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Issues involved: Appeal u/s 260A of the Income-tax Act, 1961 regarding the allowance of extra-shift allowance on underground cables as part of the plant of the assessee.
Judgment Details: The High Court of Delhi heard an appeal u/s 260A of the Income-tax Act, 1961 regarding the allowance of extra-shift allowance on underground cables as part of the plant of the assessee for the assessment year 1987-88. The dispute arose when the Assessing Officer disallowed the claim made by the assessee for extra-shift allowance on lines, wires, and cables while computing depreciation. The Tribunal, however, found that the conditions for granting extra-shift allowance were fulfilled, and the Commissioner of Income-tax (Appeals) upheld this view. The main contention raised by the Revenue was that the artificial distinction made by the Commissioner of Income-tax (Appeals) between overhead and underground lines and cables was unjustified. The Revenue argued that since the area of functioning was the same, such a differentiation was not reasonable. To be eligible for a claim for deduction as extra-shift allowance, certain conditions needed to be fulfilled, as outlined by the Tribunal. These conditions included the asset being classified as plant and machinery, multiple shift functioning, entitlement to depreciation, and no prohibition in the Income-tax Rules relating to the allowance of extra-shift allowance. The Tribunal found that the underground cables used by the assessee formed an integral part of its plant, essential for the functioning of its communication network. The Court referred to the definition of "plant" as per section 43(3) and previous legal interpretations to establish that the underground cables used by the assessee constituted plant. The Court emphasized that the legislative intent specifically referred to overhead cables and wires, not underground ones. The principle of interpreting tax laws strictly based on the language used in the statute was highlighted, dismissing the appeal by the Revenue. In conclusion, the Court found no merit in the appeal and dismissed it accordingly.
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