1982 (2) TMI 126

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....e assessee was not entitled for the deductions under the two sections. Aggrieved by that order, the assessee has filed appeal No. 842 (Coch) 77-78. 2. In the assessment year 1976-77, the assessee claimed deduction under section 80J amounting to Rs. 30,216 and under section 80HH Rs. 58,600. The ITO held that the assessee is not eligible for those two deductions as it has not satisfied the conditions that the industry should employ ten or more workers in the manufacturing process carried on with the aid of power and it is not formed by the splitting up or the reconstruction of a business already in existence. The AAC differed from the ITO and granted the relief both under sections 80HH and 80J. The revenue is, therefore, in appeal against ....

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.... on 19th June, 1973. The assessee also contended that unlike the provisions contained in section 80H, the provisions in sections 80J and 80HH do not stipulate that a minimum of ten workers must be engaged on all the days of the year. The revenue, however, maintains that the requirements under the two sections have not been satisfied by the assessee and therefore the assessee is not eligible for the deductions claimed. 5. In order to claim the reliefs under section 80HH and under section 80J, it is necessary that the industrial undertaking is not formed by transfer to a new business of machinery or plant previously used for any purpose and in a case where the industrial undertaking manufactures or produces articles, the undertaking employ....

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.... AAC's reasoning that the sections do not stipulate that a minimum of ten workers must be engaged on all the days of the year cannot be accepted. A fair reading of the provisions would require that in order to qualify for the relief and satisfy the requirement thereunder the undertaking must have employed ten or more workers substantially during the period for which relief is claimed. In CIT v. Sawyer's Asia Ltd. [1980] 122 ITR 259(Bom.) the High Court of Bombay held on similar facts that it was only the workers employed in connection with the manufacturing process that would be required to be considered and if, therefore, the normal complement of workers regularly employed was ten or more throughout the period the undertaking could be said....