Delayed Form 10B filing may not defeat Section 11 exemption where audit report was available before processing and substantial compliance was shown.

Delayed filing of Form 10B was treated as a curable procedural lapse where the audit report was already filed with the return and was available before processing of the return. The Tribunal followed the view that filing of Form 10B is directory in nature and that substantial compliance should not be defeated by delay alone when exemption under section 11 is otherwise supportable. It accepted the explanation for the 39-day delay, condoned the default, and directed the Assessing Officer to verify the claim and consider the appropriate relief under section 11.

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Issues: Whether delay of 39 days in filing Form 10B could be condoned and the assessee be granted relief under section 11 of the Income-tax Act despite the delayed audit report.

Analysis: The audit report in Form 10B was filed along with the return of income and was available when the return was processed. The Tribunal noted the consistent view taken by various High Courts and coordinate Benches that filing of Form 10B is directory in nature and that delayed filing, where the report is available before completion of processing or assessment, should not defeat exemption otherwise available under section 11. Applying a justice-oriented approach, the Tribunal accepted the explanation for delay and directed verification by the jurisdictional Assessing Officer for grant of appropriate relief.

Conclusion: The delay in filing Form 10B was condoned and relief under section 11 was directed to be considered on verification by the jurisdictional Assessing Officer.

Ratio Decidendi: Where the audit report in Form 10B is filed before the return is processed or assessed, delayed filing should not, by itself, deny exemption under section 11 if substantial compliance is otherwise established.

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