TaxTMI 
TaxTMI 
1991 (4) TMI 92
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....ts had taken out Notice of Motion No. 156 of 1977 for a direction to the Incometax Appellate Tribunal to refer certain additional questions to this court. Accordingly, the following question was referred to this court in pursuance of the order passed on the said notice of motion. The said question is numbered as question No. 3 in the statement of case already filed, being the question which the Tribunal had originally refused to refer to this court on the application made under section 256(1) of the Act. The said question reads as under : "(3) Whether, on the facts and circumstances of the case, the Tribunal erred in law in confirming the allocation of Rs. 2,48,356 to the agricultural section out of donation of Rs. 6,10,512 paid by the applicants and allowing relief under section 88 only on the amount of Rs. 2,59,320 ?" Counsel are agreed that the said additional question be decided in this reference without waiting for the supplementary statement of case and on the basis of the statement of case already filed in this reference. We have accepted the said request. Counsel are agreed that question No. 1 is covered by the decision of our court in the assessee's own case in Go....
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..... The Income-tax Officer calculated the extra shift allowance at the specified rate proportionately after dividing the days during which the factories worked extra shift by 300 days in accordance with the formula prescribed in the note forming part of item III of Part I of Appendix I forming part of the Income-tax Rules, 1962. According to the Department, the above-referred formula set out in the note to item of Part I of Appendix I (Remarks column) applies to seasonal and non-seasonal factories and all concerns alike and no distinction can be made between seasonal and non-seasonal factories for application of the formula prescribed for working out extra shift allowance. According to the assessee, the criteria of proportionate working out of extra shift allowance on the basis of the proportion between the actual days during which the machinery and plant was used for extra shifts and 300 days for the year as set out in the above-referred provisions is applicable only to non-seasonal factories. According to the contention of the assessee, the extra shift depreciation allowance is liable to be worked out in case of seasonal factories in the light of the working days of the season and ....
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.... for the assessee has further submitted that the last sentence in the remarks column of the said item III should not be interpreted to mean that the said rule applies to seasonal and non-seasonal factories alike. Learned counsel submitted that Explanation I appended to the said item III is also helpful to the assessee in his endeavour to convince the court that the criteria of dividing the actual working days of working of the extra shift by 300 and working out the proportionate allowance on this footing is not applicable to seasonal factories and is liable to be applied only to non-seasonal factories. Learned counsel for the Revenue has argued that the rules made by the appropriate authority for computation of extra shift depreciation allowance constitute a special law and the same must be interpreted and applied according to their language literally. Learned counsel for the Revenue has further submitted that the construction of the relevant rules put forward by the Department has been accepted by various High Courts of our country in decided cases and there is no overriding reason as to why the view taken in the said judgments should not be accepted by this court. Learned coun....
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....on of the actual number of days for which the plant and machinery had been working extra shift to 300 which is taken as the normal number of working days in a year, has to be applied. As this principle would apply to all concerns, whether the general rate or any special rate applies, there is no scope for the application of the principle of the second proviso to the main rule 8 in calculating the allowances for extra shift depreciation in the case of seasonal factories." Section 32.(1) of the Income-tax Act, 1961, reads as under: "32(1) In respect of depreciation of buildings, machinery, plant or furniture owned by the assessee and used for the purposes of the business or profession, the following deductions shall, subject to the provisions of section 34, be allowed - . . . (ii) in the case of buildings, machinery, plant or furniture, other than ships covered by clause (i), such percentage on the written down value thereof as may in any case or class of cases be prescribed: Provided that where the actual cost of any machinery or plant does not exceed seven hundred and fifty rupees, the actual cost thereof shall be allowed as a deduction is respect of the previous year i....
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....allowed by the Income-tax Officer where a concern claims such allowance on account of double shift working and saisfies the Income-tax Officer that the concern has actually worked double shift. An extra allowance up to a maximum of 100 per cent. of the normal allowance, instead of 50 per cent. shall be allowed in computing the total income assessable for any assessment year commencing on or after April 1, 1964, where a concern proves that it has worked triple shift. The calculations of the extra allowances for double shift working and for triple shift working shall be made separately in the proportion which the number of days for which the concern worked double shift or triple shift, as the case may be, bears to the normal number of working days throughout the previous year. For this purpose, the normal number of working days throughout the previous year shall be taken as 300, and if, for example, a concern has worked only double shift for 100 days and triple shift for another 100 days, the extra allow- ance for double shift shall be one-third of 50% of the normal allowance and that for triple shift shall....
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.... seasonal factory of the assessee has worked for all the seasons of the year even though the aggregate duration of such working may be less than 180 days. (3) The rules make sharp distinction between the criteria to be applied in the case of grant of normal depreciation allowance on the one hand and extra shift depreciation allowance on the other hand. Special provisions are made by rule-making authorities in item III of Part I of Appendix for grant of extra shift depreciation allowance. The said provision prescribes the formula for computation of extra shift allowance which is applicable to seasonal and non-seasonal factories alike. The said formula is applicable to all concerns. A non-seasonal factory is not entitled to grant of extra shift depreciation allowance in full even if it has worked for 180 days. It is specifically provided in this special rule for extra shift depreciation allowance that the extra shift allowance shall be calculated proportionately in the context of the actual working of the plant and machinery extra shift by dividing the same with the figure of 300. (4) Explanation I appended to item III of Part I of Appendix I does not affect the formula for cal....
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.... be the normal working days for the grant of full normal depreciation allowance in case of depreciation of building, machinery, plant or furniture. The second proviso to rule 5 provides that the said basis of working or use of the building, machinery, plant and furniture for 180 days for grant of full normal depreciation allowance shall not be applicable to the case of seasonal factories. If the seasonal factories have worked for all the seasons of the year and its total working has been even for 3 or 4 months or less than 180 days, that is considered sufficient for the purpose of grant of normal depreciation allowance. A totally different principle is to be applied in the case of extra shift depreciation allowance. It is specifically set out in the remarks column of item III of Part I of Appendix I as under : "For this purpose.-the normal number of working days throughout the previous year shall be taken as 300 . . ." It is also stated in the remarks column that this formula shall apply to all concerns. Mr. Dastur also invited our attention to the judgment of our court in CIT v. Bombay State Transport Corporation [1979] 118 ITR 399, wherein it was held that Explanation 2 append....