Charitable trust exemption under section 11 cannot be denied for an incorrect return status when the defect is curable.

A charitable trust registered under the income-tax law could not be denied exemption merely because its return incorrectly showed the status of a company. The ITAT Lucknow noted that Form 10B was filed within the extended due date, the return was filed in the trust's PAN, and the status error was only a curable defect that should have triggered a notice under section 139(9) before rejection. As the assessee was otherwise entitled to section 11 relief, the exemption could not be refused on the mistaken entry alone, and the appellate authority was not limited by rectification constraints in granting lawful relief.

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Issues: Whether a charitable trust, otherwise registered under the income-tax law, could be denied exemption under section 11 merely because the return was filed with an incorrect status entry and the revenue treated the claim as not allowable in rectification proceedings.

Analysis: The assessee was registered as a charitable trust and had filed Form 10B within the extended due date. The incorrect mention of the status as a company in the return did not alter the character of the assessee as a trust. The return filed in the PAN of the trust disclosed a curable defect, and a notice under section 139(9) ought to have been issued before rejecting the exemption claim. Since the assessee was otherwise entitled to exemption under section 11, the benefit could not be denied only on the basis of the mistaken return entry. The appellate authority was not confined by the limitations applicable to rectification proceedings and could grant the lawful relief.

Conclusion: The assessee was entitled to exemption under section 11, and the denial of relief on the ground of an incorrect return status could not be sustained. The appeal was allowed in favour of the assessee.

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