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Issues: Whether the proviso introduced by the Taxation Laws (Amendment) Act, 1960 to section 10(2)(vib) of the Income-tax Act, 1922 applied retrospectively from 1 April 1960 so as to deny development rebate on road transport vehicles purchased in the relevant previous year.
Analysis: The amendment Act expressly provided by section 1(2) that, subject to special provisions, it was deemed to have come into force on 1 April 1960. The proviso excluding office appliances and road transport vehicles from development rebate therefore formed part of the law in force on the first day of the assessment year. In income-tax matters, the governing law is ordinarily the law in force in the assessment year, and an amendment effective from that date controls the assessment even if the income was earned earlier. On that basis, the assessee could not claim a vested right to development rebate contrary to the amended provision.
Conclusion: The proviso applied with retrospective effect from 1 April 1960 and the assessee was not entitled to development rebate on the trucks. The answer to the referred question was in the negative, in favour of the Revenue.
Ratio Decidendi: Where an amendment to the Income-tax Act is deemed to commence from the start of the assessment year, it governs the assessment for that year and defeats any claim inconsistent with the amended provision, even if the relevant income or expenditure arose earlier.
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