TaxTMI 
TaxTMI 
TaxTMI 
2005 (3) TMI 89
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....export of brass artware and other Indian handicrafts. Its claim for deduction under sections 80HH and 80-I of the Act was rejected by the assessing authority on the ground that the firm was not a small scale industrial undertaking and it was not a manufacturer. In appeal, the Commissioner of Income-tax (Appeals) upheld the claim for deduction under the aforesaid two sections but ultimately rejected the same on the ground that the conditions prescribed in sections 80HH(2)(iv) and 80-I(2)(iv) were not satisfied. The contention of the applicant was that karigars/artisans who worked for it were paid remuneration and which has been debited in the purchases account as polishing charges, engraving charges, cutting charges, etc., and therefore are to be treated as workers employed by it and since the total number of such workers would exceed the prescribed limit being almost 100 workers, the benefit of these sections should be allowed, was rejected by the Tribunal. There is no dispute that the applicant does not have power connection. It is also admitted that it does not directly employ 20 or more persons in his employment. In this factual set up the claim of deductions under sections 80HH....
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....ins from industrial undertakings after a certain date, etc.-(1) Where the gross total income of an assessee includes any profits and gains derived from an industrial undertaking or a ship or the business of a hotel or the business of repairs to ocean-going vessels, or other powered craft to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to twenty per cent., thereof: Provided that in the case of an assessee, being a company, the provisions of this sub-section shall have effect in relation to profits and gains derived from an industrial undertaking or a ship or the business of a hotel, as if for the words 'twenty per cent.', the words 'twenty five per cent.' had been substituted. (2) This section applies to any industrial undertaking which fulfils all the following conditions, namely:- ... (iv) in a case where the industrial undertaking manufactures or produces articles or things, the undertaking employs ten or more workers in a manufacturing process carried on with the aid of power, or employs twenty or m....
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...." refers to any industrial undertaking. The deduction is granted to the newly established industrial undertaking or hotel business. Sub-section (2) of section 80HH further provides that such industrial undertaking is not formed by the split up or reconstruction, of a business already in existence in any backward area. It further provides that it is not an industrial undertaking and has not been formed by transfer to a new business of machinery or plant previously used for any purpose in any backward area. In the context of section 80HH if we give a wider meaning to clause (iv) of sub-section (2) of section 80HH, the provisions shall not be workable. The reason being that the workers should be employed in an industrial undertaking. If the work is got done on job basis from outside agencies it cannot be said that the workers were employed in an industrial undertaking which fulfils the other three conditions of sub-section (2) of section 80HH. Secondly, if the manufacturing process is carried on with the aid of power, the minimum required number of workers is 10, otherwise 20 or more workers employed in a manufacturing process carried on without the aid of power. It is quite possible ....
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....ourt in the case of Harish Chandra Bajpai v. Triloki Singh, AIR 1957 SC 444 which reads as follows: "The word 'employment' covers a much larger field in matter of conditions of service, the right of promotion, etc., than the word 'appointment'. Therefore, looking at the expression 'employment' both in its ordinary meaning and the meaning as derived from the language used in other rules, it would be right to construe it as meaning the state of being employed or as referring to the existence of employer and employee relation. A contract of employment may be in respect of either piece-work or time-work, but it does not follow from the fact that the contract is for piece-work that it must be a contract of employment. There is in law a well-established distinction between a contract for a service and a contract of service. In the one case the master can order or require what is to be done, while, in the other case, he cannot only order or require what is to be done but how it shall be done. The real test for deciding whether the contract is one of employment is to find out whether the agreement is for the personal labour of the person engaged, and if that is so, the contract is one of....