Retrospective application of section 43B upheld, and no reference was warranted where precedent had already settled the issue.

The amended section 43B was treated as retrospectively applicable to assessment year 1985-86, following authority that the amendment operated beyond its stated commencement date. The Court also found that the proposed reference under section 256(2) did not raise a fresh referable question of law because the section 43B issue and the subsidy point had already been settled by binding precedent. On that basis, reference was declined and no further answer was required.

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Issues: (i) Whether the amended provisions of section 43B of the Income-tax Act, 1961 were applicable to assessment year 1985-86 though the amendment took effect from 1 April 1988; (ii) Whether the question proposed for reference under section 256(2) of the Income-tax Act, 1961 was a question of law requiring an answer.

Issue (i): Whether the amended provisions of section 43B of the Income-tax Act, 1961 were applicable to assessment year 1985-86 though the amendment took effect from 1 April 1988.

Analysis: The Tribunal had treated the amendment to section 43B as applicable to the earlier assessment year. The point was examined in the light of authority holding the amended provision to be retrospective in operation, and the assessee was unable to show that the amendment was prospective only.

Conclusion: The amended provisions of section 43B were held applicable to assessment year 1985-86.

Issue (ii): Whether the question proposed for reference under section 256(2) of the Income-tax Act, 1961 was a question of law requiring an answer.

Analysis: The Court found that the issue on section 43B stood concluded by binding precedent and that the point relating to subsidy had also already been concluded by prior authority. In that background, the proposed question did not warrant a reference.

Conclusion: The proposed question was not treated as a referable question of law.

Final Conclusion: The application for reference was rejected and the revenue succeeded in resisting the direction sought under section 256(2).

Ratio Decidendi: Where the legal issue is concluded by precedent and the amendment is held retrospective, a reference under section 256(2) is not warranted.

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