Trust Building Flats for Members Eligible for Section 11 Exemption | HC

Case Details: Commissioner of Income-tax (Exemption) vs. Kutchi Sarvodaya Nagar - [2025] 175 taxmann.com 647 (Bombay)

Judiciary and Counsel Details

• B.P. Colabawalla & Firdosh P. Pooniwalla, JJ.
• Akhileshwar Sharma, Adv. for the Appellant.
• Nitesh Joshi & Atul K. Jasani, Advs. for the Respondent.

Facts of the Case

The assessee-trust was formed to construct flats for its members. It filed its return along with the Income and Expenditure Account, Balance Sheet, and Audit Report in Form 10B, declaring nil income. During the year, the Assessing Officer (AO) noticed that the assessee had collected transfer fees from new members and received interest on investment.

AO considered the assessee engaged in a commercial activity by constructing houses on his property and selling them to the members. He concluded that the assessee was not entitled to the exemption contemplated under section 11. On appeal, the CIT(A) deleted the additions made by AO. The Tribunal upheld the order of CIT(A). The matter then reached the Bombay High Court.

High Court Held

The High Court held that the entire case had been decided purely on facts. The Tribunal is the last fact-finding authority that concluded that the assessee trust was not carrying on any commercial activity and, therefore, was entitled to the exemption under section 11. This finding of the Tribunal is purely based on the facts of the case, which were also analysed by the CIT(A) before he partly allowed the assessee’s appeal. In these circumstances, the order of the Tribunal does not give rise to any substantial question of law, much less the questions of law as projected by the revenue. Thus, there was no merit in the appeal filed by the revenue.