COMMISSIONER OF INCOME TAX vs RAM BAHADUR THAKKUR (P) LTD.

S. Sankarasubban, J.

By this reference application u/s 256(1) of the Income Tax Act, 1961, the Commissioner Cochin, has referred the following question :

"1. Whether, on the facts and in the circumstances of the case, the new rates of depreciation prescribed in Appendix 1 to the Income Tax Rules, 1962 which came into force with effect from 2-4-1983, will be applicable for the assessment year 1983-84?"

The facts of the case are that the assessee is a company engaged in the business of manufacture of tea, cardamom and pepper. While completing the assessment for the assessment year 1983-84, the assessing officer held that new rates of depreciation prescribed in Appendix 1 to the Income Tax Rules, 1962, which came into force with effect from 2-4-1983, will be applicable only for the assessment year 1984-85 and not for the assessment year 1983-84. On appeal, the Commissioner (Appeals) confirmed the order of the assessing officer. On appeal the Tribunal held that the issue stands covered in favour of the assessee by the decision of the Tribunal in the case of Andhra Cement Co. Ltd. v. Income Tax Officer (1986) 18 lTD 93 (Hyd-Trib). The Tribunal allowed the claim for higher rate of depreciation for the assessment year 1983-84 and directed the assessing officer to allow the claim of the assessee accordingly.

Learned counsel for the revenue , Sri Ravindranatha Menon, submitted that the rates of depreciation came into effect only with effect from 2-4-1983, and it has no retrospective operation. Hence this rate could not be made applicable for the assessment year 1983-84 and it can be only made applicable for the assessment year 1984-85. The learned counsel relied on a decision of this court in Commissioner of Income Tax Vs. S.A. Wahab, . In that case Varghese Kalliath, J. on behalf of the Bench observed thus :

"The amendment sought to be relied on was an amendment to the Income Tax Rules, 1962. The notification amending the rule came into effect only on 24-7-1980, and the amendment did not have retrospective operation. The provisions relating to the depreciation as they stood on 1-4-1980, had to be applied in the instant case. The assessee was not, therefore, entitled to depreciation at the rate of 40 per cent.

Following the same decision, we are of the view that the new rates of depreciation which came into force with effect from 2-4-1983, will be applicable only for the assessment year 1984-85 and not for the assessment year 1983-84.

In view of the above fact, we answer the question in the negative and against the assessee.

Income Tax reference is disposed of as above.