TMI Blog1996 (7) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed by the assessee that in this Explanation the extra shift allowance equal to normal shift depreciation will be an allowance that should be given under rule 5 of the Income-tax Rules, the machinery and plant had been put to use for the period of 180 days or more in the previous year, the extra shift allowance should be allowed at 100 per cent. Since the revised working of extra shift allowance was not submitted, the claim of the assessee was rejected. The claim of the assessee in the year 1965-66 was also rejected on that ground. In an appeal before the Appellate Assistant Commissioner, it was contended that in case of assets which were in use for more than 30 days, but less than 180 days extra shift allowance should have been allowed equal to the normal allowance for the full year. Since the appeal in the year 1965-66, was rejected this appeal was also rejected and it was observed that the extra shift allowance can in no circumstances be more than the normal allowance for a particular asset. In second appeal before the Income-tax Appellate Tribunal, it was submitted that under Explanation 1 appearing in the remarks column 3 against item No. III in Part I of Appendix I to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aims such allowance on account of double shift working ". The Explanation was considered to give an artificial meaning to the phrase normal amount for calculating the extra allowance for double or triple shift and, namely, " for this purpose " and also by the phrase that would have been allowed under rule 5, plant or machinery had been used during the previous year for a period of 180 days or more. The normal allowance referred to in Explanation 1 was interpreted to refer to the figure of normal depreciation of plant and machinery for 180 days or more. Section 32 provides for depreciation and the provisions are as under : " Depreciation. --- (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 such deficiency is actually written off in the books of the assessee.. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... boratory or any person deriving title from such owner ; (ii) the return furnished by the assessee for his income, or the income of any other person in respect of which he is assessable, for any previous year in which the said machinery or plant is acquired, shall be accompanied by a certificate from the Secretary, Department of Scientific and Industrial Research, Government of India, to the effect that such article or thing is manufactured or produced by using such technology (including any process) or other know-how developed in such laboratory or is an article or thing invented in such laboratory ; and (iii) the machinery or plant is not used for the purpose of business of manufacture or production of any article or thing specified in the list in the Eleventh Schedule to the Act." Explanations 1 and 2 appended to Part I of Appendix I of rule 5 are as under : " Explanation 1.---For this purpose, the normal allowance means the amount of depreciation allowance (other than the extra depreciation allowance for multiple shift working) that would have been allowed under rule 5 if the machinery or plant had been used during the previous year for a period of 180 days or more, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Part I, of the Rules, it was observed that the assessee is entitled to extra shift allowance only when he satisfies that the concern has actually worked double shift or triple shift. The computation of extra allowance separately for double shift and triple shift makes it clear that it is the eligibility of the claim of any concern for extra allowance and not the mode of calculation. It was also found that there is certain machinery and plant which are not eligible as the word N. E. S. A. is mentioned against them and, therefore, the individual plant and machinery has to be taken into consideration. Explanation 2 refers to a situation where no extra allowance for double or triple shift is available if the plant and machinery has been used for a period of 30 days or less than 30 days. Since depreciation allowance is to be allowed on each item of plant and machinery on the basis of its working, the form prescribed under section 34(1) of the Act contained in Appendix II to the Income-tax Rules which requires the details to be filled in makes it clear that the extra allowance for double shift or triple shift working of any concern has to be calculated on the basis of the number of day ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... double or triple shift. The allowance is not to be given to the assessee as such. The reduction is to be allowed only if the prescribed particulars are furnished as required by section 34(1) of the Income-tax Act, 1961, in Form No. 1 of Appendix II of the Income-tax Rules requires the assessee to specifically state the number of days for which extra shifts worked, Therefore, extra shift allowance is to be calculated in proportion to the number of days the plant or machinery has actually worked and not an amount equal to the full amount of normal depreciation. This decision was followed by the Allahabad High Court in CIT v. J. K. Cotton Spinning and Weaving Mills Co. Ltd. [1991] 188 ITR 80. The Delhi High Court in the cases of Raza Sugar Co. Ltd. v. CIT [1981] 130 ITR 421 and Buland Sugar Co. Ltd. v. CIT [1981] 130 ITR 434 has also taken the view in respect of seasonal factories that they are entitled to double shift and triple shift allowance in the proportion of the number of days worked. The Full Bench of the Andhra Pradesh High Court in the case of Addl. CIT v. Sarvaraya Sugars Ltd. [1981] 129 ITR 538 observed that the plant and machinery other than those used in seasonal fact ..... X X X X Extracts X X X X X X X X Extracts X X X X
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