For Section 80-IB ‘workers’ need not be ’employees’ – Bombay HC

CIT Vs. Jyoti Plastic Works Pvt Ltd (Bombay High Court) – under Section 80IB(2)(iv) what is relevant is the employment of ten or more workers and not the mode and the manner in which the said workers are employed by the assessee. In other words, irrespective of the terms of employment, condition of Section 80IB (2)(iv) would stand fulfilled if the assessee in aggregate employs ten or more workers in its manufacturing activity. The fact that the employer– employee relationship between the workers employed by the assessee differs cannot be a ground to deny deduction under Section 80IB of the Act, so long as the workers employed by the assessee in aggregate exceed ten in number.

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION

INCOME TAX APPEAL NO. 5045 Of 2010

The Commissioner of Income Tax- 9 Versus M/s. Jyoti Plastic Works Private Limited

1. The appeal is admitted on the following two substantial questions of law and taken up for final hearing by consent of both the parties.

a) Whether the Income Tax Appellate Tribunal was justified in holding that the assessee is engaged in the activity of manufacture or producing an article or thing and, hence, eligible for deduction under Section 80IB of the Income Tax Act, 1961?

b) Whether the Tribunal was justified in holding that the workers supplied by the contractor are also to be treated as workers employed by the assessee for the purposes of Section 80IB(2) (iv) of the Income Tax Act, 1961?