TaxTMI 
TaxTMI 
2026 (8) TMI 1091
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....essee as 'Account officer Chhattisgarh Housing Board' whereas the appeals before us have been filed by 'Chhattisgarh Housing Board' having same PAN as in impugned orders and assessment orders. 3. We are taking the case of AY 2011-12 (ITA No. 649/RPR/2025) as lead case and are deciding the core issue that whether the appellant assessee is eligible for claiming exemption under section 11 of the Act. The grounds of appeal of ITA No. 649/RPR/2025, are as under: - "1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition of Rs. 1,71,93,880/- made by the Ld. AO by disallowing the exemption claimed u/s. 11 of the Act and treating the surplus as taxable profit on the following alleged grounds: a. The Appellant is allegedly engaged in commercial activities with predominant object to earn profit and such activities do not qualify as being undertaken for the advancement of the object of general public utility; b. The aggregate receipts from the commercial activities are alleged to exceed Rs. 10,00,000/- " 2. The Appellant prays that the exemption u/s. 11 of the Act be granted and the addition of Rs.....
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....termined by the appellant assessee. Based on these details/observations/inference, the Ld. AO disallowed the claim of exemption under section 11 of the Act. Aggrieved, the assessee filed appeal before the Ld. CIT(A), who upheld the findings of the Ld. AO and dismissed the appeal as under: "6.1 The appellant did not file return of income for A.Y. 2011-12. The proceedings u/s. 143(3) r.w.s 147 of the Act were initiated in the case of appellant on the basis of information available with the department that appellant did not file return of income for A.Y. 2011-12 and engaged in activities of providing housing facilities, construction and sale of houses to local public by large and carrying out all the business activities which are carried out by a construction company or entity carrying on business of builder/developer. Further cash aggregating Rs. 2 lakh or more with banking company during one day amounting to Rs. 2,94,49,120/- and received contract receipts of Rs. 39,24,946/- and received interest on securities of Rs. 21,551/-. Since no return of income was filed by the appellant, the receipts of F.Y. 2010-11 remained unoffered for the purpose of taxation. Accordingly notice....
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....ntract receipts of Rs. 39,24,946/- and was in receipt of interest on securities of Rs. 21,551/- however did not file the return of income. Therefore, receipts of Rs. 3,33,95,617/- remained unoffered for the purpose of taxation. During the assessment proceedings the appellant has filed return of income in response to the notice u/s. 148 of the Act declaring total income at NIL after claiming exemption u/s. 11 of the Act. The appellant was having net surplus of Rs. 1,71,93,880/- as per the income and expenditure statement furnished by it before AO. 6.2.2 During the assessment proceedings the AO examined the issue of advancement of general public utility in the case of the appellant. The discussion made by AO with respect to the advancement of general public utility is reproduced: ........................................................................ ............................................................ Since the contract receipts were of Rs. 39,24,946/- which is more than 25 lakh in A.Y. 2011-12, and further considering the activity of the appellant during A.Y. 2011-12 in the nature of trade, commerce or business, the AO invoked the provis....
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....roviding housing for LIG and weaker section we also works as nodal agency to the state government thus also construct houses and other buildings on the behalf of the government, PSU(s), Government departments, Universities and other agencies, on a no profit/no loss basis however has not said anything about the contract receipts. The fact is that the object of the appellant is providing houses for EWS, LIG and weaker section however, during the year under consideration the appellant is involved in construction of buildings and house for other agencies which was considered as the advancement of any other activity other than general public utility by the AO and receipts from such activity is much higher than limit of Rs. 25 Lakh. Further it is observed that in the case of the appellant in A.Y. 2018-19 по addition to the income was made by AO after due verification of receipts of main object and receipts from incidental objects. The AO while concluding the assessment proceedings in A.Y. 2018-19 has mentioned that the aggregate receipts from incidental object during the year does not exceed 20% of the total receipts of the trust or institution since w.e.f 01.04.2016 (ie. w.e....
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....ental income, etc. which resulted surplus. He contended forcefully that the question of deriving profit as a commercial entity did not arise at all. He argued that the Ld. AO had not brought any material on the record to demonstrate and to establish that the assessee had derived profit by selling its housing units. In support of his contention, Ld. AR relied on the decision of the Hon'ble Supreme Court in the case of CIT v. Andhra Chamber of Commerce [1955] 55 ITR 722, wherein it had been held as under: "The expression 'object of general public utility, however, is not restricted to objects beneficial to the whole of mankind. An object beneficial to a section of the public is an object of general public utility. To serve a charitable purpose, it is not necessary that the object should be to benefit the whole or mankind or even all persons living in a particular country or province. It is sufficient if the intention to benefit a section of the public as distinguished from specified individuals." 7. Further, the Ld. AR placed reliance on the decision of Hon'ble Supreme Court in the case of Ahmedabad Urban Development Authority [2022] 143 taxmann.com 278 & [2022] 144 t....
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....est, and the advancement of any other object of general public utility: Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity, unless- (i) such activity is undertaken in the course of actual carrying out of such advancement of any other object of general public utility; and (ii) the aggregate receipts from such activity or activities during the previous year, do not exceed twenty per cent of the total receipts, of the trust or institution undertaking such activity or activities, of that previous year;" 11. The definition of "advancement of any other object of General Public Utility" ('GPU'), which was the subject of interpretation in the case of Ahmedabad Urban Development Authority [2022] 143 taxmann.com 278 & [2022] 144 taxmann.com 78. The Hon'ble Supreme Court has dealt the ....
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....commerce, business or any service in relation to such activities for any consideration (including a statutory fee etc.). Moreover, rendition of service or providing any article or goods, by such Boards, Authority, Corporation, etc., on cost or nominal mark-up basis would ipso facto not be activities in the nature of business, trade or commerce or service in relation to such business, trade or commerce. On these basis, Statutory Corporations, Boards, Authorities, Trusts, Statutory Regulatory Bodies were held to be engaged in object of GPU (ICAI in relation to other activities carried on by it in addition to education). While holding so the Hon'ble Supreme Court laid down the primary test, that the consideration which is being charged is nominal and marginal above cost will be the decisive factor in determining their existence for charity purposes. In other words, the Hon'ble Supreme Court has further held that the GPU category charitable organizations would fulfil the criteria of 'charitable purpose' only if those do not engage in any trade, commerce, business or services in relation thereto for a cess, fee, or consideration. However, as an exception, income from business activity c....
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....ommercial receipts. In this decision, the Hon'ble Supreme Court has directed the Revenue/AO to determine the nature of activities carried out and consideration/fees charged for the same. The Hon'ble Supreme Court has held that the crucial & determinative element in a Statutory Body, like the assessee in case in hand, is whether performance of a function is driven by profit motive. If the consideration/fees charged is significantly higher than the costs incurred, such income would be subject to the prescribed quantitative threshold and may lose benefit of tax exemption. The Hon'ble Supreme Court directed the Central Government may, on a case-to-case basis, decide whether and to what extent exemption can be awarded to such bodies by notifying them. Thereafter, section 10(46A) of the Act came into statute. 14. The Hon'ble Supreme Court in the case of Ahmedabad Urban Development Authority (supra) has held that the Act does not only envisage pure charity, i.e., charitable activities with no consideration. Where GPU category charitable organizations involve incidental activities with a consideration, it can be granted exemption provided the receipts from such activities are within the....