Case Law Details
Moran Tea Company (India) Ltd. Vs ITO (ITAT Kolkata)
In Moran Tea Company (India) Ltd. Vs ITO, the Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) deleted an addition made against the assessee’s employees gratuity fund for Assessment Year 2017-18. The Assessing Officer had denied exemption under Section 10(25)(iv) of the Income Tax Act on the ground that the assessee could not produce the necessary certificate showing approval of the gratuity fund. Income Tax Appellate Tribunal
The assessee submitted that, for the immediately preceding assessment year 2016-17, the Coordinate Bench of the Tribunal had restored the matter to the Assessing Officer to provide another opportunity to produce the approval certificate. The assessee further relied upon its Income & Expenditure Account for the year ended 31.03.2017 and argued that the interest accrued during the year was Rs.95,07,683/-, whereas gratuity paid to members amounted to Rs.1,29,32,317/-. Thus, expenditure exceeded income and no addition could be sustained.
The Revenue supported the order of the Commissioner of Income Tax (Appeals). However, the Tribunal observed that the gratuity payments exceeded the interest income, resulting in excess expenditure over income. On this basis, the Tribunal held that no addition could be made. Accordingly, the addition confirmed by the CIT(A) was deleted and the assessee’s appeal was allowed.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
This is an appeal filed by the assessee against the order of the Commissioner of Income Tax (Appeals), NFAC, Delhi [hereinafter referred to as the ‘CIT(A)’] in appeal no.CIT(A), Kolkata/10144/2019-20 dated 04.12.2025 for the assessment year 2017-18.
2. Shri Soumitra Choudhary, Advocate, represented on behalf of the assessee and Shri Sandeep Lakra, Sr. DR represented on behalf of the revenue.
3. It was submitted by the ld. AR that the assessee had claimed that it has registration as an approved gratuity fund but on the ground that the assessee could not produce necessary certificate of approval, the Assessing Officer denied the exemption u/s 10(25)(iv) of the Act. The ld. AR submitted that in the immediately preceding assessment year being A.Y 2016-17, the Coordinate Kolkata Bench of this Tribunal in ITA No.2265/Kol/2019 has restored the issue to the file of the Assessing Officer giving the assessee another opportunity to produce the certificate. The ld. AR has filed additional grounds which reads as under:
3.1 The ld. AR further drew our attention to the Income & Expenditure Account ended on 31.03.2017 which reads as under:
4. It was the submission that the interest accrued during the year was only Rs.95,07,683/- whereas the gratuity to members paid was Rs.1,29,32,317/-. It was the submission that there is excess of expenditure over income, thus no addition is called for.
5. In reply, the ld. Sr. DR vehemently supported the order of the ld. CIT(A).
6. We have considered the rival submissions. A perusal of the facts of the present case clearly shows that Income & Expenditure A/c shows that interest accrued is only Rs.95,07,683/- and gratuity paid to members was Rs.1,29,32,317/-. Thus there is an excess of expenditure over income. This being so, obviously no addition itself can be made. Consequently, the addition made by the Assessing Officer and confirmed by the ld. CIT(A) is deleted.
7. In the result, the appeal of the assessee stands allowed.
Order pronounced in the open court on 07/04/2026.
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