JNTL CONSUMER HEALTH (INDIA) PRIVATE LIMITED,MUMBAI V. INCOME TAX OFFICER, WARD NO. 15(2)(1), MUMBAI

ITA 2113/MUM/2025

AI Insights

JNTL Consumer Health (India) Pvt. Ltd. appealed against the order of the Commissioner of Income Tax (Appeals), which upheld the disallowance of leave encashment and bonus payments totaling approximately Rs. 9.39 crores. These payments were claimed as deductions under section 43B of the Income Tax Act, 1961, following a demerger from Johnson & Johnson Private Limited. The Tribunal found that the CIT(A) had not considered the assessee's submissions and documentary evidence adequately, leading to a decision to remand the case for a thorough re-examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 705417 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2023-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAVITHA KAUSHIK
• Assessee Lawyers: PARAS SAVLAPRATIK PODAR
• Keywords: Principle of natural justice
• Section: 43B

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “F” BENCH, MUMBAI BEFORE SHRI VIKRAM SINGH YADAV, AM AND MS. KAVITHA RAJAGOPAL, JM ITA No. 2113/Mum/2025 (Assessment Year: 2023-24) JNTL Consumer Health (India) Private Limited 4th Floor, Arena Space, Behind Majas Depot, Off. J. V. Link Road, Jogeshwari (East), Mumbai – 400060. Vs. The Deputy Director of Income- Tax, CPC, Bengaluru / ITO Ward No. 15(2)(1) PAN/GIR No. AAFCJ4887N (Appellant) : (Respondent) Assessee by : Shri Paras Savla/Pratik Podar Respondent by : Ms. Kavitha Kaushik (SR DR) Date of Hearing : 02.07.2025 Date of Pronouncement : 03.07.2025 O R D E R Per Kavitha Rajagopal, J M: This appeal has been filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Appeals) ADDL/JCIT (A)-1 Vadodara (‘ld. CIT(A)’ for short), passed u/s. 250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2023-24. 2. The assessee has raised the following grounds of appeal: Ground No. 1: The Order passed by the learned CIT(A) under section 250 of the Act is erroneous and bad in law 1.1 The learned CIT(A) erred in passing the Order before the time allowed to the Appellant to provide written submissions in response to the notice dated 15 January 2025 issued under section 250 of the Act had elapsed. The ITA No. 2113/Mum/2025 (A.Y. 2023-24) JNTL Consumer Health (India) Pvt. Ltd. 2 learned CIT(A) also erred in not considering the submissions filed by the Appellant and request for personal hearing. 1.2 The learned CIT(A) erred in passing the Order in violation of the principles of natural justice and hence, the Order is bad in law. 1.3 On the facts and circumstances, the learned CIT(A) erred in not providing an opportunity to the Appellant for a personal hearing in the matter, through videoconferencing, before disposing off the appeal filed by the Appellant even though a specific request in this regard was made by the Appellant. Ground No. 2: Disallowance of leave encashment and bonus paid of Rs. 32,70,937 and Rs. 9,06,20,449 respectively claimed as deduction in the return of income under section 43B of the Act. 2.1. The learned CIT(A) has erred in disallowing the amounts claimed by the Appellant under section 43B of the Act on account of payment made for leave encashment and bonus of Rs. 32,70,937 and Rs. 9,06,20,449 respectively which were claimed in accordance with the approved demerger scheme. 2.2. The learned CIT(A) has erred in not appreciating that the action of CPC in disallowing the aforesaid claims merely because the said payments are not reflecting in at clause 26(A)(a) in Form 3CD of the captioned assessment year without considering the detailed explanations and documentary evidence submitted by the Appellant.” 3. Brief facts of the case are that the assessee is private company limited by shares and is engaged in the consumer health sector, mainly focusing on women health, baby products, skin health, beauty, oral health and rehydration, where the consumer health business of Johnson & Johnson Private Limited (JJPL) was demerged into the assessee’s company w.e.f. 02.01.2023 subsequent to the order of Hon'ble National Company Law Tribunal (‘NCLT’) under the scheme of Arrangement and Demerger, where all the assets, liabilities and reserves of consume health business of JJPL were transferred to the assessee company. The assessee then filed its return of income dated 29.11.2023, declaring total income at Rs. 2,06,31,60,840/- and the same was processed ITA No. 2113/Mum/2025 (A.Y. 2023-24) JNTL Consumer Health (India) Pvt. Ltd. 3 u/s. 143(1) of the Act. The CPC/AO passed the intimation dated 27.03.2024, where the total income was determined at Rs. 2,15,70,52,230/- after making addition/disallowance towards the leave encashment claimed in the return and audit report at Rs. 32,70,937/- and towards the bonus or commission for service rendered at Rs. 9,06,20,449/- u/s. 43B of the Act, thereby granting short refund of Rs 1,84,65,880/- 4. Aggrieved the assessee was in appeal before the first appellate authority, who vide order dated 20.01.2025, upheld the disallowance made by the CPC on the ground that the assessee has failed to furnish the documentary evidence to substantiate its claim of leave encashment and bonus payments made during the relevant year. 5. The assessee is in appeal before us, challenging the impugned order of the ld. CIT(A). 6. The learned Authorised Representative ('ld. AR' for short) for the assessee contended that the assessee had filed all the details pertaining to its claim of deduction u/s. 43B of the Act towards the bonus payment and leave encashment before the first appellate authority but the same was not considered by the ld. CIT(A). The ld. AR brought our attention to the notice issued by the ld. CIT(A), where the details sought for was to be furnished on or before 20.12.2024 and then in the subsequent notice on or before 21.01.2025 which were placed at page no. 336 and 339 of the paper book. Further, the ld. AR brought our attention to the page 342 of the paper book, where the assessee is said to have filed details sought for by the ld. CIT(A) vide its submission dated 20.01.2025. The ld. AR contended that the ld. CIT(A) had passed the impugned order on 20.01.2025 were the assessee’s submissions were not considered and the ld. CIT(A) had dismissed the appeal filed by the assessee on the ground that the assessee has failed ITA No. 2113/Mum/2025 (A.Y. 2023-24) JNTL Consumer Health (India) Pvt. Ltd. 4 to file the supporting documentary evidence. The ld. AR prayed that the assessee is provided with one more opportunity to present its case before the lower authorities. 7. The learned Departmental Representative ('ld. DR' for short) for the revenue on the other hand opposed to the same and stated that the assessee has not filed documents in physical mode and the same has been filed through online mode after the time specified by the ld. CIT(A). The ld. DR relied on the order of the lower authorities. 8. We have heard the rival submissions and perused the materials available on record. The issue that requires adjudication is whether the assessee was entitled to claim deduction u/s. 43B of the Act towards the payment of leave encashment and bonus amounting to Rs. 32,70,937/- and Rs. 9,06,20,449/- respectively in its return of income. It is also observed that the payment made towards the bonus and leave encashment relating to consumer health business has been disallowed by the erstwhile company in the earlier assessment year and the same has been made by the assessee i.e., the resulting company during the year under consideration which according to the ld. CIT(A) was not reported at clause 26(A)(a) of the Tax Audit Report (TAR) filed by the assessee for A.Y. 2023- 24 as the same was disallowed by the erstwhile company. Though, the ld. CIT(A) conceded to the fact that the payment has been made by the assessee and the assessee has produced TAR of JJPL for A.Y. 2022-23, where it was found that the same has been disallowed u/s. 43B of the Act which was duly reported under clause 26(A)(a) of the Tax Audit Report Act, the assessee has failed to substantiate the same with documentary evidences such as the proof of payment or other evidences pertaining to ITA No. 2113/Mum/2025 (A.Y. 2023-24) JNTL Consumer Health (India) Pvt. Ltd. 5 such payment were not filed by the assessee during the first appellate proceeding. The ld. CIT(A) has disallowed the claim on the aforementioned reasons. 9. Before us, the ld. AR has sufficiently explained that the same has been filed on the last date of the time limit provided by the ld. CIT(A) when the impugned order of the ld. CIT(A) was passed and the same has been not considered by the ld. CIT(A) while passing the appellate order. The ld. CIT(A) has not decided the issue on the merits of the case and in order to extend the assessee with more opportunity to furnish all relevant documentary evidences in support of its claim, we deem it fit to remand this issue back to the file of ld. CIT(A) for de novo adjudication on the merits of the case. We also direct the assessee to furnish all the relevant documents once again if required, before the ld. CIT(A) based on which the ld. CIT(A) has to decide the issued on the merits and in accordance with law. 10. The grounds of appeal raised by the assessee are hereby allowed for statistical purpose. 11. In the result, the appeal filed by the assessee is allowed for statistical purpose. Order pronounced in the open court on 03.07.2025 Sd/- Sd/- (VIKRAM SINGH YADAV) (KAVITHA RAJAGOPAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated: 03.07.2025 Karishma J. Pawar (Stenographer) Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT- concerned 4. DR, ITAT, Mumbai ITA No. 2113/Mum/2025 (A.Y. 2023-24) JNTL Consumer Health (India) Pvt. Ltd. 6 5. Guard File BY ORDER, (Dy./Asstt.Registrar) ITAT, Mumbai "