Grant of extra shift allowance. - Income Tax - 1605/CBDT

INSTRUCTION NO. 1605/CBDT Dated: February 26, 1985 Board had laid down in their letter No.10/83/69-ITA. II dated September 28th, 1970 that extra shift allowance will be allowed in respect of the entire plant and machinery used by a concern which has worked extra shift, without making any attempt to determine the number of days on which each machinery or plant actually worked extra shift during the relevant previous year. In circular No.103 dated 2-3-1973, it was mentioned that the said allowance should be calculated for the period bears to the normal number of working days during the previous year. Except machinery or plant against which the letters NESA appear and those listed under clause (iv) of item III in part I of the schedule, the balance of the machinery or plant of the concern would be entitled to extra shift allowance. 2. Subsequently the Allahabad High Court in Kundun Sugar Mills Vs.CIT (1977) 106 ITR 704 the Calcutta High court in the case of Anantapur Textile Mills Ltd Vs. CIT (1979) 116 ITR 851 and lately the Madras High Court in South India Viscose Ltd. Vs. CIT(1982) 135 ITR 206 have held that extra shift allowance would be admissible with reference to the number of days on which the particular machinery or plant has worked extra shift and not on the basis of the working of the concern. It may be mentioned that Board's letter dated 28-9-70 and the circular No.103 dated 20-3-1973 have not been cited before these courts and therefore had not been considered by them. Receipt Audit has been raising objections on the basis of these decisions where the assessing officers had allowed extra shift allowance on the basis of the working of the concern as a whole instead of the working of individual plant and machinery. 3. The instructions issued earlier have been considered again by the board. In exercise of the powers conferred by section 119(1) of the I.T. Act. 1961 the CBDT being of the opinion that it is expedient for the proper administration of these provisions, directs that the grant of extra shift allowance for plant and machinery be calculated with reference to the working of a factory situated at a place and not with reference to the number of days each machinery or plant has worked. Where a concern has more than one factory, the extra shift allowance will be regulated for each factory in the above manner, as the determination of the number of days each machinery or plant has worked in a factory is cumbersome. The existing instructions and the present clarification are aimed at simplifying the calculation of extra shift allowance.