9911796707
|
Home
Issues:
- Interpretation of extra shift allowance for depreciation on new machinery purchased during the accounting period. - Whether extra shift allowance should be calculated based on the concern working double or triple shifts or proportionate to the number of days the machinery worked extra shifts. - Applicability of the Circular issued by the CBDT in calculating extra shift allowance. - Consideration of High Court decisions regarding the calculation of extra shift allowance. Analysis: The appeal before the Appellate Tribunal ITAT Chandigarh involved a dispute regarding the interpretation of extra shift allowance for depreciation on new machinery purchased during the accounting period for the assessment year 1980-81. The Revenue challenged the order of the AAC, arguing that the extra shift allowance should not have been allowed for the entire accounting year. The assessee claimed extra shift allowance based on double or triple shift working, contending that it should be calculated according to the concern working double or triple shifts, not based on the number of days the machinery operated in extra shifts. Before the ITO, the assessee argued that depreciation should be calculated as per the IT Act and rules, emphasizing that the extra shift allowance was for wear and tear due to extended usage. The ITO disagreed and calculated the extra shift allowance based on the number of days the machinery operated in extra shifts. However, the AAC sided with the assessee, stating that the concern as a whole should be considered for extra shift allowance, not individual machinery or days worked. This decision was challenged by the Revenue. The ld. departmental representative contended that the interpretation by the AAC contradicted the depreciation schedule in the IT Rules, which specified a separate procedure for extra shift allowance. Referring to High Court decisions, he argued that extra shift allowance should be calculated based on each item of machinery and the days it operated in extra shifts. The assessee's counsel, on the other hand, relied on a Circular issued by the CBDT, stating that extra shift allowance should be calculated with reference to the concern as a whole, citing Supreme Court decisions supporting the binding nature of benevolent circulars. The Tribunal considered the arguments and High Court decisions, particularly the Madras High Court's ruling in South India Viscose Ltd., which emphasized the exclusion of certain machinery from extra shift allowance and the need to calculate based on actual working days. The Tribunal concluded that the AAC's decision was not sustainable, reversing it and restoring the ITO's calculation method. In light of the Madras High Court's decision and the considerations of the amended depreciation schedule and various contentions, the Tribunal rejected the assessee's arguments and allowed the Revenue's appeal, reversing the AAC's order and restoring the ITO's calculation method for extra shift allowance on the new machinery.
|
