Income‑tax‑‑‑

‑‑‑‑Depreciation‑‑‑Extra‑shift allowance‑‑Computers ‑‑‑Exra‑shift allowance cannot be claimed in respect of computers ‑‑‑Indian Income Tax Act, 1961, S.32‑‑‑Indian Income Tax Rules, 1962, R. 5.

No extra‑shift allowance is allowable in respect of any item of plant and machinery which has been specifically excepted by inscription of the letters N.E.S.A. In entry C(3) of sub‑item (ii) of Category III in Part I of Appendix I to the Income Tax Rules, 1962, which contains the rate of depreciation for "data processing machines including computers", inscription of letters N.E.S.A. is there. Therefore, computers are specifically excepted from allowance of extra‑shift allowance. In view of such express prohibition against allowance of extra‑shift allowance, no extra‑shift allowance can be allowed on computers.

CIT v. Paresh S. Shah (1999) 238 ITR 254 (Bom.) fol.

R.V. Desai with P.S. Jetley for the Commissioner.

Nemo for the Assessee.

JUDGMENT

SMT. RANJANA DESAI, J.‑‑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 allowance of depreciation is allowable on data processing computer system?"

The relevant facts are as under:

The assessee is a company carrying on business of setting up a data processing center using computer systems. The relevant assessment year is 1980‑81. The assessee claimed extra‑shift allowance, in addition to allowance of normal depreciation, on the data processing computer system. The Income‑tax Officer held that depreciation at the rate of 20 per cent. is allowed on computer system. However, no extra‑shift allowance is allowable. He, therefore, disallowed the said claim.

The appeal carried to the Commissioner of Income‑tax (Appeals) by the assessee was allowed. The Commissioner of Income‑tax (Appeals) relied upon an earlier order of the Tribunal in the assessee's case and held that the extra‑shift allowance on data processing computer system was allowable.

In the appeal carried to the Income‑tax Appellate Tribunal by the Revenue, the Income‑tax Appellate Tribunal held following its earlier decision that the extra‑shift allowance on data processing computer machine is allowable and hence no interference was called for with the order of the Commissioner of Income‑tax (Appeals). It is against this background that the present reference is made to this Court.

Our attention is drawn by learned counsel for the parties to the decision of this Court in CIT v. Paresh S. Shah (1999) 238 ITR 254. In that case this Court while dealing with a similar question considered the relevant provisions of law. Reference was made to section 32 of the Income‑tax Act which deals with allowable depreciation in respect of assets including plant and machinery as may be prescribed. Reference is also made to rule 5 of the Income‑tax Rules, 1962, which provides, inter alia, that depreciation shall be calculated at the percentage specified in the second column of the Table in Part 1 of Appendix I to the Rules. Different rates of depreciation have been prescribed for different categories of assets. Plant and machinery fall under Category III. Plant and machinery have been further classified for the purpose of depreciation and different rates of depreciation have been prescribed for different classes of plant and machinery. So far as computers are concerned, special rates have been prescribed in Entry C(3) of sub?item (ii) of Category III. Tae said entry reads thus:

Class of assets

Rate of depreciation

C(3) Data processing Machines including 20 computers (N.E.S.A.)

Item (iv) which deals with extra‑shift depreciation allowance reads thus:

"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...."

Considering these provisions the Court observed that no extra‑shift allowance was allowable in respect of any item of plant and machinery which has been specifically excepted by inscription of the letters N.E.S.A. against it in sub‑item (ii). There is no dispute that in entry C(3) of sub‑item (ii) which contains the rate of depreciation for "data‑processing machines including computers", inscription of letters N.E.S.A. is there. Therefore, computers are specifically excepted from allowance of extra‑shift allowance. This Court, therefore, observed that on the face of such express prohibition against allowance of extra‑shift allowance, no extra‑shift allowance can be allowed on computers.

Learned counsel for the parties are agreed that the facts of the present case are clearly covered by the above quoted decision. In that view of the matter, the question referred to us is answered in the negative, i.e., in favour of the Revenue and against the assessee.

Reference disposed of accordingly with no order as to costs.

M.B.A./351/FC ????????????????????????????????????????????????????????????????????????????????? Reference answered.