Blended flavouring concentrates include synthetic essence, and the later explanation was only clarificatory under the Income-tax Act.

Synthetic essence used in manufacturing aerated waters was construed as falling within "blended flavouring concentrates" in Item No. 5 of the Eleventh Schedule to the Income-tax Act, 1961, because the phrase was wide enough to cover a flavouring concentrate formed from more than one ingredient. The Explanation inserted by the Finance Act, 1987 was treated as clarificatory rather than enlarging or restricting the original entry, since it merely made explicit what was already implicit in the unamended provision. On that construction, manufacture of aerated waters remained covered by Item No. 5, and investment allowance was not available.

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Issues: Whether synthetic essence used in the manufacture of aerated waters is covered by the expression "blended flavouring concentrates" in Item No. 5 of the Eleventh Schedule to the Income-tax Act, 1961, and whether the Explanation inserted by the Finance Act, 1987 altered the scope of the original entry.

Analysis: The expression "blended flavouring concentrates" was held to be wide enough to include synthetic essences, since synthetic essence is a flavouring concentrate formed by the interaction of more than one ingredient and is therefore a blended concentrate. The later Explanation, though brought into force from 1 April 1988, was treated as clarificatory because it merely made explicit what was already implicit in the unamended entry and did not restrict or enlarge its meaning. The subsequent date of operation did not prevent the Explanation from reflecting the original legislative intent.

Conclusion: Synthetic essence falls within "blended flavouring concentrates", and the assessee was not entitled to investment allowance for manufacture of aerated waters covered by Item No. 5. The finding in favour of the assessee was unsustainable.

Ratio Decidendi: A later amendment with prospective operation may still be treated as clarificatory where it only declares the pre-existing meaning of the original provision, and the unamended entry is construed to include the item in question.

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