COMMISSIONER OF INCOME TAX Vs. WAHAB S A

JUDGEMENT

(1.) AT the instance of the Commissioner of Income-tax, Cochin, the Income-tax Appellate Tribunal, Cochin Bench, has referred the following questions of law for the decision of this court :

(2.) THE assessee is a bus operator. While completing the assessment, depreciation at the rate of 30% was allowed by the Income-tax Officer. THE assessment was for the year 1980-81. THE assessee filed an application under Section 154 of the Income-tax Act and claimed depreciation at the rate of 40%. THE Income-tax Officer did not allow it. THE assessee claimed 40% depreciation on the basis of the amendment made to the Income-tax Rules by the Income-tax (Fifth Amendment) Rules, 1980. True, the effect of the amendment was that depreciation at the rate of 40% was allowable on motor vehicles instead of at 30%. THE amended rules came into effect on July 24, 1980.

(3.) WE heard counsel for both sides. The assessment year in question is 1980-81 and the law governing the assessment is the law as it stood on April 1, 1980. The notification amending the rule came into effect only on July 24, 1980. It has to be noted that the amendment was effected in regard to the Income-tax Rules by the Income-tax (Fifth Amendment) Rules, 1980. The rule-making power is admittedly a subordinate legislative power. If the parent Act does not give specifically the power to make rules retrospectively but the rule is made retrospectively by express terms or by necessary implication, being a subordinate legislation, it is not possible to hold that the rule will have retrospective operation. The question that has to be considered is, even without retrospective operation, can the assessment be rectified under Section 154 of the Income-tax Act on the ground that the assessment made applying the law as it stood on April 1, 1980, is incorrect.