JUDGMENT
S.P. Bharucha, J.
1. The first of the aforementioned references involves the assessment year 1967-68. The second involves the assessment years 1968-69 and 1969-70. The assessee is the same. In the first reference the questions read thus :
“(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the newly established undertaking of the assessee-company fulfilled the requirements of section 84(2)(iv) of the Income-tax Act, 1961, as to the number of workers employed in the manufacturing process carried on by the undertaking with the aid of power during the previous year relevant to the assessment year 1967-68, even though the number of workers so employed was less than 10 during some part of that previous year ?
(2) Whether the Tribunal erred in importing the concept of average number of workers in the manner it did while deciding the question whether the said industrial undertaking fulfilled the requirements of section 84(2) of the Income-tax Act, 1961, as to the number of workers employed in the manufacturing process carried on by the said industrial undertaking ?”
2. In the second reference, the questions read thus :
“1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the newly established industrial undertaking of the assessee-company fulfilled the requirements as to the number of workers employed in the manufacturing process carried on by the undertaking with the aid of power during the previous years relevant to the assessment years 1968-69 and 1969-70, even though the number of workers so employed was less than 10 during some part of the relevant previous years ?
2. Whether the Tribunal erred in importing the concept of average number of workers in the manner it did while deciding the question whether the said industrial undertaking fulfilled the requirements of section 80J(4) of the Income-tax Act, 1961, as to the number of workers employed in the manufacturing process carried on by the said industrial undertaking ?”
3. The issue involved in these questions was decided by the Income-tax Appellate Tribunal having regard to its decision in the case of the assessee for the assessment year 1965-66. It was said there that it was not necessary that a new industrial undertaking must employ a minimum number of 10 workers at every point of time during the year; that though the number of workers at a certain period was reduced to six, on an average there had been 10 workers employed in the undertaking and this was sufficient. A reference to this court was made for that year but we understand that the question referred was not decided because service on the assessee had not been effected.
4. Though the tribunal has used the words “on an average” in its decision for the assessment year 1965-66, it held, really, that there had been sufficient compliance with the requirement that there should be a minimum number of ten workers. This view of the Tribunal is correct. This court decided in CIT v. Harit Synthetic Fabrics Pvt. Ltd. [1986] 162 ITR 640 (to which judgment one of us was a party) that substantial compliance was all that was required. In order to qualify for relief and satisfy the requirements of the provision, the undertaking must have employed ten or more workers substantially during the period for which the relief was claimed. There could be no hard and fast rule by which one could determine whether there had been substantial compliance. It was for the authority or the court to so decide based upon the facts before it. This court relief on the case of Harit Synthetic Fabrics Pvt. Ltd. [1986] 162 ITR 640, upon its earlier judgment in CIT v. Sawyer’s Asia Ltd. [1980] 122 ITR 259.
5. In the result, the questions in the two references are answered thus : the first questions are answered in the affirmative and in favour of the assessee and the second questions are answered in the negative and in favour of the assessee. No order as to costs.