Law:

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Section 32 of the Income-tax Act, 1961 read with column 3 of Part I of Appendix I to the Income-tax Rules, 1962 - Depreciation - Extra shift allowance - Assessment years 1967-68 to 1969-70 - Assessee, a spinning and weaving mill, claimed extra shift allowance on its machines with reference to number of days on which it worked extra shift - Whether assessee's claim regarding extra shift allowance was not valid and it was entitled to extra shift allowance with reference to exact number of days on which machines had worked extra shift - Held, yes FACTS The assessee, a spinning and weaving mill, claimed extra shift allowance on its machine with reference to the number of days the concern worked extra shift. The ITO did not agree with the assessee and allowed extra shift allowance on the machines which the assessee owned at the beginning of the relevant previous year for the whole year, but allowed extra shift allowance on the machines purchased during the previous years concerned, with reference to the number of days these machines had actually worked extra shift. On appeal, the AAC upheld the order of the ITO. On second appeal, the Tribunal, relying on a circular of the CBDT dated 28-9-1970, allowed extra shift allowance as claimed by the assessee. On reference: HELD The Full Bench of the Allahabad High Court in the case of Dhampur Sugar Mills Ltd. v. CIT [1980] 126 ITR 648 has held that extra shift allowance has to be calculated on the basis of the number of days the plant or machinery actually worked. Other High Courts too have taken the same view. Further a reading of the relevant circular of the CBDT dated 28-9-1970 shows that it does no more than reiterate the language employed in column 3 of Part I of Appendix I to the Income-tax Rules, 1962 at serial No. III. Just as column 3 says that 'the calculation of the extra allowance 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', the circular also says that 'Where a concern has worked double…

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