1967 (7) TMI 59 - HC - Income Tax

Summary

Issues:
- Disallowance of development rebate claim under section 10(2)(vib) of the Income-tax Act, 1922 for the assessment year 1961-62.
- Applicability of the proviso introduced in section 10(2)(vib) by the Taxation Laws (Amendment) Act, 1960.
- Retrospective operation of the proviso affecting the vested right of the assessee.

Analysis:
The judgment delivered by the High Court of GUJARAT pertained to the disallowance of a development rebate claim by the assessee for the assessment year 1961-62 under section 10(2)(vib) of the Income-tax Act, 1922. The claim was related to the purchase of eight new trucks in the previous year, Samvat Year 2015. The Income-tax Officer disallowed the claim, which was subsequently upheld by the Appellate Assistant Commissioner and the Tribunal. The disallowance was based on the proviso introduced in section 10(2)(vib) by the Taxation Laws (Amendment) Act, 1960, which stated that no allowance could be made for machinery or plant consisting of road transport vehicles.

The main issue revolved around the applicability of this proviso and its retrospective operation affecting the vested right of the assessee to claim development rebate. The assessee argued that the proviso should not have retrospective effect and should not impact their vested right. However, the court held that the Taxation Laws (Amendment) Act, 1960, was deemed to have come into force on 1st April, 1960, as per sub-section (2) of the Act. Therefore, the proviso was retroactively applicable from that date, and the law in force on 1st April, 1960, governed the assessment.

The court cited legal precedents to support its decision, emphasizing that the law applicable is that in force in the assessment year unless stated otherwise. The proviso being in force on 1st April, 1960, was deemed applicable, thereby disallowing the development rebate claim for the trucks purchased during the relevant year. The judgment was delivered in the negative, and the assessee was directed to pay the costs of the reference to the Commissioner. The court's decision was based on legal principles and established case law, reinforcing the retrospective application of the proviso and its impact on the assessee's claim.