Court rules approved hotels not entitled to extra-shift depreciation allowance, aligning with Calcutta High Court decision.

The court held that approved hotels are entitled only to extra depreciation allowance under sub-item (iii) and not to extra-shift depreciation allowance under sub-item (iv). The judgment aligned with the Calcutta High Court decision, rejecting the assessee's claim for extra-shift allowance. The case was remanded to the Appellate Tribunal for further action in accordance with the High Court's ruling.

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Issues:
1. Entitlement of extra-shift allowance for an approved hotel in addition to extra depreciation allowance.

Analysis:
The judgment pertains to a reference made by the Income-tax Appellate Tribunal regarding the entitlement of an assessee-company, running an approved hotel, to extra-shift depreciation allowance in addition to the extra depreciation allowance provided for approved hotels under the Income-tax Rules. The Appellate Tribunal allowed the extra-shift depreciation allowance under sub-item (iv) along with the extra depreciation allowance under sub-item (iii) for approved hotels. However, the Calcutta High Court, in a similar case, held that the special provision for approved hotels (sub-item iii) overrides the general provision for extra-shift depreciation (sub-item iv). The High Court concurred with the Calcutta High Court's reasoning, emphasizing that the extra-shift allowance is intended for factories or concerns with multiple shifts, not applicable to approved hotels. The Central Board of Direct Taxes also clarified that machinery in hotels qualifies for extra allowance under sub-item (iii) but not for extra-shift depreciation. The judgment concludes that approved hotels are entitled only to extra depreciation allowance under sub-item (iii) and not to extra-shift depreciation allowance.

The statutory position and the Board's circular make it evident that extra-shift depreciation allowance is not permissible for approved hotels in addition to the extra depreciation allowance. The judgment aligns with the Calcutta High Court decision, answering the reference question in the negative, favoring the Revenue and rejecting the assessee's claim for extra-shift allowance. The case is remanded to the Appellate Tribunal for further action in line with the High Court's decision.

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