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

ITA 337/CHANDI/2023Status: DisposedITAT Chandigarh10 October 2025AY 2016-1746 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the assessee's appeal for AY 2014-15 and AYs 2016-17 to 2018-19 were dismissed. The Tribunal found that the assessee had failed to meet the mandatory requirement of spending at least 85% of its receipts on charitable purposes. It noted that only 3.6% was utilized in one instance and 2.37% in another (AY 2015-16), which was significantly below the prescribed threshold. The Tribunal also found that the conditions for accumulation under Section 11(2) were not satisfied, as the specific purposes for accumulation were vague and the figures did not tally. The argument that the assessee had revised its balance sheet was rejected as the statutory time limit for revision had lapsed. The Tribunal also dismissed the argument that the receipts should be treated as corpus contributions, as the assessee itself had treated them as revenue and claimed deductions under Section 11(2). For AY 2015-16, the Tribunal upheld the order passed under Section 263 by the CIT(E), agreeing that the assessee's activities, particularly the 'cess receipts' which constituted a major portion of its total receipts, fell under the fourth limb of Section 2(15) and were commercial in nature, exceeding the 20% benchmark. Therefore, the benefit of Section 11 was wrongly allowed by the AO. The Tribunal found no merit in the assessee's submissions and upheld the orders of the authorities below. No issue was expressly left undecided.

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) for various assessment years. Appeals for assessment years 2016-17, 2017-18, and 2018-19 were filed with a delay of one day, for which the assessee sought condonation. The ITAT decided to condone the delay. The primary issues revolved around the eligibility of the assessee for exemption under Sections 11 and 12 of the Income Tax Act, the treatment of cess receipts, and the validity of accumulation of income under Section 11(2). The appeal for AY 2015-16 also involved an order passed under Section 263 by the CIT (Exemptions).

What were the issues?

The Tribunal had to decide the following questions: 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, considering its activities and the nature of its receipts, particularly cess receipts. 2. Whether the cess amount received by the appellant Board on behalf of the State Government of Haryana should be treated as its income. 3. Whether the accumulation of income under Section 11(2) of the Income Tax Act, 1961, is valid, given the alleged defectiveness of the notice of accumulation and the nature of the assessee's activities. Assessee's Contentions: - The assessee argued that it is engaged in activities for the welfare of poor construction workers and that its activities are of general public utility, making it eligible for exemption under Sections 11 and 12. It relied on previous ITAT orders to this effect. - The cess amount received by the Board on behalf of the State Government should be excluded from its income. - The notice of accumulation given in Form 10 should be considered valid, and the benefit of accumulation under Section 11(2) should be allowed, including the statutory reduction of 15%. - The assessee also contended that the order of the CIT(A) was erroneous and passed without proper consideration of facts and submissions. Revenue's Contentions: - The revenue contended that the assessee was engaged in activities of general public utility which were commercial in nature, and that the cess receipts exceeded the permissible limit under Section 2(15) of the Act, disqualifying it from exemption. - The revenue argued that the assessee failed to utilize the required 85% of income for charitable purposes and that the conditions for accumulation under Section 11(2) were not met. - The revenue also argued that the assessee's claim of corpus contribution was without basis as it had claimed the receipt as revenue and sought deduction under Section 11(2).

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

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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 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 स्थायी लेखा सं./ PAN NO: AAATH6995H अपीलार्थी/Appellant प्रत्यर्थी/Respondent ( PHYSICAL HEARING ) निर्धारिती की ओर से/Asses

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