Prospective application of amended depreciation rates barred their use for assessment year 1983-84 and pending assessments.

Higher depreciation rates introduced by the Income-tax (Fourth Amendment) Rules, 1983, effective from 2 April 1983, did not apply to assessment year 1983-84 because the governing law is that in force on the first day of the assessment year. The amendment operated prospectively and could not be carried back merely because assessments were pending or completed later. As depreciation is a matter of substantive law, the later effective date controlled, and the fact that 1 April 1983 fell on a Sunday did not alter the operative date. The amended rates therefore applied only from the later assessment year, not to assessment year 1983-84.

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Issues: Whether the higher rates of depreciation introduced by the Income-tax (Fourth Amendment) Rules, 1983, effective from 2 April 1983, applied to the assessment year 1983-84 and to assessments pending on that date.

Analysis: The applicable legal position was that the Income-tax law in force on the first day of the assessment year governs that year, and amendments coming into force after that date do not apply to that assessment year merely because the assessment is completed later. The amended depreciation rates were brought into force on 2 April 1983 and were treated as operative prospectively. They were not shown to have been intended to operate from 1 April 1983, and the fact that 1 April 1983 was a Sunday did not alter the effective date. Depreciation rates being a matter of substantive law, the later amendment could not be applied to the earlier assessment year.

Conclusion: The higher depreciation rates under the Income-tax (Fourth Amendment) Rules, 1983, were not applicable to assessment year 1983-84 or to pending assessments for that year.

Final Conclusion: The reference was answered by holding that the amended depreciation rates applied only from the later assessment year and not to assessment year 1983-84.

Ratio Decidendi: An amendment to the income-tax rules that comes into force after 1 April of an assessment year applies prospectively and does not govern that assessment year, even if the assessment is completed later.

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