Charitable trust exemption upheld where section 13 disqualification was not attracted and late audit report filing was only technical.

Section 13(2)(h) was not attracted on the facts, so the assessee-trust continued to qualify for exemption under section 11 of the Income-tax Act, 1961. The Gujarat High Court followed its earlier view that similar circumstances did not trigger the statutory disqualification under section 13(2)(h) read with section 13(3). The late filing of the audit report under section 12A(b) was treated as a technical lapse and, by itself, did not justify denial of the substantive exemption. The trust therefore remained entitled to section 11 relief.

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Issues: Whether the assessee-trust was entitled to exemption under section 11 of the Income-tax Act, 1961 in view of the alleged applicability of section 13(2)(h) read with section 13(3), and the objection regarding late filing of the audit report under section 12A(b).

Analysis: The question turned on whether the statutory disqualification under section 13(2)(h) was attracted on the facts. The Court followed its earlier decision holding that section 13(2)(h) was not applicable in similar circumstances and that the assessee continued to satisfy the conditions for exemption under section 11. The objection regarding the audit report was treated as a technical lapse and did not justify denial of the substantive exemption.

Conclusion: The assessee-trust was entitled to exemption under section 11, and the provisions of section 13(2)(h) were held not to apply on the facts.

Ratio Decidendi: Where the disqualifying conditions under section 13(2)(h) are not attracted, a charitable trust remains entitled to exemption under section 11, and a technical defect in filing the audit report does not by itself defeat the exemption.

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