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TMI Blog2019 (12) TMI 1671X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of additional employee cost of new employees @30% of cost incurred in the regular course of business. The Assessing Officer (AO) was of the view that the deduction u/s. 80JJAA of the Act is allowable from the profits and gains derived by the assessee to the extent of 30% of the additional employee cost incurred in the course of business during the previous year relevant to the assessment year in respect of the additional wages paid to the new employees who are employed on regular basis and completed 300 days of employment in the preceding year relevant to the A.Y under consideration. The AO asked the details and from the details furnished by the assessee, the AO found that the assessee had engaged 381 employees during the year and out of which 186 employees have completed the employment of 300 days. The assessee contended before the AO that as per the provisions of the act, there was no reference OF new employees employed in the preceding years are not eligible for deduction u/s. 80JJAA of the Act in the subsequent assessment year. The assessee further submitted before the AO that interpretation of the section should be made in a manner in which it promotes the objective soug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king days are less than 300 days because he was employed after 66 days from the start of the previous year then no deduction will be available under this section in respect of such workers appointed or employed after that date and therefore, this approach of the AO is not correct. 23. In our considered opinion, as per provisions of section 80JJAA as reproduced above, the deduction is allowable for three years including the year in which the employment is provided. Hence, in each of such three years it has to be seen that the workmen was employed for at least 300 days during that previous year and that such work men was not a casual workmen or workmen employed through contract labour. Therefore, if some work men were employed for a period less than 300 days in the previous year then no deduction is allowable in respect of payment of wage to such work men in the present year, even if such work men was employed in the preceding year for more than 300 days but in the present year, such work men was not employed for 300 days or more. In this view of the matter, we find no infirmity in the order of the Id.CIT(A) on this issue. 4. Now we examine the applicability of the judgment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o interfere in the order of lcl CITCA)" We find that the co-ordinate bench of this Tribunal in the case of Bosch Ltd. (.wpm) has also taken similar view. 9. Therefore in view of the decisions of this Tribunal on this point and to maintain the rule of consistency, we hold that the assessee has not fulfilled the condition of employing the new regular workmen in excess of 100 workmen and further an increase of 10% of the existing number or workmen employed by the assessee as on last date of preceding year. The Assessing Officer has filed the remand report and the assessee has also accepted this fact that during the previous year relevant to the Assessment Year 2001-02, the number of workmen who were employed from 300 days or more days are only 16 and similarly during the previous year relevant to the assessment year 2002-03, the number of workmen who were employed for 300 days or more Me only 8. Therefore the assessee does not satisfy the condition as prescribed under the provisions of Section 80JJAA of the Act because the workmen employed by the assessee cannot be included in the definition of regular Workmen as per explanation to his section. From the above judicial pronoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for more than 300 days in a year, even if it is not the year in which it was admitted. The ld. AR relied on the order of this tribunal in the assessee's own case for the assessment year 2013-14 in I.T.A. No.2737/Bang/2017 dated 03.04.2019. 5. On the other hand, the ld. DR supported the orders of the lower authorities and requested to confirm the order of the Ld. CIT(A). 6. We heard the rival submissions and perused the material placed on record. In the instant case, the assessee submitted that the assessee is eligible for deduction under section 80JJAA of the Act, if the workmen has employed for more than 300 days irrespective of the year in which they were recruited for three consecutive years, whereas the AO disallowed deduction under section 80JJAA of the Act relating to the workmen who have not completed 300 days in the year under consideration. The identical issue has been considered by the ITAT in the assessee's own case for the assessment year 2013-14, and held that the assessee is eligible for deduction under section 80JJAA of the Act.,on additional wages paid to the new regular workmen employed in the financial year relevant to the assessment year 2012-13 provided they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO that the payment made by the company is not chargeable to tax in India therefore; the question of deduction of tax at source u/s 195 of the Act does not arise. The assessee further explained that it has no business connection as defined u/s. 9(1)(vii) of the Act and the marketing commission is not in the nature of fee for technical services and Indo maritius treaty does not contain any provision regarding the taxability of Fee for technical services and the taxability of impugned commission is governed by the provisions related to the business income and in the absence permanent establishment in India the payment of commission is not liable to taxed in India. Thus, argued that TDS provisions are not applicable in assessee's case. On receipt of reply objecting the disallowance u/s 40(a)(i), the AO issued notice under section 142(1) calling for the details of invoices for marketing commission paid and the details of marketing services rendered by the holding company. The assessee company also furnished the agreement evidencing that the holding company was appointed as marketing representative for promotion of readymade garments manufactured by the assessee company for sale in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) did not give any opportunity to the assessee before rejecting the additional evidences and even not referred the matter to the AO for remand. Therefore, argued that the Ld. CIT(A) erred in rejecting the application filed by the assessee for admission of additional evidence. Therefore, the order of Ld. CIT(A) is bad in law and the Ld. CIT(A) ought to have examined the entire additional evidence before rejecting. The ld. AR further submitted that the AO was given a notice for making the addition under section 40(a)(ia) of the Act for non deduction of tax at source and on explanation submitted by the assessee objecting for the disallowance, the AO called for the details of the commission payment by notices under section 142(1) of the Act and given a finding with regard to genuineness of the payments of commission and the services rendered by the M/s. Aquarelle International Ltd., Mauritius, which is apparently contradicting to the issues raised for and conclusions drawn by the AO. 8.2 The Ld. AR further brought to our notice that, AO in his order though made the disallowance under section 37(1) of the Act given a finding that the payment was given to the non-resident by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces rendered by the assessee and made the addition holding that the assessee did not establish the marketing services rendered by the holding company M/s. Aquarelle International Ltd. However in subsequent paragraphs though without prejudice, the AO made the addition under section 40(a)(ia) of the Act. While making the disallowance under section 40(a)(ia) of the Act the AO made the observation that payment was genuine and the agents have rendered the services. Therefore, as rightly argued by the Ld. AR there was a contradictory finding in respect of the services rendered by the foreign agent to the assessee. The Ld. CIT(A) rejected the application of the assessee for admission of additional evidence, however, the Ld. CIT(A) reached conclusions on the basis of additional evidence produced by the assessee, without even calling for the remand report. Having rejected the application for admission of additional evidence the Ld. CIT(A) ought not to have placed reliance on the same additional evidence for concluding that the M/s. Aquarelle International Ltd., has not rendered the marketing services to the assessee. The Ld. CIT(A) also ought to have called for the remand report and made ve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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