2025 (9) TMI 1248 - AT - Income Tax

Remand to AO to verify documents for exemption claim under section 10(25)(iv) for assessment year 2024-25

Ultra Corpotech PL Employee Group Gratuity Cum Life Assurance Scheme Versus Income Tax Officer, Exemption Ward-1 (2), Pune

ITAT, PUNE remitted the matter to the file of the ld. Jurisdictional AO to verify documentation supporting the assessee's claim of exemption u/s. ... Benefit of exemption u/s. 10(25)(iv) - income received by the trustees on behalf of an approved gratuity fund - HELD THAT:- Assessee was having valid approval from the authority provided under the Income Tax Act for claiming exemption u/s. 10(25)(iv) of the Act and also the assessee has been allowed the benefit of exemption u/s. 10(25)(iv) for A.Y. 2021-22 and 2022-23 and for A.Y. 2024-25, we deem it proper to remit the issue raised in the instant appeal to the file of ld. Jurisdictional Assessing Officer to verify the details to be filed by the assessee for the claim of exemption u/s. 10(25)(iv) of the Act and if found correct then decide in accordance with law. Grounds of appeal raised by the assessee are allowed for statistical purposes. ISSUES PRESENTED AND CONSIDERED 1. Whether income received by trustees on behalf of an approved gratuity fund is exempt under section 10(25)(iv) despite the assessee having erroneously claimed exemption under a different provision in the return (section 10(23AAA)). 2. Whether non-filing of Form 10B is a bar to claim exemption under section 10(25)(iv), and whether the appellate authority was correct in denying exemption on that ground. 3. Whether the matter should be remitted to the jurisdictional Assessing Officer for verification of approval and related details before admitting exemption under section 10(25)(iv), and the appropriate final disposition where prior approvals and past allowance of exemption exist. ISSUE-WISE DETAILED ANALYSIS Issue 1: Applicability of section 10(25)(iv) where exemption was claimed under section 10(23AAA) in the return Legal framework: Section 10(25)(iv) exempts 'any income received by the trustees on behalf of an approved gratuity fund.' Section 10(23AAA) provides exemption for income of certain notified welfare funds subject to conditions and approval by the Principal Commissioner or Commissioner. Precedent treatment: No prior judicial precedent was invoked or applied in the decision; the Tribunal's conclusion is drawn from statutory language and the facts on record. Interpretation and reasoning: The Tribunal examined the record showing that the trust is an approved group gratuity fund (earlier approval and renewal were on file) and that the trust manages contributions and payments in relation to a Group Gratuity Scheme. The Tribunal observed that the assessee's selection of section 10(23AAA) in Part A of the return was a clerical/selection error which led to adjustment by the CPC. The material facts (existence of approval and nature of receipts) bring the assessee within the literal scope of section 10(25)(iv). Ratio vs. Obiter: Ratio - where the substantive facts show an approved gratuity fund and receipts by trustees, such income falls within the exemption contemplated by section 10(25)(iv) notwithstanding an incorrect section entry in the return; however, the Tribunal did not itself adjudicate the final entitlement but remitted for verification (see conclusion below). Conclusions: The Tribunal found that the case prima facie falls within section 10(25)(iv) because of the existing approvals and the nature of receipts; the erroneous selection of section 10(23AAA) in the return caused the procedural adjustment. The Tribunal deemed it appropriate to remit the matter to the Assessing Officer to verify supporting details and then decide under law. Issue 2: Requirement of Form 10B for claiming exemption under section 10(25)(iv) Legal framework: The record contains submissions by the assessee's counsel that no tax report in Form 10B is required to claim exemption under section 10(25)(iv). The judgment reproduces the statutory text of sections 10(23AAA) and 10(25)(iv) but does not cite any statutory provision mandating Form 10B for section 10(25)(iv) claims. Precedent treatment: The Tribunal did not rely upon or distinguish any authoritative decisions concerning the necessity of Form 10B for section 10(25)(iv) claims. Interpretation and reasoning: The Tribunal recorded the counsel's contention and the fact that the CIT(A) had denied the claim on the ground of non-filing of Form 10B. The Tribunal did not make a definitive ruling on whether Form 10B is a mandatory prerequisite to claim exemption under section 10(25)(iv); rather, it focused on the substantive approval and factual entitlement to the exemption and remitted the matter for verification. Ratio vs. Obiter: Obiter - the Tribunal did not decide the legal question of Form 10B's mandatory status for section 10(25)(iv) claims; no binding proposition on that point is laid down. Conclusions: The Tribunal declined to uphold the CIT(A)'s denial solely on the ground noted but did not expressly hold that Form 10B is not required. The matter was sent back to the Assessing Officer for verification of records and supporting details relevant to the exemption claim, leaving the question of any documentary prerequisites to be addressed in the course of that verification. Issue 3: Appropriateness of remand to Assessing Officer and final disposition where prior approvals and prior years' allowance exist Legal framework: The Assessing Officer has statutory competence to verify facts, approvals and documentary support for exemption claims and to decide in accordance with law after verification; appellate or quasi-judicial forums may remit for such fact-finding when records are incomplete or procedural errors have occurred in the return. Precedent treatment: The Tribunal followed routine practice of remanding to the jurisdictional officer for verification where factual support and documentary proof require examination; no precedent was cited or overruled. Interpretation and reasoning: The Tribunal noted that approvals were on record (initial approval and later renewal), that exemption had been allowed in earlier assessment years, and that for a subsequent year the exemption was denied because the wrong section was selected in the return and because CIT(A) relied on non-filing of Form 10B. Considering these circumstances and the absence of a definitive adjudication on documentary prerequisites at the appellate level, the Tribunal found it appropriate to remit the matter to the Assessing Officer to verify details and, if found correct, to pass an order in accordance with law. Ratio vs. Obiter: Ratio - where factual and documentary verification is necessary to determine entitlement to statutory exemption and where procedural errors in the return contributed to the dispute, remand to the Assessing Officer for verification is an appropriate and proper course. Conclusions: The Tribunal remitted the issue to the jurisdictional Assessing Officer to verify the details supporting the claim under section 10(25)(iv) and, if verification is satisfactory, to decide the claim in accordance with law. The appeal was allowed for statistical purposes and the grounds were disposed of by remand rather than by final adjudication on the merits at the Tribunal level. Cross-references - See Issue 1 analysis regarding the substantive fit of facts to section 10(25)(iv) and Issue 2 regarding documentary prerequisites; the Tribunal's remedial step (Issue 3) flows from the interplay of those points.