Substantial compliance for worker-count deductions includes casual and contract labour engaged through an agency.

Incentive deductions linked to employing a minimum number of workers may be satisfied by substantial compliance, not a rigid headcount, where the evidence shows workers were engaged in the manufacturing process. The term "workers" was treated as including permanent, temporary, casual and contract labour, even when engaged through an agency, and the mode of payment through banking channels, wage records and muster rolls supported the claim. On the facts discussed, the deduction was available for the relevant period, while the earlier period did not survive on the admitted facts.

---

---

Issues: Whether the assessee was entitled to deduction by satisfying the condition of employing ten or more workers, and whether casual or contract labour engaged through an agency could be counted for that purpose.

Analysis: The condition of employment of ten or more workers was held to require substantial compliance rather than a rigid mechanical count. The expression "workers" was treated as including permanent, temporary and casual labour, and the mode of engagement was held to be immaterial where the workers were employed in the manufacturing process. Payments made through banking channels to the manpower agency, wage records, muster rolls and related material were relied upon to show that the assessee had in substance employed more than ten workers during the relevant period. The period for which the business had already closed and the later stage of verification was also taken into account in appreciating the available evidence.

Conclusion: The assessee was held to have substantially complied with the worker-condition and was entitled to the deduction for the relevant assessment period. The claim for the earlier period, which was accepted as not surviving on the facts admitted, stood against the assessee.

Final Conclusion: The appeal was allowed to the extent of recognition of the deduction for the relevant period, resulting in only partial relief to the assessee.

Ratio Decidendi: For incentive deductions conditioned on employment of a minimum number of workers, the term "workers" includes casual and contract labour engaged directly or through an agency, and the statutory condition is satisfied on substantial compliance shown by the overall evidence.

---