Retrospective amendment and investment allowance: inserted Explanation did not bar allowance on fork lift trucks for earlier assessments.

Investment allowance on fork lift trucks could not be denied merely because the assessee manufactured aerated waters and fell within Item No. 5 of the Eleventh Schedule. The Explanation inserted by the Finance Act, 1987 was stated to operate from 1-4-1988 and, on the legislative material, from assessment year 1988-89 onwards. In the absence of a clear legislative mandate, the words that the expression "shall include and shall be deemed always to have included" were not sufficient to give the amendment retrospective effect to earlier or pending assessments. The denial of investment allowance was therefore unsustainable, and the assessee was entitled to the allowance on the cost of the fork lift trucks.

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Issues: Whether the assessee was entitled to investment allowance on fork lift trucks, and whether the Explanation inserted to Item No. 5 of the Eleventh Schedule applied retrospectively so as to deny that allowance.

Analysis: The fork lift trucks were not treated as road transport vehicles. The dispute turned on whether the assessee's manufacture of aerated waters fell within Item No. 5 of the Eleventh Schedule, and whether the Explanation inserted by the Finance Act, 1987 could be applied to assessment years prior to 1988-89. The amendment was stated to take effect from 1-4-1988, and the legislative material indicated that it would apply from assessment year 1988-89 onwards. The use of the words that the expression "shall include and shall be deemed always to have included" did not justify giving the provision retrospective effect to pending assessments in the absence of a clear legislative mandate.

Conclusion: The denial of investment allowance was unsustainable, and the assessee was entitled to allowance on the cost of the fork lift trucks.

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