Section 80JJAA deduction upheld for software engineers treated as workmen in technical, non-supervisory roles.

Section 80JJAA deduction was available for software engineers where the employees were engaged in technical functions and not in supervisory capacity, so they qualified as "workmen" under section 2(s) of the Industrial Disputes Act. Higher salary by itself did not exclude skilled or technical employees from the statutory definition, and the undertaking's compliance with the remaining conditions was also accepted. On that basis, the deduction was upheld and the revenue's challenge failed.

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Issues: Whether the assessee was entitled to deduction under section 80JJAA of the Income-tax Act, 1961 in respect of software engineers employed by it, on the footing that they were workmen and not excluded merely because their salary exceeded the monetary threshold.

Analysis: The deduction under section 80JJAA was examined in light of the statutory requirement of employment of additional workmen and the meaning of "workman" under section 2(s) of the Industrial Disputes Act, 1947. The relevant test was whether the employees concerned were engaged in supervisory capacity; persons doing skilled or technical work are not excluded merely because they draw higher salary, unless they fall within the statutory exclusion. The factual materials showed that the software engineers were employed in technical capacities such as systems, testing, software design and related engineering roles, and not in supervisory posts. The assessee had also shown compliance with the other conditions for the deduction, and the industrial-disputes notification applicable to the undertaking was taken into account.

Conclusion: The assessee was entitled to deduction under section 80JJAA, and the revenue's challenge to the relief granted by the first appellate authority failed.

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