Bombay High Court
Commissioner Of Income-Tax vs Paresh S. Shah on 24 November, 1998
Equivalent citations: [1999]238ITR254(BOM)
Author: Pratibha Upasani
Bench: Pratibha Upasani
JUDGMENT B.P. saraf, J.
1. By this reference under Section 256(1) of the Income-tax Act, 1961, the Income-tax Appellate Tribunal has referred the following question of law to this court for opinion at the instance of the Revenue :
"Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that extra shift depreciation allowance be allowed on computers in view of entry IIIC (3) of the Table of rates of depreciation in appendix I of the Income-tax Rules, 1962 ?"
2. As is evident from the question, the only dispute in this case whether extra shift depreciation allowance is allowable on computers. The Income-tax Officer did not allow the claim of the assessee for extra shift allowance in respect of computers in view of the specific prohibition contained in the depreciation table in Appendix I, Part I of the Income-tax Rules, 1962, ' by inscription of the letters "N.E.S.A." against "computers". The Commissioner of Income-tax (Appeals) allowed the claim of the assessee on the ground that the computer constituted plant in the hands of the assessee and hence prohibition on allowance of extra shift depreciation allowance on computers was not applicable. The order of the Commissioner (Appeals) was confirmed by the Tribunal. Hence, this reference at the instance of the Revenue.
3. We have heard Mr. R.'V. Desai, learned counsel for the Revenue, who submits that no extra shift allowance can be allowed on computers in view of the specific prohibition in the table of rates of depreciation contained in Appendix I, Part I of the Income-tax Rules, 1962 (the "Rules").
4. We have considered the above submission of learned counsel. Depreciation is allowable under Section 32 of the Act in respect of assets including machinery or plant as may be prescribed. The prescription is contained in Rule 5 of the Rules which provides, inter alia, that depreciation shall be calculated at the percentages specified in the second column of the Table in Part I of Appendix I to the Rules. Part I of Appendix I contains the table of rates at which depreciation is admissible. Different rates of depreciation have been prescribed for different categories of assets. Plant and machinery fall under category III. Plant and machinery have again been further classified for the purpose of depreciation, and different rates of depreciation have been prescribed for different classes of plant and machinery. Item (i) of category III prescribes the rate applicable to machinery and plant for which no special rate has been prescribed under item (ii). The rate of depreciation for such plant and machinery is ten per cent. So far as "computers" are concerned, special rate has been prescribed in entry C(3) of item (ii) of category III. Entry C(3) of item (ii) of Category III (Machinery and plant) reads :
Class of assets Rate of depreciation C(3). Data processing machines includ- 20 ing computers (N.E.S.A.)
5. Item (iv) deals with extra shift allowance. It, however, contains a specific prohibition on allowance of extra shift allowance in respect of certain items of machinery. Item (iv), so far as relevant, reads :
"(iv) Extra shift depreciation allowance :
An extra allowance up to a maximum of an amount equal to one-half of the normal allowance shall be allowed where a concern claims such allowance on account of double shift working and establishes that it has worked double shift. An extra allowance up to a maximum of an amount equal to the normal allowance, instead of one-half of the normal allowance, shall be allowed where a concern claims such allowance on account of triple shift working and establishes that it has worked triple shift . . . The extra shift allowance shall not be allowed in respect of any item of machinery or plant which has been specifically excepted by inscription of the letters 'N.E.S.A.' (meaning 'no extra shift allowance') against it in sub-item (ii) above and also in respect of the following items of machinery and plant to which the general rate of depreciation of ten per cent, applies..."
6. It is clear from the above provision that no extra shift allowance is allowable in respect of any item of machinery and plant which has been . specifically excepted by inscription of the letters "N.E.S.A." against it in sub-item (ii). The uncontroverted factual position is that in entry C(3) of sub-item (ii), which contains the rate of depreciation for "data processing machines including computers", the inscription of letters "N.E.S.A." is there. That being so, computers are specifically excepted from allowance of extra shift allowance. On face of such express prohibition against allowance of extra shift allowance, no extra shift allowance can be allowed on computers. The Commissioner (Appeals) and the Tribunal erred in law in allowing the claim of the assessee for extra shift allowance on computers on the face of express prohibition against allowance of the same.
7. In view of the above, we answer the question referred to us in the negative, i.e., in favour of the Revenue and against the assessee.
8. Reference is disposed of accordingly with no order as to costs.