CIT (Exemptions) Vs Shri Laxmanarayan Dev Shrishan Seva Khendra (Gujarat High Court)
The Gujarat High Court dismissed the Revenue’s appeal under Section 260A of the Income Tax Act, 1961, holding that no substantial question of law arose from the Income Tax Appellate Tribunal’s order allowing exemption under Section 11 despite delayed filing of audit report in Form 10B. The assessee, a public charitable trust registered under Section 12AA and approved under Section 80G, filed its return for AY 2017–18 declaring nil income but failed to upload Form 10B along with the return. Consequently, the Centralised Processing Centre processed the return under Section 143(1) and denied Section 11 exemption, raising a tax demand.
During appellate proceedings before the CIT(A), the assessee uploaded Form 10B electronically, explaining that the delay occurred due to technical issues. The CIT(A) accepted the explanation and held that filing of Form 10B is a procedural requirement which, if complied with before completion of assessment or even at the appellate stage, should not result in denial of exemption. The Revenue’s appeal before the Tribunal was dismissed, with the Tribunal relying on earlier Gujarat High Court decisions holding that substantial compliance with procedural requirements suffices for charitable trusts.
Before the High Court, the Revenue argued that the audit report must be filed within the prescribed due date, relying on the Supreme Court’s ruling in the Wipro case. The High Court rejected this contention, distinguishing Section 10B (dealing with export-oriented undertakings) from Section 12A(1)(b) applicable to charitable trusts. It held that the Supreme Court ruling on strict timelines under Section 10B had no application to the present facts. The Court reaffirmed its earlier view that delay in filing Form 10B is a procedural lapse that can be condoned, particularly where the assessee otherwise satisfies the substantive conditions for exemption. Finding no legal infirmity in the Tribunal’s decision, the Court dismissed the Revenue’s appeal.
