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Facts
The assessee, TechNova Imaging Systems (P) Ltd. Employees Group Gratuity Cumla Scheme, claimed exemption u/s 10(25)(iv) for its gratuity fund income. The CPC and FAA denied this, assessing the income and raising a demand of Rs. 74,97,039/-, on the grounds that the approval certificate provided was in an erstwhile name of the company, implying the current fund was not duly approved.
Held
The Tribunal found that the company had undergone a name change in 1993, and the CIT had subsequently granted approval to the gratuity scheme in the assessee's current name, TechNova Imaging Systems (P) Ltd. Employees Group Gratuity Cumla Scheme, via an order dated 17/04/1995. Thus, the gratuity fund was indeed approved, and the assessee was entitled to the exemption u/s 10(25)(iv).
Key Issues
Whether the gratuity fund of the assessee was duly approved by the appropriate authority despite a change in the company's name, entitling it to exemption under Section 10(25)(iv) of the Income Tax Act.
Sections Cited
10(25)(iv), 143(1), 3
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘E’ BENCH
आदेश / O R D E R PER AMIT SHUKLA (J.M): The aforesaid appeal has been filed by the assessee against order dated 17/02/2025 passed by Addl./JCIT(A)-2, Guwahati in relation to the adjustment made u/s.143(1) for the A.Y.2018-19.
Techno Imaging Sys (P) Ltd Employees Group Gratuity Cumla Scheme 2. In various grounds of appeal the assessee has challenged denying of exemption amount of Rs. 1,72,74,520/- u/s.10(25)(iv) under misconception that the approval of the gratuity fund is not of representative assessee but erstwhile name of the company.
3. The brief facts are that assessee M/s. TechNova Imaging Systems (P) Ltd. Employees Group Gratuity Cum Life Assurance Scheme is a Gratuity Fund set up by TechNova Imaging Systems (P) Ltd. (the Employer) for its employees under an irrecoverable trust for providing gratuity to its employees vide Deed of Trust dated 1st October, 1988. It was granted approval by the ld. CIT(A)-Mumbai vide letter dated 17/04/1995 and the approval was given w.e.f. 01/04/1998. The employer has insured its gratuity liability with LIC of India and also with Birla Sunlife Insurance, accordingly, the entire income of the assessee was exempt u/s. 10(25)(iv) of the Act as per the approved gratuity fund. For the relevant A.Y.2018-19 assessee has e-filed its return of income declaring ‘nil’ income after claiming the exemption u/s.10(25) (iv) on its entire income of Rs.1,72,74,521/-, however, the CPC denied the exemption and assessed the total income of the assessee of Rs.1,72,74,520/- and has raised demand of Rs.74,97,039/-.
4. The ld. First Appellate Authority had rejected assessee’s claim after holding as under:- “5.7. On perusal of details, it is noticed that the appellant has submitted one approval of gratuity fund dtd, 23-4-1990. It is also noticed therein that the said certificate is issued in the name of "Technova Plate Making Systems Ltd. Employees Group Gratuity Techno Imaging Sys (P) Ltd Employees Group Gratuity Cumla Scheme Scheme," but the instant appeal has been filed by the appeal viz. TECHNOVA IMAGING SYS (P) LTD EMPLOEES GROUP GRATUITY CUM L.A. SCHEME" i.e there is difference in the name of the appellant who has filed appeal and the person whose certificate dated 23.04.1990 has been furnished. The aforesaid fact is evident the screenshot of the said certificate dated 23.04.1990 is reproduced hereunder.
5. Thus, he held that assessee failed to substantiate the gratuity fund duly approved by the appropriate authority and accordingly, he has confirmed the payment alongwith interest levied by the CPC.
6. After hearing both the parties and on perusal of the facts and material on record, it is seen that there was a change in the company’s name from Techno Imaging Sys (P) Ltd. to Technova Imaging Systems for which copy of fresh certificate of incorporating was issued by the Registrar of Companies, Maharashtra dated 14/09/1993. Later on assessee vide letter dated 18/08/1994 issued by the CIT office to the assessee calling for further information for approval of gratuity scheme. Assessee had submitted the letter in a changed name of the company. Accordingly, order dated 17/04/1995 was passed by ld. CIT to assessee approving the gratuity scheme under part C of the Fourth Schedule of the Income Tax Ac, 1961. The perusal of the order dated 17/04/1995 clearly shows that approval is made in the name of Techno Imaging Systems Pvt. Ltd. Employees Group Gratuity Cumla Scheme and what the First Appellate Authority is referring is some communication dated 23/04/1990 addressed to the trustees, Technova Plate Making Systems Ltd Employees Group Gratuity Scheme. Nowhere the First Appellate Authority has even referred to the approval order dated 17/04/1995. Thus, the assessee has been accorded approval by the appropriate authority which is in the name of the present assessee i.e. Technova Imaging Sys (P) Ltd. Employees Techno Imaging Sys (P) Ltd Employees Group Gratuity Cumla Scheme Group Gratuity Cumla Scheme, then there is no reason for denying any exemption u/s.10(25)(iv). Accordingly, we direct the ld. AO to allow exemption of entire income of Rs.1,72,74,521/- u/s.10(25)(iv), accordingly, appeal of the assessee is allowed.
In the result, appeal of the assessee is allowed. Order pronounced on 26th June, 2025.