Depreciation amendment held substantive; later rule change could not govern assessment year already underway.

An amendment to the Income-tax (Fourth Amendment) Rules, 1983 changing the rate of depreciation was held to be substantive, not merely procedural, and therefore applicable only if in force on the first day of the assessment year. Since the amendment took effect after the commencement of assessment year 1983-84, it could not govern the assessees' assessments for that year. The legal position applied was that assessment is governed by the law in force at the start of the assessment year, so the amendment did not apply to assessment year 1983-84 and the issue was decided in favour of the Revenue.

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Issues: Whether the amendment to the Income-tax (Fourth Amendment) Rules, 1983, effective from 2 April 1983, applied to the assessees' income for assessment year 1983-84.

Analysis: The amendment related to the rate of depreciation and was held to affect substantive rights, not merely procedure. The applicable law for assessment is the law in force on the first day of the assessment year, and not a change introduced after that date. Since the amending rule came into force after the commencement of the assessment year, it could not govern the assessments in question.

Conclusion: The amendment did not apply to assessment year 1983-84, and the question was answered against the assessees and in favour of the Revenue.

Ratio Decidendi: An amendment affecting the rate of depreciation is substantive in nature and applies only if it is in force at the commencement of the assessment year; a subsequent amendment cannot govern that year's assessment.

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