Income Tax Act- Provisions applicable on the first day of April of any F.Y. must apply to the Assessment of that year. Any amendment which comes into force after the first day of April of a F.Y., would not apply to the A.Y. of that year- SC reiterates in Shree Choudhary Transport Co. vs. Income Tax Officer-C.A. No. 7865 of 2009- D.o.D. 29.07.2020

The Hon’ble Supreme Court of India while dealing with the question as to whether Sub Clause (ia), having been inserted to Clause (a) of Section 40 of the Income Tax with effect from 01.04.2005 by Finance (No. 2) Act, 2004, would apply w.e.f. F.Y. 2005-06 and not 2004-05, reiterated that in Income Tax matters, the law to be applied is that in force in the A.Y. in question unless stated otherwise by express intendmet or by necessary implication. 

The Supreme Court while reiterating the said preposition of law placed reliance on the judgment rendered in the case of Commissioner of Income Tax, West Bengal vs. Isthmian Steamship Lines, 1951 (20) ITR 572, wherein a 3-Judge Bench of the Supreme Court of India exposited on the fundamental principle that ‘in income tax matters the law to be applied is the law in force in the assessment year unless otherwise stated or implied.’ This decision and various other decisions were considered by the Constitution Bench of the Supreme Court of India in the case of Karimtharuvi Tea Estate Ltd. State of Kerala, 1966 (60) ITR 262, wherein it was held as follows:-

“Now, it is well settled that the Income Tax Act, as it stands amended on the first day  of April of any financial year must apply to the assessments of that year. Any amendments in the Act which comes into force after the first day of April of a financial year, would not apply to the assessment for that year, even if the assessment is actually made after the amendments come into force.”