Delhi H.C : Whether, on the facts and in the circumstances of the case, the Tribunal is justified in law in holding that the assessee was entitled to relief under s. 80J of the IT Act, 1961, when he had employed more than ten workers only for nine months and had employed less than ten workers for the remaining three months ?

Counsel Appeared

R.D. Jolly, Ms. Prem Lata Bansal & Ajay Jha, for the Applicant : None, for the Respondent

JUDGMENT

ARIJIT PASAYAT, C.J. :

At the instance of Revenue, the following question has been referred for opinion of this Court by the Tribunal, Delhi Bench E, under s. 256(1) of the IT Act, 1961 (“the Act”) : “Whether, on the facts and in the circumstances of the case, the Tribunal is justified in law in holding that the assessee was entitled to relief under s. 80J of the IT Act, 1961, when he had employed more than ten workers only for nine months and had employed less than ten workers for the remaining three months ?”

Factual position, which is almost undisputed so far as it relates to the asst. yr. 1974-75, is as follows : The assessee, a private limited company, adopted calendar year as its year of accounting. It carried on manufacture and sale of wrenches, clamps, etc. Claim for relief under s. 80J was made by the assessee before the ITO, who rejected the claim stating that assessee did not satisfy the condition laid down in s. 80J(4)(iv). This provision requires that the undertaking must have employed in the manufacturing process carried on with the aid of power ten or more workers. In the present case, the assessee had employed less than ten workers for the first three months of the calendar year, but it employed more than ten workers for the remaining nine months. The assessee preferred appeal before the CIT questioning correctness of the conclusions arrived at by the AO. Said authority held that there was no necessity for employing ten or more workers throughout accounting period. Matter was carried in appeal by the Revenue before the Tribunal. Stand of Revenue in essence was that for getting the benefit, the employment has to be throughout the accounting period and not a part of it. The Tribunal did not accept this stand and held that for substantial period of the accounting year, the assessee had employed more than ten workers and, therefore, the benefit has to be granted. On being moved for reference, question as set out above has been referred for opinion of this Court.

We have heard the learned counsel for the Revenue. There is no appearance for the assessee in spite of notice. Stand of Revenue before the Tribunal was reiterated. If for substantial period of the assessment year in question, the assessee has complied with the requirement of employing more than ten workers, the benefit has to be granted. It has to be noted that on the last date of the assessment year, the requisite number was there in the present case in addition to the fact that for substantial period of the year that was the position. Substantial compliance was all that was required. In order to qualify for the relief and satisfy the requirements of the provision, the undertaking must have employed ten or more workers substantially during the period for which relief was claimed. There could be no hard and fast rule by which one could determine whether there had been substantial compliance. It is for the authority or the Court to so decide based upon the facts before it. Similar view has been expressed by the Bombay High Court in CIT vs. Harit Synthetic Fabrics (P) Ltd. (1986) 53 CTR (Bom) 303 : (1986) 162 ITR 640 (Bom) : TC 25R.745 and CIT vs. Ormerods (I) (P) Ltd. (1989) 75 CTR (Bom) 192 : (1989) 176 ITR 470 (Bom) : TC 25R.746.

5. Above being the position, the question referred is answered in the affirmative, in favour of the assessee and against the Revenue.

The reference stands disposed of.

[Citation : 250 ITR 675]