Belated Form 10B filing is a procedural lapse and cannot by itself defeat section 11 exemption.

Exemption under section 11 could not be denied solely because the audit report in Form 10B was filed after the due date. The Tribunal noted that the return had been processed under section 143(1) and the only basis for disallowance was the belated filing of Form 10B, although the report had in fact been obtained and filed. Relying on co-ordinate bench and High Court authority, it treated the filing requirement as procedural and directory rather than mandatory. The delay in filing the audit report was therefore not fatal, and exemption under section 11 remained allowable.

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Issues: Whether exemption under section 11 of the Income-tax Act, 1961 could be denied solely because Form 10B was filed after the due date.

Analysis: The returns were processed under section 143(1) and the exemption was disallowed only on the ground of belated filing of the audit report in Form 10B. The Tribunal noted that the assessee had obtained the audit report and filed it, though belatedly, and that the issue was covered by co-ordinate bench and High Court decisions treating the filing of Form 10B as a procedural requirement. On that basis, the delay in filing the audit report was not treated as fatal to the claim for exemption under section 11.

Conclusion: The belated filing of Form 10B did not justify denial of exemption under section 11, and the exemption was held allowable in favour of the assessee.

Ratio Decidendi: A belated audit report in Form 10B, when otherwise available and filed, is a directory procedural lapse and cannot by itself defeat exemption under section 11.

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