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TMI Blog2005 (9) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the affirmative, i.e., in favour of the assessee and against the Revenue - INCOME TAX REFERENCE No. 50 of 1994 - - - Dated:- 15-9-2005 - D. A. MEHTA., MS. H. N. DEVANI. JJ. Appearance : MR TANVISH U. BHATT for Applicant(s) : 1, MR MANISH J.SHAH FOR MR JP SHAH for Respondent(s): 1, JUDGMENT Ms. H.N. Devani J. - The Income-tax Appellate Tribunal, Ahmedabad Bench A , has referred the following common question under section 256(1) of the Income-tax Act, 1961 ( the Act ), for the assessments years 1984-85, 1985-86 and 1986-87. Whether, the Appellate Tribunal is right in law and on facts in setting aside the order made by the Commissioner of Income-tax under section 263 of the Act whereby he had directed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh the contractor; hence, the pre-conditions for applicability of section 80-I of the Act were not satisfied. Accordingly, he held that the assessee was not entitled to get deduction under section 80-I of the Act. The assessee carried the matter in appeal before the Income-tax Appellate Tribunal. The Tribunal for the reasons stated in its order dated June 21, 1983, allowed the appeals of the assessee for all the three years. Heard Mr. Tanvish U. Bhatt, learned standing counsel for the Revenue, and Mr. Manish J. Shah, learned advocate on behalf of the respondent-assessee. Mr. Bhatt supported the order of the Commissioner of Income-tax and submitted that as the assessee was obtaining labourers on contract system on wages there was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wages directly or indirectly from the employer and also includes any person employed by or through a contractor. The Tribunal, therefore, held that the payment of wages directly by the employer was not the paramount criteria for establishing employer-employee relationship. The Tribunal also observed that section 80-I of the Act is a beneficial provision and hence the same cannot be interpreted in so narrow a manner as to deprive the assessee of the benefit extended by the Legislature. The Tribunal found as a matter of fact that the industrial undertaking of the assessee employs more than 20 workers; the assessee has the ultimate control over the affairs of the establishment; it is the assessee who is responsible to the workers in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l undertaking manufactures or produces articles or things, it should employ ten or more workers when the manufacturing process is carried on with the aid of power, or employ twenty or more workers where the manufacturing process is carried on without the aid of power. A plain reading of clause (iv) of sub-section (2) of section 80-I of the Act, makes it apparent that to be eligible to get the benefit of deduction under the provisions of section 80-I(1) of the Act an assessee is required to fulfil the following conditions: (i) It should be an industrial undertaking manufacturing or producing articles or things; (ii) It should employ ten or more workers in a manufacturing process carried on with the aid of power; or It should empl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts of the said case the Income-tax Officer had disallowed the claim for deduction under sections 80HH and 80J of the Act, on the ground that the assessee got certain processes done from outsiders on piece-meal basis and that the assessee had not provided regular employment to any person in its manufacturing process, held that the Tribunal was right in coming to the conclusion that the persons doing the work were employed by the assessee because the assessee was controlling not only the work to be done by those persons but also the manner of doing the work. The court further held that the Assessing Officer and the Appellate Assistant Commissioner were not right in holding that the concerned persons were not employees because they wer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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