INCOME TAX OFFICER(EXMP)-2(1), MUMBAI vs. MADHU LAXMI CHARITABLE TRUST, JUHU, BANDRA WEST

PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by revenueand cross objection therein by assessee are directed against the order of ld. CIT(A) dated 27.11.2025 for Assessment Year (A.Y.) 2017-18 The assessee has raised following grounds of appeal: “1. On the facts and circumstances of the case and in law, the Ld. Addl/Jt. CIT(A)-2, Chandigarh erred in condoning the delay in filing Audit Report in Form no 10B without appreciating the facts that the Board, in exercise of statutory power vested in it by virtue of provisions contained in Section 119(2)(b) of the Act, 1 has authorized only the Commissioner of Income Tax/ Chief Commissioner of Income Tax/Principal Chief Commissioner of Income Tax to admit application

Madhu Laxmi Charitable Trust ITA No. 980/Mum/2026 & CO No. 201/Mum/2026 (AY: 2017-18) seeking condonation of delay and decide the same on merits, as per Borad Circular No 16/2024 dated 18.11.2024, and no such authorization has been conferred on the other authorities.

Madhu Laxmi Charitable Trust ITA No. 980/Mum/2026 & CO No. 201/Mum/2026 (AY: 2017-18) “1. On the facts and circumstances of the case and in law, the Ld. AO erred in not appreciating the action of Centralized Processing Center (CPC), Bengaluru in not allowing the claim of the expenses of Rs. 2,11,52,594/-incurred and charged to the Income and Expenditure Account of the assessee against the Income of Rs. 2,11,60,500/- offered for Income Tax in the Intimation order passed u/s 143(1) of the Act for A.Y. 2017-18. 2. Without prejudice the above grounds, even if the benefit of exemption u/s 11 of the Act is denied for delay in filing of Form 10B for the year under consideration. Ld. AO has to considered the amount of Rs. 2,11,52,594/ -applied to charitable purposes by treating Trust as AOP (Association of Persons) and corresponding expenses of Rs.2,11,52,594/-must be allowed. 3. The Appellant craves leave to add, amend, omit any of the aforesaid grounds of appeal as the occasion may arise or demand.” 3. Rival submissions of both the parties have been heard and record perused. The learned Commissioner of Income Tax - Departmental Representative (ld. CIT-DR) for the revenue submits that application of income was not allowed to the assessee by CPT / AO as audit report in Form 10B was not furnished by assessee in time which is mandatory condition for availing application of income by a trust. The ld. CIT(A) while allowing relief to the assessee condone the delay in filing such audit report. The ld. CIT(A) failed to appreciate that Hon’ble Apex Court in PCIT vs Wipro Ltd. (2022) 140 taxmann.com 223 (SC) held that filing of audit report and return of income within time are mandatory and not directory in nature. The exemptions provisions are to be complied strictly. 4. On the other hand, the learned Authorised Representative (ld. AR) of the assessee supported the order of ld. CIT(A). The ld. AR of the assessee submits that ld. CIT(A) was allowing relief to the assessee has followed the

Madhu Laxmi Charitable Trust ITA No. 980/Mum/2026 & CO No. 201/Mum/2026 (AY: 2017-18) decision of various High Courts wherein it has been held that if audit report is available at the time of assessment or ld. CIT(A), the facts authority should consider it a sufficient compliance. 5. We have considered the rival submissions of both the parties and have gone through the orders of lower authorities carefully. We have also deliberated on various case laws relied by ld. CIT(A) while allowing relief to the assessee as well as case law relied by ld. CIT-DR in his submission. We find that there is no dispute that assessee is a charitable trust. The assessee is undertaking its activities in accordance with its object. Further, the assessee is having registration under section 12A/12AB. The only reason for non-allowing application of income was that assessee has furnished audit report in Form 10B beyond the due date however; the same was filed before processing the return of income. 6. We find that Gujarat High Court in CIT vs Anjana Foundation (2024) 168 taxmann.com 462 (Gujarat) and in Association of Indian Panel Board Manufacturer vs DCIT (2023) 157 taxmann.com 550 (Gujarat) held that when audit report was available with AO when he processed return under section 143(1), requirement for furnishing Form 10B was satisfied. We find that there is no other reason for disallowing the application of income under section 11 of the Act. We find that ld. CIT(A) has already directed the AO to verify the facts of law exemption of application of income under section 11 to the assessee.

Madhu Laxmi Charitable Trust ITA No. 980/Mum/2026 & CO No. 201/Mum/2026 (AY: 2017-18) 7. On careful perusal of both the decision of Hon’ble Apex Court, in PCIT Vs Wipro Ltd (supra), we find has considered the significance of filing declaration under Section 10B(8) of the Act considering the provisions of Section 10B(5) of the Act being a check to verify the correctness of the claim of deduction at the time of filing of return so that if an assessee claims an exemption under the Act by virtue of Section 10B of the Act, then the correctness of the claim has already been verified under Sub-section (5) of Section 10B. And thus, if the claim is withdrawn after filing of filing of return, the report of the Accountant filed under Section 10B(5) of the Act would become falsified and would stand to be nullified. Further, the decision in PCIT Vs Wipro Ltd. (supra) is with regard to exemption provision prescribed under Chapter III of Income Tax Act. 8. We find that Hon’ble Apex Court in CIT vs Knitting Industries (P) Ltd. & Others (2015) 376 ITR 456 (SC) wherein the claim was related with deduction under section 80IB (which is related to Chapter VI-A) the Hon’ble Court held that even though necessary certificate in Form 10CCB along with return of income had not been filed but same was filed before final order of the assessment was made, the assessee was entitled to claim such deduction. 9. We also find that recently Hon’ble Delhi High Court in Shree Bhavani Power Projects (P) Ltd. vs ITO (475 ITR 155 (Delhi) after considering the decision of Hon’ble Apex Court in PCIT Vs Wipro Ltd (supra) held that one of the reasons which appears to have weighed upon the Supreme Court while rendering its

Madhu Laxmi Charitable Trust ITA No. 980/Mum/2026 & CO No. 201/Mum/2026 (AY: 2017-18) decision in Wipro Limited (supra) was of Section 10B being an exemption provision. This is evident from the Supreme Court significantly observing that Section 10B(8) being an exemption provision not being liable to be compared with Section 32(1)(ii-a) and which was concerned with a claim for additional depreciation. Regard must also be had to the fact that Section 10B(1) is essentially concerned with the grant of exemptions to newly established hundred per cent export-oriented undertakings and the deduction of profits and gains derived by such an enterprise. Sub-section (8) thereof enables an assessee to opt out of the exemption provisions contained therein subject to a requisite declaration being submitted. Since such a declaration would have an immediate and indelible bearing on the assessment of the Return of Income itself, it would clearly be liable to be viewed as a mandatory requirement warranting such a declaration being made at the outset itself and the statutory prescriptions made in that regard being liable to be strictly adhered to. The aforesaid position may be contrasted with Section 80-IA(7), and which is principally concerned with deductions that may be claimed and the Audit Report being made available for examination by the AO. The Hon’ble Delhi High Court held that whether a failure to digitally upload the Audit Report could be said to be destructive. It is for the afore noted reasons that Delhi High Court inclined to hold that Wipro Limited (supra) is distinguishable and that it would be the principles enunciated in G.M. Knitting (supra) which would govern the present matters. (para-31 & 32).

Madhu Laxmi Charitable Trust ITA No. 980/Mum/2026 & CO No. 201/Mum/2026 (AY: 2017-18) 10. Thus, in view of the aforesaid factual and legal position we affirm the order of of ld CIT(A) with our additional observations. In the result, the grounds of appeal raised by the Revenue are dismissed. In the result, appeal of the revenue is dismissed. 11. Considering the facts that we have dismissed the appeal of revenue hence, specific adjudication on the grounds raise by assessee in its C.O. have become academic and dismissed as infructuous. Order was pronounced in the open Court on 28/07/2026.

/- S/- Sd/- /- Sd/- Sd/- VIKRAM SINGH YADAV PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated: 28/07/2026 Biswajit Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file.

By Order

Assistant Registrar ITAT, Mumbai