TaxTMI 
TaxTMI 
2011 (11) TMI 32
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....IB of the Income Tax Act, 1961? b) Whether the Tribunal was justified in holding that the workers supplied by the contractor are also to be treated as workers employed by the assessee for the purposes of Section 80IB(2) (iv) of the Income Tax Act, 1961? 2. The assessee is engaged in the manufacture of plastic parts, which are excisable. The assessment year involved herein is AY 1999-­2000. 3. In the assessment year in question, deduction under Section 80IB of the Act was claimed and allowed in the assessment order passed under Section 143(3) of the Act. Thereafter, the assessing officer passed re­assessment order under Section 143(3) read with Section 147 of the Income Tax Act, 1961 ('Act' for short) whereby deduction under....
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....he assessee got the goods manufactured from the premises of the job worker on labour contract basis and, therefore, the assessee cannot be said to be a manufacturer and, therefore, the condition set out in clause (iii) of Section 80IB(2) being not satisfied, the Tribunal committed an error in holding that the assessee is entitled to deduction under Section 80IB of the Act. 7. Relying upon two decisions of the Allahabad High Court in the case of R and P Exports V/s. Commissioner of Income Tax reported in 279 ITR 536 (All) and Venus Auto Private Limited V/s. Commissioner of Income Tax reported in (2010) 321 ITR 504 (All), counsel for the Revenue submitted that where the manufacturing activity is carried out at the premises of the contracto....
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....resaid facts, which are uncontroverted, clearly establish that the manufacturing activity was carried out at the factory premises of the assessee and, therefore, no fault can be found with the decision of the Tribunal in holding that the assessee was entitled to deduction under Section 80IB of the Act. 11. The inference drawn by the assessing officer that because the assessee has paid job work charges, the assessee must have got the goods manufactured from the job worker cannot be accepted, because, the finding of fact recorded by the Tribunal is that in the assessment year in question, the assessee has paid to the job­worker Rs.9,60,575/­ which is negligible as compared to the quantity of goods manufactured and cleared on paymen....
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....of the Act nor under Section 80IB(2)(iv) of the Act. As per Black's Law Dictionary, the expression 'worker' means a person employed to do work for another. Under Section 2(L) of the Factories Act, 1948, the expression 'worker' means a person employed directly or by or through any agency (including a contractor) with or without the knowledge of the principle employer, whether for remuneration or not in any manufacturing process, or in any other kind or work incidental to or connected with the manufacturing process. Therefore, in the absence of the expression 'worker' defined under the Act, it would be reasonable to hold that the expression 'worker' in Section 80IB(2)(iv) of the Act is referable to the persons employed by the assessee directl....
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....n the present case, it is not the case of the Revenue that the total number of workers employed in the manufacturing were less than ten at any point of time during the relevant assessment year. Therefore, when Section 80IB(2)(iv) of the Act merely provides that the undertaking must employ ten or more workers (whether directly employed or not) in the manufacturing process carried on with the aid of power, it would not be proper to hold that Section 80IB(2)(iv) refers to ten workers employed by the assessee directly. In other words, when the language used in Section 80IB(2)(iv) does not suggest that restricted meaning must be given to the expression 'worker', it would not proper to give a restricted meaning to that expression and hold that Se....
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....ers worked in the factory of the assessee under the direct control and supervision of the assessee. Therefore, the decision of the Allahabad High Court in the case of R and P Exports (supra) is distinguishable on facts. 17. No doubt that the decision of the Allahabad High Court in the case of Venus Auto Private Limited (supra) is in consonance with the arguments advanced by the Revenue. However, we find it difficult to subscribe to the views expressed by the Allahabad High Court in the aforesaid case. As held by this Court in the case of Sawyer's Asia Limited (supra), the undertaking is not required to have ten or more regular workers and it may be said to have satisfied that requirement if the aggregate actual number of workers engaged ....