Retrospective application of revised depreciation rates rejected for assessment year 1983-84 under the Income-tax Rules.

The revised depreciation rates inserted in Appendix 1 to the Income-tax Rules, 1962, with effect from 2 April 1983, were held not to operate retrospectively for assessment year 1983-84. The amendment came into force only from that date and there was no indication that it was intended to govern the earlier year. Accordingly, the pre-amendment depreciation rates applied to assessment year 1983-84, and the revised rates were confined to assessment year 1984-85 onwards.

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Issues: Whether the revised rates of depreciation inserted in Appendix 1 to the Income-tax Rules, 1962, with effect from 2 April 1983 applied to the assessment year 1983-84.

Analysis: The reference turned on whether the amended depreciation rates operated retrospectively. The amendment to the Income-tax Rules, 1962, came into force only from 2 April 1983 and there was no indication that it was intended to apply to the earlier assessment year. On that basis, the earlier rates alone governed assessment year 1983-84, while the revised rates would apply only from assessment year 1984-85.

Conclusion: The revised depreciation rates did not apply to assessment year 1983-84 and the question was answered in the negative, against the assessee and in favour of the Revenue.

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