ORIENT FASHION EXPORTS INDIA PVT LTD EMPLOYEES GROUP GRATITUTY SCHEME,NEW DELHI vs. PR. CIT - 10, NEW DELHI

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ITA 731/DEL/2021Status: DisposedITAT Delhi08 February 2023AY 2016-172 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the Gratuity Scheme had been duly approved by the Commissioner of Income Tax, there was no loss of revenue. Therefore, the addition made by the PCIT was incorrect.

What were the facts?

The assessee, an Employees Group Gratuity Scheme, claimed its contribution and interest income as exempt under Section 10(25)(iv). The PCIT invoked Section 263 to disallow this exemption, stating the scheme was not 'approved'. However, the assessee had obtained approval in 2005.

What were the issues?

Whether the income of an Employees Group Gratuity Scheme is exempt under Section 10(25)(iv) if it has obtained the necessary approval, even if the PCIT contends otherwise under Section 263.

Which sections of the Income-tax Act were involved?

Section 10(25)(iv),Section 263

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHIBENCH ‘E’, NEW DELHI

Before: Dr. B. R. R. KumarSh. Yogesh Kumar US

For Respondent: Ms. Sarita Kumari, CIT DR
Hearing: 29.11.2022Pronounced: 08.02.2023

Per Dr. B. R. R. Kumar, Accountant Member:

1.

The present appeal has been filed by the assessee against the order of ld. PCIT-10, Delhi dated 16.03.2021.

2.

Following grounds have been raised by the assessee:

“1. That the ld. Commissioner of Income Tax, Delhi-10 has grossly erred in law as well as facts of the case while making an additions of Rs.2,00,98,058/- on account of contribution received and Rs.78,99,838/- on account of interest earned by the appellant who is an “Employees Group Gratuity Scheme” and whose income is exempt from tax u/s 10(25)(iv) of the Act on the ground that the appellant is not an “Approved” Gratuity Fund whereas the appellant has applied for necessary approval vide its letter dated 31.03.2005 to the Commissioner of Income Tax, Delhi-V, New Delhi and the necessary approval has been granted by Commissioner of Income Tax-V, New Delhi vide order No. CIT-V/Gratuity/05-06/590 dated 27.06.2005.”

2 Orient Fashion Exports India Pvt. Ltd. 3. Heard the arguments of both the parties and perused the material available on record.

4.

We have gone through the assessment order wherein, the return filed declaring income of Rs. Nil, has been accepted by the AO.

5.

The ld PCIT passed u/s 263 enhancing the income of the assessee after disallowing the exempt income claimed u/s 10(23AAA) of the Act received by way of contribution of Rs. 2,00,98,050/- and interest income thereon of Rs. 78,99,830/-.

6.

At the outset it was brought to our notice that approval of Gratuity Scheme under Part “C” of the Fourth Schedule of Income Tax Act, 1961 was accorded to the assessee by the ld. CIT-5, Delhi. Since, the assessee has been duly approved, no case of loss of revenue could be discerned. Hence, the appeal of the assessee is allowed.

7.

In the result, the appeal of the assessee is allowed. Order Pronounced in the Open Court on 08/02/2023.

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