2006 (12) TMI 405 - AT - Income Tax

Eligible for deduction u/s 80JJAA - Employee employed not in a supervisory capacity and getting a salary of more than Rs. 1,600 per month - Meaning and scope of Workman section 2( s ) of the Industrial Disputes Act, 1947 - HELD THAT - As stated earlier the assessee had filed the details of the software engineers employed during the years under consideration containing the names of the employees, designation and date of joining. Further, in the same list the details of total number of employees joined during both the assessment years, number of employees without supervisory roles, workmen joined, number of supervisors joined and workmen joined and relieved during the years under consideration. A cursory perusal of this list shows that the assessee had claimed deduction in respect of employees, who had joined as engineers in their respective field such as systems engineer, test engineer, software design engineer, IC design engineer, lead engineer etc. A cursory perusal of those lists establishes that the assessee had claimed deduction in respect of the engineers employed not in the category of supervisory control. Further, from the order of the CIT(A), it is seen that he had taken note of the notification issued by the Government of Karnataka and concluded that as per the notification issued, the assessee company engaged in the development of software is covered by the Industrial Disputes Act, 1947. Further it is not the case of the revenue that the assessee did not fulfil the conditions extracted elsewhere in this order. Considering all those factual matters we do not find any infirmity in the order of CIT(A) according relief to the assessee. In fact he had clarified the relevant portions related to Industrial Disputes Act, 1947 and Income-tax Act while granting relief to the asssessee which are extracted at pp. 5 and 6 of this order. After carefully considering the same, we are inclined to accept the reasons shown by the learned CIT(A). The learned CIT-Departmental Representative could not assail the finding reached by the learned CIT(A) by bringing in any valid materials. The order of the CIT(A) is confirmed. It is ordered accordingly. In the result the appeals filed by the revenue are dismissed.

Summary

Issues:
Claim of deduction under section 80JJAA of the Income-tax Act disallowed by the Assessing Officer.

Analysis:
The only issue in the revenue's appeal pertains to the claim of the assessee under section 80JJAA of the Income-tax Act. The assessee had claimed deductions for two assessment years, which were initially disallowed by the Assessing Officer but later granted relief by the CIT(A). The dispute revolved around whether the software engineers employed by the assessee company could be considered as workmen under the Industrial Disputes Act, 1947, and thus eligible for the deduction under section 80JJAA.

The CIT-Departmental Representative argued that the salary threshold for workmen under the Industrial Disputes Act should apply uniformly, regardless of the category of work. She contended that the senior software engineers, despite their high salaries, should not be categorized as workmen. However, the counsel for the assessee countered this argument by emphasizing the conditions for claiming deduction under section 80JJAA, which aimed to encourage job creation. The counsel highlighted that the assessee met the criteria to be considered an industrial undertaking and cited relevant legal provisions and precedents to support their position.

Upon careful examination of the facts and submissions, the CIT(A) concluded that the appellant had fulfilled all conditions for claiming relief under section 80JJAA. The CIT(A) clarified that the software engineers in question were not employed in a supervisory capacity and were covered by the Industrial Disputes Act, as per a notification by the Karnataka Government. The CIT(A) allowed the deduction for the additional wages of new workmen employed during the relevant years, as per the statutory requirements.

The ITAT, after reviewing the arguments and evidence presented, upheld the decision of the CIT(A). The ITAT found no fault in the CIT(A)'s reasoning and noted the lack of substantial evidence to challenge the CIT(A)'s findings. Consequently, the appeals filed by the revenue were dismissed, affirming the relief granted to the assessee under section 80JJAA for the respective assessment years.