Provisions relating to the extra allowance of depreciation in respect of concerns which work double shift or triple shift are often being misapplied. - Income Tax - 393/CBDT

INSTRUCTION NO. 393/CBDT Dated: March 20, 1972 Section(s) Referred: 32 Statute: Income - Tax Act, 1961 It has come to the notice of the Board that the provisions relating to the extra allowance of depreciation in respect of concerns which work double shift or triple shift are often being misapplied. For avoiding errors in this respect, the relevant provisions are being restated and clarified below:- (1) The allowance is in addition to the normal allowance of depreciation. (2) It can be allowed only when the assessee has claimed and proved to the satisfaction of the I.T. Officer that concern, for which the allowance is claimed, has actually worked double or triple shift as the case may be. (3) No such extra allowance for multiple shift is admissible in respect of machinery or plant against which the letters "N.E.S.A." appear in the depreciation schedule. (4) The maximum of such extra allowance of depreciation is fixed as a proportion of the normal allowance of depreciation. Thus the extra allowance for double shift will be a maximum of 50 per cent of normal depreciation and for triple shift the maximum for the assessment year 1964-65 onwards may be 100 per cent of normal depreciation. (5) The extra allowance for double shift and triple shift has to be calculated separately as follows:- (a) Specified normal rate of the days of double shift work depreciation. X ------------------------------ the normal number of working days in the 'previous year'. (a) Specified normal rate of the days of triple shift work depreciation X ------------------------------ the normal number of working days in the 'previous year'. (b) The "normal" number of working days in a 'previous year' for the purpose of determining the extra allowance for double/triple shift work is different from the normal number of days of use of the particular items of machinery and plant for working out usual depreciation and in fact, it differs for seasonal factories and other concerns, as also for the assessment years upto 1969-70 and those after. The variations are as follows:- (i) For concerns other than seasonal factories the normal number of days of use for admissibility of usual depreciation is a minimum of 180; (ii) For allowing normal depreciation on machinery and plant used in seasonal factories no normal number of days of use of the particular items had been stipulated for the assessment year upto 1969-70, and normal depreciation would have had to be allowed if a seasonal factory had been worked during all the working seasons of the previous year. From the assessment year 1970-71 onwards, normal depreciation on machinery and plant would be allowed only if the concern had worked for a minimum of 180 days during the previous year. The stipulation was introduced by the I.T. (Sixth Amendment Rules, 1969.) (iii) For calculating the extra allowance of depreciation for double/triple shift work, in seasonal factories as well as other type of concerns, the denominator of the multiplier, indicated at (5) above would be 300 days upto the assessment year 1969-70 and 240 days from the assessment year 1970-71 onwards. 2. These instructions may please be brought to the notice of the officers working in the charge.