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PETITIONER: M/S SOUTH INDIA VISCOSE LTD.

       Vs.

RESPONDENT: COMMISSIONER OF INCOME TAX

DATE OF JUDGMENT:       09/07/1997

BENCH: S.C. AGRAWAL, D.P. WADHWA

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T S.C.AARWAL. O.      These appeals  by the assessee are directed against the judgment of  the Madras  High Court dated September 23, 1981 in T.C.  Nos. 437  to 439 of 1977 (reported in 135 ITR 206). They  involve   the  question   regarding   computation   of depreciation by way of Extra Shift Allowance under Rule 5 of the Income  Tax Rules.  1962 (hereinafter referred to a ’the Rules’) read  with Appendix  I to  the  Rules.  The  appeals relate  to  assessment  year  1971-72.  Four  questins  were referred by  the Income  Tax Appellate Tribunal (hereinafter referred to  as  ’the  Tribunal’)  to  the  High  Court  for opinion. Questions Nos. 1, 2 and 3 were aswered in favour of the appellant-assessee  but  question  No.  4  was  answered against the  assessee. The  appeals are confined to question No. 4 which was as under :      "Whether, on  the facts  and in the      circumstances  of   the  case,  the      assessee is entitled to extra shift      allowance   in   respect   of   the      machinery and  spares which  w e re      added during  the relevant previous      year, on  the basis  of double  and      triple shifts  worked by the entire      concern?"      The assessee  is a  public limited  company carrying on business in  manufacture and  sale of  rayon yarn  and  wood pulp. The  assessee claimed  multiple shift allowance during the relevant  asseessment year  on the  basis of  the number ofdays on  which the  concern as  a whole worked extra shift and not  with reference  to the number of days on which each machine had  worked. The  Income Tax  Officer retricted  the allowance to  the number of days on which each machinery had worked. On  appeal, the  Appeallate  Assistant  Commissioner accepted the  claim of  the assessee and allowed extra shift allowance on  the basis  of the number of days for which the concern as  a whole  worked double  and triple  shifts.  The Tribunal  agreed   with  the  said  view  of  the  Appellate Assistant Commissioner.  By the  impugned judgment  the High Court has,  however, held  that in  view of  the  provisions

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contained in Rule 5 of the Rules read with Appendix I to the Rules the  Income Tax  Officer is required to apply his mind to examine  which machinery  owned by  the assessee has been used by  him  in  extra  shift  and  that  so  long  as  the particular machinery  has worked  in extra  shifts,  in  the relevant years,  for  the  specified  period,  it  would  be eligible for  te extra  shift allowance  on the basis of the number of days provided the letters N.E.S.A. (No Extra Shift Allowance) do  not apply  to it.  In taking he said view the High Court  has placed  reliance on  the  decisions  of  the Calcutta  High   Court  in   Ganesh  Sugar  Mills  Ltd.  vs. Commissioner  of  Income  Tax,  [1969]  76  395  (Cal),  and Anantpur Textiles  Ltd.  vs.  Commissioner  of  Income  Tax, [1979] 116  ITR 851  (Cal), as  well as the decisions of the Allahabad High  Court in  Raza Sugar Co. vs. Commissioner of Income Tax,  [1970] 76  ITR 541 (All) and Kundan Sugar Mills vs. Commissioner of Income Tax. [1977] 106 ITR 704 (All).      Shri Sunil Dogra, the learned counsel appearing for the assessee, has assailed the interpretation placed by the High Court on  Rule 5  and the provisions contained in Appendix I to the  Rules relating  to the extra shift allowance and has urged that  the Tribunal  had  rightly  construed  the  said provisions to  mean that the extra shift allowance has to be allowed in  respect of the entire plant and machinery if the concern has  worked double shift or triple shift. Shri Dogra hs also relied upon the circulars/instructions issued by the Central Board  of Direct  Taxes (hereinafter  referred to as ’the Board’) directing that when a concern has worked double shift or  triple shift  the 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  machinery our plant actually worked double  or triple  shift during the relevant previous year. The submission is that the said circulars/instructions were binding  and that  the High  Court was  in error in not taking into consideration the same.      Dr. Gauri Shankar, the learned senior counsel appearing for the  Revenue, has,  on the  other hand,  submitted  that extra  shift  allowance  is  in  the  nature  of  additional depreciation  that   is  granted  in  view  of  the  greater intensity of  use of  the plant  and machinery  and that the grant of the said allowance is governed by Section 32 of the Income Tax  Act, 1961 (hereinafter referred to as ’the Act’) and Rule 5 of the Rules which lay down that the depreciation is permissible only in respect of the individual item of the machinery and  not for  the industrial  concern as such. The learned counsel has also placed reliance on the decisions of the High  Court referred to in the impugned judgment and has submitted  that   the  circulars   of  the  Board  are  only clarificatory in  nature and  are not  binding on  the  High Court or  on this  Court and  that  the  matter  has  to  be examined on the basis of the relevant statutory provisions.      Section 32  of the  Act makes  provision for deductions that can be allowed in respect of depreciation of buildings, machinery, plant or furniture owned by the assessee and used for the  purposes of  the business  or profession. In clause (ii) of  sub-section (1)  of Section  32, as it stood at the relevant  time,   it  was  provided  that  in  the  case  of buildings, machinery,  plant or  furniture depreciation  was allowable at  such percentage  on  the  written  down  value thereof as  may in case of class of cases be prescribed. The mode of computation of the depreciation that is allowable is prescribed in the Rules. Rule 5(1) of the Rules, as it stood at the relevant time, provided as under :      "Depreciation, - (1) Subject to the

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    provisions  of  sub-rules  (2)  and      (3), the allowance under clause (i)      or clause  (ii) of  sub-section (1)      of  Section   32  in   respect   of      depreciation     of      buildings,      machinery, plant  or  furniture  or      the allowance  under clause  (i) of      sub-section (1A)  of Section  32 in      respect    of    depreciation    of      structure or  work referred  to  in      that    sub-section     shall    be      calculated   at   the   percentages      specified in  the second  column of      the Table  in Part I of Appendix to      these rules  on the actual cost or,      as the case may be the written down      value  of   such  of   the   assets      aforesaid  as   are  used  for  the      purposes   of   the   business   of      profession of  the assessee  at any      time during the previous year :      Provided that  in a  case where the      assessee has  been allowed  to vary      the  meaning   of  the   expression      "previous year"  in respect  of any      business or  profession under  sub-      section  (4)   of  section  3  and,      thereby, his  income from  such the      business or profession for a period      of  thirteen   months  or  more  is      included in his total income of any      previous   year,    the   allowance      referred  to   in  this   sub-rule,      calculated  in  the  manner  stated      hereinabove, shall  be increased by      multiplying  it   by   a   fraction      ofwhich the numerator in the number      of complete months in such previous      year   and   the   denominator   is      twelve."      Part I  of Appendix  I to the Rules contained the table of rates  at which  depreciation was  admissible on  various classes of  assets including machinery and plant. Many items of machinery  and  plant  had  the  abbreviation  ’N.E.S.A.’ inscribed  against   them.  In   respect  of   extra   shift depreciation allowance the following provision was contained in Part I of Appendix I to the Rules :      "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 allowanc  up to  a maximum of      an   amount    equal   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

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    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 the previous      year shall be deemed to be -      (a)  in  the  case  of  a  seasonal      factory or  concern the  number  of      days  on   which  the   factory  or      concern actually  worked during the      previus year or 180 days, whichever      is greater;      (b) in  any other  case, the number      of days  on which  the  factory  or      concern actually  worked during the      previous   year    or   240   days,      whichever is greater.      Illustration      For example,  where a  non-seasonal      concern worked  270 days during the      previous  year   out  of  which  it      worked triple shift on 135 days and      double shift  on another  90  days,      the  extra  depreciation  allowance      for triple  shift working  will  be      135/270,  i.e.,   on-half,  of  the      normal  allowance,   and  that  for      double shift  working 90/270, i.e.,      one-third,  of   one-half,  of  the      normal allowance.      The extra shift allowance shall not      be   allowed in respect of any item      of machinery  of  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 -      (Omitted)"      The value  of capital  assets employed  in  production, namely, plant  and machinery, office equipment and buildings gradually depreciate through wear and tear and obsolescence. The depreciation  allowance allowable under Section 32(1) of the Act  is intended  to enable  the assessee to recover the cost of  a capital asset used in business over the period of its useful  life under  normal conditions. When a concern or factory works  double shift or triple shift there is greater wear  and  tear  of  the  machinery  and  plant.  Additional depreciation allowance  by way  of extra  shift depreciation allowance is  intended to  compensate for the extra wear and tear on  account of  the working of the concern or factor in double shift or triple shift.  This extra shift depreciation allowance  does   not  differ  in  nature  from  the  normal depreciation allowance.      A persual  of Rule  591) sows  that normal depreciation allowance under  sction 32  in respect  of  depreciation  of

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buildings,  machinery,   plant  or   furniture  has   to  be calculated at the percentages specified in the second column of Part  I of Appendix I to the Rules on the actual cost or, as the  case may  be the  written down  value of such of the assets aforesaid  as  are  used  for  the  purposes  of  the business of  profession of  the assessee  at any time during the previous  year. Under  Part I of Appendix I to the Rules extra shift depreciation allance, up to maximum of an amount equal to  one-half of  the normal  allowance, was  allowable where as concern claimed such allowance on account of double shift working  and was  able to  establish that it as worked double shift.  In cases where concern claimed such allowance on account of triple shift working and was able to establish that it  had workd  triple shift  extra  shift  depreciation allowance up  to a  maximum of  an amount  equal  to  normal allowance was  allowable. The  extra  allowance  had  to  be calculated separetely  in the proportion which the number of days for  which the  concern worked  double shift  of triple shift, as  the case may be, was bearing to the normal number of working days during the previous year.  The normal number of working  days during  the previous  year in the case of a seasonal factory  or concern  was deemed to be the number of days on  which the factory or concern actually worked during the previous  year or  180 days. whichever as greater and in any other  case, the  number of days on which the factory or concern actually  worked during  the previous  year  or  240 days, whichever  was greater.  The extra shift allowance was not allowable  in respect  of any  item of machinery or plan which has  been specifically  excepted by inscription of the latters "N.E.S.A."  against it  in sub-item (ii) of the said Appendix.   The said  allowance was  also not  allowable  on certain specified  items of machinery and plant to which the general rate  of depreciation  of 10%  was applicable.    It would thus  appear that for the purpose of calculating extra shift allowance  allowable under Part I of Appendix I to the Rules what  was required  to be  determined was  the  actual number of  days on which the concern had worked double shift or triple  shift, as  the case  may be.   For the purpose of calculating the  extra shift  depreciation  allowance  under Part I  of Appendix  I to  the Rules it was not necessary to determine the  actual number of days on which the particular item of  machinery or  plant, on  which such  allowance  was claimed, had  been used in double shift or triple during the relevant previous year.      Tribunal has laid emphasis on the word "concern" in the aforementioned provisions  in Part  I of  Appendix I  to the Rules relating to extra shift depreciation allowance and has observed  that   "there  is  no  warrant  to  interpret  the expression ’the  concern  worked’  to  mean  ’the  machinery worked".  While reversing the said view of the Tribunal, the High Court  has observed  that the  word "concern"  has been used in the said passage to show that the Income Tax Officer is obliged  to allow extra shift depreciation allowance only if the  assessee has  made a  claim therefor and that if the assessee dd  not choose  to make such a claim the Income Tax Officer is  not obliged to give the allowance. In taking the said view  the High  Court has  failed to  take note  of the words "the  number of  days for  which  the  concern  worked double shift  or triple  shift, as  the case  may be" in the following paragraph  in Appendix  I indicating  the mode  of calculation of  the extra allowance for double shift working or triple  shift working as well as the words "the number of days on  which the factory or concern actually worked during the previous  year" in  clauses (a)  and  (b)  in  the  said paragraph which  clearly indicate  that for  the purpose  of

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calculating the extra shift depreciation allowance allowable under Part  I of  Appendix I to the Rules the number of days on which the concern as a whole actually worked double shift and triple  shift  has  to  be  determined  and  it  is  not necessary to see whether any particular item of machinery or plant had actually been used in double shift or triple shift on the  days on which the concern had worked in double shift or triple shift.  All that was excluded from extra shift      It is no doubt true that under Section 32(1) of the Act depreciation is  allowable on buildings, machinery, plant or furniture owned  by the assessee and used for the purpose of the business  or profession  and in  Rule 5 it was laid down that the depreciation shall becalculated on the written down value of the assets as are used for the purposes of business or profession  of  the  assessee  at  any  time  during  the previous year.   That only means that depreciation allowance shall be  allowable on  the machinery  or plant that is used for the  purposes of  business or profession of the assessee at any  time during  the relevant  previous year.   The said provisions in  Section 31(1)  and Rule 5 do not require that for the  purpose  of  calculating  the  normal  depreciation allowance it  is necessary  to determine  the  exact  period during which  a particular  item of  machinery or  plant had been actually  used during  the previous  year.  So also for the purpose  of calculating  the  extra  shift  depreciation allowance, which  does not  differ in nature from the normal depreciation  allowance,  it  cannot  be  said  that  it  is necessary to  determine the  exact  period  during  which  a particular item of machinery of plant had been actually used in the  double/triple shift  during  the  relevant  previous year.   The High  Court, in  our opinion,  was in  error  in construing Rule  5 and  Part I of Appendix I to the Rules to hold that  the Income  Tax Officer  is required to apply his mind to  examine which machinery, owned by the assessee, had been used in the extra shift.      For  accepting   the  claim   of   the   assessee   the depreciation allowance  were the items of machinery of plant against which  the letters  N.E.S.A. were  inscribed in sub- item (ii)  of the  Table in  Part I of Appendix to the Rules and certain  specified items  of machinery or plant to which general rate of depreciation of 10% was applicable.      The High  Court has  observed that  if  the  assessee’s contention was  accepted, then  even  if  a  small  item  of machinery in  a corner  of a  huge factory  has worked extra shift, the  entire factory  would be  eligible for the extra shift allowance  in  respect  of  all  items  of  machinery, whether they actually worked or not. These observations fail to give  effect to  the  provisions  governing  extra  shift depreciation allowance.   The said provisions postulate that such allowance  would be  allowable when  the concern  works double shift  or triple shift.  It means that the concern as a whole  should have  worked extra shift.  It cannot be said that when  a small  item of  machinery in a corner of a huge factory has  worked extra  shift, the  concern as  such  has worked extra shift.      On a  proper construction of the provisions cntained in Part I  to Appendix  I to  the Rules relating to extra shift depreciation allowance  it must be held that for the purpose of claiming  the said  allowance the assessee must establish that the  concern had  worked double  shift or  triple shift and, if  he succeeds  in establishing  that the  concern had actually worked  double shift  or triple shift on particular days  in   the  previous   year.  extra  shift  depreciation allowance would be allowable in accordance with formula laid down in the said provision on the various items of machinery

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of plant except the items against which the letters N.E.S.A. are inscribed  in sub-item  (ii)  of  Table  in  Part  I  of Appendix I  as well  as the  items of  machinery  and  plant expressly  specified   to  which   the   general   rate   of depreciation of  10% was  applicable. Except  these excluded items  the  extra  shift  depreciation  allowance  would  be allowable on  all items  of machinery  and  plant  on  which normal depreciation in allowable and has been allowed.      We may  now briefly  refer to the decisions of the High Courts of  Allahabad and Calcutta on which reliance has been placed in the impugned judgment of the High Court.      Ganesh Sugar  Mills Ltd. vs Commissioner of Income Tax, [supra] was  a  case  of  a  seasonal  sugar  factory  which hadworked only during that period of the year when sugarcane was available.  A claim  for maximum  of 50%  of the  normal depreciation by  way of  extra shift  depreciation allowance was made  under  Rule  8  of  the  Income  Tax  Rules,  1922 irrespective of  the number  of days  on which the plant and machinery had  been worked  extra shift.   The said claim of the assessee  was rejected by the Calcutta High Court and it was held  that in  respect  of  seasonal  factories  special provisions had  been made  in clause  II of Rule 8 and extra shift allowance could only be granted in accordance with the said provision. Similarly in Raza Sugar Co, vs. Commissioner of Income  Tax [supra]  the Allahabad High Court was dealing with the claim for 50% over the normal depreciation as extra shift allowance in respect of a seasonal sugar factory under Rule 8  of the  1922 Rules.  Rejecting the said claim it was held that  such allowance was to be restricted to the extent laid down  in the  said rule  as regards seasonal factories. In Kundan Sugar Mills vs. Commissioner of Income Tax [supra] also the  Allahabad High  Court was  dealing with a seasonal sugar factory  and the  High Court  has followed its earlier decision in  Raza Sugar  Co. vs.  Commissioner of Income Tax [supra].   These decisions  relating to  seasonal  factories have, in our opinion, no bearing on the question falling for consideration in the present case.      Anantpur Textiles  Ltd. vs.  Commissioner of Income Tax [supra] was a case governed by Rule 5 of the Rules read with Appendix I  to Rules  as they stood prior to amendment extra shift allowance  on the  ground that  the factory had worked triple shift  for 330  days during  the previous  year.  The Income Tax  Officer found  that some  of the  items  of  the machinery had  not been  used for  the entire  period of the triple shift  as those  items of  machinery wer installed on different dates  in the year.  Calculating from the dates of installaton, the Income Tax Officer arrived at the number of days each  item of  machinery was put to use during the year of account  and allowed proportionate extra shift allowance. The said  order of the Income Tacx Officer was upheld by the Income Tax  appellate Tribunal  which held  that when normal depreciation allowance  is to  be granted  on each  item  of machinery as per the number of days it had worked, the extra shift allowance  should also follow the same principle.  The correctness of this view was assailed by the assessee before the  Calcutta   High  Court.    It  was  urged  that  normal depreciation was  governed by Rule 5 and it was allowable on the basis of the number of days the particular plant and had been used  by  the  assessee  in  its  business  during  the previous year  but the  said provision had no application to the case  of  extra  shift  allowance  for  which  necessary provision was  made in  Appendix I  in Part  I and  that for qualifying for  extra shift  allowance the assessee was only required to  prove that  the concern  of  the  assessee  had worked double  shift or  triple shift  and it  was  not  the

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requirement of  the relevant  provision that  each  item  of machinery must  have worked  double shift  or triple  shift. The said  contention of  the assessee  was negatived  by the Calcutta High Court and in that context it was said that the extra shift  depreciation allowance  is allowed on each item of plant  and machinery  on the basis of days or working and that depreciation  allowance is  not allowed  to any concern irrespective of and independent of the question of plant and machinery of  the concern  and their working.  In taking the said view  the High  Court laid emphasis on Explanation 2 in the provision  governing extra  shift allowance contained in Appendix I,  as it  stood  at  that  time,  whereby  it  was declared that  no extra allowance for double or triple shift working shall  be allowed  in a  case where the machinery or plant has  been used for a period of 30 days or less than 30 days during the previous year.  The High Court has said:      "Explanation 2  which provides that      no extra allowance for triple shift      working should be allowed in a case      where the  machinery or  plant  has      been used  for a  period of 30 days      of less  during the  previous  year      also indicates  that  in  computing      the  extra   allowance  for  triple      shift working  of the  concern  the      item of machinery and the number of      days which  the same had worked are      to be  taken  into  consideration."      [p.860]      The High Court has also emphasised that under Rule 5 in the case of computation of normal depreciation allowance the actual working  of each plant and machinery was material and depreciation allowance  was to  be computed  on the basis of the number  of days  each plant  and machinery worked during the previous  year  provided  the  plant  or  machinery  was otherwise qualified to claim the depreciation allowance.      The provisions  of Rule  5 relating  to depreciation as well as  the provisions relating to extra shift depreciation allowance contained  in Appendix I of the Rules on which the said decision  is based  were amended and the present cae is governed by  the amended  provisions.    Under  Rule  5,  as amended, normal depreciation allowance was allowable "on the actual cost  or, as  the case may be, the written down value of such  of the assets aforesaid as are used for the purpose of business or profession of the assessee at any time during the previous year" and it was not dependent on the number of days a particular item of machinery or plant was used in the previous year.   In  the amended  provisions governing extra shift depreciation allowance in Appendix 1 tothe Rules there was no provision similar to Explanation 2 that was contained earlier. On  the other hand, in the amended provision it was prescribed that  for the  purpose of claculating extra shift allowance what has to be seen is the number of days on which the concern had actually worked duble shift or triple shift. In these  circumstances, the  decision in  Anantpur Textiles Ltd. vs.  Commissioner of  Income Tax  [supra]  cannot  have application to the present case.      The  decisions   of  theHigh  Courts  of  Calcutta  and Allahabad, on  which the reliance was placed in the impugned judgment of  the High Cour, thus, do not lend any assistance to the  interpretation placed  by  the  High  Court  in  the impugned judgment  on the  provisions governing  extra shift allowance contained in Part I of Appendix I to the Rules.      We    may     at    this    stage    refer    to    the circulars/instructions issued by the Board.  By their letter

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dated September  28, 1970  the Board  had laid down that the extra shift  allownce will  be allowed  in  respect  of  the entire plant  machinery used  by a  concern which has worked extra shift  without making  any attempt  to  determine  the number of  days on  which each  machinery or  plant actually worked extra  shift during  the relevant  previous year.  By Circular No.  109 dated  March 20,  1973 the Board clarified the  legal  position  regarding  depreciation  allowance  in respect of  normal, double/triple  shift working in seasonal factories and  other concerns.   The said Circular contained separate    directions    regarding    calculating    normal depreciation and  extra shift allowance upto assessment year 1969-70 and from assessment year 1970-71 onwards. As regards extra shift  allowance from  assessment year 1970-71 onwards it  was   indicated  that   the  said  allowance  should  be calculated separately  for the  period for whcih the concern has actually  worked double  shift only  and the  period for which it  has worked triple shift, expressed in terms of the proportion which  such period  bears to the normal number of working days  during the previous year.  In the latter dated September 29,  1979 from the Under Secretary to the Board to the Commissioner  of Income  Tax, Calcutta  (Central) on the subject  of   calculation  of   depreciation,  extra   shift allowance in respect of plant and machinery, it was stated :      "I am  directed to  refer  to  your      letter No.  A/21233/CT/6A/102/69-70      dated  1.11.1969   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 th entire      plant  and   machinery  used  by  a      concern  which   has  worked  extra      shift without making any attempt to      determine the  number  of  days  on      which  each   machinery  of   plant      actually worked  extra shift during      the relevant previous year."      Subsequently the  Board  issued  Instruction  No.  1605 dated February  26, 1985  wherein, after  referring  to  the decisions of the Allahabad High Court in  Kundan Sugar Mills vs. Commissioner of Income Tax [supra] and the Calcutta High Court in  Anantpur Textiles  Ltd. vs. Commissioner of Income Tax [supra]  as well  as the  impugned judgment  it has been stated :      "The  instructions  issued  earlier      has been  considered again  by  the      Board. In  exercise of  the  powers      conferred by  Sec.  119(1)  of  the      Income Tax  Act, 1961,  the Central      Board of Direct Taxes, being of the      opinion, that  it is  expedient for      the proper  administration of these      provisions directs  that the  grant      of extra  shift allowance for plant      and machinery  be  calculated  with      reference  to   the  working  of  a      factory situated at a place and not      with reference  to  the  number  of      days each  machinery or  plant  has      worked. Where  a concern  has  more      than one  factory, the  extra shift      allowance  will  be  regulated  for      each factory  in the  above manner.

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    As the  determination of the number      of days for each machinery of plant      has  worked   in   a   factory   is      cumbersome,      the       existing      instructions   and    the   present      clarification    are    aimed    at      simplifying  the   calculation   of      extra shift allowance."      Shri Dogra  has submitted  that the  circulars  of  the Board are binding on the authorities and has placed reliance on the decision of this Court in K.P.Varghese vs. Income Tax Officer, Ernakulam & Anr. [1981] 131 ITR 597, wherein it has been laid  down that  apart from  the fact that circulars of the Board  are binding on the tax department they are in the nature of  contemporanea expositio furnishing legitimate aid in the  construction to the relevant provisions.  Shri Dogra has also  placed reliance  on the  decision of this Court in Keshavji Ravi  & Co.  vs. Commissioner of Income Tax, [1990] 183 ITR  1 [SC],  wherein it  has been  laid down  that  the circulars of the Board are statutory in character though the Court did  not consider it necessary to go into the question whether such  circulars are  recognised  legitimate  aid  to statutory construction.   The learned counsel has alsorelied on the  decision of this Court in Commissioner of Income Tax v. Vasudeo  V. Dempo, 1993 Supp. (1) SCC 612, wherein it was held that  circulars issued  by the  Department are  clearly meant to  be accepted  by the authorities, Dr. Gauri Shankar has, on  the other hand, submitted that the circulars of the Board are not binding on the High Court or on this Court and has placed  reliance on the decision of this Court in Kerala Financial Corporation vs. Commissioner of Income Tax. [1994] 210 ITR 129, wherein it has been laid down that circulars or instructions on  directions of the Board cannot override the provisions     of      the     question      whether     the circulars/instructions issued by the Board referred to above can  be   taken  into   consideration  for  the  purpose  of construing the  provisions of  Rule 5  and Appendix 1 to the Rules because  the circulars/instructions  referred-to-above are in  consonance with the construction placed by us on the said provisions.      For the  reasons aforementioned  it must  be held  that extra shift  allowance had  to be calculated on the basis of number of  days during which the concern had actually worked double shift  or triple shift and the said allowance was not required to  be calculated  on the basis of number of days a particular item  of machinery  or plant  had  worked  double shift or  triple shift,  we are, therefore, unable to uphold the impugned  judgment of the High Court in this regard.  In our opinion,  the Tribunal  had rightly  held that the extra shift allowance  had to  be calculated  on the  basis of the number of days on which the concern worked as a whole double shift or  triple shift  and not on the basis of each item of machinery being  used  in  double  shift  or  triple  shift. Question  No.4   must,  therefore,   be  answered   in   the affirmative i.e.,  in favour of the assessee and against the Revenue. In  the  result,  the  appeals  are  allowed,  the  impugned judgment of the High Court insofar as it relates to question No. 4  is set aside and the said question is answered in the affirmative, i.e,  in favour of the assessee and against the Revenue.  No order as to costs.