Commencement date rule: an amendment effective from start of an assessment year applies to that assessment year's previous financial year income.

The article addresses whether the Assam amendment's Section 8B, notified to commence on 1 April 2009, governs agricultural income of the financial year 2008-2009. It applies the principle that the law in force at the commencement of an assessment year governs assessments unless retrospective intent is explicit or necessarily implied. Because the amendment came into force on the first day of the assessment year, the operative law for assessment year 2009-2010 is the amendment, and thus Section 8B applies to agricultural income of the previous financial year 2008-2009.

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Issues: Whether Section 8B of the Assam Agricultural Income Tax (Amendment) Act, 2009, which came into force on 01.04.2009, was intended to tax the agricultural income of the financial year 2008-2009 (assessment year 2009-2010) or the financial year 2009-2010 (assessment year 2010-2011).

Analysis: The governing principle is that in income-tax matters the law to be applied is the law in force in the assessment year unless there is an express or necessarily implied retrospective intent. Section 1(3) of the Amendment Act makes the amendment come into force on 1st April, 2009. The constitutional bench authority and subsequent Supreme Court decisions establish that amendments effective on the first day of April of a financial year operate for the assessments of that year, meaning the law in force on the commencement of the assessment year governs the assessment. Applying these principles to Section 8B, which was notified as effective from 01.04.2009, the substantive law to determine agricultural income is that which is extant in the assessment year commencing 01.04.2009; therefore the assessment year 2009-2010 governs the agricultural income of the previous financial year 2008-2009.

Conclusion: Section 8B of the Assam Agricultural Income Tax (Amendment) Act, 2009 applies to agricultural income of the financial year 2008-2009 for assessment year 2009-2010; the Division Bench decision treating the amendment as operative for assessment year 2009-2010 is affirmed.

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