Madras High Court
Commissioner Of Income Tax vs S. Palaniswamy on 16 August, 1995
Equivalent citations: [1996]219ITR380(MAD)
JUDGMENT Abdul Hadi, J.
1. In this tax case under s. 256(1) of the IT Act, 1961, preferred by the Revenue, the respondent/assessee remained unrepresented. So, we have heard learned counsel for the Revenue alone.
The question referred to this Court is as follows :
"Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in holding that the assessee is entitled to depreciation at 40% in respect of the buses (on the basis of the notification dt. 24th July, 1980) for the asst. yr. 1980-81?"
2. In other words, prior to the abovesaid notification dt. 24th July, 1980 which brought about the IT (Fifth Amendment) Rules, 1980, which, inter alia, inserted item (1A) in Group E under the heading III "Machinery and plant" in Part I of Appendix I to the IT Rules, 1962, the rate of depreciation for the assessee 's buses was 30% and by the said notification, the said rate was 40% and is applicable to the assessment year in question namely, 1980-81, though the said notification came into force only during the course of the said assessment year, i.e., on 24th July, 1980. No doubt, the said IT (Fifth Amendment) Rules, 1980, says that the said rules shall come into force "at once". But the said rules cannot be given effect to, retrospectively from 1st April, 1980, the first date of the assessment year. It is settled law that though the subject of the charge is the income of the previous year, the law to be applied is the law that is in force as on 1st April, of the assessment year in question, unless the said law is changed. If the intention is to change the law on the above point retrospectively from 1st April of the abovesaid assessment year, it could have been expressly done since such power to amend the rules is given to the CBDT under s. 295(4) of the Act which says that the power to make rules conferred by this section shall include the power to give retrospective effect, from a date not earlier than the date of commencement of this Act, to the rules or any of them. So, simply because the abovesaid expression "at once" is used in the abovesaid amending Rules, it cannot be said that the said rules have retrospective effect from 1st April, 1980.
The Tribunal has not considered the abovesaid well settled legal position and has only observed that the AAC was right in granting depreciation at the rate of 40% following the earlier order of the Tribunal.
We also find support for the above view taken by us in the decisions of CIT vs. S. A. Wahab ; CIT vs. Mirza Ataullaha Baig (1993) 202 ITR 291 (Bom) and S. P. Jaiswal Estates Pvt. Ltd. vs. CIT . Of the above referred to three decisions, the former two considered the very same notification as the present one, while the last of the three, dealt with a similar notification which came in later.
3. The net result is we answer the question referred to us in the negative and in favour of the Revenue. No costs.