S. C. Agrawal, J. - (1.) These appeals by the assessee are directed against the judgment of the Madras High Court dated September 23, 1981 in T.C. Nos. 437 to 439 of 1977, reported in 135 ITR 206. They involve the question regarding computation of depreciation by way of Extra Shift Allowance under Rule 5 of the Income-tax Rules, 1962 (hereinafter referred to as the Rules) read with Appendix I to the Rules. The appeals relate to assessment year 1971-72. Four questions were referred by the Income-tax Appellate Tribunal (hereinafter referred to as the Tribunal) to the High Court for opinion, Questions Nos. 1, 2 and 3 were answered in favour of the appellant-assessee but question No. 4 was answered against the assessee. The appeals are confined to question No. 4 which was as under:"Whether, on the facts and in the circumstances of the case, the assessee is entitled to extra shift allowance in respect of the machinery and spares which were added during the relevant previous year, on the basis of double and triple shifts worked by the entire concern -
(2.) The assessee is a public limited company carrying on business in manufacture and sale of rayon yarn and wood pulp. The assessee claimed multiple shift allowance during the relevant assessment year on the basis of the number of days on which the concern as a whole worked extra shift and not with reference to the number of days on which each machine had worked. The Income Tax Officer restricted the allowance to the number of days on which each machinery had worked. On appeal, the Appellate Assistant Commissioner accepted the claim of the assessee and allowed extra shift allowance on the basis of the number of days for which the concern as a whole worked double and triple shifts. The Tribunal agreed with the said view of the Appellate Assistant Commissioner. By the impugned judgment the High Court has, however, held that in view of the the provisions contained in Rule 5 of the Rules read with Appendix I to the Rules the Income-tax Officer is required to apply his mind to examine which machinery owned by the assessee has been used by him in extra shift and that so long as the particular machinery has worked in extra shifts, in the relevant years, for the specified period, it would be eligible for the extra shift allowance on the basis of the number of days provided the letters N.E.S.A. (No extra Shift Allowance) do not apply to it. In taking the said view the High Court has placed reliance on the decisions of the Calcutta High Court in Ganesh Sugar Mills Ltd. v. Commr. of Income-tax, (1969) 73 ITR 395, and Anantpur Textiles Ltd. v. Commr. of Income-tax, (1979) 116 ITR 851 (Cal), as well as the decisions of the Allahabad High Court in Raza Sugar Co. v. Commr. of Income-tax (1970) 76 ITR 541 (All) and Kundan Sugar Mills v. Commr. of Income-tax, (1977) 106 ITR 704 (All).
(3.) Shri Sunil Dogra, the learned counsel appearing for the assessee, has assailed the interpretation placed by the High Court on Rule 5 and the provisions contained in Appendix I to the Rules relating to the extra shift allowance and has urged that the Tribunal had rightly construed the said provisions to mean that the extra shift allowance has to be allowed in respect of the entire plant and machinery if the concern has worked double shift or triple shift. Shri Dogra has also relied upon the circulars/instructions issued by the Central Board of Direct Taxes (hereinafter referred to as the Board) directing that when a concern has worked double shift or triple shift the extra shift allowance will be allowed in respect of the entire plant and machinery used by the concern without making any attempt to determine the number of days on which each machinery or plant actually worked double or triple shift during the relevant previous year. The submission is that the said circulars/instructions were binding and that the High Court was in error in not taking into consideration the same.;