THE COMMISSIONER OF INCOME TAX (EXEMPTIONS) vs. GUJARAT HOUSING BOARD (GHB)

Facts

The Revenue has filed this Tax Appeal under Section 260-A of the Income Tax Act, 1961, against an order of the Appellate Tribunal dated November 16, 2018, for Assessment Year 2012-13. The appeal challenges the Tribunal's decision to set aside the issue of deduction/exemptions under Sections 11 and 12 of the Act. The Revenue contends that the assessee's activities are covered by the provisos to Section 2(15) and thus not entitled to exemption under Section 13(8). The Tribunal had relied on previous High Court decisions concerning the Ahmedabad Urban Development Authority and Gujarat Industrial Development Corporation, finding the Gujarat Housing Board's activities comparable.

Held

The High Court held that the question proposed by the Revenue does not constitute a substantial question of law. The Court noted that the Appellate Tribunal had relied on its own previous decisions in the cases of Ahmedabad Urban Development Authority vs. PCIT (Exemption) and CIT vs. Gujarat Industrial Development Corporation. Furthermore, a coordinate bench of the same High Court had previously dismissed a similar appeal filed by the Revenue against the Gujarat Housing Board, also relying on the AUDA decision. That earlier order had restored the issue to the Assessing Officer for de novo consideration, and the High Court had not interfered with that remand order. Given this precedent and the pendency of the issue before the Supreme Court, the present appeal was dismissed.

Key Issues

1. Whether the Appellate Tribunal has erred in law and on facts in setting aside the issue of deduction/exemptions u/s. 11 & 12 of the Act, without appreciating that the activities of the assessee authority are covered by the first and second proviso to section 2(15) of the Act and thus not entitled to exemption u/s 11 and 12 as per provisions of section 13(8) of the Act? Assessee's contentions: Not recorded. Revenue's contentions: The Revenue argued that although the Gujarat Housing Board constructs residential houses for weaker sections or backward classes, it ultimately earns business and profit. Therefore, its activities fall within the provisos to Section 2(15) of the Act, disentitling it from exemptions under Sections 11 and 12 as per Section 13(8). The Revenue sought to distinguish the activities from those considered in the cited High Court judgments.