tition No 90 of 1981 etc
etc Under Article 32 of the Constitution of India
Dr Devi Prasad Pal Dinesh Vyas PH Parekh BN Aggarwal AS Rao Ravinder Narain section Ganesh AK Verma Amrita Mitra Ms Priya Hingorani section Sukumaran Ms Amrita Mitra Ms SBagga Krishan Kumar Bhaskar Pradhan Ms Poonam Madan Ms Gauri Advani section Pathak B Lal BP Aggarwal Ms Geetanjali Mohan PK Mukherjee and SC Patel for the Petitioners
SC Manchanda BB Ahuja Manoj Arora section Rajappa and Ms A Subhashini for the Respondents
The Judgment of the Court was delivered by RANGANATHAN J
The seeds of the present controversy were sown as early as in 1946
It is unfortunate that this matter should be coming up before this Court for its consideration nearly five decades later though it must be pointed out that the issue in its present form is the outcome of an amendment made by the Finance No2 Act 1980 hereinafter referred to as the 1980 Act  to the Income Tax Act 1961 hereinafter referred to as the 1961 Act 
It is also a curious co incidence that the 1980 Act effected two amendments in the 1961 Act with retrospective effect and the validity of both these provisions have been challenged before the courts
The first was the controversy with regard to the retrospective amendment of s80 J which was settled by this Court by its decision in Lohia Machines Limited vs Union of India It is the second amendment to the provisions contained in section 352 of the 1961 Act that has given rise to the present controversy between the parties
The question is really one of interpretation of two important provisions relating to the computation of business income for purposes of income tax
We may start with the provisions of the Indian lncome Tax Act 1922 hereinafter referred to as the 1922 Act 
The computation of business income for purposes of income tax was done in accordance with the provisions of section 10 of the said Act
In the process of making such computation the Act provided for two important deductions among others in respect of the capital assets employed in the business
The first was the deduction under clause vi of Section 102 of an allowance in respect of the depreciation of building machinery plant or furniture being the property of the assessee and used for the purposes of the business at a prescribed percentage of the written down value of such assets
This allowance is calculated in respect of the year of acquisition of the property at a percentage of its actual cost to the assessee and in subsequent years at a graduated scale on the basis of the actual cost less the depreciation allowances granted in the preceding years
In strict principle this is an allowance of capital nature but it is now well settled that the allowance of depreciation has to be taken into account in order to ascertain the true profits of a business and therefore an assessee is permitted to deduct in the computation of the business income year after year the prescribed percentage of the value of the assets used for the purposes of business
The second allowance was not there in the 1922 Act originally and was introduced by the Income tax Amendment Act 1946
The introduction was of certain allowances in respect of expenditure on
scientific research related to the business an expression which was defined in a fairly comprehensive manner by the statute
Three types of allowances were permitted in respect of this category of expenditure of which we are here concerned with only one
This provision was contained in clause xiv of S102 which permitted a deduction in respect of any expenditure of a capital nature on scientific research related to the business an allowance for each of the Five consecutive previous year
beginning with the year in which the expenditure was incurred or where the expenditure was incurred prior to the commencement of the business for each of the five consecutive previous years beginning with the year in which the business was commenced equal 2to one fifth of such expenditure Provided that no allowance shall be made for any expenditure incurred more than three years before the commencement of the business A Provided further that XXX XXX XXX d where a deduction is allowed for any previous year under this clause in respect of expenditure represented wholly or partly by any asset no deduction shall be allowed under clause vi or clause vii for the same previous year in respect of that asset e where an asset is used in the business after it ceases to be used for scientific research related to that business and a claim for an allowance under clause vi or clause vii is made in respect of that asset the actual cost to the assessee of the asset shall be treated as reduced by the amount of any deductions allowed under this clause A cursory and conjoint reading of section 102 vi and section 102 xiv suggests that where an assessee incurs expenditure of a capital nature on scientific research related to the business and the expenditure results in the acquisition of an asset the assessee can claim under clause vi a deduction of the specified percentage of the written down value of the asset and under clause xiv he can ask for a deduction in five consecutive years of the expenditure he has incurred on the acquisition of the asset
For this purpose we are assuming that an asset used for scientific research related to the business is also ipso facto an asset used for the purpose of business
There has been some debate before us as to whether this is always so but we need not enter into that controversy for the purposes of the present case
It will at once be seen that if these two provisions are applied simultaneously it would result in granting an assessee a double allowance in respect of the same expenditure one of the entire amount over a period of 5 years and the other a percentage of the expenditure over a number 
consecutive years at a graded scale as already mentioned
The question at once leaps to the mind as to whether it could have been the intention of the legislature to permit both these deductions simultaneously to an assessee
The provisions of clauses d and e of the proviso to S102 xiv contain a clue to answer this question
More about it later
We next turn to the provisions of 1961 Act
The topic of depreciation is dealt with by section 32
Section 321 ii provides for depreciation
As under the 1922 Act it is allowed at a percentage of the written down value of certain capital assets employed in the bussiness
The topic of scientific research expenditure is dealt with by section 35
Section 351 provides for the deduction of four types of expenditure on scientific research and what we are concerned with is the deduction provided under section 351 iv which is to the following effect iv in respect of any expenditure of a capital nature on scientific research related to the business carried on by the assessee such deduction as may be admissible under the provisions of sub section 2
 Sub section 2 provides that for the purposes of clause ivof sub section 1 one fifth of the capital expenditure incurred in any previous year shall be deducted for that previous year and the balance of the expenditure shall be deducted in equal instalments in each of the four immediately succeeding previous years
There is an explanation which is not relevant for our present purposes
Reading S352 further it provides in clauses iv and v as follows iv where a deduction is allowed for any previous year under this section in respect of expenditure represented wholly or partly by an asset no deduction shall be allowed under clauses i ii and iii of sub section 1 of section 32 for the same previous year in respect of that asset v where the asset mentioned in clause ii is used in the business after it ceases to be used for scientific research related to that business depreciation shall be admissible under clauses i ii and iii of sub section1 of section 32
 Reference must also be made to Explanation 1 to section 431 in this context
It read as follows at the relevant time Explanation Where an asset is used in business after it ceases to be used for scientific research related to that business and a deduction has to be made under clause i clause ii or clause iii of sub section I or sub section 1A of section 32 in respect of that asset the actual cost of the asset to the assessee as reduced by the amount of any deduction allowed under clause iv of sub section 1 of section 35 or under any corresponding provision of the Indian Income tax Act 1922 11 of 1922
 From the above it will be seen that the provisions of Section 321 ii and Section 352 i iv and v read with Explanation 1 to s431 virtually repeat the provisions contained in Section 102 vi and 102xiv of the 1922 Act so that the question earlier posed still loomed in the background of 1961 Act
In 1968 there was an amendment in the provisions of Section 352
The sub section was amended to read as follows 2 For the purposes of clause iv of sub section 1 i in a case where such capital expenditure is incurred before the 1st day of April 1967 one fifth of the capital expenditure incurred in any previous year shall be deducted for that previous year and the balance of the expenditure shall be deducted in equal instalments for each of the four immediately succeeding previous years i a in a case where such capital expenditure is incurred after the 31st day of March 1967 the whole of such capital expenditure incurred in any previous year shall be deducted for that previous year
 The effect of this amendment was only to provided that the entire amount of capital expenditure incurred in relation to scientific research was allowed as a deduction in one year instead of being spread over a period of five years as was the position earlier
This amendment does not touch the controversy in issue before us and it has no solution to offer to our present difficulty
The provisions of Section 102 vi and xiv of the old Act had been administered between 1946 and 1962 and the provisions of Section 32 and 35 of the 1961 Act have been administered since 1962
The question whether an assessee can simultaneously claim an allowance or deduction in respect of the same expenditure once under Section 32 and again in Section 35 must have cropped up in some cases and does appear that such a double claim was put forward in some cases
The contention on behalf of the assessees was that the allowances in respect of depreciation on the one hand and in respect of capital expenditure on scientific research on the other are two totally different and independent heads of allowances
one is a notional allowance to provide for the wear and tear of a capital asset employed in the business as the years roll by the other is an allowance for actual expenditure of a capital nature granted on the eve of our country s independence in order to give fillip to new industrial innovations and the development of indigenous know how and techniques by proper planning on research and development by various business houses
It is therefore suggested that there is nothing absurd in construing the statutes act as providing cumulatively for both types of deductions in respect of the same capital asset
The only limitations on this right are the two placed by the statute itself
The first limitation contained in clause d of the proviso to Section 102 xiv and s352 iv is that both the deductions cannot be claimed for the same previous year in respect of the same capital asset
The second limitation is found in clause e of the proviso to Section 102 xiv and s352 v which say that if a capital asset used for scientific research ceases to be so used but is thereafter brought into a business for use therein the actual cost for purposes of granting depreciation in respect of the asset thereafter should be taken as the amount of its original cost reduced by the amount of deductions allowed under Section 102 xiv or s352
In other words the contention of the assessee was and is that both the types of allowances are permissible under the statute except to the extent limited by clauses d and e of the proviso to Section 102 xiv of the 1922 Act and reproduced in clauses iv and v of Section 352 of the 1961 Act
Before us it is claimed on behalf of the assessee that this interpretation of the statutory provisions is very clear patent and unambiguous
It is alleged that despite this some Income tax Officers started disallowing the claim of depreciation in respect of such capital assets even in previous years during which no deduction was claimed or allowed under Section 102 xiv or Section 352 contrary to the clear language of clause d of s102 xiv and s352 iv
These Of orders were reversed on appeal either by the Appellate Commissioner or by the Tribunal
It was suggested that these decisions were almost unanimously in favour of the assessee but the department persisted in pursuing the matter upto the stage of the High Court
Only one reference on this topic came up before the High Courts and is reflected in the decision of the Karnataka High Court reported as CIT vs Indian Telephone Industries Ltd This was a reference of the year 1977 made at the instance of the Commissioner of Income Tax and the Commissioner of Income Tax lost this reference
The High Sourt re affirmed the position contended for by the assessee as the one and only possible interpretation of the statutory provisions
It is therefore contended that there was and could have been no doubt that an assessee was entitled to claim depreciation allowance in respect of such assets in respect of previous years other than those in which an allowance had been allowed under the other head
We shall revert later to this aspect of the matter
At this stage the Finance No2 Act 1980 intervened
It amended section 352 iv to read as follows iv where a deduction is allowed for any previous year under this section in respect of expenditure represented wholly or partly by an asset no deduction shall be allowed under clauses i ii and iii of sub section 1 of section 32 for the same or any other previous year in respect of that asset
 Emphasis added The Finance Act made this amendment retrospective wef 1462 that is the date of the commencement of the 1961 Act
This amendment is undoubtedly far reaching in its effect
It will result in completion of the pending assessments of several years on the footing of the new provision
It will also involve re opening or rectification of completed assessments of earlier years to the extent permissible under the provisions of sections 148 and 154 in cases where assessees had been granted double allowance accepting their contention at the time of the original assessments
The effect will be not for one assessment year but for a number of assessment years in succession
Painting a very grim picture of the consequences of giving full retrospective effect to the amendment the assessees say that it will impose unexpected and impossible burden on them over the years
jeopardise their solvency and lay them open to action by creditor and financial institutions
Such an onerous burden it is said
is unreasonable and oppressive and the provision imposing such burden violates the fundamental rights of the assessees under Articles 14 and 191 g of the Constitution of India
It is on this plea that even though assessments and appeals are pending in several of these cases the petitioners chose to approach this Court by way of writ petitions under Article 32 of the Constitution
These are mostly writ petitions of the year 1981 and are now coming up for hearing after a period of 10 years
Learned counsel for the assessees do not contest the competence of the legislature to enact the impugned provision nor do they dispute the right of the legislature to give retrospective effect to statutory provisions
The contention only is that retrospective provisions may be permissible even in taxing statutes in certain special circumstances such as in the case of provisions clarifying the impact of a statute provisions curing defective legislations in the light of the judicial decisions and the like
They however say that if the legislature chooses to impose a totally new burden which was not at all in contemplation earlier and proceeds to give full retrospective effect thereto such an attempt should be struck down as unreasonable and discriminatory
The principal questions therefore for our consideration are 1 Were the earlier statutory provisions capable of only one interpretation namely that placed by the assessees or was there any ambiguity in relation thereto  2 If there was some doubt or ambiguity about the earlier legislation and the 1980 Act clarified the position by a retrospective amendment would it offend the provisions of the Constitution  3 If on the other hand the earlier provision was very clear and capable of only one interpretation as placed by the assessee was the legislature within its rights in amending the provision retrospectively wef 1462 and thus imposing an unreasonable tax burden on the assessees Taking up the first of the three questions it has to be considered from two angles one factual and the other legal
An attempt was made on behalf of the petitioners to project an image as if the interpretation sought to be placed by the department on pre 1980 provisions to disallow depreciation on such assets was so far fetched that it never received the approval of the higher appellate authorities
It was suggested that the appeals by assessees against the disallowance invariably succeeded and it was the Department that had to move the High Court on reference the first of which references came up before the Karnataka High Court in Cl
T vs Indian Telephone Industries 1980 126 ITR 548 and was answered against the Department
On the basis of such allegations the petitioners attempted to make out that the Department s interpretation was patently untenable and that the 1980 amendment is not in the nature of a statutory clarification of an ambiguity but a totally new and fresh imposition sought to be unjustifiably given retrospective effect
But as Shri BB Ahuja has pointed out on the basis of the averments of the petitioner in one of the cases viz WP115381 the impression sought to be created by the petitioners does not accord with the correct facts
The position in the case is available only as it stood at the time when the writ petition and the counter affidavit were filed and subsequent developments are not known
Nevertheless the picture that emerges is this
In that case the Income tax Officer ITO is said to have allowed depreciation on assets used for scientific research for the assessment year 1969 70 though this is denied by the department
The claim was perhaps disallowed by the ITO for the assessment year 1970 71 but it was allowed by the Allahabad Bench of the Income tax Appellate Tribunal ITAT by its order dated 30876
For the assessment year 1971 72 the ITO disallowed the depreciation
The Appellate Assistant Commissioner AAC allowed it
The department appealed to the Delhi Bench of the ITAT which accepted the department s plea by its order dated 13879 placing reliance on the decision of a Special Bench of the ITAT
It has been stated that the assessee filed an application for reference to the High Court which was pending when the writ petition was filed
For the assessment years 1972 73 to 1974 75 the assessments are pending as a stay order had been obtained for reasons which are not known
For the assessment years 1975 76 and 1976 77 the assessee claimed depreciation on a number of items of scientific research assets
The ITO allowed the claims subject to the rider that there is no provision to give deduction of more than 100 of the expenditure by way of depreciation
The assessee appealed to Commissioner of Income tax Appeals who disallowed the claim
For 1977 78 the l
TO disallowed the claim and the ClT dismissed the assessee s appeals
For assessment years 1978 79 to 1980 81 the assessments are stated to be pending
The above facts are sufficient to show that atleast after 141968 there is no information before us as to the position between 141946 and 3131968 the Department has been putting forward its objections on the issue and that the same was the subject matter of controversy at various appellate stages some decided in favour of and some against the assessee
A Special Bench of the l
TAT had indeed decided the issue against the assessee
In this background it is not correct to say that the position was crystal clear and that save for a few ITOs who took a biassed view the authorities were all agreed that the Department s stand was untenable
Some of the reported decisions also show that there was a live controversy and that references have been made to the High Court both at the instances or the assessees see Alkali  Chemical Corporation of India Ltd vs ClT  and CIT vs Indian Explosives Ltd  as well as at the instance of the Revenue see CIT vs International Instruments P Ltd  CIT vs Mahindra Sintered Products Ltd and Warner Hindustan Ltd vs CIT The petitioner s contention that under the pre amended provisions depreciation on such assets was recognised allround as clearly allowable is therefore rejected
We have dealt with this aspect only to meet an aspect that was urged
What is really important is the true and correct interpretation of those provisions not what someone thought of it then and to this aspect we shall now turn
4 The second aspect of the First of the three questions posed earlier for our consideration is the legal or interpretational aspect of the provisions as they stood prior to the 1980 Amendment
Under the provisions of the statute as they stood earlier could the assessees have claimed continued grant of depreciation after the expiry of five previous years before the 1968 amendment and after the expiry or the first year after the 1968 amendment even though the entire cost of the capital asset in question had been allowed to be written off completely against the business profits of those five previous years or one previous year as the case may be We think the answer to this question must emphatically be in the negative
In our view it is impossible to conceive of the legislature having envisaged a double deduction in respect of the same expenditure even though it is true that the two heads of deduction do not completely overlap and there is some difference in the rationale of the two deductions under consideration
On behalf of the assessees reliance is placed on the following circumstances to support a contention that the statute did not intend one deduction to preclude the other  i lt is pointed out that s102 xiv of the 1922 Act was inserted in 1946 consequent on the insertion of a corresponding provision in the United Kingdom
That provision viz s204 of the UK Finance Act 1944 read thus  4 Where a deduction is allowed for any year under this or the last preceding section in respect of expenditure represented wholly or partly by any assets no deduction shall be allowed under any provisions of the Income tax Act other than this part of this Act in respect of wear and tear obsolescence depreciation or exceptional depreciation of these assets for any year of assessment during any part of which they are used by the person carrying on the trade for scientific research related to the trade  emphasis supplied The Indian provision it is said has made a deliberate departure from the said provision and limited the bar of depreciation only to those previous years during which a deduction is allowed under S102 xiv ii When the Income tax Bill 1961 was under the consideration of the Law Commission the provisions of S102 vi and xiv were carefully reviewed
But changes were made and the provisions of the new Act in this regard were drafted in pari materia with those of the old Act  iii The language used in clause d of the proviso to S102 xiv and S352 iv again is significantly different from the language used in various other provisions of the Act which in like contexts of possible double allowances emphatically rule out deductions in respect of the same expense or exemptions in respect of the same income under two different provisions for the same or even any other assessment year  See for example Sections 202 35B2 35C2 35CC4 35CCA3 35CCB3 35Db 35E8 80GGA4 80HH9A 80HHA7 and 80HHBS and iv When the relevant provisions say that depreciation shall not be allowed in certain previous years it permits a disallowance only in those previous years and means by necessary implication that it shall be allowed in other years if otherwise eligible on the language of the provision for depreciation
There is an apparent plausibility about these arguments particularly in the context of the alleged departure in the language used by S102xiv from that employed in S20 of the UK Finance Act 1944
We may however point out that the last few underlined words of the English statute show that there is really no difference between the English and Indian Acts the former also in terms prohibits depreciation only so long as the assets are used for scientific research
In our opinion the other provisions of the Act to which reference has been made some of which were inserted after the present controversy started are not helpful and we have to construe the real scope of the provisions with which we are concerned
We think that all misconception will vanish and all the provisions will fall into place if we hear in mind a fundamental through unwritten axiom that no legislature could have at all intended a double deduction in regard to the same business outgoing and if it is intended it will be clearly expressed
In other words in the absence of clear statutory indication to the contrary the statute should not be read so as to permit an assessee two deductions both under S102 vi and S102 xiv under the 1922 Act or under S321ii and 352iv of the 1922 Act qua the same expenditure
Is then the use of the words in respect of the same previous year in clause d of the proviso to S102 xiv of the 1922 Act and section 352 iv of the 1961 Act a contra indication which permits a disallowance of depreciation only in the previous years in which the other allowance is actually allowed
We think the answer is an emphatic no  and that the purpose of the words above referred to is totally different
If as contended for by the assessees there can be no objection in principle to allowances being made under both the provisions as their nature and purpose are different then the interdict disallowing a double deduction will be meaningless even in respect of the previous years for which deduction is allowed under S102 xiv S35 in respect of the same asset
If that were the correct principle The assessee should logically be entitled to deduction by way of depreciation for all previous years including those for which allowance have been granted under the provision relating to scientific research
The statute does not permit this
The restriction imposed would therefore be illogical and unjustified on the basis suggested by the assessees
On the other hand if we accept the principle we have outlined earlier viz that there is a basic legislative scheme unspoken but clearly underlying the Act that two allowances cannot be and are not intended to be granted in respect of the same asset or expenditure one will easily see the necessity for the limitation imposed by the quoted words
For in this view where the capital asset is one of the nature specified the assessee can get only one of the two allowances in question but not both
Then the question would arise and might create a difficulty  in that event which not the two allowance should the assessee be granted that which the assessee chooses or that which the assessing officer might prefer It is necessary for the statute to define this and this is what has been done by the rider in clause d of the proviso to S10 2 xivS352 iv
It mandates that the assessee should in such a case be granted the special allowance for scientific research and not the routine and annual one for depreciation
Clause d of the proviso to S102 xiv and S302 iv thus fall into place as an appropriate and necessary provision
The provision contained in clause e of the proviso to S102 xiv of the 1922 Act re enacted in Explanation to S43 1 of the 1961 Act also reinforces this line of approach
It provides that the extent of capital expenditure written off under the second of the above headings whether it be 00 under the post 1968 provision or 20 40 60 80 or 100 under the pre 1968 provision has to be pro tanto deducted in ascertaining the actual cost for purposes of depreciation
This provision militates in our view against the petitioners contention that the allowances under the two provisions are by nature unconnected with and independent of each other
Its effect is this
Suppose a person uses an asset for scientific research for sometime and then brings it into his business for other use later he would be thereafter entitled to depreciation thereon only on the actual cost less deduction allowed under S10 2 xivS35
However if the asset continues to be used in scientific research related to the business he would be entitled to get depreciation on its full cost after the first few previous years during which allowance is granted under those provisions
This seems to be anomalous but Shri Ganesh says that there is no anomaly because this is a provision intended to act as a disincentive to persons who purport to purchase assets for scientific research but withdraw it from such use soon after
Granted that this is so still the deduction of the allowances given on scientific research assets for computing depreciation is consistent only with the principle stated by us that they are deductions basically of the same nature intended to enable the assessee to write off certain items of capital expenditure against his business profits
We may add that the report of the Chocksi Committee on the basis of which the 1980 amendment was effected only echoed the same view when it said in para 329 of its report  329 Our attention has also been drawn to certain anomalous situations in the matter of allowance of depreciation
In certain cases where a full deduction has been allowed in relation to a capital asset under other sections as for example section 35 which permits a deduction in respect of capital expenditure for scientific research the taxpayers have contended that such deduction is independent of the allowance by way of depreciation
In our view the intention of the legislature is not to allow a double deduction of 200 in respect of the same asset once under section 35 and again by way of depreciation under section 32
If and to the extent that there is any anomaly or contrary view possible on a construction of section 35 we recommend that the law should be clarified to provide that no depreciation under section 32 shall be allowable in respect of capital expenditure for scientific research qualifying for deduction under section 35
 For the reasons discussed above we are of the view that even before the 1980 amendment the Act did not permit a deduction for depreciation in respect of the cost of a capital asset acquired for purposes of scientific research to the extent such cost has been written off under S102 xiv35 1  2
Prior to 1968 such assets qualified for an allowance of one fifth of the cost of the asset in five previous years starting with that of its acquisition and during these years the assessee could not get any depreciation in relation thereto
In respect of assets acquired in previous year relevant to assessment year 1968 69 and thereafter their cost was written off in the previous year of acquisition and no depreciation could be allowed in that year
This is clear from the statute
Equally it is not envisaged and indeed it would be meaningless to say that depreciation could be allowed on them thereafter with a further absurdity that it could be allowed starting with the original cost of the asset despite its user for scientific research and the allowances made under the scientific research  clause
In our view there was no difficulty at all in the interpretation of the provisions
The mere fact that a baseless claim was raised by some over enthusiastic assessees who sought a double allowance or that such claim may perhaps have been accepted by some authorities is not sufficient to attribute any ambiguity or doubt as to the true scope of the provisions as they stood earlier
We are for the reasons discussed above unable to approve of the cryptic view expressed by the Karnataka High Court in CIT vs Indian Telephone Industries Ltd or the view taken by the Bombay High Court in CIT vs Hico Products In view of the answer given by us to the first question posed by us there is no need to answer the second and third questions since even without the amendment the assessees cannot claim the depreciation allowance in question
The second question can arise only if it is assumed that there was an ambiguity or doubt as to interpretation that was retrospectively clarified by the legislature
But it is common ground before us that even on this hypothesis the validity of the amendment cannot be challenged
This is indeed beyond all doubt See Rai Ramkrishna vs State of Bihar   Asst Commissioner of Urban Land Tax vs Buckingham  Carnatic Co Ltd   Krishnamurthi  Co vs State of Madras   Hira Lal Rattan Lal vs Sales Tax Officer and Another 1973 31 STC 178 and Shiv Dutt Rai Fateh Chand vs Union of India Even the Bombay decision inCl
T vs Hico Products on which the assessees heavily rely concedes in our opinion rightly this position
The assessees may have some possible case only if the earlier statutory provisions can be said to have been unambiguously in favour of the assessee and the 1980 amendment had radically altered the provisions to cast a new and substantial burden on the assessee with retrospective effect
It is this third alternative reflected by the third question posed by us that was success fully urged before the High Court by the assessees
But we are unable to accept this argument or conclusion
In our view the first question has to be answered by saying that the pre 1980 provisions were capable of only one interpretation but that was as urged on behalf of the Revenue
The 1980 amendment has effected no change at all in the provision except to set out more clearly and categorically what the provision said even earlier
In this view the second and third questions earlier posed do not arise
For the reasons discussed above these Writ Petitions are dismissed
We however make no order as to costs
BP JEEVAN REDDY J
I agree with my learned brother Ran ganathan J that these writ petitions should fall
Having regard to the nature and significance of the question raised herein however I felt impelled to say a few words
The challenge in this batch of writ petitions is to the retrospective operation given to the amended clause iv of sub section 2 of Section 35 of Income Tax Act 1961 by the Finance No2 Act 1980
The said Finance Act added the words or any other in the said clause and gave it retrospective effect from April 1 1962
As amended clause iv reads as follows iv where a deduction is allowed for any previous year under this section in respect of expenditure represented wholly or partly by an asset no deduction shall be allowed under clause ii or sub section 1 of section 32 for the same or any other previous year in respect of that asset
 Learned Counsel for the petitioners assessees contended that the retrospective effect given to the said amendment has the effect of taking away the rights vested in the assessees by the unamended provisions making them liable to pay huge amounts by way of tax
Such payment if enforced has the effect of debilitating the assessees industries beyond recall
It is submitted that the retrospectivity given to the said amendment is violative of the petitioners fundamental rights guaranteed by Articles 191 g and 14 besides the guarantee in Article 300A
In the year 1946 clause xiv among other clauses was introduced in sub section 2 of Section 10 of the Indian Income tax Act 1922
It provided for the first time that even expenditure of a capital nature laid out on scientific research related to the business of the assessee shall be allowed to be deducted
The deduction was hundred per cent spread over a period of five consecutive previous years commencing from the previous year on which the expenditure was incurred
Sub clause d of clause xiv provided at the same time that where a deduction is allowed for any previous year under this clause in respect of expenditure represented wholly or partly by any asset no deduction shall be allowed under clausevi or clause vii for the same previous year in respect of that asset
 The effect of sub clause d was that if an assessee claimed and was allowed a deduction in respect of expenditure of a capital nature on scientific research and where such expenditure took the shape of an asset which in the normal course would be entitled to deduction on account of depreciation under clauses vi and vii of Section 102 no depreciation would be allowed in respect of that asset in those respective previous years
In other words during the period of five previous years the assessee was allowed the deduction under clause xiv of sub section 2 of section 10 claim for depreciation under clauses vi anor vii of the same sub section was excluded
In the Income tax Act 1961 a similar provision was made in section 35
Clause iv of sub section 1 of section 35 provided for deduction of expenditure of a capital nature incurred on scientific research related to the business carried on by the assessee
Sub section 2 of Section 35 set out the manner in which and the terms subject to which the deduction was to be allowed
As enacted in 1961 sub section 2 provided as was done by clause xiv of Section 102 of the 1922 Act that the said deduction shall be allowed in equal measure in five consecutive previous years commencing from the previous year in which the expenditure was incurred
In the year 1967 however sub section 2 was amended providing for full deduction of the expenditure in the very previous year in which such expenditure was incurred
Clause iv of sub section 2 however remained unchanged
Clause iv declares that where a deduction is allowed for any previous year under the said section in respect of expenditure represented wholly or partly by an asset no deduction shall be allowed under clauses i ii and iii of sub section I or under sub section 1A of section 32 for the same previous year in respect of that asset
Thus the position obtaining under the 1922 Act and the previous Act is the same with the difference that if such expenditure is incurred after April 1 1967 hundred per cent deduction was granted in the very previous year in which the asset representing the capital expenditure of the nature mentioned in clause iv of sub section 1 of Section 35 is acquired
The Revenue says that the deduction provided by Section 351 iv is in the alternative to the deduction provided by clauses i ii and iii of sub section 1 and sub section 1A of Section 32
If one is availed of the other is not available not only during the year or years in which the deduction under Section 351 iv is availed of but permanently
The reason according to them is obvious if both are allowed to be availed of it amounts to grant of 200 deduction viz 100 under Section 35 1 iv and another 100 under sub sections 1 and 1A of Section 32
This is totally outside the contemplation of the Act they say
On the other hand the case of the asssessees is that the bar created by clause iv of sub section 2 applies only to that previous year or those previous years during which the said expenditure is allowed as a deduction
That is the express language of the clause
The bar does not extend beyond the year or years in which the deduction under Section 351 iv is availed
There is no reason more so in a taxing enactment to extend the said bar beyond the limit prescribed by the statute
They say if the intention of the Parliament was to bar the claim of depreciation in respect of such asset for all time to come nothing was easier than to say so in clear words as was done by sub section 4 of section 20 of UK Finance Act 1944
It is pointed out that clause xiv of sub section 2 of section 10 was introduced in the Indian Income tax Act within two years of the introduction of a similar provision in the English Act evidently inspired by the Amendment in the English Act
But while incorporating the said provision a conscious departure was made by the Indian Legislature say the assessees
Having regard to the scant investment in scientific research in India it is submitted the legislature must have thought it necessary to provide an additional inducement over and above the deduction on account of depreciation
Considerations of equity have no place in the interpretation of a taxing enactments they say further
I find it difficult to agree with the reasoning of the assessees
Acceding to it would amount to placing an unreasonable interpretation upon the relevant provisions and to negating the intention of Parliament
I find it difficult to agree that the Indian Legislature as also the Parliament made a conscious departure from the English Amendment with the idea of providing an additional benefit to induce the Indian assessees to invest more in scientific research
I find the argument rather convoluted
If the intention of the LegislatureParliament was to provide more than 100 deduction they would have said so as they have done in cases where they provided for what is called weighted deduction 
For example See Section 35B of 1961 Act
A double deduction cannot be a matter of inference it must be provided for in clear and express language
regard having to its unusual nature and its serious impact on the Revenues of the State
Now what does clause iv of Section 352 say It says that during the years or the year in which the assessee avails of the deduction under Section 351  iv he shall not avail of the deduction on account of depreciation provided by clauses i ii and iii of sub section 1 and sub section 1A of Section 32
What could be the underlying reason It is obviously to ensure that the assessee doesn t get double deduction
Take a case where the asset was acquired prior to April 11957
The deduction under Section 351 iv would be allowed in five consecutive years
If during the very five previous years depreciation under the aforementioned provisions is also allowed the assessee would obtain at the end of five years a double depreciation ie 100 under Section 35 and almost 100 under Section 32
It may be noted that in many cases the rate of depreciation under Section 32 is 20 or even higher
If such a course was barred by clause iv during the initial five years would it be reasonable to say that same thing can be achieved by claiming the deduction after the expiry of five years If both the deductions are in the alternative as indicated by clause iv they must be understood as being in the alternative and not consecutive
It would be a rather curious thing to say in the case of an asset acquired prior to April 1 1967 that Parliament barred claim for depreciation under Section 32 even in the first year when only 20 of the cost of the asset is allowed as deduction under Section 351 iv it barred it in the second third and fourth years when the deduction has reached 40 60 and 80 per cent but permitted it be claimed after the fifth year by which year the entire 100 cost was allowed as a deduction
No express provision was necessary to say what is so obvious
The position after April 1 1967 is no different
That the aforesaid view is the correct one is indicated by Explanation 1 to clause 1 of section 43 the corresponding provision in the 1922 Act being sub clause e of clause xiv of Section 102
Clause 1 of section 43 defines the expression actual cost 
Explanation 1 appended  to the definition says Where an asset is used in the business after it ceases to be used for scientific research related to that business and a deduction has to be made under clause ii of sub section 1 of section 32 in respect of that asset the actual cost of the asset to the assessee shall be the actual cost to the assessee as reduced by the amount of any deduction allowed under clause iv of sub section 1 of section 35 or under any corresponding provision of the Indian Income tax Act 1922 11 of 1922
 Now what does this mean Take a case where the asset of a like nature acquired prior to April 1 1967 is diverted to other purposes after the expiry of two previous years the actual cost  of the asset to the assessee in such a case would be 60 of the original cost
And if it is diverted after five years it would be nil which means that the assessee cannot claim any depreciation on it at all
Counsel for the assessee explains this provision to say that it was meant to prevent diversion of such an asset from scientific research to assessee s business purposes
The explanation does not stand scrutiny
The fallacy in the explanation can be demonstrated by taking the very same illustration where the asset is acquired prior to April 1 1967
Suppose such an asset is diverted after first two previous years its actual cost  to the assessee would be 60 of the original cost which alone would qualify for deduction under Section 321 and 1A
The remaining 40 would not
This 40 goes without earning any depreciation
Why is it so if the assessees are right in saying what they do
According to their reasoning this 40 too should qualify for depreciation
The fallacy in their argument would become clearer if the diversion is at the end of the fifth year
That the Parliament never intended to provide for a double deduction is also the opinion of the Direct Tax Law Committee
In its interim report December 1977 the Committee popularly known as Choksi Committee  had this to say in para 329 of its report 329
Our attention has also been drawn to certain anomalous situations in the matter of allowance of depreciation
In certain cases where a full deduction has been allowed in relation to a capital asset under other sections as for example section 35 which permits a deduction in respect of capital expenditure for scientific research the tax payers have contended that such deduction is independent of the allowance by way of depreciation
In our view the intention of the legislature is not to allow a double deduction of 20 in respect of the same asset once under section 35 and again by way of depreciation under section 32
If and to the extent that there is any anomaly or contrary view possible on a construction of section 35 we recommend that the law should be clarified to provide that no depreciation under section 32 shall be allowable in respect of capital expenditure for scientificresearch qualifying for deduction under section 35
 lt is evidently on the basis of this recommendation that clause iv of sub section 2 of section 35 was amended to make express what was implicit in it
The amendment introduced the words or any other in the said clause
After amendment clause iv of section 35 2 reads as follows where a deduction is allowed for any previous year under this section in respect of expenditure represented wholly or partly by an asset no deduction shall be allowed under clause ii of sub section 1 of section 32 for the same or any other previous year in respect of that asset
 In our opinion the said amendment is merely clarificatory in nature
It makes explicit what was implicit in the provisions
Question of its constitutionality therefore does not arise
Though purporting to be retrospective it does not take away any rights which had legally vested in the assessees
The Bombay High Court has struck down the said amendment of clause iv in Commissioner of Income Tax vs Hico Products Pvt Ltd The approach of the Bombay High Court is at variance with ours
It has practically accepted the line of reasoning put forward by the assessees which has not commended to us
Among other reasons the High Court was impressed by the difference in the language employed in Section 102xivd and the one employed in Section 20 4 of the UKFinance Act which reads as follows 4 Where a deduction is allowed for any year under this or the last preceding section in respect of expenditure represented wholly or partly by any assets no deduction shall be allowed under any provisions of the Income tax Act other than this part of this Act in respect of wear and tear absolescence depreciation or exceptional depreciation of these assets for any year of assessment during any part of which they are used by the person carrying on the trade for scientific research related to the trade
 It is apparent that the scheme and structure of the English provision is different than ours as has been demonstrated by my learned brother G Ranganathan J So far as the arguments of taking away of vested rights is concerned it is evident from the facts stated in the writ petition 115381 which was treated as representative of the facts and contentions in all the writ petitions and with reference to which facts were arguments addressed itself that none of the assessments relating to any of the assessment years concerned herein has become final
They are pending at one or the other stage and in one or the other forum
I need not dilate upon this aspect inasmuch as the impugned amendment merely makes explicit what was implicit in the unamended clause as explained hereinabove
In such a situation the argument of any right vesting in the assessees is misplaced
The writ petitions accordingly fail and are dismissed
No costs
NPV Petitions dismissed


Summary:
The prosecution case was that the complainant was running a shop and dealing in Kimam and that on 7th January 1984 the Chief Inspector in the Health Department accused No1 and accused No 2 appellant in the appeal accused No 3 and accused No 4 who were working as Food Inspectors had approached the complainant at his shop and stated that a they had been inspecting food articles for adulteration and took a bottle of Kimam and opened it for sample and when the complainant told them that it may be taken in sealed condition they refused to do so and stated that the sample would not be passed and the complainant would be put to difficulties unless he paid Rs 5000
The complainant was not wiling to make such payment but he was pressurised
On the next day 8th January 1984 accused No 4 came to the shop to enquire whether the money had been arranged
He was given Rs 500 and the balance was promised to be given on 30th January 1984
On 30th January 1984 the complainant approaehed the office of the Anti Corruption Bureau and gave his complaint
Two Panchas were called by the ACB the number of 40 currency notes of Rs 100 each were noted done in two batches of 20 each the currency notes were treated with anthracene powder a demonstration was made and shown to the complainant and the Panchas
Panch No1 was to remain with the complainant and Panch No 2 was to remain with the raiding party
The complainant and Panch No1 went to the stop at about 600 pm and when accused No 2 demanded the money the complainant gave it to him when he was apprehended by the raiding party
The hands of accused No 2 appellant were seen in the ultra violet light and the four fingers and thumb of the right hand showed the light blue colour and white sparkle
The currency notes also showed the anthracene powder in the ultra violet light
Thereafter the complainant and Panchas went to the residence of accused No 1
The complainant offered money to accused No 1
He however refused to accept the same and therefore no raid was made
All the four accused were tried by the Special Judge for offences under section 161 of the Indian Penal Code read with Sections 51 d and 52 of the Prevention of Corruption Act
Accused Nos 1 3 and 4 were acquitted while accused No 2 was convicted and sentenced by the Special Judge
The State filed an appeal against the acquittal of the three accused whereas accused No 2 filed an appeal against his conviction and sentence
The High Court dismissed both the appeals
It noticed that the Panchas did not recognise any of the accused persons there is no corroboration as to what had happened in the meetings preceding the raid on 30th January 1984 the evidence of the complainant was disinterested and did not require any corroboration and the hands of accused No 2 when seen in ultra violet light the four fingers and thumb of the right hand showed the light blue colour and white sparkle
Allowing the appeal and setting aside the conviction and sentence this Court HELD 1
The High Court had acquitted the accused No 3 and did not find it safe to convict him on the sole testimony of the complainant supported by the test of seeing anthracene powder on the hands and fingers of accused No 3 in ultra violet light but on the same evidence upheld the conviction of accused No 2 relying on the same evidence which was rejected vis a vis accused No 3
272 G 2
When the High Court could not find it safe to rely on the uncorroborated statement of the complainant while upholding the acquittal of accused No3 it is unsafe to rely on the ipse dixit of the complainant which is unsupported by both the Panch witnesses and the police officials who formed the raiding party for upholding the conviction of accused No 2 appellant
273 E 3
Not only the two Panchas could not recognise any of the accused persons but there is no corroboration to the various statements of the complainant vis a vis accused Nos
1 to 4 by the police officials who constituted the raiding party either
The raiding party including the police officials reached the spot at a time when they could neither hear the talk if any between the accused No 2 and the complainant nor could see the alleged acceptance of money by accused No 2 and passing it on to accused No 3
272 E 4
The High Court totally ignored the statement of the 2complainant made during cross examination on behalf of accused No 2 that he had thought of teaching accused No 2 a lesson for harassing businessmen selling Pan and Masalas
273 A 5
It is clear that this is not a case merely of a complainant from whom bribe was demanded and he was forced to pay the same but the complainant had thought of teaching a lesson to accused No 2 for harassing the businessmen selling Pan Masalas and therefore it could not be said that the complainant was not interested in success or otherwise of the raid
273 D