Workmen ought not to have worked for over 300 days in year preceding relevant AY in which deduction u/s 80JJAA claimed

While hearing an appeal involving the issue of the pre-requisites for claiming deduction under Section 80JJAA of the Income Tax Act, 1961, namely deduction on employee costs incurred when hiring additional regular employees in an organisation, the High Court of Karnataka clarified that it was not a necessary pre-condition that workmen had to have worked for over 300 days in the year preceding the relevant Assessment Year (AY) in which such deduction is claimed.  

To arrive at such conclusion, the Division Bench of Justice P S Dinesh Kumar and Justice T G Shivashankare Gowda relied upon the judgment of this Court in CIT, LTU Vs. Texas Instruments India (P.) Ltd. wherein it had been held that period of 300 days could be taken into consideration both in the previous and succeeding years for the purpose of availing the benefit under Section 80JJAA of the Act.

The Appellant-Assessee was represented by T Suryanarayana, Senior Advocate, whereas the Respondent-Revenue was represented by Advocate E I Sanmathi.

The present appeal has been filed by the Assessee to seek adjudication on the issue as to whether a new regular workman is required to be employed for a period of 300 days or more in the previous year in which he is employed, for computing the entitlement of the deduction u/s 80JJAA.

The Income Tax Appellate Tribunal (ITAT) had held that the Assessee was not entitled for the deduction under Section 80JJAA in respect of new regular employees, employed on permanent basis, solely on the ground that they were employed for less than 300 days during the relevant previous year.

On hearing the contentions of both parties, the Bench observed that the provisions of Section 80JJAA were incentives extended to the industry.

The Bench relied on the judgment rendered by this Court in LTU Vs. Texas Instruments India (P.) Ltd. wherein it was held that for the purpose of availing the benefit under Section 80JJAA of the Act and it is not required that workmen work for 300 days in the previous year relevant to that Assessment Year in which the exemption is claimed.

The Bench further observed that the Parliament itself had reduced the period of employment to 240 days in the case of other industries and 150 days in the case of apparel industries.

With these observations, the Bench answered the questions in favour of the Assessee.

Cause Title: Aquarelle India Ltd vs. Deputy CIT [ITA No. 528 of 2019 / 2023-Enterslice-15-HC-Kar-IT]

Click here to read/download the Judgment

Aquarelle-India-verses-Deputy-CIT