Retrospective depreciation amendment must be express before it applies to the full assessment year.

The applicable depreciation rate for an assessment year is ordinarily the law in force on the first day of that year unless the amendment expressly provides retrospective operation. An Income-tax Rules amendment bringing a higher depreciation rate for buses into force "at once" was not treated as retrospective from 1 April 1980, because it contained no express language extending the enhanced rate to the whole of assessment year 1980-81. The increased depreciation could therefore not be claimed for that year, and the earlier contrary Tribunal view was rejected.

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Issues: Whether the amended depreciation entry introduced by the Income-tax (Fifth Amendment) Rules, 1980, which came into force during assessment year 1980-81, applied retrospectively from 1 April 1980 so as to entitle the assessee to depreciation at 40 per cent on buses for that assessment year.

Analysis: The applicable law for an assessment year is the law in force on the first day of that year unless a contrary intention is expressly made. The amendment stated to come into force "at once" did not expressly provide for retrospective operation from 1 April 1980. Since the rule-making power under section 295(4) of the Income-tax Act, 1961 permits retrospective rule-making when intended, the absence of such express retrospective language meant that the enhanced rate could not be applied to the whole of assessment year 1980-81. The earlier contrary view of the Tribunal was not accepted.

Conclusion: The assessee was not entitled to depreciation at 40 per cent for assessment year 1980-81 on the basis of the July 24, 1980 amendment; the question was answered in the negative and in favour of the Revenue.

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