TaxTMI 
TaxTMI 
2017 (6) TMI 981
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....essment Year 2006-07 wherein the assessee has raised the following grounds : 1. The assessment order dated October 14, 2010 passed by the learned Assessing Officer ("AO") under section 143(3) read with section 144C of the Income-tax Act, 1961 ("Act") is not in accordance with the law and is contrary to the facts and circumstances of the present case and in any case violation of principle of equity and natural justice. 2. Deduction under section 80JJAA of the Income-tax Act, 1961 2.1 The Honourable Dispute Resolution Panel ("DRP") and the learned AO ("Ld AO") have erred in denying the deduction under section 80JJAA of the Income-tax Act, 1961 ("the Act"). They have erred in disregarding the decision of the jurisdictional ITAT in the case of Texas Instruments (India) Private Limited ("TI India") for the assessment years 2001-02 and 2002-03, wherein the deduction claimed by the appellant under section 80JJAA has been allowed. 2.2 The Honourable DRP and Ld AO have erred in not appreciating that the "workman" defined in the Industrial Disputes Act includes persons involved in various types of activities and from out of such different types of persons ....
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....le, based on the information gathered under section 133(6) of the Act, though the same information was not available in public domain, to the assessee at the time of conducting its own Transfer Pricing study. 3.6 The Hon'ble DRP and the ld. AO have erred in law and on facts by adopting the financial data for a single year (ie the FY 2005-06 of the comparables) as against the multiple year data considered by the assessee. 3.7 The ld. AO/Hon'ble DRP have erred in law by upholding the TPO's conclusion that it is mandatory to use data pertaining to the financial year 2005-06 only (ie, the year in which international transactions are carried out). 3.8 The ld. AO/Hon'ble DRP have erred in law by upholding the TPO's action of exercising his powers under section 133(6) of the Act to obtain selective information which was not available in public domain and relying on the same for comparability purposes. 3.9 The Hon'ble DRP and the ld. AO have failed to consider the differences in the risk profile of the assessee and the comparables and rejected the risk adjustments made by the assessee. 3.10 The Hon'ble DRP and the ld.....
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....he assessee's contention. 3.20 The Honorable DRP and ld. AO have erred on facts by erroneously concluding that the assessee has used a dual approach for the related party filter. 3.21 The Honorable DRP and ld. AO have failed to appreciate that wherever consolidated financials were used, the assessee has predominantly considered the segmental information of the consolidated financials relating to the software development segment and hence having considered the details relating to the software development segment, the rejection of the said comparables is unjustified. 3.22 The Honorable DRP and ld. AO have erred in law by not providing the assessee the benefit of the +/- 5 per cent range as prescribed under the Act. 3.23 The impugned order of assessment dated December 14, 2009 was made based on an order dated October 30, 2010, purportedly under section 92CA made by the JDIT, TPO II, Bangalore. However, the said transfer pricing order is made without jurisdiction and hence invalid. In view of the provisions of the Act and the notifications, it is evident that the JDIT, TPO II, Bangalore, who made the order purportedly under section 92CA ....
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....ised Representative as well as learned Departmental Representative and considered the relevant material on record. At the outset, we note that an identical issue was considered by this Tribunal in assessee's own case for the Assessment Years 2001-02 & 2002-03 vide order dt.21.12.2006 in ITA No.273 & 274/Bang/2005. Subsequently, the Hon'ble High Court remitted the matter to the record of Tribunal for deciding another aspect of the issue regarding the condition of completion of 300 working days during the year as contemplated u/s. 80JJAA of the Act. Therefore as far as the issue of the new employees appointing during the year under consideration without any supervisory role had already been decided by the decision of this Tribunal vide order dt.21.12.2006 in assessee's own case for the Assessment Years 2001-02 & 2002-03. However the issue of the condition of 300 days employment during the year under consideration is concerned this issue was decided against the assessee in the remand proceedings in pursuant to the directions of Hon'ble High Court. The finding of the Tribunal in assessee's own case on this issue vide order dt.29.12.2016 in paras 7 to 10 as under : ....
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....ed under this provision equivalent to 30% of the aggregate charges or salary paid to new workmen on satisfaction of the conditions provided under the said provision. At this stage we quote the provisions of Section 80JJAA as exist at the relevant point of time as under : " Deduction in respect of employment of new workmen. 80JJAA. (1) Where the gross total income of an assessee includes any profits and gains derived from the manufacture of goods in a factory, there shall, subject to the conditions specified in sub-section (2), be allowed a deduction of an amount equal to thirty per cent of additional wages paid to the new regular workmen employed by the assessee in such factory, in the previous year, for three assessment years including the assessment year relevant to the previous year in which such employment is provided. (2) No deduction under sub-section (1) shall be allowed- [(a) if the factory is acquired by the assessee by way of transfer from any other person or as a result of any business re-organisation;] (b) unless the assessee furnishes along with the return of income the report of the accountant, as defined in the Explanation....
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....'previous year' as used in sub-clause (c) of Clause (ii) of explanation is not used in the Memorandum explaining the provision as the condition for such workman should be a regular workman is provided as he has been employed for atleast 300 days in an year. Therefore this condition of 300 days during the previous year as stipulated under section 80JJAA for treating a worker as a regular workman can be satisfied only when a workman joins on or before 5th June of previous year and not thereafter. There is no doubt that the Legislature has not intended while providing this incentive of generation of employment opportunity that it should be only at the beginning of each financial year but the employment is generally given throughout the year depending upon the demand and supply of the workmen in the industry. Even otherwise the definition of workmen as given under Explanation to Section 80JJAA is not an inclusive definition but certain categories of workmen are excluded such as a casual workman, a workman employed through contract labour or any other workman employed for a period of less than 300 days during the previous year. All these three categories of employment excluded from the ....
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....men falling in category (d) newly employed during the year is to be determined; and whether it is equal to or more than 10 per cent of existing number of workmen [i.e., category (b) + (c) + (d)] employed in the undertaking on the last day of the preceding year. If answer to this question is yes, then the wages paid to new regular workmen [i.e., category (d)] in excess of 100 workmen employed during the year is to be determined. 30 per cent of wages so determined will be the amount of deduction under section 80JJAA of the Act. 11. There is no dispute that the case of assessee is of an existing undertaking. Therefore, for computing additional wages the percentage increase in the number of regular workmen has to be determined with reference to the workmen employed in the undertaking as on the last day of the preceding year. From the order of ld. CIT(A) we find that in this case, the increase in the number of regular workmen has been determined with reference to regular workmen and not with reference to workmen employed in the undertaking as on the last day of the preceding year. For computation of deduction in respect of regular workmen employed for 300 days or more in previo....
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...., the labour hired on contract basis, the workmen employed less than 300 days and also the workmen employed for 300 days or more. When the percentage increase with reference to regular workmen is less than 10 per cent, it will be further less when the percentage increase will be worked out with reference to the total number of workmen employed. Therefore, in any case the assessee will not be eligible for deduction in respect of regular workmen employed during the assessment year 2001-02. The order of CIT(A) is upheld in this regard." A similar view has been taken by the Delhi Bench of this Tribunal in the case of LG Electronics India Pvt. Ltd. Vs. ACIT (supra) in paras 12 & 13 as under : " 12. As regards the merits of the case, regarding claim u/s 80JJAA the section reads as under:- "(1) Where the gross total income of an assessee being an Indian Company includes any profits and gains derived from any industrial undertaking engaged in the manufacture or production of articles of things there shall subject to the conditions specified in sub section (2) be allowed as deduction of an amount equal to 30% of additional wages paid to the new regular workmen employed ....
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.... once these workmen are excluded from the category of regular workmen then the same cannot be considered as new regular workmen in excess of 100 as well as increase in the number of regular workmen not less than 10%. Therefore while considering the alternative plea a different meaning cannot be given to the regular workmen." Accordingly, the first aspect of the issue regarding the engineers can be considered as workmen as per the provisions of section 80JJAA of the Act is decided in favour of the assessee and the issue of the condition of 300 days employment during the previous is decided against the assessee. 8. For the Assessment Year 2004-05, the assessee has challenged the order of CIT (Appeals) and raised the following grounds : 1. " The learned CIT(A) has erred in passing an order which is bad in law and on facts. 2. Denial of the claim of deduction under section 80JJAA of the Act 2.1. The learned CIT(A) erred in law and on facts in not allowing deduction under section 80JJAA of the Act to the extent of Rs. 67,962,013, as claimed in the return of income. 2.2. Without prejudice to the above, the learned CIT(A) has erred in law and on f....
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.... its jurisdiction by considering the other conditions of Section 80JJAA in respect of the employment of 300 days during the previous year which was not the issue remitted by the Tribunal to the Assessing Officer and therefore the Assessing Officer has travelled beyond the jurisdiction while passing the order in pursuant to the revision order passed under Section 263. He has relied upon the decision of Gujarat High Court in the case of CIT Vs D.N. Desai 280 ITR 275 and submitted that the Hon'ble High Court has held that the Assessing Officer by following the directions of the order passed under Section 263 had travelled beyond the jurisdiction. Thus the learned Authorised Representative has submitted that the limited issue in the remand proceedings was for the Assessing Officer to verify whether the employees employed by the assessee was in the supervisory category or workmen whereas the Assessing Officer has denied the claim of the assessee on the ground that the workmen have not worked for 300 days during the year under consideration. 10. On the other hand, the learned Departmental Representative has submitted that even on the issue of the workmen or supervisory category, t....
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....e order of the Tribunal that the details with regard to the employees on whose salary deduction under Section 80JJAA of the Act have been claimed has not been produced before the Tribunal. Therefore the Tribunal expressed its limitation to verify whether the persons employed in the supervisory role are also included in the list. Accordingly, the matter was remitted to the record of the Assessing Officer. The limited issue in the remand proceedings before the Assessing Officer was only to verify whether any persons employed in the supervisory role was included in the list for the purpose of deduction under Section 80JJAA of the Act. The Assessing Officer while passing the order dt.20.12.2011 denied the claim without giving effect the directions of the Tribunal to verify the factual position. Subsequently, the CIT passed a revision order under Section 263 dt.16.1.2013 and directed the Assessing Officer to verify whether the condition stipulated for the grant of deduction under Section 80JJAA as directed by the Tribunal are satisfied in the case of the assessee. The Assessing Officer then passed the order dt.16.1.2014 in pursuant to the revision order under Section 263 and denied the ....