Question before the larger Bench was “ whether the Tribunal was correct in holding that the share income of the minor sons of the assessees from the partnership was to be computed in the hands of their father in the assessment year 1976-77, under section 64(1)(iii) when the accounting year of the assessees had come to an end on August 10, 1975 and on December 31, 1975 respectively “

Court held that for deciding the liability under a particular provision of the Act, the date of accrual of the income would be relevant. If the provision comes into force in a particular financial year, it would apply to the assessment for that year but cannot be made applicable in respect of assessment for a previous year.

Section 64(1)(iii) was introduced with effect from April 1, 1976. The tax liability under the provision could therefore be charged on the assessee, in the assessment which was to be made for that accounting year, i.e., 1976-77, which would be done in the assessment year 1977-78. The Amending Act introducing a new tax liability which came into force with effect from April 1, 1976 could not be given retrospectivity and be made applicable to the previous accounting year, i.e., 1975-76 corresponding to the assessment year, i.e., 1976-77. Matter was remanded to division Bench for disposing the matter. (AY.1976 -77)  (Editorial: Judgement in Badri Prasad v CIT (1990) 185 ITR 307 (Patna) (HC) is overruled.