2019 (2) TMI 816 - HC - Income Tax

Court affirms ruling on tax appeals denying deduction under Section 80IB.

M.SM.P. Peeyes Power Pvt. Ltd. Versus Commissioner of Income Tax 4, Chennai.

M.SM.P. Peeyes Power Pvt. Ltd. Versus Commissioner of Income Tax 4, Chennai. - TMI Issues Involved:1. Eligibility for deduction under section 80IB of the Income Tax Act.2. Fulfillment of conditions regarding the employment of workers in the manufacturing process.Analysis:Issue 1: Eligibility for deduction under section 80IB of the Income Tax ActThe judgment deals with the appeals filed by the assessee challenging the order passed by the Income Tax Appellate Tribunal. The key question was whether the assessee was eligible for deduction under Section 80IB(2)(iv) of the Act. Section 80IB provides for deductions for profits and gains derived from eligible businesses. The specific condition in question was whether the assessee, an industrial undertaking, employed ten or more workers in the manufacturing process, as required by the Act. The initial assessment noted that the assessee did not fulfill this condition and was not entitled to the benefit under Section 80IB.Issue 2: Fulfillment of conditions regarding the employment of workers in the manufacturing processThe judgment discusses the requirement for industrial undertakings to employ a specified number of workers in the manufacturing process to claim deductions under Section 80IB. The assessee contended that they had more than ten workers and, therefore, met the conditions for the deduction. However, the Assessing Officer found that there was no manufacturing activity and that the number of workers employed did not meet the statutory requirement. The matter went through various levels of appeal, with the Tribunal ultimately upholding the decision that the assessee did not fulfill the conditions for the deduction.The Court emphasized that the burden of proof lies with the assessee to demonstrate that they meet the statutory requirements for claiming deductions under Section 80IB. In this case, the evidence presented, including the ESI contributions and statements, did not sufficiently establish that the assessee employed the required number of workers in the manufacturing process. The Court upheld the Tribunal's decision, stating that there was no substantial question of law warranting interference with the Tribunal's order.In conclusion, the Court dismissed the tax case appeals, ruling against the assessee on the grounds that they had not met the necessary conditions for claiming the deduction under Section 80IB.