C.I.T. PATIALA vs. M/S PATIALA DISTILLERS & MANUFAC. P. LTD

ITR/333/1995HC Punjab & HaryanaPHHC01032406199530 November 2006Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE RAJESH BINDAL2 pages

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What were the facts?

The Commissioner of Income Tax, Patiala (Revenue) filed a reference application before the High Court of Punjab and Haryana at Chandigarh, challenging an order of the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench. The ITAT's order, dated July 13, 1993, in ITA No. 47/Chandi/1987, pertained to the assessment year 1983-84. The dispute centered on the calculation of Extra Shift Allowance for the assessee, M/s Patiala Distillers and Manufacturers Pvt. Limited. The Revenue disputed the ITAT's decision to allow the allowance for the full year based on the concern's overall working, rather than the specific days each machinery operated on an extra shift.

What did the High Court hold?

The High Court held that the ITAT was right in law in allowing the Extra Shift Allowance for the full year on the basis of the working of the concern as a whole. The Court relied on the Supreme Court's decision in South India Viscose Ltd. v. Commissioner of Income-Tax (1997) 227 ITR 286. In that case, the Supreme Court had held that the extra shift allowance must be calculated on the basis of the number of days during which the concern actually worked double or triple shifts, and not on the basis of the number of days a particular item of machinery worked such shifts. The High Court also noted that this issue had been decided in favour of the assessee in a similar case, ITR No. 9 of 1995, Commissioner of Income Tax, Patiala v. M/s Hind Woollen & Hosiery Mills, Ludhiana, decided on September 5, 2006. Therefore, the question referred was answered in favour of the assessee and against the Revenue. The reference was disposed of accordingly.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the ITAT is right in law in allowing Extra Shift Allowance for the full year on the basis of the working of the concern as a whole and not on the basis of the number of days each machinery actually worked an extra shift? (Question of law) The Revenue contended that the Extra Shift Allowance should be calculated based on the number of days each individual piece of machinery operated on an extra shift. The assessee argued that the allowance should be calculated based on the number of days the entire concern operated on an extra shift. The judgment does not explicitly record arguments for the assessee, but their position is implied by the question referred and the subsequent reliance on Supreme Court and High Court precedents.

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Cause title — parties, addresses and appearances

ITR No.333 of 1995 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITR No.333 of 1995 Date of decision:30.11.2006 The Commissioner of Income Tax, Patiala ....Petitioner versus M/s Patiala Distillers and Manufacturers Pvt. Limited, Vill. Main, District Patiala. ....Respondent CORAM: HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE RAJESH BINDAL Present: Dr. NL Sharda, Advocate, for the revenue.

JUDGMENT: Following question of law has been referred for the opinion of this Court by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh (for short, 'the Tribunal'), arising out of its order dated 13.7.1993 in ITA No.47/chandi/1987, for the assessment year 1983-84:- “Whether, on the facts and in the circumstances of the case, the ITAT is right in law in allowing Extra Shift Allowance for full year on the basis of working of the concern as a whole and not on the basis of number of days each machinery actually worked extra shift? We find that the issue has been gone into by the Hon'ble Supreme Court in South India Viscose Ltd. v. Commissioner of Income- Tax (1997) 227 ITR 286, wherein it was observed at page 300:-

The order continues below.

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