B R HOSPITAL AND RESARCH INSTITUTE,NEW DELHI vs. ITO,WARD-EXEMPTION 1(3), DELHI

Facts

The assessee, a charitable institution, claimed exemption under Section 11 of the Income Tax Act for Assessment Year 2018-19. The Assessing Officer issued an intimation under Section 143(1) disallowing the exemption, primarily because the audit report in Form 10B was not filed along with the original return of income. The Ld. CIT(A) upheld this disallowance, stating that he lacked the power to condone the delay in filing the audit report.

Held

The Tribunal, relying on various High Court and its own previous decisions, held that the requirement of filing the audit report in Form 10B is procedural and directory in nature, not mandatory. It directed the Assessing Officer to allow the exemption claim under Sections 11 and 12 of the Act. Grounds 8 and 9, pertaining to other disallowances, were remitted back to the Assessing Officer for fresh consideration.

Key Issues

Whether the intimation under Section 143(1) disallowing exemption under Section 11 due to delayed filing of Form 10B audit report is valid, and whether the requirement to file Form 10B along with the original return of income is mandatory or directory.