Enhanced depreciation for transport vehicles applied from the notified effective date, allowing the higher rate for the year under appeal.

The effective date of the Income-tax (Fifth Amendment) Rules, 1980 determined whether motor vehicles used in transport business qualified for depreciation at 40% for assessment year 1980-81. The Revenue argued the enhanced rate applied only from assessment year 1981-82, but the amendment and notification were construed as operating from 24-7-1980. Following the later Third Member view and distinguishing the earlier Special Bench decision, the assessee was held entitled to the higher depreciation rate for the year under appeal.

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Issues: Whether the higher rate of depreciation of 40% on buses and lorries used in the assessee's transport business was available for the assessment year 1980-81 under the Income-tax (Fifth Amendment) Rules, 1980.

Analysis: The dispute turned on the effective date of the amendment enhancing depreciation for motor vehicles used in transport business. The Revenue contended that the enhanced rate operated only from assessment year 1981-82 onwards, while the assessee relied on the amendment and its notification bringing the change into force from 24-7-1980. The earlier Special Bench decision was distinguished, and the later Third Member decision was followed as being consistent with the proper construction of the notification and the amendment's operation from its stated effective date.

Conclusion: The assessee was entitled to depreciation at the higher rate of 40% for the year under appeal.

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