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Issues Involved: Interpretation of relief under section 80J of the Income-tax Act, 1961 based on the employment of workers for a private limited company during the assessment year 1974-75.
Summary: The High Court of Delhi was presented with a question referred by the Income-tax Appellate Tribunal regarding the entitlement of relief under section 80J of the Income-tax Act, 1961. The question revolved around whether the assessee, a private limited company engaged in manufacturing, was eligible for the relief despite employing more than ten workers for only nine months and less than ten workers for the remaining three months during the assessment year 1974-75. The Income-tax Officer initially rejected the claim, citing non-compliance with the condition of employing ten or more workers throughout the manufacturing process. The Commissioner of Income-tax (Appeals) later disagreed with this interpretation, leading to an appeal by the Revenue before the Tribunal. Upon review, the Tribunal held that substantial compliance with the employment requirement sufficed for granting the benefit under section 80J. It emphasized that the essential criterion was the employment of ten or more workers for a significant period during the year for which relief was sought. The High Court concurred with this interpretation, citing precedents from the Bombay High Court to support the notion of substantial compliance being the key factor in determining eligibility for relief under section 80J. In conclusion, the High Court answered the referred question in the affirmative, favoring the assessee and rejecting the Revenue's contention. The judgment clarified that substantial compliance with the employment condition, rather than strict adherence throughout the accounting period, was sufficient to qualify for the relief under section 80J.
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