JUDGMENT

R. S. PATHAK, J.:— This appeal by certificate under Section 66-A (2) of the Indian Income-tax Act, 1922 raises a question involving the interpretation of Section 24 (2) (iii) of that Act.

2. The assessee is a company carrying on the business of manufacturing jute goods. The case relates to the assessment year 1960-61, for which the relevant accounting period is the financial year ending March 31, 1960.

3. While making the assessment for the assessment year 1959-60, the Income-tax Officer set off the unabsorbed business loss of Rs.1,58,845 for 1949-50 and Rs.5,70,952 for 1950-51 against the business income of that year and directed that Rs.15,50,189 representing the loss remaining unabsorbed should be carried forward. In the assessment proceeding for the assessment year 1960-61, with which we are concerned, the assessee claimed that the unabsorbed loss should be carried forward and set off against the business income of the current year. The Income-tax Officer rejected the claim on the ground that the unabsorbed loss related to 1950-51 and could not be carried forward for more than eight years. The assessee pressed the claim in appeal before the Appellate Assistant Commissioner but without success. A second appeal was dismissed by the Income-tax Appellate Tribunal. At theinstance of the assessee, the Appellate Tribunal referred the following question of law to the High Court at Calcutta:

"Whether, on the facts and circumstances of the case, the assessee was entitled in law to set off unabsorbed loss of Rs.15,50,189 of the assessment year 1950-51 against the business income of the assessment year 1960-61?"

The High Court answered the question in the negative.

4. In this appeal by the assessee it is contended that by virtue of S. 24 (2) (iii) of the Indian Income-tax Act, 1922, as it stood before its amendment with effect from April 1, 1957, the assessee had acquired a vested right to have the unabsorbed loss carried forward from year to year until it was completely set off, and the subsequent amendment limiting the period for carrying forward the loss to eight years could not divest the assessee of the vested right which had thus accrued to him. It is pointed out that the amendment effected in 1957 is not retrospective in operation. In our judgment, there is no substance in the assessees claim.

5. Section 24 (2) has suffered amendment a number of times. Prior to its amendment by the Finance Act, 1955 it permitted a business loss to be carried forward for not more than six years, except in the case of losses pertaining to certain assessment years ending with the assessment year 1943-44 where the period for carrying forward was shorter. Section 16 of the Finance Act, 1955 amended Section 24 (2), and as a result of the amendment Section 24 (2) (iii) provided that a business loss which was not wholly set off could be carried forward from year to year. Thereafter, Finance (No. 2) Act of 1957 amended S. 24 (2) (iii) with effect from April 1, 1957 and in consequence an unabsorbed loss could not now be carried forward for more than eight years.

6. The assessee claims a vested right under Section 24 (2) (iii), as it stood before its amendment in 1957, to have the unabsorbed loss of 1950-51 carried forward from year to year until the loss is completely absorbed. The claim is based on a misconception of the fundamental basis underlying every income-tax assessment. It is a cardinal principle of the tax law that the law to be applied is that in force in the assessment year unless otherwise provided expressly or by necessary implication. Commr. of Income-tax, West Bengal v. Isthmian Steamship Lines, (1951) 20 ITR 572 (SC) and Karimtharuvi Tea Estate Ltd. v. State of Kerala, (1966) 60 ITR (SC). On that principle, it is abundantly clear that when an assessment for the assessment year 1960-61 is to be made and S. 24 (2) is invoked, it is S. 24 (2) as in force in that assessment year which has to be applied. That is the provision as amended by