ORDER
N.R. Prabhu, Accountant Member
1. The first ground which is against the rate of depreciation applied by the ITO on trucks was not pressed at the time of appeal hearing as the issue at this stage is only of an academic interest.
2. The next ground of appeal is that the CIT (Appeals) erred in disallowing the claim of investment allowance of Rs. 1,49,252 on additions to fork lift trucks. The ITO disallowed the claim, as according to him, fork lift trucks would not be treated as plant and machinery as they were essentially in the nature of road transport vehicles. When the matter was carried in appeal, the CIT (Appeals) agreed with the contention of the assessee that the fork lift trucks could not be regarded as road transport vehicles. He, however, upheld the disallowance on the ground that the assessee was engaged in the manufacture or production of articles or things mentioned in item No. 5 of Schedule 11th of the Act. Assessee is aggrieved.
3. It is contended on behalf of the assessee that the assessee is in the business of manufacture of aerated waters and bottling of the same. At the relevant time this activity of the assessee was not hit by item No. 5 of 11th Schedule. Item No. 5 at the relevant time reads as under:
Aerated waters in the manufacture of which blended flavouring concentrates in any form are used.
The Explanation to the item was inserted by the Finance Act with effect from 1-4-1988 and such explanation would not be applicable and, therefore, to be ignored while dealing with this issue. The Explanation defines the expression, blended flavoring concentrates and states that it would include and shall be deemed always to have included, synthetic essences in any form. The revenue cannot disallow the claim of the assessee for investment allowance taking shelter behind this Explanation. That the Explanation will act in a prospective manner is evident from the fact that it has been made operational from 1-4-1988. Our attention in this connection is invited to the decision of the Supreme Court in Govinddas v. ITO [1976] 103 ITR 123. In the said case, it is argued, that the Supreme Court has clearly held that it was a well settled rule of interpretation that unless the terms of the statute expressly so provide or necessarily require it, retrospective operation should not be given to a statute so as to take away or impair an existing right or create a new obligation or impose a new liability otherwise than as regards matters of procedure. It would be clear from the above decision of the Supreme Court that if retrospectivity is intended by the Legislature the same has to be spelt out in clear terms. In this case, it is contended, the amendment in the form of insertion of an Explanation to item No. 5 of 11th Schedule is contraindicative. The same is to come into operation from 1-4-1988 and the legislative inent to this effect has also been brought out in the note on clauses to the Finance Bill 1987- [See 168 ITR (Statute) 144]. It is stated therein that Clause 75 of the Finance Bill sought to amend item Nos. 5 & 22 of 11th Schedule to the Income-tax Act but the amendment would take effect from 1 -4-1988 and would accordingly apply in relation to the assessment year 1988-89 and subsequent years. The Board’s clarification can leave nobody in doubt regarding the scope of the amendment though initially the same has been described as a clarificatory amendment. Our attention is also invited to the decision in Second ITO v. Gannon Dunkerley & Co. Ltd. [1989] 33 TTJ (Bom.) 379 in which the Tribunal has held that where the Parliament by an amendment has held that the amendment would take effect from a particular date, the same cannot be applied to a date prior to the date with effect from which it is to take effect. Similar is the view taken by the Tribunal in Parmatma Saran (HUF) v. WTO [1984] 7 ITD 630 (Delhi). In the light of these decisions and also in the light of the opinion expressed by the Board in explaining the provisions of the Finance Act 1987, the CIT (Appeals) was not justified in denying the claim of investment allowance claimed by the assessee.
4. The learned Departmental Representative, on the other hand, contends that the amendment was purely darificatory in nature and that would be evident from the language employed by the Legislature while drafting the Explanation to item No. 5 of 11th Schedule. The words “shall include and shall be deemed always to have included” can leave nobody in doubt in this regard. The notes on Clause 75 to the Finance Bill, 1987, on which a lot of reliance has been placed by the assessee, does not infact advance its case a wee bit. Para 43 of the notes deals with the amendment to 11th Scheduleof the Income-tax Act. Sub-para (1) of 43 deals with the scope and effect of the amendment to item No. 5 of 11th Schedule. The Board has clearly stated therein that the Explanation inserted by the Finance Act, 1987 was with a view to clarifying the provisions of item No. 5 of 11th Schedule. In sub-para (3) of para 43 the Board has no doubt stated that the amendment would come into forcew.e.f. 1-4-1988 and would apply in relation to the assessment year 1988-89 and subsequent years, but it speaks about the amendment and not the amendments. The use of the word ‘amendment’ in the 3rd sub-para in singular has been done advisedly and it could refer to item No. 22 only which has also been amended and whose scope was also explained in 2nd para to 43 in the circular relied upon by the assessee. In such circumstances, assessee cannot claim that the explanation was not darificatory and would apply to all pending assessments.
5. We have heard the parties to the dispute and in our view the claim of the assessee has to be accepted. That the fork lift truck is not a road transport vehicle is a position even the department does not dispute. The question that comes up for consideration is whether the claim for investment allowance could be denied on the ground that the assessee is engaged in the manufacture or production of articles or things mentioned in 11th Schedule. For this purpose it would be necessary to examine the scope and effect of the explanation to item No. 5 of 11th Schedule which is to take effect from 1-4-1988. It would appear from the amendment that the same would be operative only from assessment year 1988-89. The controversy has been raised by the department on the plea that the amendment was darificatory in nature and even if it were not so, the word “shall include and shall be deemed always to have included” in the explanation inserted by the Finance Act, 1987 would clothe it with the retrospective operation. We are afraid that this view is not tenable and the same would be evident from the notes on the clauses to the Finance Bill, 1987. In para 43(1), dealing with the amendment to item No. 5, the Board has dealt with the scope and effect of the amendment. The Board has also explained what was intended by the Legislature but how the intention was set at naught by the manufacturer of aerated waters by contending that synthetic essences could not be included in the expression “blended flavouring concentrates” in any form. Thereafter the Board has stated that the amendment would come into force from 1-4-1988 and would apply in relation to the assessment year 1988-89. We are, having regard to the fact that item No. 5 and item No. 22 have been amended w.e.f. 1-4-1988, unable to buy the line of argument of the learned Departmental Representative that the amendment which would apply in relation to the assessment year 1988-89, can be only in regard to the amendment to item No. 22 because of the use of the word “amendment” in para 43(3) of the circular of the Board which is in singular. The reference to the amendment in para 43(3) can only be to the amendment of the 11th Schedule and cannot be taken as an amendment to item No. 22 of 11th Schedule to the exclusion of the item No. 5 of 11th Schedule which also stands amended. The view canvassed by the assessee before us is also supported by the decisions of the Tribunal relied upon by the assessee. We may further in this connection refer to the decision of the Bombay High Court in CIT v. International Computers Indian Mfr. Ltd. [1991] 187 ITR 580. There the Bombay High Court was explaining the scope of explanation (c) to Section 263 of the Income-tax Act as amended by the Finance Act 1989 with retrospective effect from 1-6-1988. The court in that case had to interpret the words “and shall extend and shall be deemed always to have been extended (Emphasis supplied)”. The language is similar to the language used in explanation to item No. 5 of 11th Schedule. The court in that context held that explanation to Sub-section (c) having been inserted w.e.f. 1-6-1988 any kind of amendment therein whether retrospective or otherwise could net be with effect from a date earlier to the date of insertion of explanation (e). In the light of this decision of the jurisdictional High Court also there cannot be any doubt that no retrospective effect can be given to item No. 5 of 11th Schedule and none was intended. We, in the circumstances, shall direct the AO to allow investment allowance on the cost of fork lift trucks.
6. In the result, the appeal is allowed in part.