Law: Income Tax Act, 1961

Section: 32

(a) Income-tax---Income---Diversion of income by overriding title---Manufacture of sugar-Collections towards molasses storage tank fund as per Molasses Control Order---Amounts diverted by overriding title---Not includible in income of assessee. (b) Income-tax--- ----Depreciation---Extra-shift allowance---Manufacture of sugar---Extra-shift allowance can be claimed in respect of molasses storage tank--­Indian Income Tax Act, 1961, S. 32-Indian Income Tax Rules, 1962, Appx. I, Part I. Held, (i) that the amounts collected towards molasses storage tank fund as per the Molasses Control Order do not vest with the assessee on account of diversion by overriding title at source, and cannot form part of the income of the assessee. CIT v. Salem Cooperative Sugar Mills td. (1998) 229 ITR 285 (Mad.) fol. (ii) that it is clear from the illustration given in entry III(iv) of Part I of Appendix I of the Income Tax Rules, 1962, that storage tanks are plant or machinery and that it is only the storage tanks which are owned by mineral oil concerns that are not eligible to claim extra-shift depreciation allowance. Extra-shift allowance is allowable in respect of the storage tanks owned b the assessee which was a manufacturer of sugar. JUDGMENT R. JAYASIMHA BABU, J.---This reference discloses the casualness with which the Assessing Officer and the Appellate Authority dealt with legitimate claim of the assessee for extra shift allowance. The claim of the assessee, on a bare reading of Income tax provisions of the Income-tax Rules, 1962, was clearly admissible. No agreement was put forth to support the reference, as indeed no such argument is available, having regard to the plain language in the depreciation table. The assessee is a manufacturer of sugar which has erected storage tanks for storage of molasses. It claimed extra-shift allowance in respect of those tanks for the assessment year 1983-84. Extra-shift allowance is provided for in the Table of rates at which depreciation is admissible in Appendix I, Part I of the Income-tax Rules, 1962. In respect of machinery and plant entry III(iv) deals with extra-shift depreciation allowance. There is an illustration of the rule in that…

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