1 to 6. [These paras are not reproduced here as they involve minor issues.] 6A. The second ground raised in this appeal states that on the facts and in the circumstances of the case, the Commissioner (Appeals) should not have directed the allowance of extra shift allowance for the entire year of account in respect of a new foundry unit, which was installed on 1-7-1977 and worked till the end of the accounting period, i.e., 30-9-1977.
7. During the accounting year relevant to the assessment year under appeal, the assessee-company set up a new industrial undertaking adjoining the existing one at Kansabahal. This new industrial undertaking has a foundry-unit, which commenced manufacturing operation from 1-7-1977. The assessee-company claimed relief under Section 80J of the Income-tax Act, 1961 ('the Act') in respect of its new industrial undertaking and was given relief under Section 80J. It may further be mentioned that the new foundry is housed in a new factory and it worked only for 77 days towards the close of the year after it was set up. It has got a separate and distinct entity from the old existing factory and its machineries and method of working are different from those of the old one.
8. Before the IAC, the assessee-company claimed extra shift allowance for triple shift working at 100 per cent of the normal depreciation in respect of general plant and machinery and precision machinery. Thus, normal depreciation of Rs. 1,81,801 along with extra shift allowance of Rs. 3,61,801 has been claimed for general plant and machinery and normal depreciation of Rs. 18,16,418 and extra shift allowance for triple shift of Rs. 18,16,418 has been claimed for the precision machinery. Before the IAC, it was claimed on behalf of the assessee that extra shift allowance should be allowed for triple shift working on machineries of all the undertakings. The IAC observed that in doing so, the assessee tried to equate the word 'concern' with the assessee-company itself. The IAC was of the view that in respect of the new unit, extra shift allowance has to be calculated at the rate prescribed by taking the actual number of working days at 77 and normal working days at 240 and that in this way the extra shift allowance for triple shift is to be calculated at normal depreciation 77/240. The IAC, thus, held that by this method the assessee-company was entitled in respect of general plant and machinery, extra shift allowance for triple shift at Rs. 1,16,078 as against the claim of Rs. 3,61,801 and in respect of precision machinery at Rs. 5,82,767 as against the claim of Rs. 18,16,418. So, for the new unit the total depreciation so allowed was at Rs. 3 9,46,086 as against the claim of Rs. 54,25,460.
9. The Commissioner (Appeals) allowed the assessee's claim in the following manner: With effect from 1-1-1977, the company began to operate a new foundry unit at its Kansabahal works. The present accounting period ended on 30-9-1977. Therefore, the IAC calculated ESA [Extra Shift Allowance] on the new unit machinery separately from that in the rest of the factory and allowed the same for 77 days only as against the full year for the rest. The assessee objects to that calculation. He says that ESA is allowable for the 'concern' as a whole and that, therefore, he was entitled to it for the entire concern for the whole year, including the new foundry unit, which was only a part of the said concern. In support of his stand, he has also cited the Tribunal, Bombay Bench's decision in the case of IAC v. Boehringer Knoll Ltd. rendered on 7-2-1980. The Tribunal upheld the decision of the Commissioner (Appeals) concerned in allowing extra shift allowance on the entire machinery of a concern, which was proved to have worked multiple shifts throughout the previous year and following the instructions contained in CBDT Circular No. 109, dated 20-3-1973.
The present case is exactly similar. In fact, I myself visited the factory and found that the various manufacturing shops of the company formed one integrated unit, in which the foundry was, perhaps, the most important. In these circumstances, the assessee is entitled to the relief claimed in this ground of appeal and the IAC is, therefore, directed to allow the same.
10. The learned departmental representative has submitted before us that in respect of multiple shift working, extra shift allowance has to be computed in proportion to the number of days on which the machinery and plant was used. In support of this contention, reliance was placed on the decision of the Calcutta High Court in the case of Anantapur Textiles Ltd. v. CIT  116 ITR 851. Reliance has also been placed on the Full Bench decision of the Allahabad High Court in the case of Dhampur Sugar Mills Ltd. v. CIT  126 ITR 648. Reliance has also been placed on the decision of the Madras High Court in the case of South India Viscose Ltd. v. CIT  135 ITR 206.
11. The learned authorised representative for the assessee, on the other hand, supported the order of the Commissioner (Appeals) and laid emphasis on the use of the word 'concern' occurring in Part I of Appendix I of the Income-tax Rules, 1962 ('the Rules'), in Clause (iv), relating to extra shift depreciation allowance under the head 'Machinery and plant'. It was urged that while allowing extra shift allowance, the entire concern of the assessee has to be taken into account and the claim for extra shift allowance is not to be considered separately in respect of each unit, machinery or plant. In support of this contention, reliance was placed on the decision of the Tribunal, Madras Bench, in the case of ITO v. Sri Varadaraja Textiles (P.) Ltd.  9 ITD 469. Reliance was also placed on the circular issued by the CBDT vide letter No. 10/83/69-IT (A-11), dated 28-9-1970--see Taxmann's Direct Taxes Circulars, Vol. I, 1985 edn., p. 190--which has been extracted by the Tribunal in its above decision.
12. We have considered the rival submissions and also the facts on record. Rule 5 of the Rules provides for rates of depreciation in accordance with the terms of the Schedule [Table in Part I, Appendix I]. In the Schedule, in relation to the extra shift depreciation allowance, the following appears in the Schedule to Part I, Appendix I: (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.
The calculations of the extra allowance for double shift working and for triple shift working shall be made separately in the proportion which the number of days for which the concern worked double shift or triple shift, as the case may be, bears to the normal number of working days during the previous year. For this purpose, the normal number of working days during the previous year shall be deemed to be-- The word 'concern' as used in Clause (iv) cannot be interpreted to mean the assessee's entire undertakings including the newly established undertakings in respect of which extra shift allowance has been claimed. The word 'concern' as used in Clause (iv), in our opinion, means a separate and distinct unit or undertaking. The assessee may own and run several factories, units and undertakings.
All of them cannot be considered together as one concern for the purpose of allowing extra shift depreciation allowance. For the purpose of Clause (iv), each unit or factory owned by the assessee has to be considered as a concern. The Madras High Court in South India Viscose Ltd's case (supra) has held that the word 'concern' which had been used in Appendix I, showed that the ITO was obliged to allow extra shift depreciation allowance only if the assessee had made a claim therefor. It has been further held in this case that the ITO has to apply his mind and examine which machinery owned by the assessee had been used by him in extra shift and so long as the particular machinery had worked extra shift, it. would be eligible for extra shift allowance on the basis of the number of days it had worked.
13. The Calcutta High Court in the case of Anantapur Textiles Ltd. (supra) has held that in computing the extra allowance for the triple shift working of the concern, each item of machinery and the number of days of its working has to be taken into consideration. The Full Bench of the Allahabad High Court in the case of Dhampur Sugar Mills Ltd (supra) has also held that the multiple shift allowance has to be computed in proportion to the number of days on which machinery has been so used.
14. The decision of the Tribunal in Sri Varadaraja Taxtiles (P.) Ltd.'s case (supra) cited on behalf of the assessee rests on the CBDT circular, dated 28-9-1970, which has been extracted by the Tribunal in its order. It is as follows: Subject: Calculation of depreciation - Extra shift allowance in respect of plant and machinery: I am directed to refer to your letter No. A/21233/CT/6A-102/69-70, dated 1st November, 1969 on the above subject and to say that 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'.
On the basis of the aforesaid circular, it was held by the Tribunal in that case that the assessment made by the ITO is contrary to the instructions of the CBDT. This decision of the Tribunal is of no help to the assessee. In the instant case, the IAC has not attempted to determine the number of days on which each machinery, comprised in the new foundry unit, actually worked triple shift during the relevant previous year. He has considered the entire new undertaking as one unit, while considering the claim of the assessee for extra shift allowance. The action of the IAC in allowing the extra shift allowance on the new unit for 77 days only is in conformity with the aforesaid decisions cited on behalf of the department.
15. For the foregoing reasons, we hold that the Commissioner (Appeals) was not justified in holding that the assessee was entitled to the relief claimed in respect of the extra shift allowance on new unit.