The Tax Publishers2020 TaxPub(DT) 4798 (Bang-Trib)

INCOME TAX ACT, 1961

Section 80-JJAA

Assessee could not be denied deduction under section 80JJAA, provided that, employees fulfilled the condition of being employed for 300 days for year under consideration, even though such employees did not fulfil the condition of being employed for 300 days in the immediately preceding assessment year.

Deduction under section 80-JJAA - Allowability - Denial on the ground of non-fulfillment of condition of employment for 300 days or more in the first year of employment -

Assessee company engaged in the business of distributed systems, design and development of hardware and software and digital content creation claimed deduction under section 80-JJAA. AO rejected the claim of assessee on the reasoning that condition of 300 days to be fulfilled by regular workman as per the provisions did not stand fulfilled in the 1st year of employment. Held: Deduction under section 80JJAA is allowed for three years including the year in which employment is provided. Hence, in each year it has to be seen that workman was employed for at least 300 days during that previous year and that such workman was not a casual workman or workman employed through contract labour. Therefore, if some workman were employed for a period of less than 300 days in the previous year then no deduction is allowable in respect of payment of wages to such workman in the present year even if such workman was employed in the preceding year for more than 300 days but in the present year, such workman was not employed for 300 days or more. By the very same reasoning the fact that in the first year of employment the additional wages paid is not allowed deduction for the reason that the workman did not work for 300 days or more but in the next two assessment years, if he works for more than 300 days each, then the deduction under section 80JJAA has to be allowed. It is not proper to say that if the deduction is refused in the first year of employment of the new employee then for the next two succeeding assessment years also, the benefit of deduction will not be available. Such an approach defeats the very purpose for which deduction under section 80JJAA is allowed for three consecutive assessment years. Accordingly, assessee could not be denied deduction under section 80JJAA, provided that, such employees fulfilled the condition of being employed for 300 days for year under consideration, even though such employees did not fulfil the condition of being employed for 300 days in the immediately preceding assessment year. Issue was remanded to AO for verification of details in terms of new employees having satisfied the 300 days criteria during the year.

Followed:Texas Instruments (India) (P) Ltd. v. Asstt. CIT (2020) 115 Taxmann.com 154 (Bang) : 2020 TaxPub(DT) 2145 (Bang-Trib).

REFERRED :

FAVOUR : Matter remanded.

A.Y. : 2012-13



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