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Claim of development allowance under section 33A of the Income Tax Act for the assessment year 1982-83 at a specific rate. Interpretation of section 33A regarding the timing and rate of development allowance claim. Validity of the claim for deduction under section 33A(7), proviso (ii), of the Act as amended w.e.f. 1st April, 1982, at the rate of Rs.35,000 per hectare. Analysis: The case involved an assessee, a tea-growing and manufacturing company, claiming a development allowance under section 33A of the Income Tax Act for the assessment year 1982-83 at a rate of Rs.35,000 per hectare. The Assessing Officer (AO) denied the claim, citing that the allowance was allowable only at the rate of Rs.12,500 per hectare for the years when the estate was cleared and planted. The Tribunal, however, accepted the assessee's contention, leading to the Revenue challenging the Tribunal's decision. The Tribunal referred to a decision of the Kerala High Court in a similar case, which interpreted section 33A as permitting the claim for development allowance in the subsequent assessment year at the prevailing rate during the claim. This interpretation was confirmed by the Supreme Court, emphasizing that development allowance may be granted in a year following the expenditure year, not limited to the immediate next year. The Court highlighted that the actual cost of planting spans four years for computation of development allowance, granted in two stages under clauses (a) and (b) of section 33A. The Court clarified that the claim for allowance should align with the rate applicable in the claiming year, allowing the assessee to benefit from an enhanced amount if the law changes before the claim is made. It emphasized that the law applicable to an assessment is that of the relevant assessment year's beginning. The AO must apply the law as of the assessment year, irrespective of earlier activities, rejecting the notion of a repealed figure remaining in effect for past assessments. In conclusion, the Tribunal's decision was upheld, ruling in favor of the assessee regarding the entitlement to claim a deduction under section 33A(7), proviso (ii), of the Act as amended from 1st April 1982, at the rate of Rs.35,000 per hectare. The judgment emphasized the importance of applying the prevailing law at the time of assessment and rejected the Revenue's attempt to restrict the allowance based on past rates.
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