Case Law Details
Workers working under contractor and not under the assessee company are to be be treated as employees u/s 80I(2)(iv) for the purpose of claiming deduction u/s 80I of the Income Tax Act, 1961.
The appellant concededly employed and utilised the services of workers through the contractor Buta Singh. At the relevant time during the assessment year 1986-87, the appellant employed 18 workers including those supplied by labour contractor. It claimed a deduction under Section 80I to the extent of Rs.92,251/- being 25% of the profit i.e. Rs.3,69,005.00. The AO declined it and included the amount in the taxable income by the impugned order dated 23.3.1989. The AO was of the opinion that since the employees engaged by the assessee were through a contractor and not its own employees, the assessee could not be said to have qualified for the said deduction by reason of Section 80I(2)(iv).
This Court has carefully considered the grounds of appeal as well and heard the counsel for the revenue. Section 80I enables deduction in respect of profits and gains from industrial income to the extent of 20%. This Court is at present concerned with the one provided in Section 80I(2)(iv). The same reads as follows :
“80I. xxxxx
(2) This Section applies to any industrial undertaking which fulfils all the following conditions, namely :-
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