Retrospective tax liability becomes deductible only when the charging law takes effect, not for the earlier period it covers.

A retrospective motor vehicles tax levy became an enforceable liability only when the charging provision under Act 34 of 1961 came into force, even though it operated from an earlier date. The assessee's provision in the accounts was therefore referable to a legally binding obligation arising in the accounting year ended 31 March 1962, and not to the prior periods to which the levy was retrospectively extended. The validating provision was inapplicable because the assessee had not been taxed under the earlier invalid enactment. The entire provision was accordingly deductible for assessment year 1962-63.

---

---

Issues: Whether the provision made for enhanced motor vehicles tax under Act 34 of 1961 was deductible in the accounting year ended 31 March 1962, even though the tax related retrospectively to earlier years.

Analysis: The charging provision under section 3 of Act 34 of 1961 came into force only on 31 October 1961, though it operated retrospectively from 8 May 1959. A retrospective levy covers past periods, but the liability to provide for the tax arises only when the law creating the charge comes into existence. Since the assessee had not been taxed under the invalid earlier enactment, the validating provision in section 8 was inapplicable. The provision in the accounts was, therefore, referable to a legally enforceable liability that arose only in the year ended 31 March 1962.

Conclusion: The entire provision was an admissible deduction for assessment year 1962-63.

Ratio Decidendi: A retrospective taxing enactment creates an enforceable liability only when it is brought into force, so a provision for such liability is deductible in the accounting year in which the charging law becomes operative, not in the earlier years to which it is retrospectively extended.

---