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TMI Blog2020 (11) TMI 274X X X X Extracts X X X X X X X X Extracts X X X X ..... having satisfied the 300 days criteria during the year. We direct assessee to provide all details regarding number of regular workmen/employees, number of new workmen/employees added for each of the immediately three preceding assessment years to Ld.AO. Ld.AO is then directed to analyse fulfilment of the condition in respect of new employees/workmen against whom the claim has been made by assessee under section 80JJAA of the Act. Ld.AO is then directed to allow deduction under section 80 JJAA - Ground of assessee stands allowed for statistical purposes. Deduction in respect of share of loss from A2E2, USA - HELD THAT:- Authorities below rejected the claim as assessee assessee was not allotted shares in the LLC wherein it was a partner but in our view this issue needs to be remanded to Ld.AO to consider the claim of assessee in light of evidences/documents, joint venture Agreements, declaration by the U.S. LLC before the tax authorities therein etc, OECD commentary is in respect of the same, the manner in which such incomes/loss as the case may be are treated in USA being the source country and the manner in which such income/loss are to be treated as per Indian income tax act. Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the regular workmen as per the provisions does not stand fulfilled. 2.2. Ld.AO observed that assessee has claimed deduction of ₹ 4,11,75 000/-towards share of loss from M/s.A Squard Elxsi Entertainment LLC. Ld.AO accordingly called for details in respect of the same and found noted that assessee has not been allotted shares in M/s A Squard Elxsi Entertainment LLC, USA (hereinafter referred to as A2E2) during the year under consideration. It has been noted by him that 50% loss claimed by assessee is not in accordance with provisions of the Act and accordingly the claim was disallowed. Aggrieved by additions, assessee preferred appeal before Ld.CIT(A) 3. Ld.CIT(A) upheld the disallowance following decision of Hon ble Delhi Tribunal in case of LG Electronics India Pvt.Ltd reported in (2013) 33 Taxmann.com 465, wherein, it was held that only new workmen employed for a period of 300 days in relevant previous year are eligible for deduction under section 80 JJAA of the Act. He also placed reliance on Full Bench by decision Hon ble Supreme Court in case of Commissioner of Customs (Import) Vs. Dinesh Kumar Co. Ors. reported in Civil Appeal No.3327 of 2007 by order dated 30/07/2018. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. 4.4. On the contrary Ld.CIT.DR placed reliance on observations of Ld.CIT(A) and para 4.2 of impugned order. He submitted that Ld.CIT(A) relied on his order for assessment year 2012-13. He thus submitted that nothing on record establishes the submission of Ld.AR that this is the 3rd year of claim. Ld.CIT.DR submitted that details with regard to employees on salary deduction has been claimed under section 80JJAA of the act has not been produced in the paper book. He thus requested for the issue to be remanded to authorities below for verification. 5. We have perused submissions advanced by both sides in light of records placed before us. We note that the Ld.AO denial of benefit to assessee is based on the reasoning that assessee was denied benefit against these employees in the 1st year of their employment and that assessee being a software development company is not eligible for deduction. 5.1. We note that the 1st of objection of Ld.AO regarding nonsatisfaction with respect to additional wages paid to new employees in the 1st year of employment is concerned, this Tribunal has expressed following view in case of Texas Instruments (India) Pvt.Ltd vs ACIT (supra): 9. We have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dditional wages paid is not allowed deduction for the reason that the workmen did not work for 300 days or more but if the next two Assessment years, if he works for more than 300 days each, then the deduction u/s.80JJAA of the Act has to be allowed. It is not proper to say that if the deduction is refused in the first year of employment of the new employee then for the next two succeeding Assessment Years also, the benefit of deduction will not be available. Such an approach defeats the very purpose for which deduction u/s.80JJAA of the Act is allowed for three consecutive Assessment years. This aspect has now been clarified in the Finance Act, 2018 by adding a second proviso to the definition of additional employee in Explanation (ii) to Sec.80JJAA of the Act. Even prior to such curative or clarificatory amendment, we are of the view that the claim for deduction u/s.80JJAA of the Act cannot be and ought not to have been disallowed on this ground. We therefore direct that the deduction claimed by the Assessee should be allowed. 5.2. From the above observations, there is no doubt that assessee cannot be denied deduction under section 80JJAA of the Act, provided that, such employees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to A2E2. Assessee accordingly remitted USD 1,000,001 words its share of equity contribution in A2E2 during November 2011. M/s.A Squad Entertainment LLC delayed and pertaining the requisite no objection certificate from the respective assigned for assignment of assessee s rights to A2E2 that prevented the board of management and allotting equity shares to both the joint venture partners in A2E2. 6.2. It is submitted that A2E2 opted to be assessed at partner s level. Ld.AR submitted that A2E2 was considered as a passthrough entity and that the profits or losses arising from A2E2 was assessable in the hands of joint venture partners during the year under consideration. The Ld.AR submitted that the loss claimed by assessee is assessee s 50% share in the loss suffered by A2E2 during the year in USA. 6.3. With the above factual background, we note that authorities below rejected the claim as assessee assessee was not allotted shares in the LLC wherein it was a partner. In our view this issue needs to be remanded to Ld.AO to consider the claim of assessee in light of evidences/documents, joint venture Agreements, declaration by the U.S. LLC before the tax authorities therein etc, OECD com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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