Filing Form-10B is procedural, not mandatory for deduction under Section 11; exemption claim allowed

The ITAT Chennai held that filing Form-10B is a procedural requirement and not mandatory for claiming deduction under section 11. The absence of Form-10B does not disentitle the assessee from exemption under sections 11 and 12. The order of the CIT(A) denying the deduction was set aside, and the AO was directed to allow the claim of exemption under section 11. The decision was in favor of the assessee.

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ISSUES:

Whether furnishing of Form-10B is mandatory for claiming deduction under section 11 of the Income Tax Act.Whether non-submission or belated submission of Form-10B disentitles the assessee from exemption under section 11.Whether filing of Form-10B is a procedural or directory requirement rather than a statutory mandate.

RULINGS / HOLDINGS:

The Court held that filing of Form-10B is "merely directory in nature" and not a mandatory requirement for claiming deduction under section 11.Non-submission or belated submission of Form-10B does not disentitle the assessee from claiming exemption under section 11, provided the Form is filed before completion of assessment or appellate proceedings.The Court set aside the order denying exemption on the ground of non-submission of Form-10B and directed the Assessing Officer to allow the claim of exemption under section 11.

RATIONALE:

The Court relied on binding decisions of various High Courts (Madras, Bombay, Gujarat) and coordinate benches of the Tribunal, which established that Form-10B filing is a procedural compliance and not a condition precedent to claim exemption under section 11.Precedents cited include rulings that filing Form-10B even at a later stage before the Assessing Officer or appellate authority suffices for claiming exemption.The Court noted that the Assessing Officer should examine the substantive eligibility for exemption rather than foreclose the claim on technical grounds related to timing of Form-10B submission.The Court emphasized that the issue is no longer res integra and that the procedural lapse should not defeat the assessee's substantive rights under section 11.

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