HARYANA BUILDING AND OTHER CONSTRUCTION WORKERS WELFARE BOARD,PANCHKULA vs. CIT(EXEMPTION), CHANDIGARH

ITA 63/CHANDI/2021Status: DisposedITAT Chandigarh10 December 2025AY 2015-1646 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the assessee's argument regarding its activities being for the welfare of the poor and eligible for exemption under Sections 11 and 12 was not supported by the facts. The assessee had only utilized 2.37% of its gross receipts for charitable purposes, falling significantly short of the mandated 85%. The conditions for accumulation under Section 11(2) were not met, as the specific purpose was vague and the figures did not tally. The Tribunal rejected the assessee's claim that the 'cess' amount was a corpus contribution, as the assessee itself had treated it as revenue and claimed deductions under Section 11(2). The Tribunal also noted that the statutory time limit for revising returns had lapsed. Consequently, the Tribunal found no merit in the assessee's submissions and upheld the orders of the Assessing Officer and the Commissioner of Income-tax (Appeals). For AY 2015-16 (ITA No. 63/CHD/2021), the Tribunal found that the assessee's expenditure was only 2.37% of gross receipts, and the 'cess' receipts, which formed a major part, were covered under the fourth limb of Section 2(15) and involved activities in the nature of trade, commerce, or business for a cess, making it ineligible for exemption. The Tribunal agreed with the CIT(E)'s finding that the Assessing Officer's order was erroneous and prejudicial to the revenue. Therefore, all appeals were dismissed.

What were the facts?

The assessee, Haryana Building and Other Construction Workers Welfare Board, filed several appeals before the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench, against orders passed by the Commissioner of Income-tax (Appeals) for assessment years 2014-15, 2015-16, 2016-17, 2017-18, and 2018-19. Appeals for AY 2016-17 to 2018-19 were filed belatedly by one day. The assessee sought condonation of this delay, citing bonafide reasons related to the governmental approval process for filing appeals. The ITAT considered the applications and condoned the delay. The appeals were heard together as the issues were identical, except for ITA No. 63/CHD/2021 for AY 2015-16, which involved an order passed under Section 263 of the Income Tax Act.

What were the issues?

1. Whether the assessee, Haryana Building and Other Construction Workers Welfare Board, is engaged in activities for general public utility and thus eligible for exemption under Sections 11 and 12 of the Income Tax Act, 1961, as argued by the assessee, or if its activities are commercial in nature, as held by the lower authorities, which would disentitle it to such exemptions. The assessee relied on previous ITAT orders holding its activities as welfare of the poor. 2. Whether the Cess amount received by the assessee on behalf of the State Government of Haryana should be treated as its income, as affirmed by the First Appellate Authority, or if it should be excluded from its income, as contended by the assessee. 3. Whether the assessee is entitled to the benefit of accumulation under Section 11(2) of the Income Tax Act, 1961, for the sum of Rs. 4,86,73,08,657, despite the notice of accumulation being allegedly defective and the activities being commercial, as held by the First Appellate Authority, or if the notice should be considered valid and the benefit allowed, as prayed by the assessee. 4. Whether the assessee is entitled to a statutory reduction of 15% under Section 11(2) of the Income Tax Act, 1961, on the accumulated amount of Rs. 4,86,73,08,657, as argued by the assessee, or if this deduction is not allowable due to the defects in the accumulation notice and the nature of activities, as concluded by the First Appellate Authority. 5. Whether the addition of Rs. 1,58,34,30,328 made under Section 11(3)(c) of the Income Tax Act, 1961, is erroneous and should be deleted, as argued by the assessee, or if it is justified based on the facts and law, as implied by the lower authorities' orders. 6. In the case of ITA No. 63/CHD/2021 (AY 2015-16), whether the order passed by the Commissioner of Income-tax (Exemptions) under Section 263 of the Income Tax Act, 1961, holding the Assessing Officer's order to be erroneous and prejudicial to the interest of revenue, is justified, considering the assessee's low expenditure (2.37%) against gross receipts and the nature of 'cess' receipts under Section 2(15) of the Act.

Which sections of the Income-tax Act were involved?

Section 11,Section 12,Section 11(2),Section 11(3)(c),Section 2(15),Section 263

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Heard together (2 matters)

ITA No. 237/CHD/2020
ITA No. 63/CHD/2021

Read from the judgment's own cause title. This page is filed under one of them.

आयकर अपीलीय अधिकरण, चण्डीगढ़ न्यायपीठ, चण्डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH, ‘A’, CHANDIGARH BEFORE SHRI LALIET KUMAR, JUDICIAL MEMBER & SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER

आयकर अपील सं./ ITA No. 237/CHD/2020 निर्धारण वर्ष / Assessment Year : 2014-15 Haryana Building and Other Construction Workers Welfare Board, Bays No. 29- 30, Sector 4, Panchkula, Haryana The DCIT, बनाम स्थायी लेखा सं./ PAN NO: AAATH6995H अपीलार्थी/Appellant प्रत्यर्थी/Respondent

आयकर अपील सं./ ITA Nos.337 to 339/CHD/2023 निर्धारण वर्ष / Assessment Years : 2016-17, 2017-18 & 2018-19 Haryana Building and Other Construction Workers Welfare Board, Bays No. 29- 30, Sector 4, Panchkula, Haryana The DCIT बनाम | Exemption, Vs. Chandigarh स्थायी लेखा सं./ PAN NO: AAATH6995H अपीलार्थी/Appellant प्रत्यर्थी/Respondent

आयकर अपील सं./ ITA No. 63/CHD/2021 निर्धारण वर्ष / Assessment Year : 2015-16 Haryana Building and Other Construction Workers Welfare Board, Bays No. 29-30, Sector 4, Panchkula, Haryana The DCIT बनाम | Exemptions, Vs. Chandigarh

स्थायी लेखा सं./ PAN NO: AAATH6995H अपीलार्थी/Appellant प्रत्यर्थी/Respondent

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