2015 (7) TMI 1117

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..../- and the assessee is eligible for deduction on additional wages paid to the new workmen employed during the year. 3. For these and other grounds that may be urged at the time of hearing, it is prayed that the order of the CIT(A) in so far as it relates to the above grounds may be reversed and that of the AO may be restored". 3. The assessee company is engaged in the business of manufacturing and sale of readymade garments. The assessee claimed deduction u/s 80JJAA of the Act, in respect of the employment of new workmen. Assessee has given the details of the additional wages paid to the new workmen as under; For employment of new workmen           Addl.wags 2004-05                                                               38,72,178            11,61,653 2005-06     ....

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.... in the preceding year does not arise. The AO held that the assessee is eligible for deduction on additional wages paid to new workmen employed during this year only. Accordingly, the AO restricted the deduction claimed u/s 80JJAA to Rs. 26,37,638/- only, as against claim of Rs. 53,10,703/-. The assessee challenged the action of the AO before the CIT(A)and contended that as per the provisions of section 80JJAA deduction of an amount equal to 30% of additional wages paid to new regular workmen employed by the assessee in the previous year is eligible for three assessment year including the assessment year in which such employment is provided. Thus, the assessee contended that it is entitle for the deduction equal to 30% of the additional wages paid to new regular workmen employed in the preceding two years. The assessee placed reliance on the decision of the co-ordinate bench of this Tribunal in the case of ACIT Vs M/s Texas Instruments Pvt.Ltd., 27 SOT 72. The assessee explained that the deduction has been claimed in respect of the additional wages paid to the newly employed workmen during the preceding two years who have worked for 300 days or more. Therefore, the assessee f....

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....nal wages paid by the assessee in respect of the new workmen employed who work for 300 days, the deduction is available for three years including the previous year in which the new workmen were employed. Once the condition of new workmen is employed by the assessee during the previous year s fulfilled than the deduction of 30% shall be available in each of the three years, commencing from assessment year relevant to the previous year in which such employment is provided by the assessee. He has relied on the following decisions; 1. ACIT Vs Texas instruments (Ind.)Pvt.Ltd(2009) 27 SOT 72(Bang.) 2. OnMobile Global Ltd Vs Addl.CIT(2014) 45 Taxman.com 346 (B'lore-Trib). 3. Honeywell Tech. Solutions L:ab(P)Ltd Vs DCIT(2013) 35 taxmann.com144(B'lore-Trb) 7. We have considered the rival submissions as well as the relevant material on record. We have also given our deep thought on the provision of Sec.80JJAA of the Act which was inserted in the statute by the Finance Act, 1998 w.e.f.01-04-199. For the sake of ready reference we quote Sec.80JJAA as it existed for the assessment year under consideration.  " 80JJAa (1) where the gross total income of an assessee, being an I....

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....see and worked for 300 daysbut ceased to be the workmen of the assessee for the subsequent assessment year. The claim of the assessee is that once the condition as prescribed u/s 80JJAA of the Act is fulfilled in the first year of the employment of new workmen, than, the assessee is entitled for deduction of 30% of the additional wages each of the three assessment year commencing from the assessment year relevant to the previous year in which such employment is provided. On the contrary, he case of the revenue is that the assessee cannot avail the deduction of 30% of the additional wage paid in the earlier year to the new regular workmen employed by the assessee in those years. Thus, as per the AO as well as the learned DR the assessee is entitled for deduction of 30% additional wage paid during the year to the new regular workmen employed by the assessee during the year as well as in the earlier two years. Hence, as per the revenue the deduction is available equivalent to 30% of the wages paid during the year and not as a standard deduction of the wages paid in the earlier years. Though, we find a logic in the argument of the learned DR that the deduction u/s 80JJAAx is allowable ....

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....the issue raised by the revenue is identical. In view of our finding on this issue for the assessment year 2007-08, the issue raised by the revenue for the assessment year 2008-09 and 2009-10 has been disposed of in the same terms. 10. In the cross objection the assessee has raised common grounds which reads as under;  "1. The ld.AO has erred in invoking the provisions of explanation 3 to sec.43(1) of the Act and disallowing the depreciation claimed by the appellant on the assets purchased from M/s Trigen Apparels Ltd., and the ld.CIT(A) has erred in confirming the same. On proper appreciation of facts, the appellant's case is not covered by the explanation 3 to sec.43(1) of the Act. The disallowance as made being contrary both to the facts and law is to be deleted. 2. The authorities below have erred in not appreciating the fact that the purchase of assets are duly supported by valuation reports and there being no enhanced cost the disallowance is erroneous and is liable to be deleted. 3. The appellant has rightly claimed the depreciation o the assets purchased from M/s Trigen Apparels Ltd., and the same is to be allowed as such.ost the disallowance is erroneous a....

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....e actual cost of the asset to the assessee. He has relied upon the orders of the authorities below. 14. We have considered the rival submissions as well as the relevant material on record. The assessee has claimed deprecation on the fixed asset purchased by the assessee amounting to Rs. 2,21,81,957/- the purchase price of these assets were paid by the assessee on the basis of the valuation of the Charted Engineers and approved valuer. The AO has restricted the claim of depreciation on these fixed assets acquired by the assesssee from M/s Treason Apparels Pvt. Ltd. which was stated to be family concern of the Directors of the assessee company, as observed by the AO. The AO invoked the Explanation-3 to provisions of sec.43(1) which reads as under; "43(1) In sections 28 to41and in this section, unless the context otherwise requires;- "actual cost" means the actual cost of the assets to the assessee, reduced by that portion of the cost thereof, if any, as has been met directly or indirectly by any other person or authority: Provided that where the actual cost of an asset, being a motor car which is acquired by the assessee after the 31st day of March, 1967 , 2 but before th....