Dr. B.P Saraf, J.:— By this reference under section 256(1) of the Income-tax Act, 1961, the Income-tax Appellate Tribunal has referred four questions of law to this court for opinion—three at the instance of the assessee, one at the instance of the Revenue. These questions are:
At the instance of the assessee:
“1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in not excluding commission of Rs. 13,471 paid to the managing director for the purpose of remuneration to be allowed as deduction to the company under section 40(c) of the Act?
2. Whether, on the facts and in the circumstances of the case and in law, the Tribunal was justified in reversing the decision of the Commissioner of Income-tax (Appeals) allowing deduction of Rs. 80,301 being gratuity liability and provided in the books on the basis of actuarial valuation for the assessment year 1973–74, and Rs. 19,06,977 and Rs. 5,72,219, respectively, being the gratuity liability and not provided in the books on the basis of actuarial valuation for the assessment years 1974–75 and 1975–76?
3. Whether, on the facts and circumstances of the case, the Tribunal was justified in law in determining that the extra-shift depreciation allowance for a seasonal factory as in the case of the appellant has to be calculated in proportion to the number of days the plant and machinery had actually worked and not an amount equal to the full amount of normal depreciation and thereby rejecting the claim of the appellants for extra-shift depreciation to the extent of Rs. 11,291?
At the instance of the Revenue:
4. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that on a proper construction of the relevant provisions of the Act, section 32 and section 34, the assessee had an option to decline grant of depreciation allowance?”
2. The questions are numbered serially for the sake of convenience. Counsel for the parties are agreed that all the questions except question No. 3 are covered by the decisions of the Supreme Court or of this court and they may be answered accordingly. We, therefore; first answer questions Nos. 1 and 2 which are referred at the instance of the assessee and question No. 4 which is referred at the instance of the Revenue as follows:
Question No. 1 is covered by the decision of this court in Commissioner Of Income-Tax v. Kores India Private Ltd., [1989] 176 ITR 500. Following the same, we answer this question in the affirmative and in favour of the Revenue. Question No. 2 is covered by the decision of the Supreme Court in Shree Sajjan Mills Ltd. v. CIT, [1985] 156 ITR 585 in favour of the Revenue. Accordingly, we answer question No. 2 also in the affirmative and in favour of the Revenue. Question No. 4 is covered in favour of the assessee by the decision of this court in CIT v. Shri Someshwar Sahakari Sakhar Karkhana Ltd., [1989] 177 ITR 443. This question is accordingly answered in the affirmative and in favour of the assessee.
3. We are now left only with question No. 3. The controversy in this question pertains to the allowability of extra-shift depreciation in respect of the Lakshmiwadi factory for the assessment year 1974–75. The assessee claimed extra-shift allowance on the working of its factories at Sakarwadi and Lakshmiwadi. It was noticed by the Income-tax Officer that in the previous year relevant to the above assessment year, though the Sakarwadi factory worked for 185 days, the Lakshmiwadi factory worked only for 170 days. The Income-tax Officer, therefore, restricted extra-shift allowance in respect of the Lakshmiwadi factory to Rs. 1,91,944 as against Rs. 2,03,235 claimed by the assessee. The disallowance of Rs. 11,291 was on the basis of calculation made in the manner set out in the circular of the Board dated March 20, 1973, having regard to the number of days during which the said factory actually worked double shift. The order of the Income-tax Officer was confirmed by the Commissioner of Income-tax as well as by the Tribunal. Hence this reference at the instance of the assessee.
4. The contention of the assessee is that one of its two factories, i.e, the Sakarwadi factory, having worked for 185 days, the assessee is entitled to get extra-shift depreciation at the full rate in respect of the other factory also. Reliance is placed in this connection on a letter of the Board No. 10/83/69-IT (A-II) dated September 28, 1970, which is in the following terms:
“Calculation of depreciation-Extra-shift allowance in respect of plant and machinery.—The Board have decided that where a concern has worked double shift or triple shift, 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 machine actually worked double or triple shift during the relevant previous year.”
5. The contention of the assessee is that both the factories of the assessee should be treated as one concern and one of them having worked for the requisite number of days which entitles it to get full extra-shift depreciation allowance, the Income-tax Officer should have allowed the claim in respect of the other factory also without determining the number of days on which it had worked. In support of this contention, reliance is also placed on a decision of the Gujarat High Court in CIT v. Transpek Industry Pvt. Ltd., [1992] 194 ITR 581.
6. We have carefully considered the submission. There is no real dispute about the legal position regarding calculation of extra-shift allowance. It has been set out in the circular of the Board No. 109 (F. No. 202/21/71-IT (All)) (see [1973] 89 ITR (St.) 30) dated March 20, 1973. The relevant portion of the said circular which deals with extra-shift allowance in multi-shift factories reads as follows:
“4. The said allowance is calculated separately for the period for which the concern has actually worked double shift only and the period for which it has worked triple shift, expressed in terms of the proportion which such period bears to the ‘normal number of working days during the previous year’. For this purpose, the norm of ‘normal number of working days during the previous year’ has been fixed—
(i) in the case of a seasonal factory or concern, at 180 days, or the number of days on which the factory or concern actually worked during the previous year, whichever is greater; and
(ii) in the case of a non-seasonal factory or concern, at 240 days, or the number of days for which the factory or the concern actually worked during the previous year, whichever is greater.
4. The formulae for calculating the extra-shift depreciation allowance in regard to a factory or concern, whether seasonal or non-seasonal, which has worked (a) double shift or (b) triple shift for any period during the previous year, may be stated as follows,—
(a) Double shift One-half of the normal depreciation allowance
The number of days during the previous year for which the factory or concern actually worked double shift.
One-half of the normal depreciation allowance
X
‘Normal number of working days in the previous year’.”
7. There is no dispute that the calculation made by the Income-tax Officer is in accordance with the above circular. The only grievance of the assessee is that one of its factories having worked for the normal number of working days, in view of the decision of the Board contained in its letter dated September 28, 1970, it is entitled to the full double shift allowance in respect of the factory in question also even though during the relevant previous year, it worked only for 170 days.
8. We have carefully considered the above submission on behalf of the assessee and also the relevant circular and letter of the Board. We, however, find it difficult to accept the same as, in our opinion, the two factories of the assessee in the instant case are two different concerns. The letter of the Board dated September 28, 1970, merely provides that where a concern has worked double shift, 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 machine actually worked double or triple shift during the relevant previous year. Evidently, this letter is confined to “a concern”. It does not apply to all concerns belonging to a particular assessee. In the instant case, evidently, the two sugar factories, though belonging to the same assessee, are two independent concerns. The above letter of the Board, therefore, has no application.
9. In view of the above discussion, we do not see any merit in the submission of counsel for the assessee. The Gujarat High Court in the decision referred to above-Transpek Industries Ltd.'s case, [1992] 194 ITR 581—has nowhere held that all concerns belonging to one assessee can be treated as one concern for the purpose of extra-shift depreciation allowance. That judgment, in our opinion-, has no application to the facts of the present case. We, therefore, answer question No. 3 in the affirmative, i.e, in favour of the Revenue and against the assessee.
10. No order as to costs.