CIT LUDHIANA vs. M/S MUNJAL CASTING IND.AREA B
What were the facts?
The Commissioner of Income-Tax, Ludhiana (Revenue) has filed an Income Tax Reference (ITR) No. 121 of 1999 before the High Court of Punjab and Haryana at Chandigarh. The reference arises from an order dated January 14, 1997, passed by the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench, in I.T.A. No. 1151/Chandi/91. The assessment year in question is 1986-87. The dispute pertains to the calculation of extra-shift allowance for M/s Munjal Castings, Ludhiana (Assessee). The ITAT's order is under challenge.
What did the High Court hold?
The High Court held that the Income Tax Appellate Tribunal was right in law in holding that extra-shift allowance should be worked out on a full year's basis, irrespective of the number of days the machinery/plant actually worked an extra shift during the year. The Court relied on its own previous judgment in I.T.R. No. 9 of 1995 (The Commissioner of Income-Tax, Patiala Vs. M/S Hind Woollen & Hosiery Mills, Ludhiana), decided on September 5, 2006. This earlier judgment, in turn, followed the decision of the Hon'ble Supreme Court in South India Viscose Ltd. Vs. Commissioner of Income-Tax (1997) 227 ITR 286. The ratio decidendi is that the allowance for extra shifts is to be computed on the basis of the entire year, not on a pro-rata basis for the days the extra shift was actually operated. The question referred to the High Court was answered against the Revenue and in favour of the assessee. The reference was disposed of accordingly.
What were the issues?
1. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that extra-shift allowance be worked out on a full year's basis irrespective of the number of days the machinery/plant actually worked extra shift during the year? (Question of law) Assessee's Contention: The judgment does not record any specific contentions made by the assessee before the High Court. However, the ITAT's decision, which is being upheld, implies that the assessee argued for the extra-shift allowance to be calculated on a full year's basis. Revenue's Contention: The Revenue's contention is implicit in its filing of the reference, challenging the ITAT's decision. The Revenue likely argued that the extra-shift allowance should be proportionate to the actual number of days the machinery operated on an extra shift, rather than a full year's basis.
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JUDGMENT Following question of law has been referred for opinion of this Court by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh arising out of its order dated 14.1.1997 passed in I.T.A.No.1151/Chandi/91, in respect of the assessment year 1986-87. “Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that extra-shift allowance be worked out on full years basis irrespective of the number of days the machinery/plant actually worked extra shift during the year?”
An identical question has been gone into by this Court in I.T.R. No.9 of 1995-- The Commission of Income-Tax, Patiala Vs. M/S Hind Woollen & Hosiery Mills, Ludhiana, decided on 5.9.2006, wherein following the judgment of the Hon'ble Supreme Court in
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