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TMI Blog1980 (7) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany was to be calculated with reference to the actual number of days on which the extra shifts worked and not at 100% of the normal depreciation allowance for the relevant previous year ? " When the case came up for hearing before a Division Bench it found that on this matter there was a conflict of opinion in this court. It referred the following question of law for decision by a larger Bench : " Whether having regard to rule 5 read with entry III of Appendix I, Part 1, of the Income-tax Rules, 1962, as applicable in the assessment year 1964-65, depredation allowance for multiple shift working has to be allowed in proportion to the number of days on which the machinery or plant was used or an amount equal to the full allowance of normal depreciation ? " Section 32 of the I.T. Act, 1961, deals with depreciation. Under cl. (ii) of subs. (1) in the case of buildings, machinery , plant or furniture, the allowable deduction is such percentage on the written down value thereof as may, in any case or class of cases, be prescribed. The computation of depreciation allowance is to be done according to the Rules. Rule 5 refers to depreciation. We shall refer to its provisions as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the normal allowance means the amount of depreciation allowance (other than the extra depreciation allowance for multiple shift working) that would have been allowed under rule 5 if the machinery or plant had been used during the previous year for a period of I 80 days or more, or in the case of a seasonal factory, if that factory had been worked by the assessee during all the working seasons of the previous year ............" It is noticeable that the extra allowance is only for machinery and plant, unlike the normal allowance which extends to buildings or furniture in addition to machinery and plant. Then the remark in column 3 of the Appendix exclusively provides the method for computing the extra allowance for double and triple shift working. Its Explanations I lays down the method of calculating the normal allowance for purposes of computing the extra allowance for double or triple shift working. The note in the remarks column of the Appendix is hence a self-contained code for determining the extra allowance for double and triple shift working. The note requires that the ITO be satisfied that the concern has actually worked double or triple shift. For double shift the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the remarks column. For this purpose, recourse cannot be had to the second proviso to r. 5. For the assessee, it was stressed that the yardstick of 300 working days cannot possibly apply to a seasonal factory like a sugar factory because it can never work for 300 days in a year. Therefore, the method provided in the second proviso that if it has worked throughout the working season it should get 100% extra allowance for triple shift working, ought to apply. We are unable to agree. The opening part of the note in the remarks column provides for the eligibility to extra allowance, the condition being that the concern has actually worked double or triple shift to the satisfaction of the ITO. If so, the maximum allowance is 50% in case of double shift and 100% for triple shift of the normal allowance. Thereafter, the note lays down the mode or method of computation of the extra allowance. The extra allowance is computed for each plant or machinery that has been worked double or triple shift. The allowance is riot given to the assessee as such, It is confined to the actual or triple shift working of the plant or machinery. The form prescribed under r. 34(1) (sic) of the Rules and re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ked for period of 180 days or more and not the hypothetical figure of normal depreciation." Having said so, the Bench went on to hold (p. 988) : " For double and triple shift working, 100% of such normal depreciation allowance is admissible. The actual number of days on which the factory worked such extra shifts is immaterial. In view of this decision, the fifth question is liable to be answered in favour of the assessee." In J. K. Synthetics case [1979] 118 ITR 629 (All), the only question raised and decided by this court related to the method of computing the normal depreciation allowance. It was held that the method provided in the first Explanation to the note in the Appendix was applicable to compute the normal depreciation for calculating the extra shift allowance. In that case there was no dispute as to the method of calculating the extra shift allowance. The Bench erroneously held that J. K. Synthetics case [1979] 118 ITR 629 (All) decided that for double and triple shift working 100% of such normal depreciation allowance is admissible and that the actual number of days on which the factory worked such extra shifts, is immaterial. In respect of this matter, the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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