Extra shift allowance and higher development rebate for cotton yarn were treated as available under the governing legal principles.

Extra shift allowance is computed by reference to the concern's actual double or triple shift working, not by tracking each individual machine or item of plant, and the Tribunal's plant-wide approach was affirmed. Cotton yarn manufacturing also qualifies for the higher rate of development rebate where the governing schedule permits it, so the claim could not be denied on the ground that cotton yarn was outside item 32 of the Fifth Schedule. The reference was answered on the merits in favour of the assessee.

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Issues: (i) whether extra shift allowance was to be computed on the entire plant and machinery or on the basis of the actual user of individual items of machinery; (ii) whether the assessee manufacturing cotton yarn was entitled to development rebate at the higher rate.

Issue (i): Whether extra shift allowance was to be computed on the entire plant and machinery or on the basis of the actual user of individual items of machinery.

Analysis: The allowance was held to depend on the number of days on which the concern actually worked double shift or triple shift, and not on the number of days each individual machine or plant worked such shifts. The Tribunal's view that the allowance should be granted on the entire plant and machinery was consistent with the governing legal principle.

Conclusion: The issue was decided in favour of the assessee and against the Revenue.

Issue (ii): Whether the assessee manufacturing cotton yarn was entitled to development rebate at the higher rate.

Analysis: The rejection of the claim was based only on the ground that cotton yarn manufacturing did not fall within item No. 32 of the Fifth Schedule. The relevant legal position had already recognised that cotton yarn manufacturing qualified for the higher rate of development rebate.

Conclusion: The issue was decided in favour of the assessee and against the Revenue.

Final Conclusion: The reference was answered on the merits in favour of the assessee, and no answer was given to the first question as it became unnecessary.

Ratio Decidendi: Extra shift allowance is computed with reference to the concern's actual double or triple shift working, and cotton yarn manufacturing qualifies for the higher development rebate where the governing schedule so permits.

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