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Issues: (i) Whether depreciation was allowable on the price paid for acquisition of drawings, specifications and technical data as "plant" under the Income-tax Act, 1961; (ii) whether development rebate for the assessment years 1968-69 and 1969-70 could be allowed to be carried forward despite absence of the prescribed reserve under section 34(3) of the Income-tax Act, 1961.
Issue (i): Whether depreciation was allowable on the price paid for acquisition of drawings, specifications and technical data as "plant" under the Income-tax Act, 1961.
Analysis: The issue was covered by the earlier decision in the assessee's own case, which had held that such drawings, specifications and technical data did not qualify as "plant" for depreciation purposes. That position governed the reference, though liberty was noted to give effect to any future reversal by the Supreme Court.
Conclusion: The question was answered in the negative and against the assessee, in favour of the Revenue.
Issue (ii): Whether development rebate for the assessment years 1968-69 and 1969-70 could be allowed to be carried forward despite absence of the prescribed reserve under section 34(3) of the Income-tax Act, 1961.
Analysis: Although the existing judicial position would have supported the Revenue, the law had been retrospectively amended by the Finance Act, 1990, and the amended position controlled the answer to the reference.
Conclusion: The question was answered in the affirmative and in favour of the assessee.
Final Conclusion: The reference was answered partly against the assessee and partly in its favour, with the depreciation issue decided for the Revenue and the development rebate issue decided for the assessee.
Ratio Decidendi: A retrospective statutory amendment must govern the answer to a tax reference, and the earlier judicial position yields to the amended law for the relevant assessment years.
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