2002 PLP 1692 (PTD)

R. JAYASIMHA BABU, J.

This reference discloses the casualness with which the Assessing Officer and the Appellate Authority dealt with legitimate claim of the assessee for extra shift allowance. The claim of the assessee, on a bare reading of Income tax provisions of the Income-tax Rules, 1962, was clearly admissible. No agreement was put forth to support the reference, as indeed no such argument is available, having regard to the plain language in the depreciation table. The assessee is a manufacturer of sugar which has erected storage tanks for storage of molasses. It claimed extra-shift allowance in respect of those tanks for the assessment year 1983-84. Extra-shift allowance is provided for in the Table of rates at which depreciation is admissible in Appendix I, Part I of the Income-tax Rules, 1962. In respect of machinery and plant entry III(iv) deals with extra-shift depreciation allowance. There is an illustration of the rule in that clause which reads thus: "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 10 per cent. applies: (3) Mineral oil concerns

field operations:... d. Storage tanks (above ground)." It is clear from this illustration that storage tanks are plant or machinery and that it is only the storage tanks which are owned by mineral oil concerns that are not eligible to claim extra-shift depreciation allowance. If the conditions laid down in, clause (iv) of entry III are satisfied, extra-shift allowance is normally applicable in respect of storage tanks (other than) in mineral oil concerns. The assessee is not a mineral oil concern. The Officer gave no reason at all for rejecting the claim. The Commissioner merely asserted that extra-shift allowance is not available on the storage tanks. It is apparent that neither of these two officers had cared to go through the relevant parts of the depreciation table and had negligently rejected the claim of the assessee. The assessee, therefore, preferred an appeal to the Tribunal. The Tribunal had rightly held that the extra-shift allowance is allowable in respect of the storage tanks owned by the assessee which as noticed earlier is a manufacturer of sugar and is riot a mineral oil concern. Even after that order of the Tribunal, the Revenue has persisted and has caused this reference to be made. In the light of what has been discussed by us earlier, it is patent that the extra-shift allowance is clearly admissible in respect of the molasses storage tanks owned by the assessee. The first question referred to us, namely, "whether, on the facts and in the circumstances of the case, the assessee is entitled to extra-shift allowance on molasses storage tank?" is, therefore, answered in favour of the assessee and against the Revenue. One more question has been referred to us, at the instance of the Revenue and that question is as to "whether, on the facts and in the circumstances of the case, the collection towards the molasses storage fund as per the Molasses Control Order cannot be considered diverted at source by overriding title?" A question similar to this was considered by this Court in the case of CIT v. Salem Cooperative Sugar Mills Ltd. (1998) 229 ITR 285, wherein it was held that the amounts required to be spent by the assessee for construction of molasses storage tanks which the assessee is required to construct under the Molasses Control Order do not vest with the assessee on account of diversion of overriding title at source, and cannot form part of the income of the assessee. Following the above judgment this question must be answered and is answered in favour of the assessee and against the Revenue. The Revenue shall pay costs in the sum of 85.3,000 to the assessee. M.B.A./726/FC Reference answered.