Carry forward of business loss is governed by the law in force for the relevant assessment year, not a claimed vested right.

For income-tax assessments, the law in force in the relevant assessment year governs the assessment unless the statute shows a contrary intention. After the 1957 amendment to section 24(2), carry forward of unabsorbed business loss was limited to eight years, and an assessee could not claim a vested right under the pre-amendment provision to continue carrying the loss indefinitely. Any direction in an earlier assessment order could not override the statutory regime applicable to assessment year 1960-61. The loss was therefore not available for set-off against the business income of that year.

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Issues: Whether the assessee had a vested right under section 24(2)(iii) of the Indian Income-tax Act, 1922, as it stood before the 1957 amendment, to carry forward unabsorbed business loss indefinitely so as to set it off against income of assessment year 1960-61.

Analysis: The governing principle is that the law applicable is the law in force in the relevant assessment year, unless a contrary statutory intention appears. Section 24(2), after its amendment by the Finance (No. 2) Act, 1957, limited carry forward of unabsorbed loss to eight years. The assessee's claim to an accrued or vested right under the pre-amendment form of the provision was rejected because an assessee has no right to insist that an earlier assessment year's law will continue to govern a later assessment year. The direction in the earlier assessment order could not override the statutory regime applicable to assessment year 1960-61.

Conclusion: The assessee was not entitled to carry forward the unabsorbed loss beyond eight years, and the loss could not be set off against the business income of assessment year 1960-61.

Ratio Decidendi: For income-tax assessments, the law in force in the relevant assessment year governs the assessment, and no vested right to carry forward losses survives where the statute validly limits such carry forward for that year.

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