The Pune Bench of the Income Tax Appellate Tribunal (ITAT) has ruled that a delay in filing the audit report in Form 10B will not deprive a charitable trust of exemption under Section 11, provided it is duly registered under Section 12A and has otherwise satisfied the substantive conditions for claiming such exemption.
The Tribunal emphasized that procedural lapses should not defeat a legitimate claim where the trust’s charitable nature and compliance with core provisions are undisputed.
Case Details
- Issue: Whether exemption under Section 11 can be denied merely due to delay in filing the audit report in Form 10B.
- AO’s View: The Assessing Officer denied exemption on the ground that the audit report was not furnished within the due date prescribed under Section 139(1).
- CIT(A)’s Order: Confirmed the AO’s decision, treating the filing delay as fatal to the exemption claim.
- Case Citation: [2025] 179 taxmann 139 (Pune – Trib.)
- Date of Order: 30 September 2025
- Bench: Income Tax Appellate Tribunal, Pune Bench
- Date Reported: 06 November 2025
Tribunal’s Observations
The ITAT observed that:
- The trust was duly registered under Section 12A, and there was no dispute about the genuineness of its charitable activities.
- The audit report was eventually filed, though belatedly, and the accounts were duly audited as required under Section 12A(1)(b).
- The Central Board of Direct Taxes (CBDT) has, in several circulars and instructions, recognized condonation of delay in filing Form 10B to avoid hardship where substantive compliance is met.
The Tribunal also relied on judicial precedents which hold that procedural delays—such as late filing of audit reports—should not override the right to exemption when the substantive conditions are fulfilled.
Ruling
The Pune ITAT held that:
“Denial of exemption under Section 11 merely on account of delay in furnishing the audit report, despite the trust being registered under Section 12A and fulfilling all other conditions, is not justified.”
Accordingly, the Tribunal directed the Assessing Officer to allow exemption under Sections 11 and 12 to the assessee trust.
Key Takeaway
This ruling reinforces a liberal interpretation of procedural requirements for charitable institutions.
A bona fide delay in filing the audit report should not disentitle a trust from Section 11 benefits if:
- The trust is registered under Section 12A,
- Its accounts are audited, and
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It has genuinely carried out charitable activities.