(E) (supra) is reproduced below:
“16. We find the Hon’ble Gujarat High Court in the case of CIT v. Laxmanarayan Dev Shrishan Seva Khendra (supra) has held that where the assessee, a public charitable trust, did not upload audit report in Form 10B along with its return of income and CPC processed return under section 143(1) denying benefit of section 11, since assessee had already filed audit report in Form 10B electronically during pendency of appellate proceedings along with copy of audited financial statements, delay in filing said form was to be condoned. The relevant observations of Hon’ble High Court read as under:
7. Reference to the aforesaid decision has no connection whatsoever remotely to the facts of the present case and therefore, in the facts of the present case, the Tribunal has rightly followed the decision of this Court in case of Sarvodaya Charitable Trust v. Income Tax Officer (Exemption) in Special Civil Application No.6097 of 2020 decided on 09th December, 2020 as well as the decision in case of Social Security Scheme of GICEA (supra) to uphold the decision of the CIT (Appeals), wherein this Court has held that the approach of the authority in such type of cases should be equitable, balancing and judicious. In the facts of the case. when the assessee has already filed the audit report in Form 10B electronically on 27.02.2021 during pendency of appellate proceedings along with copy of audited financial statements, delay in filing the said form is rightly condoned by CIT(A) and the Tribunal.
8. In such circumstances, we are of the opinion that the Tribunal has not committed any error by not following the decision in case of M/s. Wipro Limited (supra) as referred to and relied upon by learned advocate for the appellant-Revenue, and has rightly followed the decision of this Court in case of Social Security Scheme of GICEA (supra).
9. In view of the foregoing reasons, we are of the opinion that no question of law much less any substantial question of law arises from the impugned order of the Tribunal. The Appeal is accordingly dismissed.”
17. In view of the above decisions, we hold that the Ld. Addl./JCIT(A) was not justified in rejecting the claim of exemption u/s 11 of the Act on account of delay in filing of the return of income as well as delay in uploading the audit report in Form 10B. We, therefore, set aside the order of the Ld. CIT(A)/NFAC and direct the Assessing Officer/ CPC to allow the claim of exemption u/s 11 of the IT Act, 1961. The grounds raised by the assessee are accordingly allowed. Since the assessee succeeds on the issue of claim of exemption u/s 11, therefore, the alternate claim of the assessee, for taxing the net income rather than gross receipt does not require any adjudication being academic in nature. The appeal of the assessee is accordingly allowed.”
7.3. Based on the factual matrix and the legal position set out above, in our view, the Ld.ADDL/JCIT(A) erred in dismissing the assessee’s appeal denying its claim of exemption u/s. 11 of the Act on the ground of delay in filing of Form-10B. We, therefore, set aside the order of the Ld.ADDL/JCIT(A) and direct the Ld.AO/CPC to allow the assessee’s claim of exemption u/s. 11 of the Act. The effective grounds raised by the assessee are accordingly allowed. The other grounds raised by the assessee relating to taxing of the net income and not gross receipts are not adjudicated as these grounds are rendered academic in nature in view of our decision above on the issue of claim of exemption u/s. 11 of the Act.
8. In the result, the appeal filed by the assessee is partly allowed.
Order pronounced in the open Court on 10-08-2026
