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Issues involved: Interpretation of the term "worker" under section 80HH of the Income-tax Act, 1961.
Summary: The High Court of Karnataka was presented with a question regarding the interpretation of the term "worker" under section 80HH of the Income-tax Act, 1961. The issue arose when the Income-tax Appellate Tribunal had to determine whether casual workers should be counted to ascertain if a new industrial undertaking has employed ten or more workers for the purpose of claiming relief under section 80HH. The industrial undertaking, the assessee, claimed relief under section 80HH on the basis of employing at least ten workers. However, the Income Tax Officer (ITO) denied the deduction, arguing that casual workers on daily wages should not be considered when counting the number of workers as per section 80HH(2)(iv). Upon appeal, the Commissioner of Income-tax (Appeals) II, Bangalore, upheld the ITO's decision. Subsequently, the Tribunal ruled that section 80HH(2)(iv) does not differentiate between casual or regular workers, emphasizing that the requirement is to employ ten or more workers in the manufacturing process, regardless of their employment status. Therefore, the Tribunal allowed the appeal, granting relief to the assessee. The High Court agreed with the Tribunal's interpretation of the term "worker" as used in section 80HH(2)(iv). The Court noted that the provision clearly states that if the assessee employs ten or more workers, without specifying their employment status. As there is no specific definition of the term "worker" provided, the ordinary meaning should encompass casual, permanent, or temporary workers. Consequently, the Court upheld the Tribunal's decision, overturning the views of the Commissioner of Income-tax (Appeals) and the ITO. In conclusion, the High Court answered the question in the affirmative, favoring the assessee and rejecting the Revenue's contention.
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