JNTL CONSUMER HEALTH (INDIA) PRIVATE LIMITED,MUMBAI vs. INCOME TAX OFFICER, WARD NO. 15(2)(1), MUMBAI

Brief facts of the case are that the assessee is private company limited by shares and is engaged in the consumer health sector, mainly focusing on women health, baby products, skin health, beauty, oral health and rehydration, where the consumer health business of Johnson & Johnson Private Limited (JJPL) was demerged into the assessee’s company w.e.f. 02.01.2023 subsequent to the order of Hon'ble National Company Law Tribunal (‘NCLT’) under the scheme of Arrangement and Demerger, where all the assets, liabilities and reserves of consume health business of JJPL were transferred to the assessee company. The assessee then filed its return of income dated 29.11.2023, declaring total income at Rs. 2,06,31,60,840/- and the same was processed (A.Y. 2023-24) JNTL Consumer Health (India) Pvt. Ltd. u/s. 143(1) of the Act. The CPC/AO passed the intimation dated 27.03.2024, where the total income was determined at Rs. 2,15,70,52,230/- after making addition/disallowance towards the leave encashment claimed in the return and audit report at Rs. 32,70,937/- and towards the bonus or commission for service rendered at Rs. 9,06,20,449/- u/s. 43B of the Act, thereby granting short refund of Rs 1,84,65,880/- 4. Aggrieved the assessee was in appeal before the first appellate authority, who vide order dated 20.01.2025, upheld the disallowance made by the CPC on the ground that the assessee has failed to furnish the documentary evidence to substantiate its claim of leave encashment and bonus payments made during the relevant year.

The assessee is in appeal before us, challenging the impugned order of the ld. CIT(A).

The learned Authorised Representative ('ld. AR' for short) for the assessee contended that the assessee had filed all the details pertaining to its claim of deduction u/s. 43B of the Act towards the bonus payment and leave encashment before the first appellate authority but the same was not considered by the ld. CIT(A). The ld. AR brought our attention to the notice issued by the ld. CIT(A), where the details sought for was to be furnished on or before 20.12.2024 and then in the subsequent notice on or before 21.01.2025 which were placed at page no. 336 and 339 of the paper book. Further, the ld. AR brought our attention to the page 342 of the paper book, where the assessee is said to have filed details sought for by the ld. CIT(A) vide its submission dated 20.01.2025. The ld. AR contended that the ld. CIT(A) had passed the impugned order on 20.01.2025 were the assessee’s submissions were not considered and the ld. CIT(A) had dismissed the appeal filed by the assessee on the ground that the assessee has failed (A.Y. 2023-24) JNTL Consumer Health (India) Pvt. Ltd. to file the supporting documentary evidence. The ld. AR prayed that the assessee is provided with one more opportunity to present its case before the lower authorities.

The learned Departmental Representative ('ld. DR' for short) for the revenue on the other hand opposed to the same and stated that the assessee has not filed documents in physical mode and the same has been filed through online mode after the time specified by the ld. CIT(A). The ld. DR relied on the order of the lower authorities.

We have heard the rival submissions and perused the materials available on record. The issue that requires adjudication is whether the assessee was entitled to claim deduction u/s. 43B of the Act towards the payment of leave encashment and bonus amounting to Rs. 32,70,937/- and Rs. 9,06,20,449/- respectively in its return of income. It is also observed that the payment made towards the bonus and leave encashment relating to consumer health business has been disallowed by the erstwhile company in the earlier assessment year and the same has been made by the assessee i.e., the resulting company during the year under consideration which according to the ld. CIT(A) was not reported at clause 26(A)(a) of the Tax Audit Report (TAR) filed by the assessee for A.Y. 2023- 24 as the same was disallowed by the erstwhile company. Though, the ld. CIT(A) conceded to the fact that the payment has been made by the assessee and the assessee has produced TAR of JJPL for A.Y. 2022-23, where it was found that the same has been disallowed u/s. 43B of the Act which was duly reported under clause 26(A)(a) of the Tax Audit Report Act, the assessee has failed to substantiate the same with documentary evidences such as the proof of payment or other evidences pertaining to (A.Y. 2023-24) JNTL Consumer Health (India) Pvt. Ltd. such payment were not filed by the assessee during the first appellate proceeding. The ld. CIT(A) has disallowed the claim on the aforementioned reasons.

Before us, the ld. AR has sufficiently explained that the same has been filed on the last date of the time limit provided by the ld. CIT(A) when the impugned order of the ld. CIT(A) was passed and the same has been not considered by the ld. CIT(A) while passing the appellate order. The ld. CIT(A) has not decided the issue on the merits of the case and in order to extend the assessee with more opportunity to furnish all relevant documentary evidences in support of its claim, we deem it fit to remand this issue back to the file of ld. CIT(A) for de novo adjudication on the merits of the case. We also direct the assessee to furnish all the relevant documents once again if required, before the ld. CIT(A) based on which the ld. CIT(A) has to decide the issued on the merits and in accordance with law.

The grounds of appeal