C.I.T. LDH. vs. M/S STEEL STRIPS LTD.
What did the High Court hold?
The High Court held that the extra shift allowance should be calculated on the basis of the number of days the concern worked as a whole double shift or triple shift, and not on the basis of each item of machinery being used in double or triple shift. This decision is based on the Supreme Court's judgment in South India Viscose Ltd. v. Commissioner of Income-Tax (1997) 227 ITR 286. The Supreme Court had observed that the allowance had to be calculated on the basis of the number of days during which the concern had actually worked double or triple shift. The High Court also noted that a similar question was decided against the revenue and in favour of the assessee in ITR No.9 of 1995, The Commissioner of Income tax, Patiala v. M/s Hind Woollen & Hosiery Mills, Ludhiana, decided on 5.9.2006. Therefore, the question referred in the present case is answered against the revenue and in favour of the assessee. The reference is disposed of accordingly.
What were the facts?
The Commissioner of Income Tax (Central), Ludhiana (Revenue) has filed a reference application before the High Court of Punjab and Haryana at Chandigarh, challenging an order passed by the Income Tax Appellate Tribunal, Chandigarh Bench. The assessment year in question is 1982-83. The dispute pertains to the calculation of extra shift allowance. The Tribunal, in its order dated February 28, 1994, in ITA No. 780/Chandi/86, held that the extra shift allowance should be worked out on a full-year basis, irrespective of the number of days the machinery/plant actually worked extra shifts. The High Court is considering the question of law referred by the Tribunal.
What were the issues?
1. Whether, on the facts and in the circumstances of the case, the ITAT was right in law in holding that extra shift allowance be worked out on full year basis irrespective of the number of days the machinery/plant actually worked extra shift during the year? (Question of law) Assessee's contention: The assessee contends that the extra shift allowance should be calculated on a full-year basis. The judgment does not explicitly record the assessee's arguments but implies their position through the question referred and the subsequent reliance on Supreme Court and High Court judgments in favour of the assessee. Revenue's contention: The revenue contends that the extra shift allowance should be calculated based on the number of days the machinery/plant actually worked extra shifts. The judgment does not explicitly record the revenue's arguments but implies their position through the question referred and the subsequent reliance on Supreme Court and High Court judgments that were decided against the revenue.
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
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 28.2.1994 in ITA No. 780/Chandi/86, for the assessment year 1982-83:- “Whether, on the facts and in the circumstances of the case, the ITAT was right in law in holding that extra shift allowance be worked out on full year basis irrespective of the number of days the machinery/plant actually worked extra shift during the year?” 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:- “For the reasons aforementioned, it must be held that extra shift allowance had to be calculated on the basis of number of days during which the concern had actually worked double shift or triple shift and the said allowance was not required to be calculated on the basis of the number of days a particular item of machinery or plant had worked double shift or triple shift. We are,
ITR No.397-1995 2 therefore, unable to uphold the impugned judgment of the High Court in this regard. In our opinion, the Tribunal had rightly held that the extra shift allowance had to be calculated on the basis of the number of days on which the concern worked as a whole double shift or triple shift and not on the basis of each item of machinery being used in double shift or triple shift. Question No.4 must, therefore, be answered in the affirmative, i.e., in favour of the assessee and against the Revenue.” Following the above judgment, the question has been decided against the revenue and in favour of the assessee in ITR No.9 of 1995, The Commissioner of Income tax, Patiala v. M/s Hind Woollen & Hosiery Mills, Ludhiana, decided on 5.9.2006. Accordingly, the question referred in the present case is also answered against the revenue and in favour of the assessee. Reference is disposed of accordingly. (Adarsh Kumar Goel) Judge November 22,2006 (Rajesh Bindal) 'gs' Judge
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