An amendment to the Income-tax Act, which comes into force after the commencement of the assessment year, cannot be applied to the assessment of the assessee for that year.

JUDGMENT - Chagla, C.J.

1. The assessee before us is the Scindia Steam Navigation Co. Ltd. and the assessment year is 1946-47.

2. The company had a ship by the name of "E1 Madina" which was purchased at the cost of Rs. 24,95,016. It was lost as a result of enemy action on 16th March, 1944. Government paid compensation of Rs. 20,00,000 on 12th July, 1944, and Rs. 23,00,000 on 22nd December, 1944, for the loss of this ship. Depreciation of this ship was allowed from time to time and its written-down value in the assessment year was Rs. 15,68,484. The Income-tax Office included the difference between these two amounts, viz., Rs. 9,26,532 in the total income of the company for the assessment year 1946-47. The assessee contended that it was not liable to pay tax it was not liable to pay tax on this amount and the Tribunal upheld the decision of the Income-tax Officer and has refereed the following question of law to us :

"Whether the sum of Rs. 9,26,532 was properly included in the assessee companys total income computed for the assessment year 1946-47 ?"

3. Now, this inclusion is justified by reason of the provisions of the fourth proviso to Section 10(2) (vii) and it is not disputed by the Department that if this proviso has no application then the said amount cannot be included in his income. Therefore the main question that arises for our consideration is whether this provision applies to the assessment of the assessee.

4. A preliminary point was raised by Mr. Joshi that this question does not arise because it was not argued before the Tribunal, and Mr. Joshi says that this question does not arise out of the order made by the Tribunal. In our opinion it is arise out of the order made by the Tribunal. In our opinion it is open to the assessee, looking to the form in which the question has been raised, to contend before us that it is not liable to pay tax on the sum of Rs. 9,25,532 having regard to any provision of the Income-tax Act. The Tribunal has taken the view that the sum of Rs. 9,26,532 must be included in the total income of the assessee. It does not follow that because a particular aspect of the question was not urged before the Tribunal that it is not open to the assessee to urge that aspect before us. If all the facts necessary to decide a question from a particular aspect are before the Court, then the assessee is entitled to justify its contention that it is not liable to pay tax having regard to the provisions of the Indian Income-tax Act. It is not incumbent upon the assessee in order to put forward a particular point of law before this Court that it should necessarily have urged that very point of law before the Tribunal. If that point of law is implicit in the question raised by the Tribunal and if no additional facts are necessary to support that point, then it is open to the assessee to urge it notwithstanding the fact that it was not considered by the Tribunal. It would be throwing an intolerable burden upon the assessee if we were to hold that although the assessee is not liable to tax under the provisions of the Indian Income-tax Act merely because it did not point out to the Tribunal the specific provision of the law or it was ignorant of the specific provision of the law therefore it should be debarred from urging that aspect of the case before us. The only question that we have to decide is whether this sum was properly included in the assessees total income, and if the assessee satisfied us that this sum was not properly included by reference to any provision of the Indian Income-tax Act then the question raised must be answered in its favour.

5. Now, turning to the merits of the case, it appears that this proviso which is relied upon by the Department was incorporated in the Indian Income-tax act by Act VIII of 1946 which came into force on the 4th of May, 1946. Therefore this proviso was not in operation on the 1st of April, 1946, when the assessment year of the assessee, viz., 1946-47, commenced; and

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