The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT), confirmed tax exemptions for Gujarat Housing Board Under Sections 11 and 12 of the Income Tax Act,1961 and rejected the Revenue’s appeal.
The case relates to multiple assessment years, including 2011-12 and 2015-16 to 2018-19, during which the Revenue had challenged the Gujarat Housing Board’s claim of exemption under the Income Tax Act. The Revenue had earlier taken the matter to the Supreme Court after the Gujarat High Court ruled in favor of the Housing Board, directing the assessment officer to re-examine the exemption claims in light of relevant judicial precedents.
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In a landmark ruling in October 2022, the Supreme Court sided with the Gujarat Housing Board and other similar statutory bodies, rejecting the Revenue Department’s claims. The Court made it clear that organizations set up by the government for essential public service, such as housing, town planning, and industrial development, do not engage in commercial business if they charge fees that only cover costs or include a nominal margin. It ruled that only those entities significantly overpricing their services could lose their tax-exempt status.
With this precedent existing ,the ITAT found no merit in the Revenue’s appeals, concluding that the Gujarat Housing Board’s operations genuinely served the public good and did not fall under the category of trade or commerce. The bench also dismissed the argument that the Board’s exemption should be reconsidered under Sections 2(15) and 13(8) of the Income Tax Act, emphasizing that the Supreme Court had already settled the issue in favor of similar government-backed bodies.
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The ITAT comprising Narendra Prasad Sinha ( Accountant Member ) and T.R. Senthil Kumar( Judicial Member ) dismissed the appeals filed by the revenue.
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