Judgment :- N. V. BALASUBRAMANIAN J. - This is a combined reference at the instance of the assessee as well as at the instance of the Department. The following questions of law have been referred for our consideration "1. Whether, on the facts and circumstances of the case, the surtax paid by the assessee under the Companies (Profits) Surtax Act is an admissible deduction in computing the total income under the Income-tax Act, 1961 ? 2. Whether, on the facts and in the circumstances of the case and having regard to the provisions of sub-section (2B) of section 37 of the Income-tax Act, 1961, inserted by the Taxation Laws (Amendment) Act, 1978, with effect from April 1, 1979, the Appellate Tribunal was justified in holding that the said provisions are applicable only to the expenditure incurred during the accounting year 1979-80 relevant to the assessment year 1980-81 and not to the assessment year 1979-80 itself ? 3. Whether, on the facts and in the circumstances of the case and having regard to the provisions of section 37(2B) of the Income-tax Act, 1961, the Appellate Tribunal was right in law in holding that the expenditure incurred by the assessee by way of advertisement in the souvenir published by the Indian National Congress should be allowed as a deduction in computing the income for the assessment year 1979-80 ?" * The year of assessment is common for both the references, viz., 1979-80. In so far as the question of law referred to us at the instance of the assessee is concerned, it is fairly stated that the question is covered against the assessee by a recent decision of the Supreme Court in the case of Smith Kline and French (India) Ltd. v. CIT wherein the Supreme Court held that the surtax levied under the Companies (Profits) Surtax Act, 1964 falls within the mischief of sub-clause (ii) of clause (a) of section 40 of the Income-tax Act, 1961. We are of the view that the view of the Appellate Tribunal is plainly erroneous as it is well settled by the several decisions of the apex court as well as by decisions of this court that the law in force on the first day of April of the assessment year would be the law applicable for the allowability of the expenditure incurred in the previous year relevant for the assessment year. If any authority is needed in support of the proposition, it is found in the judgment of the apex court in Reliance jute and Industries Ltd. v. CIT. There is no doubt that the expenditure was incurred during the previous year relevant for the assessment year 1979-80 and though it was incurred prior to April 1, 1979, the law to be applied is the law in force on the first day of April of the assessment year and since section 37(2B) of the Act came into full force on April 1, 1979, section 37(2B) of the Act would apply and the expenditure incurred by the assessee by way of advertisement in the souvenir published by the Indian National Congress is not allowable expenditure for the year 197980. The amendment of law has not indicated anywhere any contrary intention making it inapplicable to the expenditure in question. Therefore, we are of the view that the Tribunal is not correct in holding that the provisions of section 37(2B) of the Act did not apply to the expenditure incurred by the assessee. As per the amendment the expenditure is not allowable as a business expenditureAccordingly, we answer both the questions of law referred to us at the instance of the Revenue, in favour of the Department and against the assessee. No costs.