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Interpretation of section 80J of the Income-tax Act, 1961 regarding entitlement to relief for an assessee engaged in an industrial undertaking. Analysis: The judgment of the High Court of MADRAS dealt with the interpretation of section 80J of the Income-tax Act, 1961 concerning the entitlement of an assessee to relief under this provision. The case involved an assessee, a chemical engineer, whose only source of income was from a business carried out in an Industrial Estate under the self-employment scheme. The assessee claimed relief under section 80J for the assessment year 1973-74, but the Income-tax Officer denied the relief on the grounds that the assessee did not meet the conditions specified in section 80J(4)(iv) as he was not considered a worker employed in the undertaking. The Appellate Assistant Commissioner rejected the appeal filed by the assessee, leading to the matter being taken to the Tribunal. The Tribunal, in its decision, considered the assessee, who was a proprietor, as being engaged in the working of the plant, thereby treating the assessee as a worker employed in the undertaking. The Tribunal based its decision on the interpretation of the word "employed," relying on a decision of the Saurashtra High Court, which defined "employed" as being engaged or occupied, rather than under a contract of service. The Tribunal allowed the appeal, granting the assessee the benefit of section 80J. However, the High Court disagreed with the Tribunal's interpretation, emphasizing that the owner of an establishment cannot be considered a worker under the statutory provision. The High Court analyzed the relevant statutory provision, section 80J(4)(iv), which requires an industrial undertaking to employ a certain number of workers for eligibility for relief. The Court emphasized that the phrase "undertaking employs ten or more workers" does not imply that the undertaking is an employer independent of the assessee who owns it. The Court clarified that the owner of the undertaking, even if contributing labor, does not lose their status as the owner and cannot be classified as a worker. Therefore, when determining the number of workers employed for the purpose of section 80J(4)(iv), the owner must be excluded, and only those employed by the owner should be counted. In conclusion, the High Court held that the assessee did not qualify for relief under section 80J as the number of workers employed, excluding the assessee, was only nine, falling short of the required threshold. The Court answered the question referred in the negative, in favor of the Revenue, and directed the assessee to pay the costs of the reference.
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