Madras HC Gives Relief to Charity Trust, Sets Aside Rejection of Delayed Form 10B Filing
The Madras High Court has allowed a petition filed by ISA Children’s Home Trust and set aside an order of the Income Tax Department that refused to condone a delay in filing the audit report required for tax exemption.
Background of the Case
The present case has been filed by ISA Children’s Home Trust (petitioner) against the Commissioner of Income Tax (Exemptions), requesting the court to cancel the order dated December 25, 2024, issued by the tax authority. The petitioner also requests the Court to condone a delay of 10 days in submitting Form 10B for the Assessment Year 2023-24.
The trust had filed its income tax return on November 10, 2023, which was within the permitted time. However, the trust failed to file Tax Audit Report in Form 10B within the required time and filed it late. The trust later applied to the tax department, seeking condonation of the delay under Section 119(2)(b), but the request was rejected.
According to the trust, the delay occurred because the managing trustee was busy coordinating a visit by foreign donors to the children’s home in the Madurai district. As a result, he could not coordinate with the accounting staff or provide the books of accounts to auditors on time.
The Income Tax Department rejected this explanation, stating that the trust had already finalised its accounts and filed its return on time and therefore, should also have filed the audit report within the prescribed deadline.
Decision of the High Court
After examining the facts, the High Court observed that the trust runs a children’s home for destitute children and is engaged in charitable activities. The court found that the reasons given for the delay were reasonable.
As a result, the high court quashed the order of the Commissioner of Income Tax (Exemptions) and directed the assessing officer to reconsider the case. The court directed the officer to reassess the trust’s return under Section 143 of the Income Tax Act and grant the tax exemption under Section 11, if the trust is otherwise eligible.
With these directions, the High Court disposed of the writ petition and closed the connected miscellaneous petition, without imposing any costs.
Citation: ISA Children’s Home Trust Vs CIT(E) (Madras High Court); W.P.No.25731 of 2025 & W.M.P.No.28923 of 2025; 02/03/2026; 2023-2024.
