Form 10B filing requirement defeats section 11 exemption claim at processing stage for delayed audit report.

Exemption under section 11 was treated as not allowable at the processing stage under section 143(1) where the prescribed audit report in Form 10B had not been filed by the specified date. The audit report was regarded as a condition precedent for the claim, so its absence made the exemption claim incorrect within the meaning of the Explanation to section 12(1). A pending request for condonation under section 119(2)(b) was noted only as a matter that could affect the intimation if later allowed. The denial of exemption was upheld.

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Issues: Whether exemption under section 11 could be denied at the processing stage under section 143(1) for non-filing of the prescribed audit report in Form 10B before the specified date.

Analysis: The trust was registered under section 12A and had claimed exemption under section 11. The prescribed audit report in Form 10B was admittedly filed after the return was processed. The filing of the audit report in the prescribed form was treated as a condition precedent for claiming exemption under section 11, and absence of such report rendered the claim an incorrect claim within the meaning of the Explanation to section 12(1). The pending request for condonation under section 119(2)(b) was noted only as a matter that could consequentially affect the intimation if allowed.

Conclusion: The denial of exemption at the processing stage was upheld and the assessee's challenge failed.

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