1983 (1) TMI 144 - AT - Income Tax

Summary

Issues:
Interpretation of law for depreciation rates in assessment year 1980-81 based on a notification dated 24-7-1980.

Detailed Analysis:

The appeal before the ITAT Hyderabad-A involved a dispute regarding the depreciation rate applicable to lorries for the assessment year 1980-81. The assessee firm, engaged in transport business, claimed depreciation at 40%, citing a government notification dated 24-7-1980. However, the assessing officer and the Commissioner (Appeals) restricted the claim to 30% based on the law in force as on 1-4-1980. The main contention was whether the notification, effective 'at once,' should be applied for the assessment year 1980-81 or not.

The ITAT considered various legal precedents establishing that the law applicable is that in force at the beginning of the assessment year unless stated otherwise. The CBDT has the power to make rules with retrospective effect, provided it is not prejudicial to the assessee. The ITAT highlighted the importance of inferring retrospective intention from amendments, as seen in the Madras High Court's decision in CIT v. Best & Co. The scheme of depreciation is based on assets used during the accounting year, not the date of purchase, as argued by the revenue.

The ITAT emphasized the significance of the words 'at once' in the notification, indicating immediate effect for the benefit intended for the transport industry. Citing the Supreme Court's decision in Mathra Parshad's case and the Bombay High Court's decision in CST v. Cooper & Co., the ITAT noted that exemptions or reliefs granted mid-year can apply for the entire year. The ITAT held that the words 'at once' implied application for the assessment year 1980-81, supporting the assessee's claim for 40% depreciation.

Ultimately, the ITAT allowed the appeal, directing the assessing officer to rework the depreciation at 40%. The decision was based on the interpretation of the law, the intention behind the notification, and the application of legal principles from income-tax and sales tax cases regarding retrospective effect and relief provisions.

In conclusion, the ITAT's judgment clarified the application of law, the significance of statutory notifications, and the interpretation of retrospective effect in tax matters, ultimately ruling in favor of the assessee's claim for higher depreciation rates for the assessment year 1980-81.