Commissioner of Income Tax vs K.G. Yediyurappa and Co.

Jagannatha Shetty, J.—The Income Tax Appellate Tribunal, Bangalore Bench, has referred the following question of law under s. 256(1) of the I.T. Act, 1961, for the opinion of this court.

"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that even the casual workers also should be counted to ascertain whether the new industrial undertaking has employed ten or more workers, for the purpose of s. 80HH of the Income Tax Act, 1961 ?"

The industrial undertaking, which is the assessee herein, claimed relief under s. 80HH of the I.T. Act on the ground that it was employing at least ten workers. But the ITO refused to allow deduction on the ground that the assessee employed casual workers on daily wages and they should not be reckoned for the purpose of counting the number of workers prescribed under s. 80HH(2)(iv).

Upon appeal, the Commissioner of Income Tax (Appeals) II, Banglore, has affirmed the view taken by the ITO. But on further appeal, the Tribunal held that s. 80HH(2)(iv) does not speak of either casual or regular workers and all that it states is that the assessee should employ ten or more workers in the manufacturing process. So, it allowed the appeal giving the relief to the assessee.

In our opinion, the Tribunal has correctly construed the scope and meaning of the word "worker" found in s. 80HH(2)(iv). It reads as follows :

"(2) This section applies to any industrial undertaking which fulfils all the following conditions, namely...........

(iv) it employs ten or more workers in a manufacturing process carried on with the aid of power, or employs twenty or more workers in a manufacturing process carried on without the aid of power."

To understand the above provisions, no canon of construction is called for. The wordings are unambiguous. It provides that "if the assessee employs ten or more workers... " In the absence of any definition of the word "worker", the court has to take its ordinary meaning which may mean casual, permanent or temporary. There is, therefore, no reason why the word "worker" shall not include all these three categories.

The Tribunal was, therefore, justified in reversing the view taken by the Commissioner of Income Tax (Appeals) and also the ITO.

In the result, we answer the question in the affirmative and against the Revenue.