Tata Elxsi Ltd. v. Jt. CIT [ITA No.
3445/Bang/2018, dt. 29-10-2020] : 2020 TaxPub(DT) 4556 (Bang-Trib)
Denial of deduction under section 80JJAA in 3rd year
subsequent to recruitment year of new employees citing employees working for
less than 300 days in first year - retrospective reading of 4th proviso in
section 80JJAA
Facts:
Assessee claimed deduction under section 80JJAA in the
assessment year 2014-15 which was the third year of recruitment of new
employees. Revenue denied it citing that the new employees did not meet the
threshold cut off of 300 days as per the section in the first year. On higher
appeal -
Held in favour of the assessee that they were entitled to
the deduction under section 80JJAA.
The 300 day rule if applied in the first year of new recruitment
will lead to absurdity resulting in denial of the deduction and with no
purposive interpretation of the section.
Applied: Texas
Instruments (India) Pvt. Ltd. v. ACIT (2020) 115 taxmann.com 154 (Bang-Trib) :
2020 TaxPub(DT) 2145 (Bang-Trib).
Editorial Note:
Amendment made in section 80JJAA(2) by inserting 4th
proviso vide Finance Act, 2018 with effect from 1-4-2019 may need to be read
retrospective to make the section workable despite below wording of section
80JJAA(3).
"The provisions of this section, as they stood
immediately prior to their amendment by the Finance Act, 2016 shall apply to an
assessee eligible to claim any deduction for any assessment year commencing on
or before the 1-4-2016".
The number of days is now reduced from 300 to 240 is also
to be noted.