CIT (Exemptions) Vs Gujarat Housing Board (Gujarat High Court)
Summary: The Gujarat High Court considered a Revenue appeal under Section 260A of the Income-tax Act, 1961 arising from the Income Tax Appellate Tribunal, Ahmedabad order dated 23.03.2021 in ITA No. 445/Ahd/2019 for AY 2015-2016. The appeal raised four substantial questions concerning the Gujarat Housing Board’s eligibility for Sections 11 and 12 benefits in view of activities such as sale of forms, tender fees, N.A. charges, fine and forfeiture and transfer fees, the availability of 15% accumulation of Rs.5,01,08,514/- under Section 11(1)(a), accumulation of Rs.6,51,38,141/- under Section 11(2), and the effect of the Department’s earlier Tax Appeal and pending SLP. The parties submitted that the issue was no longer res-integra in view of the Supreme Court decision in Assistant Commissioner of Income Tax (Exemption) v. Ahmedabad Urban Development Authority, reported in [2022] 143 taxmann.com 278 (SC).
The High Court reproduced the relevant conclusions of that decision concerning statutory corporations, boards and authorities carrying out objects of general public utility. The Supreme Court’s principles, as reproduced in the order, recognise that statutory bodies in housing development, town planning and industrial development may qualify as GPU charities even where, in pursuing their public objects, they undertake activities in the nature of trade, commerce or business. The reproduced tests include examination of the statutory or controlling instrument, the purpose of the entity, whether services are supplied at cost or nominal mark-up, the statutory basis for rates and charges, governmental control and the extent to which receipts exceed cost. Where receipts are significantly higher than cost, the quantitative limit under the proviso to Section 2(15) becomes relevant. The High Court then applied the Supreme Court’s dictum to Gujarat Housing Board and held that the issue regarding applicability of Section 2(15) read with Section 13(8) would not be applicable to the respondent assessee and that the assessee would be entitled to the benefit of Sections 11 and 12. The Court found no reason to interfere with the Tribunal’s order and
