IN THE INCOME TAX APPELLATE TRIBUNAL “A’’BENCH: BANGALORE BEFORE SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER AND SHRI KESHAV DUBEY, JUDICIAL MEMBER ITA Nos.512 & 513/Bang/2025 Assessment Year : 2021-22 & 2015-16 Karnataka Housing Board

4^th Floor Cauvery Bhavan DCIT (Exemptions)

K.G. Road Circle-1 Vs.

Bangalore 560 009 Bangalore PAN NO :AAAJK0398K APPELLANT RESPONDENT Appellant by : Sri Padamchand Khincha, A.R.

Respondent by : Sri K.M. Mahesh, D.R.

Date of Hearing : 17.09.2025 Date of Pronouncement : 15.12.2025

O R D E R

PER KESHAV DUBEY, JUDICIAL MEMBER:

These appeals at the instance of the assessee are directed against the orders of the ld. CIT(A)/NFAC dated 18.02.2025 vide DIN & Order No.ITBA/NFAC/S/250/2024-25/1073418441(1) for the assessment year 2021-22 and vide Order dated 31.1.2025 with DIN & Order No.ITBA/NFAC/S/250/2024-25/1072790068(1) for the assessment year 2015-16 passed u/s 250 of the Income Tax Act, 1961 (in short “The Act”). Since the issues in both the appeals are similar, these are clubbed together, heard together and disposed of by this common order for the sake of convenience.

2. First, we take up assessee’s appeal in ITA No.512/Bang/2025 for the assessment year 2021-22 for adjudication. The assessee has raised the following grounds of appeal:

3. Brief facts of the case shows that the assessee Karnataka Housing Board (KHB) was established under the Karnataka Housing Board Act, 1962 by the Government of Karnataka as a successor of Mysore Housing Board which was constituted in the year 1956. Further, as per the details furnished, the primary object of Karnataka Housing Board is to make schemes and to carry out such works as are necessary for the purpose of dealing with the need of the housing accommodation in the state of Karnataka. It endeavors to provide houses to the people of Karnataka at an affordable cost. The case for the assessment year 2021-22 was selected for scrutiny through CASS the reason being “large receipts reported by the Trust for Charitable purposes” and accordingly notices u/s 143(2) as well as 142(1) of the Act were issued along with SCN from time to time. During the course of assessment proceedings, the assessee submitted the computation of income from which the AO observed that the main function of the assessee is to procure the land and develop the same into layouts by undertaking land development activities and convert the same into saleable plots/sites. Similarly, the assessee is also engaged in acquisition of land for the construction of houses and sale of the same to the general public.

3.1 Up to the assessment year 2002-03, the assessee was enjoying the benefit of exemption u/s 10(20A) of the Act under which the entire income of the assessee was exempted from tax. However, the above provisions were deleted w.e.f. 1.4.2003 and subsequently from AY 2003-04 onwards, it had opted for exemption u/s 11 & 12 of the Act. The assessee had filed an application before the DIT (Exemptions) seeking registration u/s 12AA of the Act, which was granted on 3.2.2004 vide Reg. No. DIT(E)/12A/VOL1/K-

714/W-1.

3.2 During the course of the assessment proceedings,the AO observed that the substantial receiptsare from the auction of housing sites and shops. As per the ITR, the gross receipts amounting to Rs.282,36,24,802/-, wherein the sale as per the submission of the assessee amounting to Rs.87,16,44,809/- i.e. 30% of the receipt is received from the auction sale on commercial lines. The assessee in its reply submitted that the primary object of the Karnataka Housing Board is to make such schemes and to carry out such works as are necessary for the purpose of dealing with and satisfying the need of housing accommodation. With this directive KHB endeavors to provide housing to the people of Karnataka state at affordable cost and therefore, recognized as the most important agency for housing throughout Karnataka. However, the AO did not accept the contention of the assessee& held that as per section 2(15) of the Act as