MAHADEVA UPENDRA SINAI ETC. ETC. vs UNION OF INDIA & ORS.

The Supreme Court examined the validity of the Taxation Laws (Extension to Union Territories) (Removal of Difficulties) Order, 1970, particularly Clause (3) and its proviso (2), in light of the Income Tax Act, 1961. The Court held that the Order was ultra vires as it contravened the provisions of the Taxation Laws (Extension to Union Territories) Regulation, 1963, which did not permit the retrospective application of local laws for depreciation calculations. Consequently, the Court ruled that the assessment made under the Indian Income Tax Act for the assessment year 1964-65 was invalid, as it improperly accounted for depreciation based on local laws that were not applicable post-extension of the Indian Act.