Judgment :- THANIKKACHALAM. J. At the instance of the department, the Tribunal referred the follow ing three questions under section 256(1) of the Income-tax Act, 1961, for our opinion "(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the Income-tax Officer was not justified in applying the provisions of rule 4 of the Second Schedule to the Companies (Profits) Surtax Act, 1964, to the deduction allowed under Chapter VIA of the Income-tax Act, 1961, for the assessment years 1968 69 to 1974-75 ? (2) Whether the Appellate Tribunal was right in holding that the amendment to the provisions of section 14 of -the Surtax Act, 1964, intro duced by the Taxation Laws (Amendment) Act, 1970, with effect from April 1, 1971, are applicable to the assessment years 1969-70 to 1970-71 ? (3) Whether the Appellate Tribunal was right in holding that the proposed dividend declared subsequent to the end of the accounting year should be treated as a reserve for the assessment year 1972-73 ?" So far as question No. 1 is concerned, at the time of hearing learned standing counsel for the department represented that he is not pressing this question. Accordingly, this question is not answered and is returned unanswered So far as question No. 3 is concerned, it is squarely covered against the assessee by the decision in Indian Tube Co. P. Ltd. v. CIT. Accordingly, the Tribunal was not correct in holding that the proposed dividend declared subsequent to the end of the accounting year should be treated as a reserve for the assessment year 1972-73. In that view of the matter we answer this question in the negative and against the assessee So far as question No. 2 is concerned, it relates to the assessment years 1969-70 and 1970-71. The Income-tax Officer while making the assessment for the assessment years 1969-70 and 1970-71 made certain deductions under Chapter VIA of the Income-tax Act. On appeal, the Commissioner of Income-tax (Appeals) held in favour of the assessee that in respect of the incomes which are deducted under Chapter VIA of the Income-tax Act, the capital could not be proportionately reduced. In order to take this view the Commissioner followed the decision in CIT (Addl.) v. Bimetal Bearings Ltd. Aggrieved, the Revenue filed the appeal before the Appellate Tribunal. In order to take this view the Commissioner followed the decision in CIT (Addl.) v. Bimetal Bearings Ltd. Aggrieved, the Revenue filed the appeal before the Appellate Tribunal. According to the Department, the Commissioner of Income-tax (Appeals) erred in directing the Income-tax Officer to compute the surtax liability on the basis of the reliefs allowed by him, in the income-tax appeals for the corresponding assessment years in I.T.A. Nos. 505 and 506 of 1972-73, 106 of 1975-76, 502 of 1973- 74, 323 and 324 of 1974-75 dated November 13, 1978. In fact, the Commissioner of Income-tax (Appeals) has directed for the assessment years 196970 and 1970-71 that the assessee will be entitled to the consequent relief in the surtax assessment following his appellate order in the income-tax appeals for the corresponding years. Before the Tribunal, the Department submitted that this ground was taken by the department by way of abundant caution in case the Commissioner of Income-tax (Appeals) orders in the income-tax appeals get modified, which would also affect the surtax assessments as a sequel. However, the Tribunal held that section 14 of the Surtax Act provides that following any appellate or revision order under the Income-tax Act, the chargeable profit for the purpose of the Surtax Act will have to be recomputed and the surtax payable redetermined. Therefore, the Tribunal directed the Surtax Officer to compute the surtax assessment on the basis of the total income as finally determined in the income-tax appeals. Before us, learned standing counsel for the Department submitted that the amendment introduced by the Taxation Laws (Amendment) Act, 1970, brought about an amendment in section 14 of the Surtax Act with effect from April 1, 1971. Therefore, according to learned standing counsel, this amended provision of section 14 of the Surtax Act would not be applicable for the assessment years 1969-70 and 1970-71 since the amended provisions would be applicable for the assessment year 1971-72 and thereafter. Learned standing counsel further submitted that section 14 of the Surtax Act is a substantive provision and it is not either procedural or machinery in nature. Therefore, the amendment brought about with effect from April 1, 1971, cannot be made applicable retrospectively. In order to support his contention, learned standing counsel relied upon the decision of this court in K. Krishnaveni v. AAC of LT. Therefore, the amendment brought about with effect from April 1, 1971, cannot be made applicable retrospectively. In order to support his contention, learned standing counsel relied upon the decision of this court in K. Krishnaveni v. AAC of LT. In that decision while considering the amended provisions of section 64(1)(iii) of the Income-tax Act, 1961, it was held that "it is well settled that in the matter of imposition of income-tax, the law as on the first day of April, covers the previous year. The amended law came into force on or April 1, 1976, and it naturally applied for the accounting year preceding that date. The statute itself specifically declares that the law as on April 1, 1976, would be applicable to the income earned in the previous year. The law did not come into operation retrospectively but the law acting prospectively applied to certain stated facts which took place in the previous year." Therefore, according to learned standing counsel, inasmuch as the assessment years involved in the present case are 1969-70 and 1970-71, the law as it stood on April 1, 1971, cannot be made applicable. It remains to be seen that according to the facts arising in the abovesaid decision the point for consideration is whether the amended provision would be applicable to the income earned in the previous accounting year. While considering this aspect this court pointed out that the amended law came into force on April 1, 1976, would naturally be applicable for the accounting year preceding that date. While considering this aspect this court pointed out that the amended law came into force on April 1, 1976, would naturally be applicable for the accounting year preceding that date. Therefore, the contention put forward by learned standing counsel that the provisions of section 14 of the Surtax Act would not be applicable to the facts arising in this case cannot be acceptedThe Kerala High Court had an occasion to consider the provisions of section 14 of the Companies (Profits) Surtax Act, 1964, in CIT v. Marikar Motors Ltd., wherein the Kerala High Court held as under "Held, on the facts, that the Appellate Tribunal was right in holding that the Income-tax Officer could not invoke section 14 of the Companies (Profits) Surtax Act, 1964, as amended with effect from April 1, 1971, by the Taxation Laws (Amendment) Act, 1970, to recompute chargeable profits in a case where the order of the Appellate Tribunal under section 254 of the Income-tax Act, 1961, as a result of which order it became necessary to recompute the chargeable profits, was passed prior to April 1, 1971."* Therefore, according to the Kerala High Court, the amendment brought about to section 14 of the Companies (Profits) Surtax Act with effect from April 1, 1971, would be applicable to all assessment orders made by the Income-tax Officer and appellate orders passed by the appellate authority and the Tribunal Another decision relied upon in this context is Waldies Ltd. v. CIT, wherein the Calcutta High Court had an occasion to consider the consequent rectification of assessment under the Surtax Act under section 13 of the Companies (Profits) Surtax Act, 1964, wherein the Supreme Court while considering the amended provisions of section 35(5) of the Indian Income-tax Act, 1922, held "Clause (5) of section 35 of the Income-tax Act which was enacted by the Income-tax (Amendment) Act, 1953, is not declaratory of the pre-existing law, nor a matter relating to procedure, but affects vested rights, and must be deemed to have come into force only from April 1, 1952. It has no greater retrospective effect than has been expressly granted to it and the power conferred by the said clause to rectify the assessment of a partner of a firm by including or correcting his share of the profit or loss of the firm can, therefore, be exercised only in the case of an assessment of a firm made on or after April 1, 1952. The Income-tax Officer has no jurisdiction under the said clause to rectify the assessment of a partner consequent on the assessment of the firm, in cases where the firm's assessment was completed before April 1, 1952."* In the abovesaid decision, the Supreme Court held that the amended provision is not procedural because it affects the vested right of the assessee. But in the present case, even the unamended provisions of section 14 of the Companies (Profits) Surtax Act gave a right to the assessee to recompute the income in the surtax proceedings according to the assessment made in the income-tax proceedings. Therefore, the vested right of the assessee to get a rectification under the unamended section 14 of the Surtax Act was not taken away by the amended provision. In fact, the amended provision enlarge the vested right of the assessee in getting benefit even after the income-tax assessment was completed by the first appellate authority and the Tribunal. Therefore, we are of the opinion that the amendment brought about to section 14 of the Companies (Profits) Surtax Act with effect from April 1, 1971, cannot be considered to be substantive in nature. But it provides machinery for rectification of the income for the purpose of levying surtax. Even otherwise, since the final order was made by the Commissioner of Income-tax on November 30, 1978, which is after the coming into force of the amended Act on April 1, 1971, the assessee is entitled to recomputation of his income under the Surtax Act in consequence of the order passed by the Commissioner of Income-tax in his income-tax assessment. Accordingly, we hold that the order passed by the Tribunal in directing the Surtax Officer to compute the income of the assessee in consequence of the order passed by the Commissioner of Income-tax (Appeals) in the appellate proceedings appears to be in order. Accordingly, we hold that the order passed by the Tribunal in directing the Surtax Officer to compute the income of the assessee in consequence of the order passed by the Commissioner of Income-tax (Appeals) in the appellate proceedings appears to be in order. In that view of the matter, we answer the question referred as question No. 2 in the reference in the affirmative and against the department. Counsel fee is fixed at Rs. 1, 000.