“Section 11(3)(b)”
The decision most relied on for Section 11(3)(b) is CIT v. Gujarat Oil & Allied Industries (201 ITR 325), cited in 195 judgments on BharatTax.
Leading authorities on Section 11(3)(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).
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.
Once an Assessing Officer forms a reason to believe that income has escaped assessment and issues a notice under section 148, they can assess or reassess income related to other issues not originally included in the reasons recorded.
Circulars issued by the Board under Section 37-B of the Central Excise Act, 1944, are binding on the tax authorities, and the revenue cannot repudiate such circulars even if they are perceived to be inconsistent with statutory provisions.
Business expenditure is deductible even if the business has not yet commenced, provided it is incurred for the purpose of setting up the business. The commercial expediency of a businessman's decision regarding payment quantum is generally respected.
