Retrospective tax amendment denied development rebate for road transport vehicles, with assessment-year law controlling eligibility.

The amended proviso to section 10(2)(vib) of the Indian Income-tax Act, 1922 barred development rebate on machinery or plant consisting of road transport vehicles for assessment years 1960-61 and 1961-62. The governing Finance Acts operated by reference to the Act as in force on the first day of each assessment year, so the retrospective insertion of the proviso applied throughout those years. The fact that the vehicles were purchased before 1 April 1960 did not preserve eligibility, because the relevant test was the law applicable in the assessment years, not the purchase date. The claim for development rebate was therefore rightly rejected.

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Issues: Whether the proviso inserted in section 10(2)(vib) of the Indian Income-tax Act, 1922, with effect from 1 April 1960, barred development rebate on road transport vehicles purchased before that date but claimed in the assessment years 1960-61 and 1961-62.

Analysis: The relevant Finance Acts operated with reference to the Income-tax Act as in force on the first day of the assessment year. The proviso, though inserted retrospectively, was in force throughout the assessment years in question and expressly denied allowance for machinery or plant consisting of road transport vehicles. The date of purchase before 1 April 1960 did not control the availability of the allowance when the assessment years themselves were governed by the amended provision.

Conclusion: The claim for development rebate was rightly rejected, and the answer to the referred question was against the assessee.

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