Concessional tax notification clarification applied from its commencement date, extending relief to excess turnover in the first operative year.

A concessional tax reduction for small-scale industrial units applied only from 1 April 1995 under S.R.O. No. 429 of 1995, and the later explanation inserted by S.R.O. No. 585 of 1996 was to operate from that date. The explanation provided that where turnover first exceeds the Rs. 50 lakh limit, the higher rate applies only to the excess turnover. On that basis, the benefit was to be tested with reference to the regime commencing on 1 April 1995, and the explanatory benefit applied for assessment year 1995-96.

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Issues: Whether the explanation inserted by S.R.O. No. 585 of 1996, deeming it to have effect from 1 April 1995, entitled a small-scale industrial unit whose turnover crossed Rs. 50 lakhs during the previous year 1994-95 to tax reduction for the assessment year 1995-96.

Analysis: The reduction in tax for small-scale industrial units with turnover not exceeding Rs. 50 lakhs became operative only from 1 April 1995 under S.R.O. No. 429 of 1995. The later explanation clarified that where the turnover exceeds the limit in the first year in which the limit is crossed, the higher rate applies only to the excess turnover. As the assessee's entitlement had to be tested with reference to the regime that commenced on 1 April 1995, the first year for applying the explanation was the year beginning on that date, and not a prior year.

Conclusion: The assessee was entitled to the benefit of the explanation for the assessment year 1995-96.

Ratio Decidendi: Where a concessional notification and its explanatory amendment operate from a specified commencement date, the explanatory benefit applies with reference to the first year under that operative regime and must be given effect according to its stated commencement.

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