Enhanced depreciation rate applied immediately for assessment year 1980-81, reflecting retrospective intent and use-based depreciation rules.

The enhanced depreciation rate notified on 24-7-1980 applied to assessment year 1980-81 because income-tax law generally operates as it stands in the assessment year, but that rule yields where contrary intention appears. The notification said the amended rate would come into force "at once", depreciation under rule 5 is tied to use of the asset during the previous year, and the object was to grant immediate relief to the transport industry. The availability of retrospective effect under section 295(4) of the Direct Taxes (Amendment) Act, 1974 also supported application of the amended 40 per cent rate for the relevant year.

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Issues: Whether the enhanced depreciation rate notified on 24-7-1980 applied to the assessment year 1980-81.

Analysis: The governing principle is that income-tax law ordinarily applies as it stands in the assessment year, but that rule yields where a contrary intention is expressed or can be gathered by necessary implication. The notification stated that the amended depreciation rate would come into force "at once". Depreciation under rule 5 of the Income-tax Rules, 1962 is linked to the use of the asset during the previous year, not merely to the date of purchase. The wording of the notification, the object of granting immediate relief to the transport industry, and the power to give retrospective effect under sub-section (4) of section 295 of the Direct Taxes (Amendment) Act, 1974 supported application of the amended rate to the relevant assessment year.

Conclusion: The enhanced depreciation rate of 40 per cent applied to assessment year 1980-81, and the assessee succeeded.

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