Madras H.C : Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the assessee was entitled to depreciation at the amended rate of 15 per cent on the general machinery or plant for the asst. yr. 1981-82, though the IT (Fourth Amendment) Rules of 1983 came into force from 2nd April, 1983 ?

High Court Of Madras

CIT vs. Tractors And Farm Equipments Ltd.

Section 32

Asst. year 1981-82

R. Jayasimha Babu & N.V. Balasubramanian, JJ.

Tax Case No. 516 of 1987

16th April, 1998

Counsel Appeared

C.V. Rajan, for the Revenue : P.P.S. Janarthana Raja, for the Assessee

JUDGMENT

N.V. BALASUBRAMANIAN, J. :

The question of law referred to us at the instance of the Revenue relating to the assessee’s asst. yr. 1981-82 is as follows : “Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the assessee was entitled to depreciation at the amended rate of 15 per cent on the general machinery or plant for the asst. yr. 1981-82, though the IT (Fourth Amendment) Rules of 1983 came into force from 2nd April, 1983 ?” The point which arises for consideration in the tax case under reference is as to whether the IT (Fourth Amendment) Rules, 1983, which came into force from 2nd April, 1983, were not applicable to the assessee in respect of its asst. yr. 1981-82. The Tribunal held that the said amendment will apply for the asst. yr. 1981-82 on the ground that the assessment proceedings are pending, on the date when the amendment rules came into force on 2nd April, 1983. The said view of the Tribunal is quite unsustainable, as it is well settled that the law as it stood on the first day of the assessment year would be the law applicable for the assessment year in question and if that principle is applied, the amended rules which came into force from 2nd April, 1983, have no application to the assessment of the income of the assessee in respect of the asst. yr. 1981-82. A similar view was taken by this Court in CIT vs. S. Palaniswamy (1996) 219 ITR 380 (Mad), wherein this Court held that the provisions relating to depreciation as they stood on 1st April, 1980, had to be applied and, therefore, the assessee was not entitled to depreciation as per the amended law. The view of the Tribunal that because the assessment proceedings are pending, the amended law will apply is not sustainable in law. Accordingly, we answer the question referred to us in the negative and in favour of the Revenue. The Revenue shall be entitled to a cost of Rs. 750.

[Citation : 244 ITR 595]

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