Section 11 Exemption Cannot Be Denied Solely for Late Filing of Form 10B: ITAT

The Income Tax Appellate Tribunal (ITAT), Ahmedabad, has held that an exemption under Section 11 of the Income Tax Act, 1961, cannot be denied just because of the delayed filing of Form 10B.

The assessee, Shri Manav Vikas Foundation, is a charitable trust engaged in educational activities and managing two schools. It is registered under the provisions of the Bombay Trust Act, 1950, Section 12A and Section 80G of the Income Tax Act. The trust filed its income tax return (ITR) within the prescribed due date, declaring nil income after claiming exemption under Section 11 of the Income Tax Act.

However, while processing the return under Section 143(1), the Central Processing Centre (CPC) denied the exemption because the Form 10B was not filed within the specified timeline.

The trust had missed filing Form 10B, and when it came to know about it, the same was uploaded beyond the due date. The CIT(A) upheld the denial of exemption, saying that the assessee had failed to file Form 10B within the required time.

The trust challenged this denial before the ITAT Ahmedabad, arguing that the exemption under section 11 cannot be denied just because of the late filing of Form 10B. The assessee trust relied on the Supreme Court’s ruling to support its argument.

The ITAT agreed with the assessee, observing that in the case of CIT(E) vs. Anjana Foundation, the Hon’ble Supreme Court ruled that the benefit of Section 11 cannot be denied just because the trust failed to file an audit report in Form 10B on time, as it is only a procedural requirement. Additionally, the trust observed that other previous orders have also ruled in favour of the assessee.

Therefore, the Tribunal upheld that filing Form 10B is just a procedural requirement, and even if it is filed beyond the specified due date, the assessee would still be entitled to claim exemption under section 11 of the Income Tax Act. The trust’s appeal was allowed.