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Judgment
N.V. Balasubramanian, J.—The question of law referred to us at the instance of the Revenue relating to the assessee''s assessment year
1981-82 is as follows :
Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in law in holding that the assessee was entitled to
depreciation at the amended rate of 15 per cent. on the general machinery or plant for the assessment year 1981-82, though the Income tax
(Fourth Amendment) Rules of 1983 came into force from April 2, 1983 ?
The point which arises for consideration in the tax case under reference is as to whether the Income Tax (Fourth Amendment) Rules, 1983,
which came into force from April 2, 1983, were applicable to the assessee in respect of its assessment year 1981-82.
The Tribunal held that the said amendment will apply for the assessment year 1981-82 on the ground that the assessment proceedings are
pending, on the date when the amendment rules came into force on April 2, 1983. The said view of the Tribunal is quite unsustainable, as it is well
settled that the law as it stood on the first day of the assessment year would be the law applicable for the assessment year in question and if that
principle is applied, the amended rules which came into force from April 2, 1983, have no application to the assessment of the income of the
asses-see in respect of the assessment year 1981-82. A similar view was taken by this court in Commissioner of Income Tax Vs. S. Palaniswamy,
, wherein this court held that the provisions relating to depreciation as they stood on April 1, 1980, had to be applied and, therefore, the assessee
was not entitled to depreciation as per the amended law. The view of the Tribunal that because the assessment proceedings are pending, the
amended law will apply is not sustainable in law.
Accordingly, we answer the question referred to us in the negative and in favour of the Revenue. The Revenue shall be entitled to a cost of Rs.
750.