Extra shift depreciation allowance is not available to an approved hotel as it is entitled to extra allowance.

Ajit K. Sengupta, J.

1. IN this reference under Section 256(1) of the Income-tax Act, 1961, for the assessment year 1978-79, the following question of law has been referred to this court:

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that extra shift depreciation allowance for triple shift working was not available to the assessee's approved hotel ?"

2. THE facts leading to this reference are stated hereinafter. The assessee is a private limited company and derived income from hotel business. The assessee's hotel is an approved one. According to the assessee, its hotel worked triple shift during the previous year relevant to the assessment year under consideration. The assessee claimed before the Income-tax Officer extra shift depreciation allowance for triple shift working. This claim was disallowed by the Income-tax Officer on the ground that the assessee is entitled to extra depreciation allowance under sub-item (iii) of Item No. III of Part I of Appendix I of the Income-tax Rules, 1962, being an approved hotel and as such extra shift allowance for triple shift working was not available to it under sub-item (iv) thereof. He also relied on the Central Board of Direct Taxes Circular No. 109 dated March 20, 1973 see [1973] 89 ITR (St.) 30. This finding was upheld by the Commissioner of Income-tax (Appeals). On further appeal, it was contended before the Tribunal on behalf of the assessee that sub-item No. (iii) related to extra depreciation allowance for approved hotels only whereas sub-item (iv) covers extra shift depreciation allowance for triple shift working and that this could not be disallowed only because the assessee's hotel is an approved one. This contention was opposed by the departmental representative who relied on the decision of this Tribunal in the case of Hotel Banjara Ltd. v. ITO. Following the said decision of the Hyderabad Bench, this Tribunal upheld the finding of the Commissioner of Income-tax.

3. THE short question which calls for determination here is whether an approved hotel is entitled to extra shift depreciation allowance in addition to extra allowance. Section 32 deals with depreciation. Rule 5 of the rules deals with the calculation of depreciation. THE percentages of depreciation allowable are given in Part I of Appendix I. In that Appendix I, item III of Part I refers to the percentage of depreciation allowable in respect of machinery and plant at the specified rates thereunder. Under sub-item (iii), extra depreciation allowance for approved hotels is allowable, whereas under item (iv), extra shift allowance is allowable for concerns and factories. THE relevant rules are as follows :

"Appendix I, Part I (iii) Extra depreciation allowance for approved hotels : An extra allowance of depreciation of an amount equal to one-half of the normal allowance shall be allowed in the case of machinery and plant installed by an assessee, being an Indian company, in premises used by it as a hotel where such hotel is for the time being approved by the Central Government for the purposes of Section 33 of the Act. Explanation.--For the purposes of this sub-item and sub-item (iv), 'normal allowance' means the amount of depreciation allowance other than the extra depreciation allowance under this sub-item or the extra shift depreciation allowance under sub-item (iv) which is allowable under Rule 5. (iv) Extra shift depreciation allowance : 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."

4. FROM a reading of the aforesaid R