ITO - 31(2)(1), MUMBAI vs. JOHNSON & JOHNSON LTD. GRATUITY, MUMBAI

This appeal is filed by the ld. ITO 31(2)(1)-Mumbai (the ld. AO) filed against the order of the CIT (Appeals) 42, Mumbai [ the ld CIT (A)] for A.Y. 2010-11 dated 21.02.2020 raising following grounds of appeal.

The brief facts of the case shows that, assessee is a gratuity fund approved within the meaning of Section 2 (5) of the Income Tax Act and necessary rules contained in part C of the 4th schedule to the Act. The gratuity fund manages the contribution made by the company namely Johnson & Johnson Ltd and is also responsible for income arising from such contribution.

For A.Y. 2010-11, the assessee filed return of income on 15.10.2010 at where in income of the trust shown of ₹15,07,70,722/-, claimed exemption of the same, offered business income as Nil. However in the acknowledgement income was inadvertently arrived at Rs 150770722/- . The return was processed u/s. 143(1) on 10.02.2011 determining the same income however, tax liability of ₹ 05,47,17,861/- arose.

Assessee filed an application for rectification stating that as the trust is approved w.e.f. 01.01.1979 as approved gratuity fund trust, income of which is exempt u/s. 10(25)(iv) of the Income Tax Act, 1961.

On 31.05.2019 an order u/s. 154 of the Act was passed for the reason that assessee itself has offered income of ₹ 15,07,70,722/- under the head income of business or profession and has not claimed any exemption in the return of income, the intimation did not suffer from any mistake apparent from record and request u/s 154 of the Act was rejected.

Assessee preferred appeal before the ld. CIT (A) who after considering the fact of the case, allowed the claimed of the

The ld. AO aggrieved with the order of the ld.CIT (A) is in appeal before us.

We have heard the rival contentions and perused the orders of lower authorities. Facts clearly shows that assessee gratuity fund is an approved gratuity fund trust within section 2 (5) of the Act approved by the Commissioner of Income Tax, Bombay City-V, Bombay, by order dated 29.12.1979. For the impugned A.Y. 2010- 11, the assessee filed its return of income in ITR-5. Assessee offered the income in schedule BP A5(c) assessee mentioned that the above income of ₹ 15,07,70,722/- is an exempt income and accordingly the total income was offered at ₹ Nil. However in the acknowledgement the total income was found at Rs 150770722/- without any exemption. On processing of the return, CPC did not grant exemption of the above income and assessed the total income at Rs 150770222/- without any exemption of the same. The impugned A.Y was the first year for online filing of return of income for person Filing Form No. ITR-5. Inadvertently, exemption amount in the acknowledgement was not shown and it showed total income of Rs. 150770222/- . Thus it is alleged that assessee failed to claim exemption in the acknowledgment, however, in the return of income the amount offered under the head business income was ₹ Nil. Therefore, as per the return of income no tax was payable in computation of tax liability also in Part B TTI the tax liability was Nil. Therefore, in the return of income, the claim was correctly made. However, in the acknowledgment such exemption was not shown. The return was processed by the CPC and on processing, above tax demand

The decision of the Hon’ble Supreme Court in case of Goetze (India) Ltd Vs. CIT has no application in the case as the claim of the assessee was in return of income itself. Accordingly, we confirmed the order of the ld.CIT (A) and dismiss Ground No. 1 and 2 of the appeal of ld. AO.

In the result, appeal of the ld. AO is dismissed.