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Issues Involved:
1. Determination of double shift allowance for the assessee. 2. Inclusion of interest paid on borrowings for machinery in computing development rebate. Summary of Judgment: Issue 1: Determination of Double Shift Allowance - The primary question was whether the double shift allowance should be determined by taking 300 days as working days during the year or with reference to the second proviso to rule 8, entitling the assessee to 50% of the normal depreciation as extra allowance for double or triple shift worked. - The Tribunal had held that for seasonal factories, the number of days should be taken as 300, but the allowance should be calculated with reference to the second proviso to rule 8. - The High Court clarified that the second proviso to rule 8 is a special provision for seasonal factories, indicating that the normal depreciation should be calculated as if the assets were in use throughout the period the assessee was the owner during the previous year. - The remarks column under rule 8 specifically provides for extra allowances for double and triple shifts, stating that the normal number of working days throughout the year should be taken as 300. - The High Court concluded that the mode of calculating double shift allowance for seasonal factories should follow the general mode laid down in the remarks column, which applies to all concerns, including seasonal factories. - Therefore, the Tribunal's conclusion that the number of days for seasonal factories should not be taken as 300 was incorrect. The High Court answered question No. (1) in the negative, in favor of the revenue and against the assessee. Issue 2: Inclusion of Interest Paid on Borrowings for Machinery in Computing Development Rebate - The second question was whether the interest paid on borrowings made for the purchase of machinery should be included in computing the development rebate. - The High Court referred to the Supreme Court's decision in Challapalli Sugars Ltd. v. Commissioner of Income-tax, which held that interest paid before the commencement of production on amounts borrowed for the acquisition and installation of plant and machinery forms part of the "actual cost" of the assets. - Based on this precedent, the High Court concluded that the interest paid should indeed be included in computing the development rebate. - Consequently, question No. (2) was answered in the affirmative, in favor of the assessee and against the revenue. Conclusion: - Question No. (1) was answered in the negative, in favor of the revenue. - Question No. (2) was answered in the affirmative, in favor of the assessee. - No order as to costs was made, as each side had partly lost and partly succeeded.
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