Law: Income Tax Act, 1961

Section: 263

Income-tax------Depreciation---Extra shift allowance---To be allowed in respect of entire plant and machinery used by concern---Does not depend upon the number of days on which each machine actually worked double or triple shift during assessment year---CBDT Letter No. 10/83/69-II(A-II), dated 28-9-1970. Where a concern has worked double shift or triple shift, extra shift allowance is to be allowed in respect of the entire plant and machinery used by the concern. The allowance does not depend upon the number of days on which each machine actually worked double or triple shift during the relevant assessment year. . This point is reinforced by the letter of the CBDT No.10/83/69-II (A-11), dated September 28, 1970. JUDGMENT R.C. MANKAD, J: --The assessee is a private limited company and it is engaged in the business of manufacturing chemicals like sodium hexemeta phosphate. The assessment year with which we are concerned is 1972-73, the year of account being calendar year 1971. The assessee commenced White Phosphoric Acid Plant in the assessment year under reference. The Income-tax Officer allowed extra shift allowance at half the normal depreciation for such shift and computed the assessee's total taxable income at Rs.63,562. The Commissioner of Income-tax invoked his revisional powers under section 263 of the Income Tax Act, 1961 ("the Act" for short), and, after hearing the assessee, who appeared before him in response to the show-cause notice, held that White Phosphoric Acid Plant was a new manufacturing unit set up in the calendar year 1971. He further found that the said new unit had worked only for 53 days and the assessee was entitled to extra shift allowance at 53/240 of half the normal depreciation. He, therefore, held that the Income-tax Officer had erred in allowing extra shift allowance at 53/240 of half the normal depreciation. He, therefore, held that the Income tax Officer had erred in allowing extra shift allowance. The Commissioner, therefore, set aside the assessment and directed the Income-tax Officer to make a fresh assessment and after determining the correct extra shift allowance that might be admissible to the assessee in respect of the new…

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