IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA ITA No. 32 of 2004 along with ITA No 33 of 2004 Date of decision: 30.09.2010 ITA No. 32 of 2004 M/s Amrit Rubber Industries …Appellant. Versus Commissioner of Income Tax …Respondent. ITA No. 33 of 2004 M/s Amrit Rubber Industries …Appellant. Versus Commissioner of Income Tax …Respondent. Coram The Hon’ble Mr. Justice Deepak Gupta, J. The Hon’ble Mr. Justice Sanjay Karol, J. Whether approved for reporting?1No. For the appellant: Mr. Vishal Mohan, Advocate. For the respondent: Mr. Vinay Kuthiala and Ms. Vandana Kuthiala, Advocates. Deepak Gupta, J. (Oral) 1. These appeals are being disposed of by a common judgment, since the questions of law involved in both the appeals are identical and read as follows: 1 Whether the reporters of local papers may be allowed to see the Judgment? Yes. 2 “1. Whether in the facts and circumstances of the case the Tribunal was correct in law in holding that the requisite number of persons required to be employed had to employed for the entire year or a substantial part of the year in order to qualify for exemption under Section 80-IA of the Income Tax Act, 1961? 2. Whether in the facts and circumstances of the case the Tribunal was correct in law in holding that the appellant was not entitled to exemption under Section 80-IA though it had employed more than ten workers for some part of the year and it could not employ the minimum workers required for the remaining period due to non-availability of orders and work (from Puralator for which the appellant was manufacturing rubber parts) and which eventuality led finally to the closure of the unit of the appellant?” The only difference is that the appeals relate to two different assessment years. 2. The main question which arises in these appeals is with regard to the interpretation of Section 80-IA (2) (v) of the Income Tax Act, 1961, which reads as follows: “(v) in a case where the industrial undertaking manufactures or produces articles or things, the undertaking 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.” 3. It is not disputed before us that in one of the appeal, ten or more workers were employed only for two months and in the other, only for six months. This cannot be deemed to fulfill the requirements of the aforesaid clause of Section 80-IA. The employment has to be for a substantial part of a year and employment for two months and six months cannot be termed to be employment for a substantial part of the year. 3 4. In this regard, we may make reference to the judgment of Delhi High Court in Commissioner of Income Tax versus Taluja Enterprises (P.) Ltd., (2001) 250 ITR 675, wherein the Division Bench held as follows: “In order to qualify for relief under section 80J (4) (iv) of the Income Tax Act, 1961, substantial compliance with the requirement that the new industrial undertaking must have employed in the manufacturing process carried on with the aid of power ten or more workers, is all that is required. The undertaking must have employed ten or more workers substantially during the period for which relief is claimed. There can be no hard and fast rule by which one can determine whether there has been substantial compliance. It is for the authority or the court to so decide based upon the facts before it.” 5. It may be true that substantial part does not mean the entire year, but employment for 1/6th of the year or half of the year can under no circumstance be termed to be employment for a substantial part of the year. 6. Therefore, the appeals are dismissed and the questions of law are answered against the assessee and in favour of the Revenue. No costs. (Deepak Gupta) Judge (Sanjay Karol) Judge September 30, 2010 (rajni)