M/S THE MORAN TEA CO. (INDIA) LTD. EMPLOYEES'S GRATUITY FUND,KOLKATA vs. I.T.O.,WARD-36(4), KOLKATA

Brief facts of the case are that the assessee has filed its return of income on 17.02.2017 declaring total income as ‘NIL’. The Assessing Officer selected the case of the assessee for scrutiny assessment and a notice under section 143(2) was issued and served upon the assessee. A perusal of the accounts revealed to the ld. Assessing Officer that the assessee has claimed interest income of Rs.94,98,828/- as exempt under section 10(25) of the Income Tax Act. The ld. Assessing Officer directed the assessee to submit the approval granted by the Competent Authority under section 10(25)(iv) of the Income Tax Act. According to the ld. Assessing Officer, such certificate was not filed by the assessee. Hence he disallowed the claim of the assessee.

Appeal to the ld. CIT(Appeals) did not bring any relief to the assessee.

Ld. Counsel for the assessee admitted the fact that at present the assessee is not in a position to submit the certificate contemplated under section 10(25(Iv) of the Income Tax Act. He submitted that though the Trust came into existence on 16.03.1990 but somehow it has misplaced the certificate issued under section 10(25)(iv) of the Income Tax Act. He further submitted that the Trust has made investment of its total Provident Fund in Life Insurance Corporation of India and a certificate to this effect from LIC is available on page no. 2 of the paper book. He took us through this page and contended that the total value of the fund is of Rs.11,54,37,985/- and the closing balance is of Rs.11,55,72,747/-. The interest income credited by the LIC is of only Rs.1,71,204/-. He submitted at the most this interest income could be added back as the income of the assessee in the absence of certificate. On the other hand, ld. D.R. contended that this plea had never been raised by the assessee before the lower authorities nor this paper was submitted. Therefore, at this stage this plea ought not to be entertained by the Tribunal.

We have duly considered the rival contentions and gone through the record carefully. Before embarking upon an inquiry on the facts of the present case, we deem it appropriate to the bear in mind the provisions of section 10(25) of the Income Tax Act. The relevant part reads as under:- “Chapter – III INCOMES WHICH DO NOT FORM PART OF TOTAL INCOME Incomes not included in total income. 10. In computing the total income of a previous year of any person, any income falling within any of the following causes shall not be included- (1) agricultural income; *****************************************

(25)(i) interest on securities which are held by, or are the property of, any provident fund to which the Provident Funds Act, 1925 (19 of 1925), applies, and any capital gains of the fund arising from the sale, exchange or transfer of such securities;

Perusal of the above clause would reveal that if an assessee fulfils the conditions contemplated in the above clause, then it will not be included in the total income. As observed by the Assessing Officer, the assessee failed to submit the requisite certificate issued by the Competent Authority in order to claim the exemption of the interest income. However, we have perused the balance-sheet of earlier years and subsequent years. We have perused the LIC Certificate available on page no. 2 of the paper book. A perusal of all these documents would reveal that the assessee has erroneously calculated the alleged interest income of Rs.94,98,828/-, which is not supported by any documentary evidence. On the other hand, the interest income discernable from the LIC Certificate is of a lesser amount. Therefore, we deem it appropriate to remit this issue to the file of the Assessing Officer for a fresh adjudication. The ld. Assessing Officer would calculate the interest income earned by the assessee-Trust and thereafter make a disallowance. While doing so, ld. Assessing Officer will grant sufficient opportunity of hearing to the assessee.

In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on March 22nd, 2022.