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2017 (6) TMI 981 - AT - Income TaxDenial of deduction under Section 80JJAA - Deduction in respect of employment of new workmen - Held that - The limited issue in the remand proceedings before the Assessing Officer was only to verify whether any persons employed in the supervisory role was included in the list for the purpose of deduction under Section 80JJAA of the Act. The Assessing Officer while passing the order dt.20.12.2011 denied the claim without giving effect the directions of the Tribunal to verify the factual position. Subsequently, the CIT passed a revision order under Section 263 dt.16.1.2013 and directed the Assessing Officer to verify whether the condition stipulated for the grant of deduction under Section 80JJAA as directed by the Tribunal are satisfied in the case of the assessee. The Assessing Officer then passed the order dt.16.1.2014 in pursuant to the revision order under Section 263 and denied the claim by following the order of the earlier assessment year. We find that for the earlier assessment year, the issue of nature of employment whether it is supervisory or not has been decided in favour of the assessee. However, this issue is pending before the Hon ble High Court for the Assessment Years 2001-02 and 2002-03. As regards the issue of satisfying the condition of not less than 300 days of employment during the previous year, we find that this issue does not germane from the order of this Tribunal in the first round of appeal as the limited aspect remitted to the Assessing Officer for verification was whether any person employed in the supervisory role was included in the list of workmen as claimed by the assessee. Therefore even if the Assessing Officer has made a reference about the employment of less than 300 days, this issue is not emanating from the proceedings as remanded by the Tribunal. Since this issue is still pending before the Hon ble High Court therefore to keep this issue open as per the outcome of the proceedings pending before the Hon ble High Court, we direct the Assessing Officer to take necessary step only after the decision of Hon ble High Court.
Issues Involved:
1. Validity of the assessment order under Section 143(3) read with Section 144C. 2. Denial of deduction under Section 80JJAA of the Income-tax Act, 1961. 3. Transfer Pricing adjustments and related grounds. Issue-wise Detailed Analysis: 1. Validity of the Assessment Order: The assessee challenged the assessment order dated October 14, 2010, passed under Section 143(3) read with Section 144C, arguing it was not in accordance with the law and violated principles of equity and natural justice. The Tribunal did not specifically adjudicate on this ground as it was considered general in nature. 2. Denial of Deduction under Section 80JJAA: The Tribunal addressed the denial of deduction under Section 80JJAA for both assessment years 2006-07 and 2004-05. The primary contention was whether the engineers employed by the assessee qualified as "workmen" under the Industrial Disputes Act, and whether they met the condition of being employed for at least 300 days during the previous year. Assessment Year 2006-07: The Tribunal noted that an identical issue was previously considered in the assessee's own case for assessment years 2001-02 and 2002-03. The Tribunal had decided that engineers could be considered workmen as per Section 80JJAA, but the condition of 300 days of employment during the previous year was not met. The Tribunal followed its earlier decision and held that while engineers could be considered workmen, the assessee did not satisfy the 300-day employment condition, thus denying the deduction. Assessment Year 2004-05: The Tribunal remitted the matter to the Assessing Officer to verify whether the employees were in supervisory roles or not. The Assessing Officer initially denied the claim without proper verification, leading to a revision order under Section 263. Upon further review, the Tribunal found that the issue of 300 days of employment was not part of the original remand and directed the Assessing Officer to take necessary steps only after the decision of the Hon'ble High Court, which was still pending. 3. Transfer Pricing Adjustments: The assessee raised multiple grounds related to transfer pricing adjustments, challenging the jurisdiction and the methodology adopted by the Transfer Pricing Officer (TPO) and the Dispute Resolution Panel (DRP). Specific issues included the inclusion of certain companies as comparables, the use of single-year data, the exclusion of foreign exchange losses, and the application of various filters. During the hearing, the assessee's representative informed that the Transfer Pricing dispute had been resolved under the Mutual Agreement Procedure (MAP). Consequently, the Tribunal dismissed the transfer pricing grounds as not pressed, following the resolution under MAP. Conclusion: For the assessment year 2006-07, the Tribunal partially allowed the appeal, upholding the denial of deduction under Section 80JJAA due to non-fulfillment of the 300-day employment condition. For the assessment year 2004-05, the Tribunal allowed the appeal, directing the Assessing Officer to await the High Court's decision on the 300-day employment issue. The transfer pricing grounds were dismissed as resolved under MAP.
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