9911796707
TMI Blog2005 (9) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... er of Income-tax under section 263 of the Act whereby he had directed the Income-tax Officer to pass a fresh order withdrawing the deduction granted under section 80-I?" The assessee is an individual. The assessment years are 1984-85, 1985-86 and 1986-87 and the relevant accounting periods are Samvat years 2039, 2040 and 2041, respectively. For the years under consideration the Assessing Officer allowed deduction under section 80-I of the Act. The Commissioner of Income-tax after going through the records came to the conclusion that the orders passed by the Assessing Officer for the aforesaid years are erroneous and prejudicial to the interests of the Revenue. He, therefore, in the exercise of powers under section 263 of the Act, directed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was obtaining labourers on contract system on wages there was no relationship of employer-employee, between the assessee and the workers working for the assessee, and that other benefits were also paid through the contractor, hence, it could not be said that the workers were employed by the assessee, therefore, the requirements of clause (iv) of sub-section (2) of section 80-I of the Act were not fulfilled. Hence, the assessee was not entitled to the benefit of deduction under section 80-I of the Act. As can be seen from the order of the Tribunal, the Tribunal has found that it is not disputed that the assessee was carrying on his business activities without the aid of power and had employed more than 20 workers for all the years under c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the assessee who is responsible to the workers in the case of an accident and that the assessee can let off workers at any time, if he so desires. Dealing with the contention of the Revenue that the assessee was claiming exemption from the contributory provident funds, etc., the Tribunal observed that the provisions of section 32 of the EPF Act cast the responsibility upon the contactor to recover the contribution payable by such employee who was employed through the contractor and to pay the same to the principal employer together with an equal amount of contribution. The Tribunal, therefore, held that the same could not be held against the assessee for denying him the benefit under section 80-I(2)(iv) of the Act. The Tribunal held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied on with the aid of power; or It should employ twenty or more workers in a manufacturing process carried on without the aid of power. In the facts of the present case, there is no dispute that the industrial undertaking of the assessee manufactures or produces articles or things. There is also no dispute that the assessee carries on manufacturing process without the aid of power, for which purpose the assessee avails of the services of twenty or more workers. The only question that arises is in view of the fact that the workers are engaged on contract labour basis, whether it can be said that the industrial undertaking of the assessee employs twenty or more workers in the manufacturing process carried on by it. As can be seen, the ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersons were not employees because they were being paid on piece-rate basis or job work basis. In the present case the Tribunal has found that the assessee has the ultimate control over the affairs of the establishment and that the industrial undertaking of the assessee was employing more than 20 workers through the contractor. Applying the principles laid down by the aforesaid decision to the facts of the present case it cannot be said that the Tribunal was not justified in holding that the assessee is employing 20 workers in its industrial undertaking as contemplated by the provisions of clause (iv) of sub-section (2) of section 80-I of the Act. Accordingly, it is held that the Tribunal is right in law and on the facts in setting aside th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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