Law:

Section:

Section 32 of the income-tax act, 1961, read with rule 5 of, and part I of appendix I to, the Income-tax rules, 1962-Depreciation-Extra shift allowance-Assessment year 1964-65-Assessee-company was sugar fact-ory which worked seasonally-Whether in view of second proviso to rule 5 assessee could claim extra allowance for triple shift working at 100 per cent of normal depreciation or only in proportion to number of days on which machinery or plant worked-Held that extra shift depreciation allowance was relatable to number of working days Facts The assessee-company owned and run a sugar factory. It worked seasonally. For the assessment year 1964-65, it worked triple shift for 105 days. It claimed 100 per cent of the normal depreciation allowance for the triple shifts. The ITO allowed extra shift allowance in the ratio of 105 to 300 of the normal depreciation allowance. The AAC, on first appeal, and Tribunal on second appeal, sustained the ITO's order. On reference, the assessee contended (i) that the remarks in column 3 against Item III "Machinery and plant" in Part I of Appendix I did not specifically provided for seasonal factory and the second proviso to rule 5 was the only provision applicable to seasonal factory; and (ii) that the yardstick of 300 of working days could not possibly apply to a seasonal factory like a sugar factory because it could never work for 300 days in a year. Therefore, the method, provided in the second proviso to rule 5 that if it had worked throughout the working season it should get 100 per cent extra allowance for triple shift working, ought to be applied. Held 1. Second proviso to rule 5 does not refer to or lay down the criteria for computing the extra shift allowance. This aspect has been dealt with by the remarks column 3 against Item III "Machinery and plant" in Part I of Appendix I. It is noticeable that the extra allowance is only for machinery and plant, unlike the normal allowance which extends to buildings or furniture in addition to machinery and plant. Moreover, the said remark exclusively provides the method for computing the extra allowance for double and triple shift working. Explanation to the remarks lays down the…

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