What did the Tribunal hold?

The Tribunal upheld the denial of exemption for the interest income. The assessee-trust was not approved in the relevant assessment year, and therefore, the exemption under Section 10(25)(iv) was rightly denied.

The assessee, an Employee Gratuity Fund Trust, claimed exemption on interest income received from LIC. The Assessing Officer disallowed the exemption as the Trust was not approved under the Income Tax Act for the assessment year 2011-12.

What were the issues?

Whether interest income received by an unapproved Employee Gratuity Fund Trust is eligible for exemption under Section 10(25)(iv) of the Income Tax Act.

Progility Technologies Pvt. Ltd… vs ITO | s.10(25)(iv) | ITAT Mumbai 2022

Income Tax Appellate Tribunal, MUMBAI BENCH “C” MUMBAI

Before: SHRI KULDIP SINGH & SHRI OM PRAKASH KANT

For Respondent: Mr. R.A. Dhyani, DR

Hearing: 29/03/2022Pronounced: 29/03/2022

ORDER

PER OM PRAKASH KANT, AM

This appeal has been preferred by the assessee against the order dated 19.11.2018 passed by the Ld. Commissioner of Income Tax (Appeals)-33, Mumbai [in short ‘the Ld. CIT(A)] for assessment year 2011-12. The grounds raised by the assessee are reproduced as under:

Progility Technologies Pvt. Ltd. Employee Gratuity Fund 2 “The Ld. ITO-18(1)(4) erred in considering exempted interest income u/s 10(25) of the Income Tax Act, 1961, received from LIC, as taxable income of ₹805,839/-. Appellant preferred CIT Appeals-33 against order of Ld. ITO-18(1)(4), however appeal is dismissed on following ground appellant did not have approval from CIT, due to absence of approval exemption u/s 10(25) denied.”

2. Briefly stated facts of the case are that the assessee is an Employee Gratuity Fund Trust and earned interest on the contribution to LIC Gratuity Fund. During the year under consideration, the assessee received interest of ₹8,05,839/-. The Assessing Officer noticed that the Trust was not approved by the competent authority under the Income Tax Act, 1961 (in short ‘the Act’). Despite issuing show cause notices, there was no response from the assessee and hence, the Assessing Officer disallowed the exemption of the interest income claimed u/s 10(25)(iv) of the Act.

Before the Ld. CIT(A), the assessee filed that approval was granted w.e.f. 25.05.2018. The Ld. CIT(A) held that the assessee-trust was not approved in the year under consideration i.e. assessment year 2011-12 and therefore, he upheld the denial of exemption on interest income by the Assessing Officer.

Despite notifying for the hearing before us neither anyone attended on behalf of the assessee nor any adjournment was filed for the hearing dated

Progility Technologies Pvt. Ltd. Employee Gratuity Fund 3 29.03.2022. On the last three occasions i.e. hearing dated 23.09.2021, 18.11.2021 and 11.01.2022 also non attended on behalf of the assessee, though the assessee was duly notified.

In the circumstances, we have heard the appeal ex-parte qua the assesse after hearing the arguments of the Ld. Departmental Representative (DR).

5.1 We find that the Ld. CIT(A) has upheld the order of the Assessing Officer in view of the approval of the assessee gratuity fund w.e.f. 25.05.2018. As the assessment year involved before us is 11-12 and therefore we do not find any error in the order of the Ld. CIT(A) in upholding denial of exemption of interest u/s 10(25)(iv) of the Act. The appeal of the assessee is accordingly dismissed. However, in case the assesse is able to obtain post-facto approval of the Gratuity fund from the competent authority, the assessee will be at liberty to file a request for recalling the order by way of miscellaneous application.

In the result, the appeal of the assessee is dismissed.

PROGILITY TECHNOLOGIES PVT. LTD. EMPLOYEES GRATUITY FUND,MUMBAI vs. ITO 18 (1)(4), MUMBAI

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