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TMI Blog2012 (11) TMI 622X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee has not employed more than 10 workers during the year for its manufacturing process. According to the ld.DR for claiming deduction u/s 80IB, the assessee has to necessarily employ more than 10 employees in the manufacturing process carried on with the aid of power. According to the ld.DR, majority of the workers are employed through contractor and payment of workers are also made through contractor. Therefore, the assessing officer found that the assessee is not eligible for deduction u/s 80IB of the Act. However, the Commissioner of Income-tax(A) found that this Tribunal in assessee's own case for the assessment year 2002-03 found that the assessee is eligible for deduction u/s 80IB of the Act. According to the ld.DR, unless and until it is shown that the assessee has employed more than 10 workers, the claim of deduction u/s 80IB cannot be allowed. 4. On the contrary, Shri Krishna Iyer, the ld. representative for the assessee submitted that the very same issue was considered by this Tribunal for the assessment years 2002-03 and 2005-06. This Tribunal after taking into consideration the casual employees and other workers including electrician found that the assessee has e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the casual and contract labourers are also considered for the purpose of computing the total number of employees. This Tribunal has also placed reliance on the judgment of the Gujarat High Court in Prithviraj Bhoorchand (supra). After taking into consideration the judgment of the Allahabad High Court in the case of R&P Exports vs Commissioner of Income-tax 279 ITR 536 (All) this Tribunal found that there are conflicting judicial opinion by various High Courts. Therefore, ultimately by following the judgment of the Apex Court in Commissioner of Income-tax vs Vegetable Products 88 ITR 192 (SC) the Tribunal found that in view of the conflicting judicial pronouncements of various High Courts, the view which is favourable to the assessee should be adopted. Accordingly by placing reliance on the judgment of the Gujarat High Court in the case of Prithviraj Bhoorchand (supra), the Tribunal found that casual and contract labourers should be taken into account for the purpose of counting the number of employees employed by the assessee while computing deduction u/s 80IB of the Act. The Tribunal has also found that electrician is also included in the employees' list. Therefore, he should al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g officer fixed the loss at 5.5% and the excess loss claimed to the extent of 5.39% was added to the iron ingot production. The Commissioner of Income-tax(A) deleted the addition made by the assessing officer. 10. The only submission of the ld.DR is that the assessing officer fixed the burning loss on the basis of the industrial average. In this case, according to ld.DR the assessee has utilized 74% of the imported scrap, therefore, the burning loss would be very less. Therefore, according to the ld.DR, the Commissioner of Income-tax(A) is not justified in deleting the addition made by the assessing officer. 11. On the contrary, Shri Krishna Iyer, the ld.representative for the assessee submitted that the assessee has filed comparable case particularly in case of Steel Complex Ltd, a Kerala Government Undertaking company. The assessee has also maintained R.G. Register under the Central Excise Act and all other registers for the purpose of value added tax. Both Central Excise Department and Salestax authorities have not disputed the burning loss claimed by the assessee. According to the ld.representative, in the absence of any allegation that income was escaped, it is not c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at 13.25% and for the assessment year 2006-07 at 13.81%. The assessee has also made an attempt to clarify that M/s Steel Complex Ltd makes pellets from scrap whereas the assessee is producing iron ingots. The assessee has also explained before the lower authorities that pellet making yield will be 3.5% more and hence the burning loss will be less by 3.5%. After comparing this burning loss claimed by M/s Steel Complex Ltd, the assessee explained before the lower authorities that the industrial average would be 7.45% to 18.18%. 13. Conversion of scrap into iron ingots needs melting of the scrap and converting the same into iron ingots. In that process, the impurity embedded on the scrap would be eliminated and that would be a loss to the assessee. The percentage of loss would depend upon the impurity which is embedded in the raw material, viz. iron scrap. Therefore, there cannot be any specific rule to fix the percentage of impurity in the raw material. It would depend upon the exact nature of the raw material used by the assessee. In the absence of any material that the assessee has not suffered any loss in the process of conversion of scrap into iron ingots, this Tribunal is of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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