Law:

Section:

Section 32 of the Income-tax Act, 1961, read with rule 5 of the Income-Tax Rules, 1962 - Depreciation - Extra shift allowance - Assessment year 1964-65 - Whether criterion of proportionate working out of extra shift allowance on basis of proportion between actual days during which machinery and plant was used for extra shift and 300 days for year as set out in note forming part of Item III of Part I of Appendix I to Income-tax Rules, 1962, is applicable to both seasonal and non-seasonal factories - Held, yes Interpretation of statutes - Rule of literal construction occurring in Income-tax Act, 1961. FACTS The assessee, a manufacturer of sugar, owned two sugar factories. During the accounting year relevant for the assessment year 1964-65 the said factories worked during the season. The said factories also worked extra shift. The assessee claimed deduction of a sum on account of extra shift depreciation allowance and in this regard stated before the ITO that the extra shift depreciation allowance was liable to be worked out in case of seasonal factories in the light of the working days of the season and not 300 days and as its factories had worked extra shifts for the entire period of sugarcane season, such working was liable to be treated at par with the working period of 300 days and, thus, it was entitled to full extra shift allowance as specified in the rules and not merely proportionate allowance. The ITO rejected the contention of the assessee and calculated the extra shift allowance at the specified rate proportionately after dividing the days during which the factories worked extra shift by 300 days in accordance with the formula prescribed in the note forming part of item III of Part I of Appendix I forming part of the Income-tax Rules, 1962. The AAC as well as the Tribunal upheld the order of the ITO. On reference : HELD It was not possible to accept the submission of the assessee that the distinction made between seasonal and non-seasonal factories for the purpose of computation of normal depreciation allowance must necessarily be maintained for the purpose of computing extra shift depreciation allowance. It is for the law-making authorities to decide…

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