Statutory Housing Boards: Profit Motive vs. General Public Utility (GPU)

The Legal Issue

The core dispute is whether a Statutory Housing Board, which sells plots and residential units, should be treated as a commercial real estate developer (taxable) or a charitable organization providing a General Public Utility (GPU) (exempt under Section 11). The conflict centers on the Proviso to Section 2(15), which denies charitable status if the entity engages in any activity in the nature of trade, commerce, or business for a fee.

Facts of the Case

The Assessee: A Housing Board established under a state statute, registered under Section 12A, with the primary mandate of providing housing to lower-income groups and weaker sections.
The Assessment: For several years (AY 2011-12 to 2017-18), the Assessing Officer (AO) denied the Section 11 exemption. The AO argued that the Board’s activities—selling units and plots—were identical to those of private builders and were driven by profit.
The Defense: The Board argued it was performing a statutory function for the public good, and any surplus generated was incidental to its primary charitable purpose.

**The Decision (Applying the AUDA Supreme Court Precedent)**

The Court followed the landmark 2022 Supreme Court ruling in ACIT (Exemptions) v. Ahmedabad Urban Development Authority (AUDA). The ruling established a specific “test” for statutory bodies:

Nature of the Function: If a statutory body performs functions that advance a “General Public Utility” (like housing), the mere fact that it charges a fee does not automatically make it a business.
The “Nominal Mark-up” Test: The activity is NOT “trade, commerce, or business” if the fee or consideration charged:
- Only covers the cost (including administrative expenses).
- Includes only a nominal mark-up intended to sustain the organization or its future projects.
Remand Order: The Court held that since the Board was discharging public functions, its receipts could be excluded from “business income” if they met the AUDA criteria. The matter was remanded to the AO to check the Board’s accounts.

Key Takeaways

Statutory Shield: Being a government-created body provides a stronger argument for GPU status, but it is not an absolute shield.
Accounting for Costs: Housing Boards must demonstrate that their pricing for EWS (Economically Weaker Sections) and LIG (Lower Income Groups) is based on a “cost-recovery” model rather than a “profit-maximization” model.
The 20% Limit: Even if an activity is deemed “commercial,” the entity can still keep its exemption if the gross receipts from such activities do not exceed 20% of the total receipts of the trust/institution (as per the second proviso to Section 2(15)).

IN THE ITAT RAIPUR BENCH

Chhattisgarh Housing Board

Assistant Commissioner of Income-tax (Exemption)^*

Partha Sarathi Chaudhury, Judicial Member
and Avdhesh Kumar Mishra, Accountant Member

IT Appeal Nos. 649, 650, 651,652 & 653 (RPR.) of 2025
[Assessment years 2011-12 to 2013-14, 2016-17 and 2017-18]

FEBRUARY 17, 2026

Shubham Mehta, CA for the Appellant. Dr. Priyanka Patel, Sr. DR and Raj Kumar Ghosh, CIT-DR for the Respondent.

ORDER

Avdhesh Kumar Mishra, Accountant Member.- 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:

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;

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

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.”

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.

ITA No. 649/RPR/2025

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 profit motive in the assessee’s activities have been noticed by the Ld. AO. Therefore, the Ld. AO has held that the assessee is engaged in the business as Builders & Developers. Further, the Ld. AO has also observed that the assessee does not exist for general public as it sells the housing unit & plots to the financially capable persons who could buy the property at the rate determined by the appellant assessee. Based on these details/observations/inference, the Ld. AO disallowed the claim of exemption under section 11 of the Act. Aggrieved, the assessee filed appeal before the Ld. CIT(A), who upheld the findings of the Ld. AO and dismissed the appeal as under:

“6.1 The appellant did not file return of income for A.Y. 2011-12. The proceedings u/s 143(3) r.w.s 147 of the Act were initiated in the case of appellant on the basis of information available with the department that appellant did not file return of income for A.Y. 2011-12 and engaged in activities of providing housing facilities, construction and sale of houses to local public by large and carrying out all the business activities which are carried out by a construction company or entity carrying on business of builder/developer. Further cash aggregating Rs. 2 lakh or more with banking company during one day amounting to Rs. 2,94,49,120/- and received contract receipts of Rs. 39,24,946/- and received interest on securities of Rs. 21,551/-. Since no return of income was filed by the appellant, the receipts of F.Y. 2010-11 remained unoffered for the purpose of taxation. Accordingly notice u/s 148 of the Act dated 23.03.2018 was issued to the appellant requesting to file return of income within prescribed time limit. In response, the appellant filed return of income declaring total income at Nil. During the assessment proceedings the appellant was confronted on the issue of receipt of Rs. 3,33,95,617/- [Rs. 2,94,49,120/- 39,24,946/- 21,551/-]. Various notices were issued to the appellant, in response, the appellant filed its reply from time to time, however failed to explain the issue before the AO. Therefore, the assessment proceedings u/s 143(3) r.w.s 147 of the Act were finalized on 24.12.2018 after treating net surplus shown in income and expenditure account of Rs. 1,71,93,880/- as business income earned by the appellant as income from business and profession filed this appeal. Aggrieved by such addition to the total income, the appellant has filed this appeal.

6.2 Ground no.1 and 2 of appeal are related to the addition of Rs. 1,71,93,880/- to the total income of the appellant as income from business and profession. The appellant has submitted that the observations made by the A.O. against the appellant and ultimate addition made in the impugned assessment, unsubstantiated on the strength of evidence brought against the appellant. The appellant further submitted that the AO has erred in making addition of Rs.1,71,93,880/- being net surplus shown in the income expenditure a/c on account of proviso to section 2(15) stating the activity of the assessee is in the nature of commercial activity and the receipts in the nature of commercial activity are more than 20% of total receipts.

6.2.1 The issues raised by the appellant have been perused. Appellant is a body corporate having perpetual succession, created to act, to acquire, hold and dispose of property and to contract by the said name. Further, the appellant is enacted under the State Act for the purpose of taking measures to deal with and satisfying the need of housing accommodation in the State of Chhattisgarh, especially to the lower income group (LIG) and to the weaker sections of the society with a no profit/loss objective. The appellant has been granted registration under section 12A of the Income Tax Act, 1961 Perusal of the assessment order reveals that the appellant during the year under consideration deposited cash to the tune of Rs. 2,94,49,120/-, received contract receipts of Rs. 39,24,946/- and was in receipt of interest on securities of Rs. 21,551/- however did not file the return of income. Therefore, receipts of Rs. 3,33,95,617/- remained unoffered for the purpose of taxation. During the assessment proceedings the appellant has filed return of income in response to the notice u/s 148 of the Act declaring total income at NIL after claiming exemption u/s 11 of the Act. The appellant was having net surplus of Rs. 1,71,93,880/- as per the income and expenditure statement furnished by it before AO.

6.2.2 During the assessment proceedings the AO examined the issue of advancement of general public utility in the case of the appellant. The discussion made by AO with respect to the advancement of general public utility is reproduced:

…………………………………………………..

………………………………………………….

Since the contract receipts were of Rs. 39,24,946/- which is more than 25 lakh in A.Y. 2011-12, and further considering the activity of the appellant during A.Y. 2011-12 in the nature of trade, commerce or business, the AO invoked the provision of section 2(15) of the Act and treated the net surplus of Rs. 1,71,93,880/- shown in income & expenditure statement and income earned by the appellant from business & profession.

6.2.3 During the appellate proceedings the appellant has re-iterated the same facts which were stated before the AO. The appellant has submitted that it is an Extended arm of Chhattisgarh State Government, It was enacted under a separate Act i.e. Chhattisgarh Griha Nirman Mandal Adhiniyam, 1972 constituted under the State Act for the purpose of taking measures to deal with and satisfying the need of housing accommodation in the State of Chhattisgarh, especially to the lower income group and to the weaker sections of the society with a no profit / loss objective. The appellant has claimed that in A.Y. 2010-11 reassessment proceedings were dropped on the same issue after verification of the books of accounts however no documentary evidences have been furnished by the appellant.

6.2.4 The appellant has argued that it works for ‘not for profit as it constructs and sells the houses on cost basis. Further it is not authorized to declare any dividend still the AO concluded that the objects of the appellant are not charitable in nature which is contrary to the registration granted u/s 12A of the Act.

6.2.5 The appellant has filed the written submission before appellate authority which has point wise rebuttal of the reason and conclusion of AO which led to the addition of Rs. 1,71,93,880/- being income from business & profession. The appellant has also relied upon various case laws and pleaded to delete the addition made by the AO. The submission filed by the appellant and the copy of assessment order u/s 147 of the Act dated 24.12.2018 has been carefully perused and verified. The issue overhear is related to the contract receipts of Rs. 39,24,946/- which is more than the prescribed limit for A.Y. 2011-12 of Rs. 25 Lakh since the appellant is a trust and advancement of any other utility shall not be entitled to exemption u/s 11 or 12 of the Act in year wherein its receipts from commercial activities exceed Rs. 25 Lakhs, therefore the activity of the appellant is regarded as noncharitable nature by virtue of section 2(15) first and second provision.

6.2.6 The appellant has tried to justify on the issues of contract receipts stating along with providing housing for LIG and weaker section we also works as nodal agency to the state government thus also construct houses and other buildings on the behalf of the government, PSU(s), Government departments, Universities and other agencies, on a no profit/no loss basis however has not said anything about the contract receipts. The fact is that the object of the appellant is providing houses for EWS, LIG and weaker section however, during the year under consideration the appellant is involved in construction of buildings and house for other agencies which was considered as the advancement of any other activity other than general public utility by the AO and receipts from such activity is much higher than limit of Rs. 25 Lakh. Further it is observed that in the case of the appellant in A.Y. 2018-19 no addition to the income was made by AO after due verification of receipts of main object and receipts from incidental objects. The AO while concluding the assessment proceedings in A.Y. 2018-19 has mentioned that the aggregate receipts from incidental object during the year does not exceed 20% of the total receipts of the trust or institution since w.e.f 01.04.2016 (ie. w.e.f A.Y. 2016-17) the limit for aggregate receipts from advancement of any other activity other than general public utility is restricted to 20% of total receipts of trust/institution during previous year ie, do not exceed to 20% of the total receipts of trust/institution. However for A.Y. 2011-12 no such details of receipts from main object and receipts from incidental objects has been furnished by the appellant. The only details available on record is about the contract receipts of Rs. 39,24,946/- which the appellant has claimed of receiving in lieu of contract received from government, PSU(s), Government departments, Universities and other agencies. Further with respect to the objects of general public utility, the Hon’ble Supreme Court in the case of Ahmedabad Urban Development Authority (SC) has held as under:

……………………………………………….

6.2.7 In view of the above discussion and respectfully following the decision of the Hon’ble Supreme Court in the case of Ahmedabad Urban Development Authority (SC) the action of AO in considering the net surplus of Rs. 1,71,93,880/- as income earned by the appellant from business and profession by invoking provision of section 2(15) of the Act is justified. Ground no. 1 and 2 of appeal are dismissed.”

[Emphasis supplied]

5. 1 Similar findings are in other appeals of AYs 2012-13, 2013-14, 2016-17 & 2017-18 also.

6. At the outset, Shri Shubham Mehta, CA, Ld. Authorized Representative (‘AR’) of the assessee submitted that the assessee came into the existence by the enactment of Chhattisgarh Legislature. The aim and object of the assessee was to provide housing accommodations at reasonable price to all sections of the society particularly to weaker sections and not to earn any profit from trade, commerce and business. Further, the Ld. AR submitted that the appellant assessee had sold housing units on cost to cost basis and had not derived any profit thereon. He drew out attention to the page 50 of the Paper Book to demonstrate that the assessee had not derived any profit from the sale of plots. He categorically submitted that the Income & Expenditure Account of the relevant year included interest income, rental income, etc. which resulted surplus. He contended forcefully that the question of deriving profit as a commercial entity did not arise at all. He argued that the Ld. AO had not brought any material on the record to demonstrate and to establish that the assessee had derived profit by selling its housing units. In support of his contention, Ld. AR relied on the decision of the Hon’ble Supreme Court in the case of CIT v. Andhra Chamber of Commerce [1965] 55 ITR 722 (SC), wherein it had been held as under:

“The expression ‘object of general public utility, however, is not restricted to objects beneficial to the whole of mankind. An object beneficial to a section of the public is an object of general public utility. To serve a charitable purpose, it is not necessary that the object should be to benefit the whole or mankind or even all persons living in a particular country or province. It is sufficient if the intention to benefit a section of the public as distinguished from specified individuals.”

7. Further, the Ld. AR placed reliance on the decision of Hon’ble Supreme Court in the case of Asstt. CIT (Exemptions) v. Ahmedabad Urban Development Authority ITR 1 (SC) & Asstt. CIT (Exemptions) v. Ahmedabad Urban Development Authority ITR 389 (SC) and the Tribunal decision in the case of Dy. CIT v. Raipur Development Authority [IT Appeal No. 212 of 2014, dated 16-4-2018] (Raipur ITAT). The Ld. AR, placing reliance on the decision of the Hon’ble Supreme Court in Ahmedabad Urban Development Authority (supra), submitted that the objective of housing Authority/Board is for advancement of public development and amount charged by such Authority/Board achieving its objectives did not, prima facie, fall within the purview of commercial receipts merely because a certain consideration had been charged as there was no element of any trade, commerce or business. He contended that neither the Ld. AO nor the Ld. CIT(A) had taken any pain to examine the case in view of the decision of Hon’ble Supreme Court in the case of Ahmedabad Urban Development Authority (supra). Further, he placed reliance on the decision of the Hon’ble Supreme Court in following cases:

•

Dy. CIT, Exemption v. Jhansi Development Authority ITD 692 (Delhi – Trib.) [Page 161-165 of Case laws);

•

Dy. CIT (Exemptions) v. Surat Urban Development Authority (Ahmedabad – Trib.) [Page 166-170 of Case laws);

•

Maharashtra Cricket Association v. ACIT(E) (Pune – Trib.) [Page 200-206 of Case laws];

•

M.P. Madhyam v. DY. CIT [IT Appeal Nos. 422, 423, 425 and 427 (Ind.) of 2022, dated 31-8-2023] [Indore ITAT] [Page 207-228 of Case laws).

8. The Ld. AR also submitted that the Ld. PCIT/CIT dropped the initiation of cancellation proceedings of registration of the assessee as Trust under section 12AA(3) of the Act vide order dated 08.02.2021.

9. Shri Raj Kumar Ghosh, CIT-DR, argued all cases except the ITA No. 649/RPR/2025 vehemently. He, placing reliance on the findings of the Ld. CIT(A), defended the orders of Authorities below. Dr. Priyanka Patel, Sr. DR, argued the case; ITA No. 649/RPR/2025 vehemently and defended the orders of the Authorities below.

10. We have heard both parties and have perused the material available on the record. We find force in the contentions/submissions/arguments of the Ld. AR. Section 2(15), which deals with definition of charitable purpose, reads as under:

“charitable purpose” includes relief of the poor, education, yoga, medical relief, preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest, and the advancement of any other object of general public utility:

Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity, unless—

(i)

such activity is undertaken in the course of actual carrying out of such advancement of any other object of general public utility; and

(ii)

the aggregate receipts from such activity or activities during the previous year, do not exceed twenty per cent of the total receipts, of the trust or institution undertaking such activity or activities, of that previous year;”

11. The definition of “advancement of any other object of General Public Utility” (‘GPU’), which was the subject of interpretation in the case of Ahmedabad Urban Development Authority (supra) & Ahmedabad Urban Development Authority (supra). The Hon’ble Supreme Court has dealt the issue related to the assessees claiming exemption as charitable organizations under the GPU Category. The ‘charitable purposes’ defined in the Act includes activities for the advancement of object of GPU subject to certain prescribed conditions. Various Hon’ble High Courts have interpreted the term ‘GPU’ widely, and by applying the ‘predominant object’ test, have held that carrying on of any trade, commerce or business is per se not a bar or disqualification for a GPU category charitable organizations. Three judges bench of the Hon’ble Supreme Court, in a batch of appeals dealing with more than 100 SLPs where not only Housing Boards such as Ahmedabad Urban Development Authority (AUDA), Gujarat Industrial Development Corporation (GIDC) and Gujarat Housing Board (GHB) etc., Statutory Regulatory Bodies/Authorities such as, Institute of Chartered Accountants of India (ICAI), Andhra Pradesh State Seeds Certification Authority, etc., Trade Promotion Bodies, such as AEPC, Non-Statutory Bodies such as ERNET, NIXI and GS, Sports/Cricket Associations, such as BCCI and State Cricket Associations, Private Trusts, titled as Ahmedabad Urban Development Authority (supra), has interpreted the proviso to section 2(15) of the Act and has also answered the question as to whether the above mentioned categories of assessees were involved in the object of GPU and if so, whether they were carrying on any trade, commerce and business.

12. The Hon’ble Supreme court, in the case of Ahmedabad Urban Development Authority (supra), while noting the entire history of charitable enactments since early 1900, threadbare dealt with the decisions in case the Indian Chamber of Commerce, Andhra Chamber of Commerce, Surat Art Silk Mills (where predominant object test was applied), Thanti Trust and the law in this regard including the provisions of section 11(4) and 11(4A) and the distinction between these two sections. The Hon’ble Supreme Court also interpreted the relevance of CBDT Circular No. 1/2009 dated 27 March.2009 and Circular No. 11/2008 dated 19 December 2008, FM speech in the parliament as far as interpretation of an enactment was concerned. It has been held by the Hon’ble Supreme Court that section 2(15) of the Act after its amendment in 2008, 2011 and 2015 and thereafter, is that firstly a GPU charity organization is not permitted to engage in any activity in the nature of trade, commerce, business or any service in relation to such activities for any consideration (including a statutory fee etc.). Moreover, rendition of service or providing any article or goods, by such Boards, Authority, Corporation, etc., on cost or nominal mark-up basis would ipso facto not be activities in the nature of business, trade or commerce or service in relation to such business, trade or commerce. On these basis, Statutory Corporations, Boards, Authorities, Trusts, Statutory Regulatory Bodies were held to be engaged in object of GPU (ICAI in relation to other activities carried on by it in addition to education). While holding so the Hon’ble Supreme Court laid down the primary test, that the consideration which is being charged is nominal and marginal above cost will be the decisive factor in determining their existence for charity purposes. In other words, the Hon’ble Supreme Court has further held that the GPU category charitable organizations would fulfil the criteria of ‘charitable purpose’ only if those do not engage in any trade, commerce, business or services in relation thereto for a cess, fee, or consideration. However, as an exception, income from business activity carried out in the course of attaining the object of GPU, would qualify for tax exemption, where the income is within the prescribed threshold and separate books of accounts are maintained. The Hon’ble Supreme Court distinguished the decision in the case of Addl. CIT v. Surat Art Silk Cloth Manufacturers Association (SC)/[1980] 2 SSC 31 as it no longer stood good due to amendments in the law. Similarly, the decision in the case of Asstt. CIT v. Thanthi Trust (SC)/[2001] 2SCC 707 was also distinguished on the basis that the said trust was involved in ‘education’ and advancing GPU was not its objective.

13. The Hon’ble Supreme Court in the case of Ahmedabad Urban Development Authority (supra) has further held that not every state activity resembling commerce may be considered taxable. Section 11(4A) of the Act is to be interpreted together with section 2(15) of the Act, with which there is no conflict. Carrying out an activity in the nature of trade, commerce, or business, or a related service, is conducted in the course of achieving the GPU object, and the income, profit, surplus, or gains must therefore be incidental. The requirement in section 11(4A) to maintain separate books of account also is aligned with the necessity of demonstrating that the quantitative limit prescribed in the proviso to section 2(15) of the Act has not been breached. The Hon’ble Supreme Court in the case of Ahmedabad Urban Development Authority (supra), in the cases of Statutory Corporation, Board, or any other body set-up by the State or Central Government, has held that they discharge public functions which may resemble trade, commercial, or business activities, but it is essential for advancement of public purposes/functions. The assessee in present case, a Statutory Corporation, is discharging public functions resembling trade, commercial, or business activities, but it is essential for advancement of public purposes/functions. However, since its objects are essential for advancement of public purposes or functions, its receipts are prima facie to be excluded from the scope of business or commercial receipts in case the assessee has not charged over & above the nominal mark-up which should be sufficient for its survival & reasonable growth over the years. Such receipts, as per the decision of the Hon’ble Supreme Court in the case of Ahmedabad Urban Development Authority (supra), are prima facie have to be excluded from the mischief of business or commercial receipts. In this decision, the Hon’ble Supreme Court has directed the Revenue/AO to determine the nature of activities carried out and consideration/fees charged for the same. The Hon’ble Supreme Court has held that the crucial & determinative element in a Statutory Body, like the assessee in case in hand, is whether performance of a function is driven by profit motive. If the consideration/fees charged is significantly higher than the costs incurred, such income would be subject to the prescribed quantitative threshold and may lose benefit of tax exemption. The Hon’ble Supreme Court directed the Central Government may, on a case-to-case basis, decide whether and to what extent exemption can be awarded to such bodies by notifying them. Thereafter, section 10(46A) of the Act came into statute.

14. The Hon’ble Supreme Court in the case of Ahmedabad Urban Development Authority (supra) has held that the Act does not only envisage pure charity, i.e., charitable activities with no consideration. Where GPU category charitable organizations involve incidental activities with a consideration, it can be granted exemption provided the receipts from such activities are within the prescribed threshold. Similarly, statutory boards and authorities, which are under section 11(4A) of the Act mandate to develop housing, industrial and other estates at reasonable or subsidized costs and which might entail charging higher amounts from some section of the beneficiaries to cross-subsidize the main activity, cannot be characterized as engaging in business. Where a fee or consideration charged for an activity (advancing GPU objective) is nominal and only covers the cost (including administrative expenses) or includes a nominal mark-up, it cannot be construed to be ‘trade, commerce, or business’. However, where the consideration/fees charged for an activity is substantial or significantly above the cost, such activity would fall within the ambit of ‘trade, commerce, or business’. The Hon’ble Supreme Court also provided certain instances where even though consideration is charged, it would not be construed to be in the nature of business income. This includes providing low-cost hotels, renting marriage halls for low amounts, blood bank services with fees only to cover costs, etc. The Hon’ble Supreme Court in the case of Ahmedabad Urban Development Authority (supra) has also deliberated on the availability of tax exemption to different types of charitable bodies, such as statutory organizations, regulatory bodies, trade associations, etc., under GPU category.

15. We have heard both parties at length and have perused the material available on record. We are of the considered view that this case is squarely covered by the decision of the Hon’ble Supreme Court in the case of Ahmedabad Urban Development Authority (supra). In view of the above observations/ comments/details, we, following the reasoning given by the Hon’ble Supreme Court in its decision in the case of Ahmedabad Urban Development Authority (supra), set aside the impugned order and remand the matter back to the file of the Ld. AO to examine that whether the consideration charged for residential units/plots by the appellant assessee is substantial or significantly above the cost plus nominal mark-up. In case, the Ld. AO finds that there is no element of profit in the activates carried out by the assessee, the exemption under section 11 of the Act has to be allowed to the assessee as per law, otherwise not.

16. In the result, this appeal of the assessee is allowed as above for statistical purposes.

ITA No. 650 to 653/RPR/2025

17. The finding in ITA No. 649/RPR/2025 is held applicable mutatis mutandis in these cases/appeals also.

18. In the result, these appeals of the assessee are allowed as above for statistical purposes.

ITA No. 649, 650, 651, 652 & 653/RPR/2025:

19. In the result, all appeals of the assessee are allowed as above for statistical purposes.