PIONEER STEELS EMPLOYEES GROUP GRATUITY FUND,COIMBATORE vs. ADDITIONAL/ JOINT/ DEPUTY/ ASSISTANT COMMISSIONER OF INCOME TAX - NATIONAL E-ASSESSMENT CENTRE, DELHI, DELHI

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ITA 457/CHNY/2023Status: DisposedITAT Chennai16 June 2023AY 2018-194 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted the assessee had made repeated attempts to get the gratuity fund approved. It directed the Assessing Officer to inquire into the status of the original approval application and consider the implications of deemed approval if the application was not decided.

What were the facts?

The assessee claimed exemption under Section 10(25) for contributions to a gratuity fund. The Assessing Officer disallowed the claim due to lack of approval from the competent authority. The CIT(A) confirmed the disallowance, noting approval was granted only from a later assessment year.

What were the issues?

Whether the disallowance of exemption for gratuity fund contributions is justified when the approval process was pending and the assessee had made diligent efforts for approval.

Which sections of the Income-tax Act were involved?

Section 10(25)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ (SMC

Before: SHRI MAHAVIR SINGH

Hearing: 14.06.2023Pronounced: 16.06.2023

आदेश /O R D E R This appeal by the assessee is arising out of the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 17.01.2023. The assessment was framed by the Addl./Joint/Deputy/Asst. Commissioner of Income Tax/Income Tax Officer, National e-Assessment Centre, Delhi for the assessment year 2018-19 u/s.143(3) r.w.s. 143(3A) & 143(3B) of the Income Tax Act, 1961 (hereinafter the ‘Act’) vide order dated 06.01.2021.

2.

At the outset it is noticed that this appeal are barred by limitation by 23 days. The impugned appellate order of CIT(A) was communicated to the assessee on 17.01.2023 and appeal was to be filed within 60 days i.e., 18.03.2023 but actually the appeal was filed only on 10.04.2023 thereby there was a delay of 23 days. The assessee has filed condonation petition supported by affidavit stating that the assessee was based at Coimbatore and there was change in the authorized representative of the assessee. Therefore, in the process of collation of details and handing over documents to the newly appointed representative at Chennai, there was a delay. When the above reason was confronted to ld. Senior DR, he could not controvert the above fact situation. After going through the reasons given in the affidavit stating the reasons for delay of 20 days, I feel the cause as reasonable and hence, condone the delay and admit the appeal.

3.

The only issue in this appeal of assessee is as regards to the order of CIT(A) upholding the disallowance made by AO of Rs.3,81,095/- claimed u/s.10(25) of the Act being contribution to gratuity fund without approval of group gratuity fund by CIT.

4.

I have heard rival contentions and gone through facts and circumstances of the case. I noted that the assessee’s trust has filed an application for approval of gratuity fund under Part C of the fourth

1.

- 3 - Act before ACIT, Circle XI, Coimbatore as claimed by it. This application is to be approved by the concerned CIT(Admin) / PCIT. The assessee time and again filed reminders and several reminder letters vide dated 05.01.2010, 01.02.2012 and 24.07.2015 were filed but remained unreplied.

5.

The assessee filed return of income for the relevant assessment year 2018-19. The assessee is a gratuity fund trust of M/s. Pioneer Steels, a partnership firm and claimed exemption u/s.10(25) of the Act for an amount of Rs.3,81,095/- being contribution to group gratuity scheme. The AO simpliciter disallowed, for the reason that there is no approval from the competent authority i.e., PCIT for claim of deduction u/s.10(25) of the Act and hence, he made disallowance. The CIT(A) also confirmed the action of the AO but noted that the assessee’s application filed online seeking approval of PCIT, Coimbatore-1 on 29.04.2022 was accorded approval vide proceedings dated 27.10.2022 w.e.f., financial year 2022-23. It means, according to CIT(A), the assessee is eligible for claim of deduction u/s.10(25) of the Act from assessment year 2022-23 and hence, he rejected the claim of assessee.

6.

I noted that the assessee has applied application for approval of group gratuity fund under Part C of the fourth schedule of the Act

- 4 - CIT/PCIT and has sent several reminders vide letters dated 05.01.2010, 01.02.2012 and 24.07.2015 but remains unanswered. It means that there is no fault on the part of the assessee for seeking approval of the group gratuity fund and there is no doubt about the genuineness of transaction. However, in entirety of facts, I’m of the view that let one more opportunity be given to the Revenue to enquire into the assessee’s trust application dated 15.04.2008 for approval of group gratuity fund, whether the same is rejected or not. In case, it is rejected prior to 01.04.2017, the assessee will have no case but if it is not decided, the deemed approval will come into play and AO has to allow the claim of assessee. In term of the above, the appeal of the assessee is set aside and remanded back to the file of the AO for fresh consideration in term of the above directions.

7.

In the result, the appeal filed by the assessee is partly-allowed for statistical purposes.

Order pronounced in the open court on 16th June, 2023 at Chennai.

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