DCIT, Bangalore V. M/s Onmobile Global Ltd., Bangalore

ITA 1175/BANG/2012

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8903 (ITAT-BANGALORE)
• Duration Of Justice: 8 year(s) 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 06-08-2021
• Assessment Year: 2008-2009
• Appeal Filed On: 12-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K R VASUDEVAN
• Keywords: Retrospective amendment; Question of law; Set aside
• Section: 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER IT A NO . 1163/BANG/2012 ASSESSMENT YEAR : 2008 - 09 ONMOBILE GLOBAL LIMITED, TOWER # 1, 94/1C AND 94/2, VEERASANDRA VILLAGE, ATTIBELE HOBLI, ANEKAL TQ., ELECTRONICS CITY PHASE-1, BANGALORE 560 100. PAN: AAACO 3900E VS. THE ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE 12, BANGALORE. APPELLANT RESPONDENT IT A NO . 11 75 /BANG/2012 , 98 7 & 1513 / BANG/2015 ASSESSMENT YEAR S : 2008 - 09 , 2009 - 10 & 2010 - 11 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 12(2) / 5(1)(2), BANG ALORE. VS. ONMOBILE GLOBAL LIMITED, BANGALORE 560 100. PAN: AAACO 3900E APPELLANT RESPONDENT APPELLANT BY : SHRI K.R . V A SUDEVAN, ADVOCATE RESPO NDENT BY : SHRI MU ZAFFAR HUSSAIN , C IT(DR)(ITAT ), BENGALURU. DATE OF HEARING : 06. 0 8 .2021 DATE OF PRONOUNCEMENT : 09. 0 8 .202 1 ITA NOS.1163 & 1175/BANG/2012 & 987 & 1513/BANG/2015 PAGE 2 OF 13 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THESE APPEALS ARE BY THE ASSESSEE AND REVENUE AGAI NST THE RESPECTIVE ORDERS OF THE CIT(APPEALS) FOR DIFFERENT ASSESSMENT YEARS. THE APPEALS FOR THE AY 2008-09 ARE CROSS APPEALS BY BOT H PARTIES AND FOR AYS 2009-10 & 2010-11 THE APPEALS ARE PREFERRED BY THE REVENUE. HAVING HEARD ALL THE APPEALS TOGETHER, THEY ARE DISPOSED O F BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THA T THE ONLY ISSUE INVOLVED IN ALL THESE APPEALS IS THE DISALLOWANCE O F DEDUCTION CLAIMED U/S. 80JJA OF THE INCOME-TAX ACT, 1961 [THE ACT]. 3. HE FURTHER SUBMITTED THAT FOR THE AY 2008-09 CRO SS APPEALS ARE FILED. THE ISSUE OF DEDUCTION U/S. 80JJA OF THE ACT ARISES OUT OF THE REVENUES APPEAL IN ITA NO.1175/B/2012 AND HENCE THE ASSESSEE S APPEAL IN ITA NO.1163/BANG/202 IS INFRUCTUOUS FOR THE ISSUE UNDER CONSIDERATION. BEING SO, THE ASSESSEES APPEAL IN ITA NO.1163/BANG/2012 FOR AY 2009-09 IS DISMISSED AS INFRUCTUOUS IN THE ABOVE CIRCUMSTANCES . 4. WE NOW TAKE UP FOR CONSIDERATION THE REVENUES A PPEAL FOR AY 2008- 09. THE CROSS APPEALS HAD ORIGINALLY COME FOR CONS IDERATION BEFORE THE TRIBUNAL. THE BRIEF FACTS OF THE CASE WERE THAT THE ASSESSEE CLAIMED AN AMOUNT OF RS.48,30,929 AS DEDUCTION U/S. 80JJA OF T HE ACT. CERTIFICATE IN FORM10DA WAS SUBMITTED. THE EXISTING NO. OF EMPLOY EES WAS 81 AND 49 NEW EMPLOYEES. THE AO DISALLOWED THIS CLAIM OF ASS ESSEE ON THE GROUND THAT THE ASSE DOES NOT QUALIFY AS INDUSTRIAL UNDERT AKING AND EMPLOYEES EARNING HIGH SALARIES ARE CONSTRUED AS EMPLOYEES OF MANAGERIAL NATURE. THE CIT(APPEALS) DELETED THE ADDITIONS AND ALLOWED THE APPEAL OF ITA NOS.1163 & 1175/BANG/2012 & 987 & 1513/BANG/2015 PAGE 3 OF 13 ASSESSEE. THE TRIBUNAL DISPOSED OF THE APPEAL VIDE ORDER DATED 21.12.2014 ALLOWING THE DEDUCTION RELYING ON THE DE CISION OF THE TRIBUNAL IN THE CASE OF TEXAS INSTRUMENTS [2006] 115 TTJ 476 . ON FURTHER APPEAL BY THE REVENUE, THE HONBLE JURISDICTIONAL HIGH COURT REMANDED BACK THE ISSUE TO THE TRIBUNAL BY JUDGMENT DATED 18.01.2021 OBSERVING AS FOLLOWS:- 14. NOW, WE MAY DEAL WITH THE SECOND SUBSTANTIAL Q UESTION OF LAW. THE ASSESSING OFFICER HAS HELD THAT CONDITION PRECEDENT FOR CLAIM DEDUCTION UNDER SECTION 80JAA OF THE ACT IS T HAT THE ASSESSED SHOULD BE A COMPANY WHICH IS ENGAGED IN TH E MANUFACTURE OF PRODUCTION OF ARTICLE OR THING. HOWE VER, IN THE INSTANT CASE, THE ASSESSEE IS PROVIDING TELECOM SER VICES AND THEREFORE, THE ASSESSEE CANNOT BE TERMED AS AN INDU STRIAL UNDERTAKING. IT HAS FURTHER BEEN HELD THAT HIGHLY Q UALIFIED PERSONS ARE EMPLOYED BY ASSESSEE AND ADDITIONAL WAGES STATE D TO BE PAID TO THEM TO 49 PEOPLE IS SHOWN TO BE RS.1,61,03,098/ - WHICH COMES TO RS.3,28,000/- PER YEAR. THEREFORE, ANY PER SON DRAWING A SUM OF RS.3,28,000/- AND HAVING TECHNICAL QUALIFICA TIONS WOULD BE AN INDEPENDENT EXECUTIVE AND CANNOT BE TREATED A S WORKMAN. THEREFORE, THE CLAIM FOR DEDUCTION UNDER SECTION 80 JJA OF THE ACT WAS DISALLOWED. HOWEVER, THE TRIBUNAL BY PLACIN G RELIANCE ON THE DECISION OF THE TRIBUNAL IN THE CASE OF TEXAS INSTRUMENTS (INDIA) P. LTD. , SUPRA ALLOWED THE CLAIM OF THE ASSESSEE. IT IS PERTINENT TO NOTE THAT THE DECI SION OF TEXAS INSTRUMENTS (INDIA) P. LTD. SUPRA WAS CHALLENGED BEFORE THIS COURT IN ITA NO.535/2007 AND ITA NO.537 /2007 AND THE MATTER WAS REMITTED BY AN ORDER DATED 17.02.201 4 TO DECIDE THE MATTER AFRESH. HOWEVER, WE FIND THAT THE TRIBUN AL IN PARAGRAPH 6.5.4 HAS RATHER RECORDED THE CONCLUSIONS AND HAS FAILED TO ASSIGN ANY REASONS. THEREFORE, THE MATTER INSOFA R AS IT PERTAINS TO CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTIO N 80JAA OF THE ACT REQUIRES RECONSIDERATION BY THE TRIBUNAL. ACCOR DINGLY, THE SECOND SUBSTANTIAL QUESTION OF LAW IS ANSWERED. THE IMPUGNED ORDER DATED 21.02.2014 INSOFAR AS IT DISMISSES THE APPEAL OF THE REVENUE TO THE EXTENT OF CHALLENGE OF THE CLAIM OF THE ASSESSEE UNDER SECTION 80JAA OF THE ACT IS HEREBY QUASHED. ITA NOS.1163 & 1175/BANG/2012 & 987 & 1513/BANG/2015 PAGE 4 OF 13 5. ACCORDINGLY, THE APPEAL WAS TAKEN UP FOR HEARING BY THE TRIBUNAL. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE APPEALS IN THE CASE OF TEXAS INSTRUMENTS (INDIA) P. LTD. REACHED THE HIGH COURT IN ITA NOS.535/2007 AND 537/2007 PERTAINING TO AYS 2001-02 & 2002-03 FOR CONSIDERATION OF TWO ISSUES AS UNDER:- (I) WHETHER IT COMPANY / ENGINEERS ARE ELIGIBLE FOR DED UCTION U/S. 80JJA. (II) WHETHER THE DEDUCTION IS ALLOWABLE IF THE EMPLOYEES ARE EMPLOYED FOR LESS THAN 300 DAYS IN ANY PREVIOUS YEA R. 6. IN TEXAS INSTRUMENTS (INDIA) P. LTD.S CASE, TH E HONBLE HIGH COURT REMANDED THE SECOND ISSUE BACK TO THE TRIBUNAL FOR RECONSIDERATION AND KEPT THE FIRST ISSUE OPEN TO BE RAISED IF IT GOES A GAINST THE REVENUE. IN PURSUANCE OF THE REMAND, THE TRIBUNAL PASSED ORDER DATED 29.12.2016 HOLDING THE SECOND ISSUE OF EMPLOYEES EMPLOYED LES S THAN 300 DAYS AGAINST THE ASSESSEE. THE FIRST ISSUE REMAINED UNA DJUDICATED. AGAINST THIS ORDER OF THE TRIBUNAL, THE ASSESSEE THEREIN, I.E., TEXAS INSTRUMENTS (INDIA) P. LTD. MOVED IN APPEAL TO THE HIGH COURT. DURING THE PENDENCY OF THE APPEAL, IT APPEARS TEXAS INSTRUMENTS (INDIA) P. LTD . OPTED FOR VSV SCHEME, 2020 AND PRAYED FOR WITHDRAWAL OF APPEALS. THE HONBLE HIGH COURT IN ITA NO.300 OF 2017 BY ORDER DATED 02.02.20 21 DISMISSED THESE APPEALS AS WITHDRAWN. IT IS IN THESE CIRCUMSTANCES THAT THE ADJUDICATION OF THE ISSUE U/S. 80JJA OF THE ACT WAS KEPT OPEN FOR A DJUDICATION BY THE HONBLE HIGH COURT IN THE CASE OF TEXAS INSTRUMENTS (INDIA) P. LTD. AS FAR AS ASSESSMENT YEARS 2001-02 & 2002-03 ARE CONCERNED AT THE RELEVANT POINT OF TIME. 7. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITT ED THAT THE TRIBUNAL HAS ADJUDICATED THE APPEALS OF TEXAS INSTRUMENTS (I NDIA) P. LTD. FOR AY 2008-09 ON THE TWIN ISSUES; VIZ., (I) WHETHER IT CO MPANY/ENGINEERS ARE ITA NOS.1163 & 1175/BANG/2012 & 987 & 1513/BANG/2015 PAGE 5 OF 13 ELIGIBLE FOR DEDUCTION U/S. 80JJA, AND (II) WHETHER DEDUCTION IS ALLOWABLE IF EMPLOYEES ARE EMPLOYED FOR LESS THAN 300 DAYS IN AN Y PREVIOUS YEAR. BY ORDER DATED 06.03.2020 , THE TRIBUNAL IN ITA NOS.169 & 149/BANG/2014 IN TEXAS INSTRUMENTS (I). P. LTD. HAS HELD ALLOWED THE DEDUCTION U/S. 80JJA OF THE ACT ON BOTH THE COUNTS, WHICH WAS UPHELD BY THE HONBLE HIGH COURT OF KARNATAKA VIDE JUDGMENT DATED 21.04.2021 IN ITA NOS.141 & 151/2020 . HENCE THE ISSUE STANDS SETTLED IN FAVOUR OF THE ASS ESSEE FOR THE AY 2008- 09 AND FOLLOWED IN AYS 2009-10 & 2010-11 BY THE HON BLE HIGH COURT IN THE CASE OF TEXAS INSTRUMENTS (INDIA) P. LTD. 8. THE LD. DR SUBMITTED THAT THE ISSUE OF DEDUCTION U/S. 80JJA THAT IN THE PRESENT CASE FOR THE AY 2008-09 THE ISSUE WAS N OT ANSWERED BY THE HONBLE HIGH COURT OF KARNATAKA IN ITA NO.340/2014 BY JUDGMENT DATED 18.1.2021 AND IT WAS REMANDED TO THE TRIBUNAL FOR F RESH DECISION. 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. IN THE PRESENT CASE BEFORE US, AS SUBMITTED BY THE LD. DR, IN PURSUANCE OF THE REMAND BY THE HONBLE HIGH COURT OF KARNATAKA I N ITA NO.340/2014 BY JUDGMENT DATED 18.01.2021, THE ISSUE OF DEDUCTION U/S. 80JJA OF THE ACT IS NOW TAKEN UP FOR ADJUDICATION FOR AY 2008-09 BEFORE THE TRIBUNAL. SIMILAR ISSUE HAS BEEN CONSIDERED BY THE HONBLE HIGH COURT OF KARNATAKA IN ITA NOS.141/2020 AND 151/2020 IN THE CASE OF IN CIT V. TEXAS INSTRUMENTS (INDIA) P. LTD. [2021] 127 TAXMANN.COM 59 (FOR AY 2008-09) WHEREIN, AFFIRMING THE DECISION OF THE TRIBUNAL DATED 06.03. 2020 [ 15 TAXMANN.COM 154 (BANG. - TRIB.)], THE HONBLE JURISDICTIONAL HI GH COURT HELD AS FOLLOWS:- 16.1. THE ASSESSEE HAD CLAIMED DEDUCTION UNDER SEC T ON 80E- AA OF THE ACT ON ACCOUNT OF THE PAYMENTS MADE TO TH E EMPLOYEES HIRED BY THE ASSESSEE IN THE PREVIOUS YEAR EVEN THO UGH THEY HAD NOT COMPLETED 300 DAYS OF SERVICE IN THAT YEAR SINC E THEY CONTINUED ON THE ROLLS OF THE ASSESSEE IN THE NEXT YEAR TOTALLING UP ITA NOS.1163 & 1175/BANG/2012 & 987 & 1513/BANG/2015 PAGE 6 OF 13 TO MORE THAN 300 DAYS AS REQUIRED UNDER SECTION 80E -AA OF THE ACT. THE ISSUE RAISED BY THE REVENUE IS THAT THE EM PLOYEES OF THE ASSESSEE WOULD NOT COME WITHIN THE PURVIEW OF THE D EFINITION OF WORKMAN UNDER SECTION 2(2) OF THE INDUSTRIAL DISPUT ES ACT, 1947 (FOR SHORT 'ID ACT') AND THAT SINCE THE EMPLOYEE HA S RIOT COMPLETED 300 DAYS OF EMPLOYMENT IN THE PREVIOUS YE AR, NO DEDUCTION COULD BE CLAIMED BY THE ASSESSEE. 16.2. AS REGARDS THE FIRST CONTENTION OF THE REVENU E, THE SAME DOES NOT REQUIRE MUCH EXAMINATION BY THIS COURT INA SMUCH AS AT THE FIRST INSTANCE; THE ASSESSING OFFICER HAD HELD THAT THE ASSESSEE'S EMPLOYEES WOULD NOT COME WITHIN THE PURV IEW OF WORKMAN UNDER SECTION 2(S) OF THE I.D. ACT AND DISA LLOWED THE CLAIM, ON AN APPEAL FILED BY THE ASSESSEE, THE COMM ISSIONER, INCOME-TAX (APPEALS) CIT(A) ACCEPTED THE ASSESSEE'S CONTENTION AND HELD THAT THE ASSESSEE'S EMPLOYEE WOULD COME WI THIN THE PURVIEW OF SECTION 2(S) OF THE ID ACT. THIS ASPECT WAS NOT CHALLENGED OY THE REVENUE, ALTHOUGH THE REVENUE HAD FILED AN APPEAL AGAINST THE ORDER OF THE CIT(A). HAVING ACCE PTED THE SAID FINDING OF THE CIT(A) AND NOT HAVING FILED ANY APPE AL, THE REVENUE CANNOT NOW SEEK TO CHALLENGE THE SAID FINDI NG IN THE PRESENT APPEAL. 16.3. SECTION 2(S) OR THE ID ACT IS REPRODUCED HERE UNDER FOR EASY REFERENCE: 'WORKMAN' MEANS ANY PERSON (INCLUDING AN APPRENTICE ) EMPLOYED IN ANY INDUSTRY TO DO ANY MANUAL, UNSKILLE D, SKILLED, TECHNICAL, OPERATIONAL, CLERICAL OR SUPERVISORY WOR K FOR HIRE OR REWARD, WHETHER THE TERMS OF EMPLOYMENT BE EXPRESS OR IMPLIED, AND FOR THE PURPOSES OF ANY PROCEEDING UNDER THIS A CT IN RELATION TO AN INDUSTRIAL DISPUTE, INCLUDES ANY SUCH PERSON WHO HAS BEEN DISMISSED, DISCHARGED OR RETRENCHED IN CONNECTION W ITH, OR AS A CONSEQUENCE OF, THAT DISPUTE, OR WHOSE DISMISSAL, D ISCHARGE OR RETRENCHMENT HAS LED TO THAT DISPUTE, BUT DOES NOT INCLUDE ANY SUCH PERSON- (I) WHO IS SUBJECT TO THE AIR FORCE ACT, 1950 (45 O F 1950), OR THE ARMY ACT, 1950 (46 OF 1950), OR THE NAVY ACT, 1 957 (62 OF 1957); OR ITA NOS.1163 & 1175/BANG/2012 & 987 & 1513/BANG/2015 PAGE 7 OF 13 (II) WHO IS EMPLOYED IN THE POLICE SERVICE OR AS AN OFFICER OR OTHER EMPLOYEE OF A PRISON, OR (III) WHO IS EMPLOYED MAINLY IN A MANAGERIAL OR ADM INISTRATIVE CAPACITY; OR (IV) WHO, BEING EMPLOYED IN A SUPERVISORY CAPACITY, DRAWS WAGES EXCEEDING ONE THOUSAND SIX HUNDRED RUPEES PER MENSEM OR EXERCISES, EITHER BY THE NATURE OF THE DUTIES ATTAC HED TO THE OFFICE OR BY REASON OF THE POWERS VESTED IN HIM, FUNCTIONS MAINLY OF A MANAGERIAL NATURE. 16.4. IN TERMS OF SECTION 2(S) OF THE ID ACT, THE D EFINITION OF A WORKMAN IS VERY WIDE INASMUCH AS THE SAID DEFINITIO N WOULD COVER ANY PERSON WHO HAS THE TECHNICAL KNOWLEDGE, S ELF SKILLED IN AN INDUSTRY. IT CANNOT BE DISPUTED THAT THE ASSESSE E'S BUSINESS IS AN INDUSTRY. IT ALSO CANNOT BE DISPUTED THAT THE EM PLOYEES OF THE ASSESSEE ARE TECHNICAL PERSONS SKILLED IN SOFTWARE DEVELOPMENT AND, AS SUCH, ENGAGED BY THE ASSESSEE TO RENDER SER VICES IN THE INDUSTRY BEING RUN BY THE ASSESSEE. THUS THE SOFTWA RE ENGINEER WOULD ALSO COME WITHIN THE PURVIEW AND AMBIT OF WOR KMAN UNDER SECTION 2(S) OF THE ID ACT SO LONG AS SUCH A PERSON DOES NOT TAKE A SUPERVISORY ROLE. THE SOFTWARE ENGINEER PER SE WOULD BE A WORKMAN; A SOFTWARE ENGINEER RENDERING SUPERVI SORY WORK WOULD NOT BE A WORKMAN. IN THE PRESENT CASE, IT IS NOT THE CASE OF THE REVENUE THAT THE PERSONS EMPLOYED BY THE ASSESS EE ARE RENDERING ANY SUPERVISORY WORK OR ASSISTANCE. ADMIT TEDLY, THE SAID PERSONS HAVE BEEN ENGAGED FOR THE PURPOSE OF S OFTWARE DEVELOPMENT, AND AS SUCH, THEY ARE TO BE REGARDED A S A WORKMAN IN TERMS OF SECTION2 (S) OF THE ID ACT. 16.5. THE APEX COURT HAS IN THE CASE OF DEVINDER SINGH'S (SUPRA) CATEGORICALLY HELD THAT WHEN A PERSON IS EMPLOYED IN AN INDUSTRY FOR HIRE OR REWARD FOR DOING MANUAL, UNSKI LLED, SKILLED, OPERATIONAL, TECHNICAL OR CLERICAL WORK, SUCH A PER SON WOULD SATISFY THE REQUIREMENT AND WOULD FAIL WITHIN THE D EFINITION OF THE 'WORKMAN'. IN THE PRESENT CASE, A SOFTWARE ENGINEER IS A SKILLED PERSON, A TECHNICAL PERSON WHO IS ENGAGED BY THE EM PLOYER FOR HIRE OR REWARD. THEREFORE, ALL THE SAID PERSONS WOU LD SATISFY THE ITA NOS.1163 & 1175/BANG/2012 & 987 & 1513/BANG/2015 PAGE 8 OF 13 REQUIREMENT OF BEING A WORKMAN IN TERMS OF SECTION 2(S) OF THE I.D. ACT. 16.6. IN OUR CONSIDERED VIEW, THE CONCEPT OF THE WO RKMAN HAS UNDERGONE A DRASTIC CHANGE AND IS NO LONGER RESTRIC TED TO A BLUE COLLARED PERSON BUT EVEN EXTENDS TO WHITE-COLLARED PERSON. A COUPLE OF DECADES AGO, AN INDUSTRY WOULD HAVE MEANT ONLY A FACTORY, BUT TODAY INDUSTRY INCLUDES SOFTWARE AND H ARDWARE INDUSTRY, POPULARLY KNOWN AS THE INFORMATION TECHNO LOGY INDUSTRY. THUS THE UNDERTAKING OF THE ASSESSEE BEIN G AN INDUSTRIAL UNDERTAKING, THE PERSONS EMPLOYED BY THE ASSESSEE O N THIS COUNT ALSO WOULD SATISFY THE REQUIREMENT OF A WORKMAN UND ER SECTION 2(S) OF THE ID ACT. 16.7. SRI. ARAVIND, LEARNED SENIOR PANEL COUNSEL OF THE REVENUE, HAS STRENUOUSLY ARGUED THAT THE PERIOD OF 300 DAYS IN A YEAR WOULD MEAN 300 DAYS IN THE FINANCIAL YEAR ALONE, NO T IN THE CALENDAR YEAR OR OTHERWISE. HE HAS SUBMITTED THAT I F THE PERIOD OF 300 DAYS IS NOT SATISFIED, NO SUCH DEDUCTION COULD BE ALLOWED. 16.8. ADMITTEDLY, THE PROVISIONS CONCERNED, I.E. SE CTION 80JJ-AA, COMES UNDER CHAPTER-VI-A OF THE IT ACT, WHICH DEALS WITH DEDUCTIONS IN CERTAIN INCOME; THIS DEDUCTION IS ISS UED AND OR PERMITTED AS AN INCENTIVE TO THE ASSESSEE ON FULFIL LING CERTAIN CRITERIA AS REQUIRED UNDER THE VARIOUS PROVISIONS U NDER CHAPTER- VI-A. THE INCENTIVE OF THE DEDUCTION PROVIDED UNDER SECTION 80JJ-AA IS WITH AN INTENTION TO ENCOURAGE THE ASSES SEE TO EMPLOY MORE AND MORE PEOPLE, PROVIDE EMPLOYMENT AND , IN LIEU THEREOF, PERMIT THE EMPLOYER/ASSESSEE TO DEDUCT CER TAIN AMOUNTS FROM THE INCOME WHEN THE RETURNS ARE FILED. IT IS W ITH THIS OBJECT, PURPORT AND INTENT OF SECTION 803J-AA OF THE ACT TH AT THE PRESENT FACTS AND CIRCUMSTANCES WOULD HAVE TO BE CONSIDERED . IT IS ALSO REQUIRED FOR THE ASSESSING OFFICER, CITA, INCOME-TA X APPELLATE TRIBUNAL, AS ALSO ANY OTHER OFFICER TO ALWAYS INTER PRET AND OR APPLY THE PROVISIONS OF THE ACT, TAKING INTO CONSID ERATION THE INTENT AND PURPORT OF THE SAID PROVISION. 16.9. THE MEANING OR INTERPRETATION NOW SOUGHT TO B E GIVEN BY SRI. ARAVIND, LEARNED SENIOR PANEL COUNSEL IS THAT ONLY IF THE EMPLOYEE WERE EMPLOYED FOR A PERIOD OF 300 DAYS IN A PARTICULAR ITA NOS.1163 & 1175/BANG/2012 & 987 & 1513/BANG/2015 PAGE 9 OF 13 FINANCIAL YEAR, ONLY THEN DEDUCTIONS COULD BE CLAIM ED, IF NOT THE DEDUCTIONS COULD NOT BE CLAIMED EVEN THOUGH SUCH EM PLOYEE HAS BEEN EMPLOYED FOR 300 CONTINUOUS DAYS OR MORE. 16.10. WE WOULD DISAGREE WITH THE SAID CONTENTION. WHAT IS REQUIRED IS FOR A PERSON TO BE EMPLOYED FOR A PERIO D OF 300 DAYS CONTINUOUSLY. THERE IS NO SUCH CRITERIA MADE OUT FO R A PERSON TO BE EMPLOYED IN ANY PARTICULAR YEAR OR OTHERWISE. IF SUCH A RESTRICTIVE INTERPRETATION IS GIVEN, THEN ANY PERSO N EMPLOYED POST 5TH JUNE OF A PARTICULAR YEAR WOULD NOT ENTITLE THE ASSESSEE TO CLAIM ANY DEDUCTION. THUS IN ORDER TO CLAIM THE BEN EFIT UNDER SECTION 80JJ-AA, AN EMPLOYER WOULD HAVE TO HIRE THE WORKMEN BEFORE 5TH JUNE OF THAT YEAR. AS A COROLLARY, SINCE THE ASSESSEE WOULD RIOT GET ANY BENEFIT IF THE WORKMEN WERE ENGA GED POST 5TH JUNE, THE EMPLOYER/ASSESSEE MAY NOT EVEN EMPLOY ANY ONE POST 5TH JUNE, WHICH WOULD MILITATE AGAINST THE PURPOSE AND INTENT OF SECTION 8OJJ-AA, WHICH IS THE ENCOURAGE CREATION OF NEW EMPLOYMENT OPPORTUNITIES. 16.11. THE INCOME-TAX APPELLATE TRIBUNAL, WHILE CON SIDERING A SIMILAR SITUATION AS IN BOSCH LIMITED (SUPRA) HELD THAT SO LONG AS THE WORKMAN EMPLOYED FOR 300 DAYS, EVEN IF THE SAID PERIOD IS SPLIT INTO TWO BLOCKS, I.E. THE ASSESSMENT YEAR OR FINANCIAL YEAR, THE ASSESSEE WOULD BE ENTITLED TO THE BENEFIT OF SE CTION 80JJ-AA IN THE NEXT ASSESSMENT YEAR AND SO ON SO FORTHWITH FOR A PERIOD OF THREE YEARS. THE INCOME-TAX APPELLATE TRIBUNAL, HAV ING HELD TO THAT EFFECT, IN OUR CONSIDERED OPINION, IT WOULD NO T BE OPEN FOR THE REVENUE TO NOW CONTEND OTHERWISE, MORE SO SINCE THE SAID ORDER HAS ATTAINED FINALITY ON ACCOUNT OF THE REVENUE NOT HAVING FILED AN APPEAL. 16.12. IT IS SOUGHT TO BE CONTENDED BY SRI. K V ARA VIND, LEARNED SENIOR PANEL COUNSEL THAT THE FACT THAT SUCH AN INT ERPRETATION COULD NOT BE GIVEN IS ESTABLISHED BY THE CURATIVE A MENDMENT CARRIED OUT IN THE YEAR 2018 WHEREIN IT IS CLARIFIE D THAT AN ASSESSES WHOSE EMPLOYEE COMPLETES 300 DAYS IN A SECOND YEAR WOULD ALSO BE ENTITLED TO A DEDUCTION FOR THREE YEARS THEREFRO M. THUS HE SUBMITS THAT THE AMENDMENT HAVING BEEN BROUGHT INTO FORCE IN THE YEAR 2018 THE PRESENT MATTER RELATING TO THE YEAR 2 007-2008, THE SAID CURATIVE OR CLARIFICATORY AMENDMENT WOULD NOT COME TO THE ITA NOS.1163 & 1175/BANG/2012 & 987 & 1513/BANG/2015 PAGE 10 OF 13 RESCUE OF THE ASSESSEE AND AS SUCH, THE FINDING OF THE TRIBUNAL IN THIS REGARD IS REQUIRED TO BE SET ASIDE. 16.13. WE ARE UNABLE TO AGREE WITH SUCH A SUBMISSIO N- THE AMENDMENT OF THE YEAR 2018 THOUGH CLAIMED CURATIVE BY SRI. ARAVIND, WE ARE OF THE CONSIDERED OPINION THAT THE SAME IS MORE AN EXPLANATORY AMENDMENT OR A CLARIFICATORY AMENDME NT WHICH CLARIFIES THE METHODOLOGY OF APPLYING SECTION 803J- AA OF THE ACT. IF THE SUBMISSION OF SRI. K.V.ARAVIND IS ACCEP TED, THEN NO EMPLOYER/ ASSESSEE WOULD BE ABLE TO FULFIL THE REQU IREMENT OF EMPLOYING ITS LABOUR/ASSESSEE PRIOR TO 5 TH JUNE OF THAT ASSESSMENT YEAR SO AS TO CLAIM THE BENEFIT OF SECTION 80JJ-AA. SUCH A NARROW AND PEDANTIC APPROACH IS IMPERMISSIBLE. IT ALSO BEI NG ON ACCOUNT OF THE FACT THAT SECTION 80JJ-AA RELATING TO DEDUCT IONS UNDER CHAPTER IS AN INCENTIVE AND, THEREFORE, HAS TO BE R EAD LIBERALLY. IN THIS ASPECT, WE ARE ALSO SUPPORTED BY THE DECISION OF THE APEX COURT IN MAVILAYI SERVICE CO-OPERATIVE BANK LTD'S CASE (SUPRA) , WHEREIN THE APEX COURT HAS HELD THAT A BENEVOLENT PROVISION HAS TO BE READ LIBERALLY AND REASONABLY A ND IF THERE IS AN AMBIGUITY IN FAVOUR OF THE ASSESSEE. 16.14. THE APEX COURT IN THE CASE VATIKA TOWNSHIP (P.) LTD. (SUPRA) HAS ALSO HELD SIMILARLY, IN THAT IF THERE IS A BEN EFIT CONFERRED BY LEGISLATION, THE SAID BENEFIT BEING LE GISLATIVE'S OBJECT, THERE WOULD BE A PRESUMPTION THAT SUCH A LE GISLATION WOULD OPERATE WITH RETROSPECTIVE EFFECT BY GIVING A PURPOSIVE CONSTRUCTION. THUS THE CLARIFICATORY AMENDMENT OF T HE YEAR 2018 CAN ALSO BE SAID TO APPLY RETROSPECTIVELY FOR THE B ENEFIT OF THE ASSESSEE EVEN THOUGH THE REVENUE CONTENDS THAT THER E WAS NO PROVISION IN THE YEAR 2007 PERMITTING THE ASSESSEE TO AVAIL THE BENEFIT OF DEDUCTION WHEN THE EMPLOYEE WORKS FOR A PERIOD OF 300 DAYS IN CONSECUTIVE YEARS. 16.15. IN VIEW THEREOF, THE SUBSTANTIAL QUESTION NO .1 IS ANSWERED BY HOLDING THAT THE SOFTWARE PROFESSIONAL/ENGINEER IS A WORKMAN WITHIN THE MEANING OF SECTION 2(S) OF ID ACT, SO LO NG AS SUCH A SOFTWARE PROFESSIONAL DOES NOT DISCHARGE SUPERVISOR Y FUNCTIONS, THE BENEFIT OF SECTION 80JJ-AA CAN BE CLAIMED BY AN ENNPLOYER/ASSESSEE EVEN IF THE EMPLOYEE WERE NOT TO COMPLETE 300 DAYS IN A PARTICULAR ASSESSMENT YEAR BUT IN THE SUBSEQUENT ITA NOS.1163 & 1175/BANG/2012 & 987 & 1513/BANG/2015 PAGE 11 OF 13 YEAR SO LONG AS THERE IS CONTINUITY OF EMPLOYMENT, THE ASSESSEE COULD CONTINUE TO CLAIM FURTHER BENEFIT IN THE NEXT TWO YEARS AS PROVIDED IN UNDER SECTION 80JJ-AA OF THE ACT. 16.16. ACCORDINGLY, WE ANSWER QUESTION NO.1 BY HOLD ING THAT A SOFTWARE ENGINEER IN A SOFTWARE INDUSTRY IS A WORKM AN WITHIN THE MEANING OF SECTION 2(S) OF THE INDUSTRIAL DISPUTES ACT SO LONG AS THE SOFTWARE ENGINEER DOES NOT DISCHARGE ANY SUPERV ISORY ROLE. 16.17. THE PERIOD OF 300 DAYS AS MENTIONED UNDER SE CTION 80JJAA OF THE ACT COULD BE TAKEN INTO CONSIDERATION BOTH IN THE PREVIOUS YEAR AND THE SUCCEEDING YEAR FOR THE PURPO SE OR AVAILING BENEFIT UNDER SECTION 80JJAA. IT IS NOT REQUIRED TH AT THE WORKMAN WORKS FOR ENTIRE 300 DAYS IN THE PREVIOUS YEAR. 16.18. HENCE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE SOFTWARE ENGINEER BEING WORKMAN HAVING SATISFIED TH E PERIOD OF 300 DAYS, THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTI ON UNDER SECTION 80JJAA. 10. BEING SO, THE ALLOWABILITY OF DEDUCTION U/S. 80 JJA HAS ALREADY BEEN DECIDED IN FAVOUR OF ASSESSEE IN THE CASE OF TEXAS INSTRUMENTS (INDIA) (P.) LTD . BY THE AFORESAID JUDGMENT OF HONBLE HIGH COURT OF KARNATAKA CITED SUPRA FOR AY 2008-09. FURTHER, FOLLOWING THIS JUDGMENT, THE HONBLE HIGH COURT HAS DECIDED THE IMPUGNED ISSUE FOR AYS 2 009-10 AND 2010-11. RESPECTFULLY FOLLOWING THE SAME, WE HOLD THE ISSUE IN FAVOUR OF ASSESSEE FOR THE AY 2008-09. 11. IN IDENTICAL FACTS AND CIRCUMSTANCES OF THE CAS E FOR THE AYS 2009-10 & 2010-11 ALSO, THE HONBLE HIGH COURT OF KARNATAKA ITA NO.299 OF 2016 AND 2109 OF 2017 VIDE SEPARATE JUDGMENTS DATED 18.0 1.2021 HAS REMANDED THE SAME ISSUE FOR BOTH THE YEARS IN THE C ASE OF INSTANT ASSESSEE HOLDING AS FOLLOWS FOR AY 2009-10:- 2. FOR THE REASONS ASSIGNED BY US IN ITA NO.340/2 014 PASSED TODAY, THE IMPUGNED ORDER DATED 13.11.2015 IS HEREB Y QUASHED ITA NOS.1163 & 1175/BANG/2012 & 987 & 1513/BANG/2015 PAGE 12 OF 13 INSOFAR IT DISMISSES THE APPEAL OF THE REVENUE TO T HE EXTENT OF CHALLENGE OF THE CLAIM OF THE REVENUE TO THE EXTENT OF CHALLENGE OF THE CLAIM UNDER SECTION 80JJA OF THE ACT IS HEREBY QUASHED AND THE MATTER IS REMITTED TO THE TRIBUNAL TO DECIDE TH E CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80JJA OF THE A CT AFRESH IN ACCORDANCE WITH LAW. ACCORDINGLY, THE APPEAL IS DISPOSED OF. 12. FOR THE AY 2010-11 TOO, THE HONBLE HIGH COURT HAS REMANDED THE ISSUE BACK TO THE TRIBUNAL WITH IDENTICAL DIRECTION S. 13. AS WE HAVE ALREADY DECIDED THE IMPUGNED ISSUE F OR AY 2008-09 IN FAVOUR OF THE ASSESSEE HEREINABOVE IN THE PRECEDING PARAGRAPHS, FOLLOWING THE SAME, WE HOLD THE ISSUE IN FAVOUR OF ASSESSEE A ND AGAINST THE REVENUE FOR AYS 2009-10 & 2010-11 ALSO. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED AS INFRUCTUOUS, WHILE ALL THE APPEALS OF THE REVENUE ARE DISMISSED, INSOFAR AS THE ISSUE OF DEDUCTION U/S. 80JJA IS CONCERNED. PRONOUNCED IN THE OPEN COURT ON THIS 9 TH DAY OF JULY, 2021. SD/- SD/- ( N V VASUDEV AN ) ( CHANDRA POOJARI ) VICE PRESIDENT ACCOUNTANT MEMBER BANGALORE, DATED, THE 9 TH AUGUST, 2021. / DESAI S MURTHY / ITA NOS.1163 & 1175/BANG/2012 & 987 & 1513/BANG/2015 PAGE 13 OF 13 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.