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TMI Blog1984 (11) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... D forming part of Part I of Appendix I to the Income-tax Rules, 1962 ('the Rules') by the Notification S.O. 562(E), dated 24-7-1980, which came into force 'at once'. The above plea of the assessee was accepted by the Commissioner (Appeals). While granting the said relief to the assessee, the Commissioner (Appeals) made, inter alia, the following observations : " The manner in which the notification has been inducted is unfortunate. Normally, in income-tax cases, changes are made with effect from a particular date. Ordinarily, date is the 1st April of particular year, indicating that the new provision would be effective with reference to the assessment year commencing on that date. In certain contingencies, provisions are made operative wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed on the order of the Commissioner (Appeals) and on the following decision of the Tribunal---South India Road Transport v. ITO [1983] 4 ITD 176 (Hyd.) and Rayalaseema Passenger & Goods Transports (P.) Ltd. v. IAC [1984] 7 ITD 111 (Mad.). 6. The question in controversy before us would, in our opinion, turn on the fact whether the amendment in the depreciation table is procedural in nature or is it an amendment of the substantive law. Section 32 of the Income-tax Act, 1961 ('the Act'), provides for depreciation at the rates as may be prescribed. Rule 5 of the Rules, which has been formulated in pursuance of the provisions of section 32, stipulates, inter alia, as follows : " Subject to the provisions of sub-rules (2) and (3), the allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e fourth proviso to section 10(2)(vii) of the Indian Income-tax Act, 1922 was inserted by the Income-tax (Amendment) Act, 1946 ('the Amendment Act'), with effect from 4-5-1946. The department had in that case contended that the said proviso would apply to the assessment for the assessment year 1946-47. The above contention was negatived by the Bombay High Court, which held that the fourth proviso to section 10(2)(vii) did not apply to the assessment for the assessment year 1946-47 as the said proviso was not in force on 1-4-1946 and that the liability of the company had to be determined as on 1-4-1946, when the Finance Act, 1946 came into force. The above finding of the Bombay High Court was approved by their Lordships of the Hon'ble Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he use during the accounting year ...." [Emphasis supplied] We are in respectful agreement with the above observations of our learned brothers. Applying the above principle to the facts of the present case, we find that there is no user of the machinery in question in the accounting period corresponding to the assessment year 1980-81 and, therefore, the question of granting depreciation on the asset in accordance with the amendment brought into effect on 24-7-1980 would not arise. 9. The significance of the words 'at once' is unambiguous in the context in which these words have been used in the amendment referred to above, namely, that with effect from 24-7-1980, buses and trucks, etc., would be eligible for depreciation at the rate of 40 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case, as noted earlier, had ended on Diwali 1979 and as on that date, the rate of depreciation was 30 per cent, the rate of 40 per cent could not be read into the rule as on Diwali 1979. 11. In the case of Rayalaseema Passenger & Goods Transports (P.) Ltd., it has been observed, inter alia, as follows : ". . . the Board expressly provided that it [i.e., amendment] will take effect from 24-7-1980 shows that they wanted to apply it to all assessments pending on 24-7-1980. So the amended rules apply to an assessment like the one on hand completed after 24-7-1980. ..." [Emphasis supplied] The above observations clearly imply that the change in the rates of depreciation was an amendment in procedural law and so it would apply to asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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