COMMISSIONER OF INCOME TAX Vs. PRITHVIRAJ BHOORCHAND

JUDGEMENT

(1.) The Income Tax Appellate Tribunal, Ahmedabad Bench 'A' has referred the following common question under section 256(1) of the Income Tax Act, 1961 (the Act) for the Assessment Years 1984-85, 1985-86 and 1986-87.

(2.) Whether, the Appellate Tribunal is right in law and on facts in setting aside the order made by the Commissioner of Income-tax u/s.263 of the Act whereby he had directed the ITO to pass a fresh order withdrawing the deduction granted u/s.80-I

(3.) The assessee is an individual. The Assessment Years are 1984-85, 1985-86 and 1986-87 and the relevant accounting periods are Samvant Years 2039, 2040 and 2041 respectively. For the years under consideration the Assessing Officer allowed deduction under Section 80I 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 interest of the revenue. He, therefore, in the exercise of powers under Section 263 of the Act, directed the Assessing Officer to pass a fresh order withdrawing deduction granted to the assessee under Section 80I of the Act in respect of all the three years. The Commissioner of Income Tax was of the view that the assessee did not fulfill the requirements of clause (iv) of sub-section (2) of Section 80I of the Act because though the assessee was carrying on industrial activities without the aid of power, the assessee was not employing 20 workers as required by law. The Commissioner was of the view that as the assessee was procuring labourers on contract system on wages from one M/s.Ambica Screen Printing Contractor, there was no employer-employee relationship between the assessee and the workers working for the assessee, and that the other benefits also were not paid directly by the assessee but were paid through the contractor hence, the pre-conditions for applicability of Section 80I of the Act were not satisfied. Accordingly, he held that the assessee was not entitled to get deduction under section 80I of the Act.