BUILDERS ASSOCIATION OF INDIA,MUMBAI vs. ITO (EXEMPTIONS) - 1(1), MUMBAI

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ITA 1687/MUM/2026Status: DisposedITAT Mumbai28 July 2026AY 2016-177 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee's activities, including membership subscriptions, publications, and organizing seminars/exhibitions, were incidental and ancillary to its charitable objects. Therefore, the proviso to section 2(15) was not attracted, and the assessee was entitled to exemption under section 11.

What were the facts?

The Builders Association of India, registered under section 12A, claimed exemption under section 11 for AY 2016-17. The AO denied this, invoking the proviso to section 2(15), stating its activities were business-like. The CIT(A) upheld this denial.

What were the issues?

Whether the activities of the assessee, including receipts from membership, publications, and events, constituted business or trade attracting the proviso to section 2(15) and thus disentitling it from exemption under section 11.

Which sections of the Income-tax Act were involved?

Section 11,Section 2(15),Section 143(3),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, MUMBAI

Before: SHRI SANDEEP GOSAIN & SHRI JAGADISH

For Appellant: Shri Vipul Joshi
Hearing: 22.07.2026Pronounced: 28.07.2026

Per: SHRI JAGADISH, A.M.:

1.

This appeal filed by the assessee is directed against the order dated 20.01.2026 passed by the learned Additional/Joint Commissioner of Income-tax (Appeals)-1, Hyderabad [“learned CIT(A)”], under section 250 of the Income-tax Act, 1961 (“the Act”), for the assessment year 2016-17. The impugned appellate order arises from the assessment order dated 23.12.2018 passed by the Income Tax Officer (Exemption)-1(1), Mumbai, under section 143(3) of the Act.

2.

The effective grounds raised by the assessee read as under:

“1. THE ORDER IS BAD IN LAW AND ILLEGAL

1.1 In the facts and circumstances of the case and in law, the Appellant submits that the impugned order passed by the Hon’ble Addl. Commissioner of Income-tax (Appeals)-1, Hyderabad is bad in law and illegal as the same is passed in gross violation of the principles of natural justice.

1.2 Without prejudice to the above, the impugned order is bad in law as no proper, effective and fair opportunity of being heard was granted to the Appellant.

WITHOUT PREJUDICE

2.

ON MERITS

2.1 The Appellant submits that the Hon’ble CIT(A) erred in denying exemption under section 11(1)(a) of the Act of Rs.1,00,86,622 by upholding that the Appellant carries on activities in the nature of trade, commerce or business within the meaning of proviso to section 2(15) of the Act.

2.2 The Appellant prays that based on the facts and circumstances of the case as well as in law, the proviso to section 2(15) of the Act is not applicable in the instant case and, therefore, exemption under section 11(1)(a) of the Act should have been granted.

2.3 The Appellant prays that the impugned order of the Hon’ble CIT(A), being contrary to the facts and circumstances of the case as well as in law, be set aside and exemption under section 11(1)(a) of the Act of Rs.1,00,86,622 be allowed.”

3.

Brief facts of the case are that the assessee is a pan-India association of civil and construction contractors registered under section 12A of the Act. Its principal objects are to promote the science of building and construction, improve and elevate technical standards in the construction industry, disseminate technical and statistical information, encourage correct and ethical business practices and organise seminars, conferences, exhibitions and training programmes for persons connected with the construction industry. The assessee filed its return of income on 30.09.2016 declaring nil income after claiming exemption under section 11 of the Act. During the year, the assessee received membership subscription, income from sale of diaries, calendars, magazines and journals, contributions towards meetings, functions, exhibitions and conventions, interest income and miscellaneous receipts. The Assessing Officer held that these activities were in the nature of trade, commerce or business and, consequently, invoked the proviso to section 2(15) of the Act. The exemption under section 11 was denied and the total income was determined at Rs.71,24,746. The learned CIT(A) upheld the action of the Assessing Officer on the ground that the receipts arose from organised, repetitive and monetised activities and that the principle of consistency would not apply, as each assessment year was a separate unit. Accordingly, the appeal filed by the assessee was dismissed.

4.

The learned Authorised Representative submitted that the activities undertaken by the assessee were directly connected with and incidental to the attainment of its charitable objects. Membership subscription was collected to meet the establishment and administrative expenditure of the Association. Journals and magazines were published to disseminate technical information and changes in laws concerning the construction industry. The seminars, conferences and exhibitions were organised to educate the members and improve their technical knowledge. The contributions collected in connection with these activities were intended to recover their costs and there was no independent profit- 3 making activity. It was further submitted that an identical issue had been decided in favour of the assessee by the Coordinate Bench in its own case for assessment years 2009-10, 2010-11, 2011-12, 2013-14 and 2014-15. There was no change either in the objects or in the nature of activities during the year under consideration. The learned CIT(A), therefore, erred in disregarding the binding decisions in the assessee’s own case merely by describing the receipts as repetitive or monetised.

5.

The learned Departmental Representative relied upon the orders of the Assessing Officer and the learned CIT(A). It was submitted that the assessee earned receipts regularly from exhibitions, conventions, seminars, publications, advertisements and sponsorships. According to the learned Departmental Representative, the frequency and organised manner in which these activities were carried out established their commercial character and attracted the proviso to section 2(15) of the Act. It was further submitted that the eligibility for exemption under section 11 was required to be examined independently in each assessment year and the decisions rendered for earlier years were not conclusive.

6.

We have considered the rival submissions and perused the material available on record. The short issue for our consideration is whether the receipts earned by the assessee from membership subscriptions, publications, meetings, seminars, exhibitions and conventions render its activities commercial within the meaning of the proviso to section 2(15) of the Act.

6.1 The principal objects of the assessee are to promote the science of building and construction, improve technical standards, disseminate information concerning the construction industry and provide training and education to persons connected with that industry. The organisation of seminars, conferences and exhibitions and the publication of journals, magazines, calendars and technical literature are specifically contemplated by the objects of the assessee. Therefore, the mere fact that the assessee received contributions, participation charges, advertisement receipts or nominal sale consideration while carrying out these activities does not, by itself, establish that the assessee was carrying on an independent activity of trade, commerce or business.

6.2 The material placed before us shows that membership subscription was collected to meet the administrative and establishment expenditure of the Association. Journals and magazines were published for communicating technical developments, statutory changes and matters affecting the construction industry. Similarly, the seminars and conferences were conducted on subjects such as works contract tax, service tax, labour laws, statutory compliance, safety measures and technical developments. The receipts in question, therefore, have a direct nexus with the objects for which the assessee was established.

6.3 We also find that the issue is squarely covered by the decisions of the Coordinate Bench in the assessee’s own case. In ITA No.550/Mum/2012, the Tribunal, while restoring the registration granted to the assessee, held as under:

“Otherwise also, if any transaction of the trust which is incidental or ancillary towards fulfilment of the object of other general public utility, it will not normally amount to business, trade or commerce, unless there is some intention to carry out business, trade or commerce on a permanent basis or for a reasonable continuity. The learned DIT has not brought any evidence or material on record to show that the assessee was carrying out the activities on business or commercial principles or outside its objects.”

6.4 The Coordinate Bench thereafter, in ITA Nos.2266/Mum/2015 and 4698/Mum/2015 for assessment years 2010-11 and 2011-12, and in ITA Nos.5590/Mum/2019 and 5591/Mum/2019 for assessment years 2013- 14 and 2014-15, held that the assessee was entitled to exemption under section 11 of the Act. The nature of receipts and activities considered in those years was substantially the same as that involved in the year under consideration.

6.5 The learned CIT(A) has observed that the factual matrix for the present year was materially different. However, no particular activity newly undertaken during the year, no alteration in the objects and no material change in the manner of conducting the existing activities has been identified in the impugned order. The receipts from membership subscriptions, meetings, seminars, exhibitions, conventions, publications, advertisements and sponsorships were also present in the earlier years and were considered by the Tribunal. Merely describing the same activities as organised, repetitive or monetised does not constitute a material change in facts.

6.6 It is well settled that the principle of res judicata does not strictly apply to income-tax proceedings. However, where the fundamental facts remain unchanged, a settled position should not be departed from without demonstrating a material change in facts or law. In the present case, the Revenue has not brought any material on record to show that the assessee carried out its activities with a profit motive or conducted any business activity independent of its stated objects. The surplus, if any, arising incidentally from the activities undertaken for achieving the objects cannot, by itself, alter the charitable character of the institution.

6.7 In view of the above, respectfully following the decisions of the Coordinate Bench in the assessee’s own case, we hold that the activities 6 undertaken by the assessee during the year were incidental and ancillary to the attainment of its objects and were not in the nature of trade, commerce or business. Consequently, the proviso to section 2(15) of the Act is not attracted. The assessee is entitled to exemption under section 11 of the Act, subject to fulfilment of the other statutory conditions. The Assessing Officer is directed to allow exemption under section 11 and recompute the income in accordance with law.

7.

In the result, the appeal filed by the assessee is allowed.

Order pronounced in the open court on 28/07/2026.

Sd/- Sd/- (SANDEEP GOSAIN) (JAGADISH) Judicial Member Accountant Member

Mumbai, Dated: 28/07/2026 Ashwani Rao Sr. Private Secretary

Copy of the order forwarded to: 1. Appellant 2. Respondent 3. The CIT 4. The CIT (Appeals) 5. The DR, I.T.A.T. By order

(Assistant Registrar) ITAT, Mumbai 7

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