Tribunal upholds deduction claim under IT Act for industrial undertaking, clarifies worker requirement.

The Tribunal upheld the CIT (A) XI, Bombay's decision to allow the claim for deduction under s. 80J of the IT Act, 1961 for the assessment year 1977-78. The appeal by the revenue challenging the claim was dismissed. The Tribunal clarified that the requirement of employing workers in an industrial undertaking for claiming deduction under s. 80J(4)(iv) of the Act can be fulfilled by the undertaking, regardless of whether the workers are directly employed by the assessee or the company. Therefore, the assessee was deemed eligible for the relief under s. 80J.

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Issues:
- Appeal against the order of CIT (A) XI, Bombay allowing the claim for deduction under s. 80J of the IT Act, 1961 for the asst. yr. 1977-78.
- Interpretation of s. 80J(4)(iv) of the Act regarding the requirement of employing workers in an industrial undertaking for claiming deduction.

Analysis:
The appeal was filed by the revenue against the order of the CIT (A) XI, Bombay, which allowed the claim for deduction under s. 80J of the IT Act, 1961 for the assessment year 1977-78. The assessee, a registered firm, was engaged in processing scrap material on behalf of a private limited company. The revenue contended that the assessee did not fulfill the requirement of employing ten or more workers in the industrial undertaking for manufacturing goods, as mandated by s. 80J(4) of the Act. The revenue argued that since the assessee did not employ the workers directly, the claim for deduction should be disallowed.

In the appeal, the CIT (A) accepted the claim of the assessee, stating that s. 80J of the Act applies to industrial undertakings, and as the assessee was engaged in manufacturing and processing work, they were entitled to the benefit under s. 80J. The CIT (A) held that the requirement of employing ten or more workers was fulfilled, irrespective of whether the workers were paid by the company or the assessee. The revenue challenged this decision, arguing that the CIT (A) erred in allowing the claim under s. 80J.

The Tribunal analyzed the provisions of s. 80J(4)(iv) of the Act, which stipulates the conditions for claiming deduction related to the employment of workers in an industrial undertaking. The Tribunal noted that the section requires the undertaking to employ workers, not necessarily the assessee directly. Therefore, if ten or more workers are employed in the industrial undertaking for manufacturing goods, regardless of their employment by the assessee or the undertaking, the conditions for relief under s. 80J are satisfied. The Tribunal upheld the order of the CIT (A) and confirmed that the assessee was entitled to the relief under s. 80J.

In conclusion, the appeal was dismissed, affirming the decision of the CIT (A) to allow the claim for deduction under s. 80J of the IT Act, 1961 for the assessment year 1977-78.

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