Procedural tax amendment applied retrospectively where it changed only assessment machinery, not the ultimate tax liability.

An amendment that alters only the machinery of assessment, without changing the ultimate tax liability, is procedural and may apply retrospectively unless the statute indicates otherwise. On that basis, Section 23(5)(a) of the Indian Income-tax Act, introduced by the 1939 amendment, applied to the 1938-39 assessment year because it merely changed the method of assessing registered firms and did not affect the net tax burden. The amended provision was therefore held applicable retrospectively, and the question was answered in the affirmative.

---

---

Issues: Whether Section 23(5)(a) of the Indian Income-tax Act, introduced by the 1939 amendment, applied to the assessment year 1938-39 and could operate retrospectively because the assessment was made after 1 April 1939.

Analysis: The amendment changed only the method of assessment of registered firms. Before the amendment, the firm was assessed on its total profits and partners could obtain relief by refund where the rate on the firm exceeded the rate applicable to the partners' total incomes under Section 48(2). After the amendment, the same net tax burden was reached directly by assessing each partner on his share of the profits. Since the amendment did not alter the ultimate revenue payable but only simplified the machinery for collection, it was procedural rather than substantive. A procedural amendment may operate retrospectively unless the statute indicates otherwise.

Conclusion: Section 23(5)(a) was applicable to the assessment year 1938-39, and the Tribunal was right in answering the question in the affirmative.

Final Conclusion: The reference was answered in favour of retrospective application of the amended assessment provision, leaving the assessee entitled to the benefit of the Tribunal's view.

Ratio Decidendi: An amendment that alters only the machinery or method of assessment, without changing the ultimate tax liability, is procedural and may apply retrospectively.

---