1987 (10) TMI 101 - AT - Income Tax

Summary

Issues:
1. Allowance of Triple Shift Allowance for cold storage and ice factory.
2. Classification of machinery used in cold storage and ice factory.
3. Admissibility of extra shift allowance on machinery in cold storage and ice factory.

Analysis:
1. The appeal before the Appellate Tribunal ITAT Delhi-B concerned the allowance of Triple Shift Allowance for a cold storage and ice factory. The assessee claimed extra depreciation allowance for running the factory on a triple shift basis. The Income Tax Officer (ITO) allowed normal depreciation without addressing the extra shift allowance claim. However, the CIT (A) allowed the claim based on the production of wage registers showing different sets of employees working in three shifts. The CIT (A) relied on a previous order allowing depreciation on a triple shift basis for a similar case. The Appellate Tribunal heard arguments from both parties regarding the claim.

2. The dispute also involved the classification of machinery used in the cold storage and ice factory. The Departmental Representative argued that the machinery falls under specific categories in the Income-tax Rules, which do not allow for extra shift allowance. The categories mentioned were related to air-conditioning machinery and refrigeration plant containers. The representative contended that the machinery used in the cold storage and ice factory should be classified as air-conditioning machinery, as the processes of preserving items in the cold storage and forming ice rely on conditioning the air in the chambers.

3. The Appellate Tribunal analyzed the nature of the machinery and the operations of a cold storage and ice factory. It concluded that the machinery used in such facilities falls under the specified categories in the Income-tax Rules, which do not permit extra shift allowance. The Tribunal reasoned that the machinery in cold storage and ice factory operations must run continuously to maintain the required conditions for preservation and ice formation. The Tribunal highlighted that the concept of working in shifts does not apply to these facilities, as the machinery needs to operate 24 hours a day without interruption. Therefore, the Tribunal found that the assessee was not entitled to extra shift allowance but should receive depreciation at a higher rate of 15 percent instead of the usual 10 percent. The Tribunal allowed the revenue's appeal and directed the ITO to allow depreciation at 15 percent to the assessee.