“Section 11(1)(b)”
The decision most relied on for Section 11(1)(b) is CIT v. Gujarat Oil & Allied Industries (201 ITR 325), cited in 195 judgments on BharatTax.
Leading authorities on Section 11(1)(b)
The requirement to file an audit report along with the income tax return, as specified in provisions like Section 80J(6A) or 80-IA(7), is directory and not mandatory. Substantial compliance is achieved if the audit report is submitted at any time before the assessment is framed or completed, and benefits should not be denied merely due to a delay in furnishing it.
Exemption provisions under Chapter III, such as Section 10B(8), must be interpreted strictly, and any claim for such exemptions must be made in the return of income. The principles governing Chapter III (incomes not forming part of total income) differ from those for Chapter VIA (deductions in computing total income).
The filing of Form 10B for claiming exemption under sections 11 and 12 is directory, not mandatory. A delay in filing Form 10B can be condoned, and exemption cannot be denied solely on this ground if the assessee satisfies other conditions and shows sufficient cause.
A trust's objects, even if based on religious tenets, can qualify as charitable for tax exemptions if its benefits are not exclusively restricted to a particular religious community or caste.
An object beneficial to a section of the public, as distinguished from an individual or group of individuals, qualifies as an object of general public utility under Section 2(15) and hence a charitable purpose. This applies even if the benefits are restricted to a specific caste, community, or professional group.
A charitable trust that substantially satisfies the conditions for exemption under Section 11 should not be denied the exemption merely due to a delay in filing the audit report in Form 10B, especially when there are discretionary powers to condone such delays.
The Gujarat High Court held that Form No. 10, for exercising the option under section 11(2) to accumulate income, can be submitted during assessment proceedings, including before the Income Tax Appellate Tribunal, which is a continuation of assessment proceedings. Such submission constitutes sufficient compliance for claiming exemption under section 11.
An assessee claiming exemption must follow the procedure in CBDT Circular No. 2/2020 by filing a condonation application under section 119(2)(b) with the CIT for the belated submission of an audit report. The merits of the exemption claim are considered only after such condonation of delay is granted.
