Blended flavouring concentrates include synthetic essences, so aerated waters made with them fall within the disqualifying tax entry.

Synthetic essences used in aerated waters were treated as "blended flavouring concentrates in any form" for Item No. 5 of the Eleventh Schedule to the Income-tax Act, because a synthetic essence is itself a flavouring concentrate made up of more than one ingredient in blended form. The later Explanation to Item No. 5, though brought into force from 1 April 1988, was regarded as clarificatory and therefore as explaining the original scope of the entry rather than narrowing it. On that construction, aerated waters manufactured with synthetic essences fell within the disqualifying entry, and investment allowance was not available.

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Issues: Whether synthetic essences used in aerated waters fall within the expression "blended flavouring concentrates in any form" in Item No. 5 of the Eleventh Schedule to the Income-tax Act, 1961, so as to deny investment allowance.

Analysis: Synthetic essence is a flavouring concentrate and, by its very nature, involves more than one ingredient in a blended form. The later Explanation inserted to Item No. 5, though brought into force from 1.4.1988, was clarificatory and did not narrow the scope of the original entry. A clarificatory amendment may explain the meaning of the pre-existing provision and show what was always intended by the legislature. On that construction, aerated waters manufactured with synthetic essences are covered by Item No. 5.

Conclusion: Synthetic essences are included within blended flavouring concentrates, and the assessee was not entitled to investment allowance.

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