Cold storage and ice plant machinery qualifies for higher depreciation, but not extra shift allowance

Machinery used in a cold storage and ice factory was treated as air-conditioning or refrigeration plant under the relevant Income-tax Rules, so it qualified for depreciation at 15% rather than 10%. However, the plant's continuous operation was inherent to its function of maintaining low temperatures and producing ice, and that nature of use did not support extra shift allowance. The fact that the facility operated round the clock or employed separate staff was insufficient to show that the machinery was worked in shifts for that allowance.

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Issues: Whether machinery used in a cold storage and ice factory is entitled to extra shift allowance, and whether the assessee was entitled only to depreciation at the higher rate applicable to the relevant category of machinery.

Analysis: The machinery in a cold storage and ice factory operates by reducing and maintaining air temperature for preservation and ice formation, which brought it within the category of air-conditioning/refrigeration machinery under the relevant appendix to the Income-tax Rules. Such plant is inherently required to run continuously and cannot, by its very nature, be treated as machinery worked in shifts for the purpose of extra shift allowance. The presence of separate employees or the fact that the plant runs through 24 hours does not by itself establish entitlement to extra shift allowance, since the continuous operation is dictated by the nature of the activity rather than by extra working burden in shifts.

Conclusion: The claim for extra shift allowance was rejected, but depreciation was directed to be allowed at 15 per cent instead of 10 per cent.

Final Conclusion: The revenue succeeded on the question of extra shift allowance, while the assessee obtained relief to the limited extent of higher depreciation.

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