Section 11(5) compliance defect cured by withdrawal and fresh investment, with exemption rejection set aside and fresh application permitted.

Non-compliance with section 11(5) in relation to the petitioner's investment was the only stated objection to the exemption claim, and the Revenue accepted that the defect could be cured by withdrawal and fresh investment in accordance with the statute. The petitioner was permitted to withdraw the impugned investment, reinvest the funds in compliant form, and file a fresh application treated as a substitute for the earlier one. The impugned order rejecting exemption under section 10 was set aside, with the petitioner's position preserved for the relevant financial years.

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Issues: Whether the petitioner could withdraw the impugned investment and reinvest the funds in compliance with section 11(5), and whether the impugned order rejecting exemption under section 10 was liable to be set aside with liberty to file a fresh application.

Analysis: The only objection raised against the exemption claim was the petitioner's non-compliance with section 11(5) of the Income-tax Act, 1961 in relation to its investment with India Exposition Mart Ltd. The Revenue accepted that the defect could be cured by withdrawal and fresh investment in accordance with section 11(5). The Court accordingly permitted the petitioner, if so advised, to withdraw the investment and to make a fresh application after compliance, treating it as a substitute for the earlier application and preserving the petitioner's position for the relevant financial years.

Conclusion: The petitioner was permitted to cure the defect and file a fresh application, and the impugned order was set aside.

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