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TMI Blog2022 (12) TMI 1084X X X X Extracts X X X X X X X X Extracts X X X X ..... , there is no satisfaction recorded by the AO in terms of sec.14A of the Act. This issue of the assessee is allowed. Disallowance of claim of deduction u/s.80JJAA - AO required the assessee as to whether any of the regular workmen as mentioned in Column No.7 was employed for a period of less than 300 days during the previous year - HELD THAT:- The Hon'ble High Court of Karnataka in the case of Texas Instruments India (P.) Ltd. [ 2021 (4) TMI 1049 - KARNATAKA HIGH COURT] has considered the issue of amendment brought in Sec.80JJAA of the Act, by bringing proviso which has relaxed condition in regard to number of days of employment of new employees. Once, one has interpreted the provision and held the same as retrospective, no contrary decision was pointed out by the Revenue before us. We in principle allow the claim of the assessee, but subject to verification by the AO. The AO will carry out the verification in terms of amendment bringing the provisions of Sec.80JJAA and then will consider the eligibility of claim of deduction. Accordingly, appeal is allowed, but for verification purpose remanded back. - ITA No.652/Chny/2016 - - - Dated:- 21-12-2022 - Shri Mahavir Sing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, since unrelated parties in similar circumstances would not extend/avail any interest free loan / advance . 2.2 Aggrieved, now the assessee is in appeal before the Tribunal. 2.3 We have heard rival contentions and gone through the facts and circumstances of the case. Before us, the ld.Counsel for the assessee made argument in regard to commercial expediency in giving interest free advances and relied on the decision of the Hon ble Supreme Court in the case of SA Builders 248 ITR 1. Alternatively, he stated that only Libor rate should be applied. On the other hand, the ld.CIT-DR Dr.S.Palanikumar relied on the order of the TPO and that of the DRP. 2.4 We noted that this issue is covered by the decision of the Hon ble Bombay High Court in the case of CIT v. Everest Kanto Cylinder Ltd. (378 ITR 57) ( Bombay HC), wherein, the Libor + 200 bps point is accepted at the bench mark and hence, respectfully following the same, we upheld the order of the AO/TPO. This issue of the assessee is dismissed. 3. The next issue in this appeal is as regards to the order of the AO making disallowance of expenses relatable to exempt income by invoking provisions of Sec.14A r.w.r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dditional wages ought to be determined only for new regular workmen employed by the assessee in the previous year and the meaning of the provision cannot be extended and benefit cannot be given by stating that provision. The AO relying on the decision of the Tribunal in the assessee s own case for the AY 2006-07 2007-08 in ITA Nos.1357 1358/Mds/2010, disallowed the claim of deduction made by the assessee amounting to Rs.2,86,13,977/-. Aggrieved, the assessee preferred his claim before the DRP. 4.2 The DRP simpliciter relying the decision of the Tribunal in the earlier years, dismissed the claim of the assessee. Aggrieved the assessee is in appeal before the Tribunal. 4.3 At the outset, the Ld.Counsel for the assessee stated that neither the AO nor the DRP has considered this issue independently and the ld.Counsel argued that the Hon ble Madras High Court in the case of CIT v. Hi Tech Ara Ltd. reported in [2010] 321 ITR 477 (Madras) [01.09.2009], has categorically held that, once the incorrect decision of earlier years, cannot be followed and for this, the Ld.Counsel for the assessee referred to Para-3 of the Hon ble Madras High Court, which reads as under: 3. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of this section shall apply accordingly . It was argued by the Ld.Counsel, in view of the above note on clause explaining the provisions, stating that it was proposed to rationalize this deduction of 30% by allowing the benefit for a new employee, who is employed for less than the minimum period during the first year but continues to remain employed for the minimum period for subsequent year. It was explained that although this amendment is effective from 01.04.2019 and will apply for the AY 2019-20 and subsequent years but it has retrospective operation. For this, the Ld.Counsel for the assessee relied on the decision of the Hon ble Karnataka High Court in the case of CIT-LTU v. Texas Instruments India (P.) Ltd., reported in 435 ITR 1 (Karnataka). This provision was explained by the Hon ble Karnataka High Court and held that the amendment brought by the legislature w.e.f.01.04.2019 by the Finance Act, 2018 though claimed curative, the same is more explanatory amendment or a clarificatory amendment which clarifies the methodology of applying the provisions of Sec.80JJAA of the Act. According to the Ld.Counsel, the judgment of the Hon ble Karnataka High Court in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 12.l of the decision, Hon'ble High Court heavily placed its reliance on the decision of ITAT, Bangalore in the case of Bosch Ltd v 4CIT., LTU, Bangalore reported in (2016)74 taxmann.com 161. It is held that the Ld. senior counsel appeared on behalf of Texas Instruments submitted that the Tribunal order is proper and correct and that not require any interference. (2) Hon'ble High Court reproduced the decision of ITAT rendered in Bosch Ltd in paragraph 12.1.1. it is as under: 22. In the present case, the AO held that sec.80JJAA was restricted to additional wages paid to employees who have worked for more than 300 days during the relevant period irrespective of whether they were employed on a permanent basis or otherwise. Accordingly, the AO ascertained the additional wages paid to those workers who had worked for less than 300 days of Rs.25,64,771/- and 30% of which worked out to Rs.7,69,431/- was disallowed by the AO. The claim of the assessee is this that if the worker is employed on permanent basis then only because in the present year, working days are less than 300 days because he was employed after 66 days from the start of the previous year then no dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The decision in the case of Bosch Ltd by Hon'ble ITAT was in favour of Revenue. The IT AT had never held that even if the period is split into 2 blocks, i.e. the assessment year or the financial year, the appellant would be entitled to the benefit of section 80JJAA. The law laid down by Bosch Ltd was not correctly interpreted by Hon'ble High Court. It is submitted that this issue attained finality in favour of Revenue and not in favour of the appellant as the appellant did not file any further appeal. However, the High Court held that this issue attained finality on account of Revenue not filed further appeal. He made following points: 4.1. Per incuriam: In view of the above, the decision of Hon'ble High Court rendered in the case of Texas Instruments India Pvt. Ltd (2021) 435 ITR 1 (Kar) is per incuriam. 4.2. Bosch Ltd has to be followed: As the decision of Hon'ble High Court is per incuriam, it is prayed that, that decision cannot be followed. Rather, decision in the case of Bosch Ltd v. ACIT reported in Bosch Ltd v ACIT, LTU, Bangalore reported in (2016)74 taxmann.com 161 may kindly be followed as it had attained finality without any further appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t interpreted correctly. He narrated as under:- 5.2 Incorrect interpretation of law given by Hon'ble High Court; Hon'ble High Court had reproduced the amendment at Para-14 of its decision. The second proviso to explanation given in Finance Act 2018 is as under; Following second proviso shall be inserted after the existing proviso to clause (ii) of Explanation to section 80JJAA by the Finance Act, 2018, w.e.f. 1-4-2019: Provided further that where an employee is employed during the previous year for a period of less than two hundred and forty days or one hundred and fifty days, as the case may be, but is employed for a period of two hundred and forty days or one hundred and fifty days, as the case may be, in the immediately succeeding year, he shall be deemed to have been employed in the succeeding ear and the provisions of this section shall apply accordingly ; ► It is very clear that if the employee is employed during the previous year for a period of less than 240 days or 150 days as the case may be, and if he is employed for a period of 240 days or 150 days in the immediately succeeding year, then he shall be deemed to have been employe ..... 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