Belated Form 10B filing did not defeat section 11 exemption where the audit report was available before processing.

Belated filing of Form 10B did not, on these facts, justify denial of exemption under section 11 where the audit report had been obtained before processing of the return and uploaded later. The Tribunal treated the filing requirement as directory rather than mandatory in an absolute sense, and noted that the CBDT's condonation framework, including delegation of power to condone delay from assessment year 2018-19 onwards, supported acceptance of the report. The assessee's exemption claim was therefore sustained and the Revenue's challenge failed.

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Issues: Whether exemption under section 11 of the Income-tax Act, 1961 could be denied merely because Form 10B was filed belatedly, despite the condonation request having been rejected.

Analysis: The assessee obtained the audit report in Form 10B before the return was processed and uploaded it subsequently. The appeal turned on whether timely filing of Form 10B was mandatory in the sense that its delay would defeat the exemption claim. The Tribunal noted the view that filing of Form 10B is directory in nature and that the CBDT circulars governing condonation, including the later delegation of power to condone delay up to three years from assessment year 2018-19 onwards, supported acceptance of the belated filing in the facts of the case.

Conclusion: The exemption claim could not be denied on the facts of the case, and the Revenue's challenge failed.

Final Conclusion: The order allowing the assessee's claim was sustained and the Revenue's appeal was dismissed.

Ratio Decidendi: Where the audit report in Form 10B is filed before completion of processing and the delay is capable of being condoned under the governing administrative framework, the exemption under section 11 should not be denied merely on account of belated filing of the report.

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