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.
