HARYANA BUILDING AND OTHER CONSTRUCTION WORKERS WELFARE BOARD,PANCHKULA vs. DCIT, EXEMPTION, CHANDIGARH

ITA 338/CHANDI/2023Status: DisposedITAT Chandigarh10 December 2025AY 2017-201846 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the assessee's appeals were dismissed. Regarding the eligibility for exemption under Sections 11 and 12, the Tribunal found that the assessee failed to utilize at least 85% of its income for charitable purposes and did not meet the conditions for accumulation under Section 11(2). The Tribunal noted that the accumulation claimed was technically defective and substantively invalid due to vague purposes. The argument that the assessee revised its balance sheet was rejected as the statutory time limit had lapsed. The contention that receipts should be treated as corpus contribution was dismissed as the assessee itself claimed them as revenue and sought deductions under Section 11(2). The Tribunal found no merit in the assessee's submissions and upheld the orders of the AO/CIT(A). For AY 2015-16 (ITA No. 63/Chd/2021), the Tribunal upheld the CIT(E)'s findings under Section 263. It was noted that the assessee incurred only 2.37% expenditure against gross receipts, far below the mandated 85%. The Tribunal also found that major receipts were in the nature of 'cess' which, exceeding the 20% threshold for general public utility activities involving trade or business, made tax exemption not allowable as per Section 2(15) of the Act. The assessee's counsel could not rebut these findings. Therefore, the Tribunal found no reason to interfere with the findings of the authorities below and dismissed all the appeals.

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, for assessment years 2014-15, 2015-16, 2016-17, 2017-18, and 2018-19. These appeals were against orders passed by the Commissioner of Income-tax (Appeals) [CIT(A)] for various assessment years. Appeals for AY 2016-17, 2017-18, and 2018-19 were filed with a delay of one day, which the assessee attributed to procedural requirements involving governmental functionaries and approvals. The ITAT condoned this delay. The core dispute revolves around the denial of exemption under Sections 11 and 12 of the Income Tax Act, 1961, and the taxability of certain receipts.

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, preventing such exemption. 2. Whether the Cess amount received by the assessee, held as custodian on behalf of the State Government of Haryana, is to be treated as the assessee's income, as affirmed by the First Appellate Authority, or if it should be excluded from the scope of 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 CIT(A), or if the notice should be considered valid and the benefit allowed, as argued by the assessee. 4. Whether the addition of Rs. 1,58,34,30,328 made under Section 11(3)(c) of the Income Tax Act, 1961, is justified, as affirmed by the First Appellate Authority, or if it should be deleted, as prayed by the assessee. 5. Whether the statutory reduction of 15% allowable under Section 11(2) of the Income Tax Act, 1961, should be allowed, as argued by the assessee, or if the entire receipts are liable to be taxed, as held by the CIT(A). Assessee's Contentions: The assessee argued that it is engaged in welfare of poor construction workers, that its activities are for general public utility, and that previous ITAT orders support this. It contended that Cess received is on behalf of the State Government and should be excluded from income. The assessee also argued for the validity of its accumulation notice under Section 11(2) and for the deletion of additions under Section 11(3)(c), and for the allowance of statutory reduction. Revenue's Contentions: The revenue, through the CIT DR, did not object to the condonation of delay. The judgment does not explicitly record separate arguments for the revenue on the substantive issues, but the findings of the lower authorities, which were upheld, reflect the revenue's position.

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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Cases cited in this judgment(7)Show list

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

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