Law: Income Tax Act, 1961

Section: 32

Income-tax----Depreciation---Plant and machinery---Extra-shift allowance---To be allowed only on number of actual days each machinery worked and not on basis of days the whole unit, i.e., factory worked---Indian Income Tax Act, 1961, S.32---Indian Income Tax Rules, 1962, R.5, Appx. I. The assessee-company claimed before the Assessing Officer in the course of the assessment proceedings for the assessment year 1967-68, that extra-shift allowance of depreciation equal to the normal depreciation allowance should be allowed to it in respect of its plant and machinery, on the basis of Explanation 1 to the remarks appearing in the remarks column against Item III. "Machinery and plant" in Part I of Appendix I to the Income Tax Rules, 1962. The Income-tax Officer and the Appellate Assistant Commissioner disallowed the assessees claim following the rejection of a similar claim by the assessee in the assessment year 1965-66. On further appeal to the Appellate Tribunal by the assessee, the Tribunal accepted the assessees contentions and allowed its claim for extra-shift allowance equal to the normal depreciation, for the full year in respect of the assets, which were used during the year for more than 30 days but less than 180 days. On a reference at the instance of the Commissioner: Held, that the assessee was entitled to extra-shift allowance only on the number of actual days, it (i.e., each machinery) had worked and not on the basis of working of the whole unit under the provisions of section 32 of the Income Tax Act, 1961, and rule 5 read with Appendix I to the Income Tax Rules, 1962. The Tribunal was not justified in holding that extra-shift allowance equal to the normal depreciation should be allowed for the full year in respect of the assets which were used during the year for more than 30 days but less than 180 days. Anantapur Textiles Ltd. v. CIT (1979) 116 ITR 851 (Cal.); Buland Sugar Co. Ltd. v. CIT (1981) 130 ITR 434 (Delhi); CIT v. J.K. Cotton Spg. and Wvg. Mills Co. Ltd. (1991) 188 ITR 80 (All.); CIT v. Punalur Paper Mills Ltd. (1988) 170 ITR 37 (Ker.); CIT (Addl.) v.. Sarvaraya Sugars Ltd. (1981) 129 ITR 538 (AP); CIT v. South India Viscose Ltd. (1987) 163…

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