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TMI Blog2023 (3) TMI 1099X X X X Extracts X X X X X X X X Extracts X X X X ..... erifiable fact and that AO has examined the Manager and also obtained report of PF department from both of which it is clear that assessee did not have 10 workers during the year 3. The Ld. CIT (A) is in error in accepting the case setup by the appellant which is against facts on records. The appellant craves to amend or add any one or more grounds of appeal." 3. The assessee is manufacturing supplements for poultry feed. The case of earlier year was also under scrutiny. The assessee has declared sales at Rs. 13.59 crores and gross profit of Rs. 5.56 crores which is 41.62% of the total sales. After claiming expense in the profit and loss account, the net profit was declared at Rs. 5.56 crores which is 50.97% of the sales. After claiming 100% deduction u/s. 80IB of the Income tax Act, returned income of 'NIL' was filed. The assessee has paid tax of Rs. 1,06,09,326/- u/s. 115JC of the Income tax Act. During the assessment proceedings, in order to examine whether the conditions required u/s. 80IB of the Income tax Act, have been fulfilled by the assessee, the AO recorded the statement of Shri Harit Sharma, Manager and In-charge of the concern M/s J. K. Mint Industries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dger account bills and details of workers employed from security agency is also enclosed as Annexure A-F. The appellant has also enclosed the copy of income tax return, balance sheet, and profit and loss account along with Annexure, Audit Report and From No. 10CCB of the Income tax Act for the assessment year 2013-14 i.e., the assessment year under consideration. The appellant then placed the reliance on the decision of CIT Vs. CIT Vs. K.G. Yedyurappa & Co. 152 ITR 152 ( Kar ), CIT Vs. Prithviraj Bhoorchand [ 2005] 280ITR 94 ( Guj ) and CIT Vs. Jyoti Plastic Works ( P ) Ltd. 203 Taxman 546/16 Taxman.Com 172 (Bom.) where the term 'workers' used in section 80IB (iv) of the Income tax Act includes and mean ' casual' ' Permanent', 'temporary', all these three categories are counted to define workers under this section. Since under the provisions of section 80IB (iv) the 'worker' has not been defined the definition as suggested in the above judicial decisions should prevail. The appellant has stated that the statement of Sh. Harit Sharma, Manager and the inspection report given by the Provident Fund Department cannot be relied upon as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Harit Sharma cannot be made a basis for denial of deduction in the absence of opportunity not provided the assessee to cross examine him in view of the settled legal position. On facts also, the AO had not pointed out any specific defect in the salary register, wages register attendance register and payment of wages register produced before him during the assessment proceedings which showed that more than 10 workers were working in the factory unit of the assessee. I, therefore, hold that assessee was entitled to get deduction u/s. 80IB of the Act. It is pertinent to mention here that though, the return of income after claiming deduction u/s. 80IB was declared at 'NIL', yet the assessee had paid tax of Rs. 1,06,09,326/- U/S.115JC of the Income tax Act. Accordingly, the claim of deduction made by the assessee u/s. 80IB of the Act is allowed. In effect the appeal is allowed." 5. The Ld. DR for the department submitted that the Ld. CIT (A) has erred in allowing the appeal of the assessee on the ground that the assessee has fulfilled the conditions for claiming deduction u/s 80IB of the Act in the previous and subsequent assessment years. He failed to appreciate that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30 to31 From the perusal of the aforesaid it shall be clear that the actual numbers of workers employed by the Appellant is more than ten. Besides the aforesaid document the appellant is enclosing the copies of the ITR, Audit report and form no. 10CCB for the A.Y 2013-14. These are enclosed as Annexure-E (Colly) from page no. 32 to54 3. WITHOUT PREJUDICE TO THE ABOVE, it is further submitted that besides the above workers, the Appellant has also employed some security workers from M/s B.D Security Pvt. Ltd. for the A.Y 2013-14 and these are not included in the number of workers the details of which are enclosed from Annexure-B to Annexure-D (supra). The copy of ledger account, bills and details of workers employed from security agency is also enclosed as Annexure-F (Colly) from page no. 55 to85. All the aforesaid document, except Annexure-C are already placed/produced before the AO, however the same is again enclosed for ready reference. The Annexure-C cannot be filed before the AO due to the JAT agitation going on in Haryana when the assessment order was passed. 4. It shall not be out of place to mention here that the term 'workers' used in section 80IB (iv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t out in different background with different purposes. Without prejudice it is submitted that the report of the PF department nowhere states that the appellant was not employing ten workers for the purpose of claiming deduction U/s 80IB, at the most it throws light on the number of workers present on that particular dav when the alleged inspection was carried out by the PF department. When the report is read with the attendance register of the appellant, it shall be clear that on that particular day the number of employees were less than ten, as some of them were absent or on leave. This fact was not considered by the AO while passing the assessment order. 8. It is also submitted that it is not the case of the AO that the Department has undertaken an independent enquiry to find out as to whether ten or more workers were working and have found that the actual numbers of workers were actually less than ten. The sole reliance on the report of PF department is not tenable. The alternative submission of the Appellant is that in view of the case laws submitted before your honour the security guards which has been employed by the Appellant for the A.Y 2013-14 clearly falls under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rohit Sharma, Manager was taken in isolation and the assessee has not been granted an opportunity to cross examine in rebuttal and hence, the evidentiary value of such statement without cross examination is in nullity in the eyes of law. Further, the report of PF department, did not make it clear that on which particular day there were 8 workers excluding watchman/ckaukidars for day and night and the frequently of such day on monthly basis, so as to understand the working strength/man power/workers employed in view of the requirement of the provisions of section 80IB(iv) of the Act. In our view, the Ld. CIT(A) was justified in approving the claim of the appellant assesse that there were 10 and more workers were employed during the year under consideration. 8. The Ld. Counsel argued that the inspection on one or two day in a financial year conducted by the PF Department, without any specific finding of the said Department does not ipso facto applies to the provisions of the Income Tax Act. Reliance in this regard was placed on the decision of "K.T.M.S Mohammed l/s Union of India", (1992) 197 ITR 196 (SC), where it is observed that the provisions of PF Act and those of Income Tax Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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