Circulars issued by the Board of Revenue under S.119 of the Income Tax Act have the force of law and are binding on all officers of the department, and can afford administrative relief by relaxing the rigour of the law.

1. The Revenue is the petitioner herein. This is a petition filed under S.256(2) of the Income Tax Act praying that this Court may be pleased to refer the following questions of law, formulated in para 9 of the O.P, for the decision of this Court:

1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in holding that there was no error in the assessment order passed by the Income-tax Officer in the matter of allowing extra shift allowance which required the intervention of the Commissioner under S.263?

2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in cancelling the order under S.263 passed by the Commissioner of Income-tax withdrawing the extra-shift allowance allowed by the Income-tax Officer in the assessment order?"

2. The respondent is an assessee to Income-tax. The matter relates to the assessment year 1977-78, the corresponding previous year ended by 31-3-1977. The controversy is regarding the allowance of extra shift allowance in respect of the entire machinery in the factory of the respondent. The Income Tax Officer allowed the same in entirety. The Commissioner of Income-tax initiated suo mote revision proceedings.

After giving an opportunity to the assessee, he held that the extra shift allowance can be allowed only in respect of such machinery as has worked during, the previous year, relevant to the assessment year. In taking the said view, the Commissioner of Income-tax relied on the decision of the Calcutta High" Court reported in Anantapur Textiles Ltd. v. CIT [(1979) 116 ITR. 851]. The order of assessment was set aside. The Income Tax Officer was directed to make a fresh assessment, according to law. The respondent/ assessee filed an appeal before the Appellate Tribunal against the revisional order of the Commissioner of Income-tax. The main plea of the assessee before the Tribunal was that the Income Tax Officer was justified in granting extra shift allowance on all the machinery in the concern of the assessee in view of the Circular of the Board (F. No. 10/83/63-ITA. (II) dated 28-9-1970. It was argued that the said circular is binding on all officers of the department and that the Income Tax Officer was justified in giving effect to the said circular. In this view of the matter, the order of the Income Tax Officer is not erroneous, nor can the same be considered to be one prejudicial to the Revenue. The Appellate Tribunal held that this circular was not brought to the notice of the Calcutta High Court in the decision reported in Anantapur Textiles Ltd. case (116 ITR 851) and further held that the circular is binding on all authorities subordinate to the Board. It was further held that the Income Tax Officer was justified in allowing extra shift depreciation on the entire plant and machinery in the concern of the assessee in the light of the circular and that no error was committed in the matter. The Revenue filed an application before the Appellate Tribunal under S.256(1) of the Income Tax Act to refer two questions of law for the decision of this Court. By order dated 19-9-1984, the said application was rejected. Thereafter, the Revenue has filed the present petition, under S.256(2) of the Act. praying that this Court may be pleased to direct the Appellate Tribunal to refer the two questions of law, formulated in para 9 of the OP. for the decision of this Court.

3. We heard counsel for the Revenue, Mr. Menon, as also counsel for the respondent, Mr. Jose Joseph and Mr. Mayankutty Mather. The main plea of the counsel for the Revenue was that the Appellate Tribunal was in error in relying upon the Circular of the Board of Revenue dated 28-9-1970 and in holding that the assessee is entitled to the entire extra shift allowance, as claimed by it. It was argued that the Circular of the Board of Revenue is only an administrative direction and it will not over-ride the law. The decision of the Calcutta High C