Statutory housing bodies advancing general public utility qualify for section 11 exemption if charges are nominal/cost-based without profit motive, despite resembling commerce; AO to verify against substantial profit threshold.

आदेश/ORDER 

Per Avdhesh Kumar Mishra, AM:

Common facts and similar grounds arise in the above captioned appeals of the assessee; therefore, these appeals were heard together and are being disposed off by this common order.

2. These appeals for Assessment Years (‘AYs’) 2011-12, 2012-13, 2013-14, 2016-17 & 2017-18 filed by the assessee are directed against the orders dated 05.08.2025 (same order date in every appeal) of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (‘NFAC’), Delhi [‘CIT(A)’] passed under section 250 of the Income Tax Act, 1961 (‘Act’). The impugned orders and assessment orders have been passed in the name of the assessee as ‘Account officer Chhattisgarh Housing Board’ whereas the appeals before us have been filed by ‘Chhattisgarh Housing Board’ having same PAN as in impugned orders and assessment orders.

3. We are taking the case of AY 2011-12 (ITA No. 649/RPR/2025) as lead case and are deciding the core issue that whether the appellant assessee is eligible for claiming exemption under section 11 of the Act. The grounds of appeal of ITA No. 649/RPR/2025, are as under: -

“1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition of Rs.1,71,93,880/- made by the Ld. AO by disallowing the exemption claimed u/s 11 of the Act and treating the surplus as taxable profit on the following alleged grounds:

a. The Appellant is allegedly engaged in commercial activities with predominant object to earn profit and such activities do not qualify as being undertaken for the advancement of the object of general public utility;

b. The aggregate receipts from the commercial activities are alleged to exceed Rs.10,00,000/- ”

2. The Appellant prays that the exemption u/s 11 of the Act be granted and the addition of Rs.1,71,93,880/- kindly be deleted."

3. The appellant craves leaves to add to, alter, amend and / or DLEETE the above grounds of appeal"

3.1 Similar grounds have been also taken in the other appeals.

4. The relevant facts giving rise to this appeal are that the assessee, a corporate body enacted by the State Legislature under the Chhattisgarh Griha Nirman Mandal Adhiniyam, 1972 (‘the Adhiniyam’) with the aim and object to fulfill the need of housing accommodation in urban areas of Chhattisgarh State, specially to the lower income group and weaker sections of the society. The functions and duties of the appellant assessee stipulated in Chapter-VI and IX of the Adhiniyam are mainly:

 To undertake housing schemes [page 13 of Factual Paper Book (FPB)];

 To undertake execution of work of housing schemes on behalf of any other body [page 14 of FPB];

 To provide the following in the housing sites developed [page 14 of FPB):

 Provision of the draining, water supply and lighting of the area;

 Provision of parks, playing fields and open spaces;

 Provision of facilities for communication and transport.

 To plan & co-ordinate the housing activities for the effective implementation of housing schemes [page 20 of FPB];

 To maintain, allot & lease the plots, buildings & other properties [page 20 of FPB].”

5. The assessee is also registered under section 12A of the Act since January, 30 of 2008 (with effect from 01.04.2006). The Ld. Assessing Officer (‘AO’) observing that the assessee’s activity is similar to those of the real estate Builder/ Developer as the assessee has sold residential units & plots on profit like Builders & Developers though the profit margin is lesser than the market. The Ld. AO has held that the assessee has not sold its housing unit on the cost to cost basis to the general public. The element of commercial and prof