ORDER Per Shri R. Rangayya, Accountant Member - This is an appeal filed by the assessee against the order of the Commissioner of Income-tax, passed u/s 263 of the Income-tax Act, 1961 for the Asst. year 1981-82. The assessee is a limited company working as Cold Roll Mill. Included in its plant and machinery are several items of machinery; which the assessee claimed to be automatic, semi-automatic or precision machine tools, for which it is entitled to higher depreciation at the rate of 15%. For the Asst. year 1981-82, the ITO accepted the assessees contention and allowed depreciation and extra shift allowance on the above items of machinery @ 15%. The Commissioner, after calling for the records and examining the same, opined that the action of the ITO in allowing higher depreciation Tribunal 15% on the above items of machinery is erroneous and prejudicial to the interests of the Revenue. He found that the Income-tax Officer had allowed depreciation at a higher rate of 15% without ascertaining the fact whether the above items of machinery are automatic or semi-automatic precision tools as claimed by the assessee. During the course of hearing, the assessee contended before the Commissioner that the machinery under consideration was entitled to higher depreciation. It was also claimed that there was an appeal against the order of the assessment and the CIT (A) passed an order on 29-3-1985. As such it was claimed that the order passed by the ITO merged with that of the CIT (A) and so the provisions of sec. 263 cannot be invoked. The Commissioner, however, held that the order passed by the ITO merged with that of the CIT (A) and so the provisions of sec. 263 cannot be invoked. The Commissioner, however, held that the order of the ITO merges only in respect of the matters which were subject matters of appeal before the CIT (A), on which he had given a decision. In respect of the other matters, he held that the order of the ITO merges only in respect of the matters which were subject matters of appeal before the CIT (A), on which he had given a decision. In respect of the other matters, he held that there will be no merger of the ITO order with that of the CIT (A). In respect of the other matters, he held that there will be no merger of the ITO order with that of the CIT (A). He pointed out that the dispute before the CIT (A) was regarding the depreciation allowable on the additions of machinery during the course of the year and not in respect of depreciation allowable on the written down value of such machinery, on which also higher depreciation was allowed. He accordingly directed ITO to re-examine the issue after allowing the assessee on opportunity to produce evidence in support of its claim, for higher depreciation. Aggrieved by the above order of the CIT, the assessee is in appeal before us. 2. It is contended by Shri V. Ranganathan, the learned representative for the assessee, that the Commissioner is not correct in rejecting the assessees contention regarding the merger of the ITOs order with that of the first appellate authority. In view of the merger, it is claimed that the Commissioner had no power to invoke the jurisdiction u/s 263 to revise the assessment. Though it is true that certain amendments were made to sec. 263 by way of introduction of Explanation to that section w. e. f. 1-5-1988, by Finance Acts of 1988 and 1989, these provisions have effect from 1-6-1988 only and since the order of the Commissioner was passed on 16-7-1986 which was long before the Explanation came on the statute book, the Commissioner cannot take the help of Explanation. When it is specifically made clear that the Explanation is to take effect from 1-6-1988, it cannot be held to be retrospective so as to be operative even before that very date. The Explanation cannot be given such retrospective effect so as to take away the vested rights of the assessee not to have its completed assessment disturbed. The assessment was completed in 1984 and the order of the first appellate authority was passed in 1985, which is long before the Explanation was brought on to the statute book. As such the order of the ITO should be taken as having merged in the order of the CIT (A) in all respects, as the Explanation was not available at that time. In any case, it is contended that when the Commissioner passed his order u/s 263, the Explanation was not available at that time. As such the order of the ITO should be taken as having merged in the order of the CIT (A) in all respects, as the Explanation was not available at that time. In any case, it is contended that when the Commissioner passed his order u/s 263, the Explanation was not available at that time. In any case, it is contended that when the Commissioner passed his order u/s 263, the Explanation was not available and so he lacked jurisdiction for passing the order. Reference in this connection was made to the decisions of the Supreme Court and Allahabad High Court in the cases of S. Sundaram Pillai v. V. R. Pattabiraman AIR 1985 SC 582 and CIT v. Nitro Phosphetic Fertilizer [1988] 174 ITR 269/40 Taxman 280 (FB.), in which the scope of the Explanation is explained. Reliance was also sought to be placed on the decision of the Punjab & Haryana High Court in the case of CIT v. Mela Ram Jagdish Raj & Co. [1981] 132 ITR 897 to claim that a statute dealing with procedure is retrospective and its provisions apply to the proceedings pending at the time of its enactment, but where the provisions of the statute affect vested rights, the provisions are prospective in operation unless there is an indication in the statute to the contrary. Reliance was also placed in the decisions of the Appellate Tribunal, Delhi Benches in the cases of Madan Fruit Agency v. ITO [1988] 24 ITD 305 and Aeroplane Shoe Factory v. ITO [1989] 28 ITD 478. It is also contended that while it may be true that the subject matter of appeal before the CIT (A) was the depreciation allowable on the additions to the plant and machinery and not depreciation on the written down value of the machinery installed in earlier years. Since the same issue of allowance of higher depreciation on similar machinery was subject matter of consideration by the CIT (A), it is contended that it should be taken that the ITOs order in respect of the depreciation allowance has merged with that of the CIT (A). He also points out that for the asst. Since the same issue of allowance of higher depreciation on similar machinery was subject matter of consideration by the CIT (A), it is contended that it should be taken that the ITOs order in respect of the depreciation allowance has merged with that of the CIT (A). He also points out that for the asst. year 1981-82 the Tribunal had remitted back the matter to the file of the ITO with a direction to ascertain the true nature of additions made to the machineries during the year in question with the held of a recognised valuer and decide the issue of merits. While such an exercise may be all right in respect of the additions made during the year in question with the help of a recognised valuer and decide the issue on merits. While such an exercise may be all right in respect of the additions made during the current year, it will be unjust and unfair to call upon the assessee to prove now by evidence, the nature of the additions to the plant and machinery made in earlier years. Firstly, the evidence will not be available after lapse of so many years and secondly, regard being had to the nature of allowance viz. depreciation, which is to be allowed one year or the other, such an exercise may not be necessary and may be of doubtful benefit to the Revenue. It is pointed out that the Tribunal, B-Bench, Madras in the case of T. I. Diamond Chain Ltd. [IT Appeal No. 161 (Mad.) of 1986 dated 31-7-1987], had held that in view of the practical difficulties involved in this type of exercise and in view of the doubtful benefit to the Revenue, it is not reasonable to call upon the assessee to produce evidence regarding the nature of the additions to the machinery in the earlier years to prove its claim for higher depreciation. In the circumstances, the Tribunal upheld the order of the CIT (A) in that case whereby he directed the ITO not to disturb the written down value of the earlier years and to continue to allow depreciation on such written down value of the earlier years and to continue to allow depreciation on such written down value at the same rate as in the earlier years. In view of the above decision of the Tribunal, it is contended that the action of the Commissioner in directing the ITO to go into the nature of the machineries added in the earlier years is unjust and unfair. 3. Shri C. S. Sethuraman, the learned Departmental Representative, on the other hand, relied on the order of the Commissioner. He points out that the Explanation u/s 263 though made effective from 1-6-1988 only, by its very wording, will have retrospective effect even before that date. The Explanation is a declaratory legislation for removal of doubts. The Explanation clearly states that where an order was passed by the assessing officer and it had been made subject matter of an appeal filed on or before or after 1st June, 1988, the powers of the Commissioner to revise, extend and shall always deemed to have extended to such matters as have not been considered and decided in such appeal. In view of the specific wording of the Explanation, it is contended that it has retrospective effect even in respect of orders passed before that date, and so only such portions of the assessment order which have been considered and decided upon by the CIT (A) will deemed to have merged with the order of the CIT (A) and not other portions. As there is no dispute that the CIT (A) had not decided the question of allowability or otherwise of higher depreciation in respect of the written down value of the plant and machinery in the course of his appellate order, this issue cannot be considered to have merged in the course of his appellate order, this issue cannot be considered to have merged in the CIT (A)s order. In the circumstances, it is contended that the Commissioner is justified in invoking his jurisdiction u/s 263. Reliance in this connection was made on the decision of the Madhya Pradesh High Court in the case of CIT v. Vithal Textiles [1989] 175 ITR 629 and the decision of the Tribunal, A-Bench, Madras in the case of Agarwal Finance Co. [IT Appeal No. 2367 (Mad.) of 1986 dated 7-8-1989]. Reference was also made to the notes on clauses appearing at 176 ITR (St.) 127, wherein the intention of the Legislature was clearly explained. [IT Appeal No. 2367 (Mad.) of 1986 dated 7-8-1989]. Reference was also made to the notes on clauses appearing at 176 ITR (St.) 127, wherein the intention of the Legislature was clearly explained. On merits, it is contended that the burden was on the assessee to prove that its plant and machinery is entitled to higher rate of depreciation and therefore, the Commissioner is justified in directing the ITO to examine the issue with reference to the evidence to be produced by the assessee. 4. We have heard the rival submissions. In our opinion, the contention of the assessee that the Commissioner has no jurisdiction to pass the order u/s 263 on the ground that entire order of the Income-tax Officer has merged with that of the CIT (A), cannot be accepted. It is not disputed that the CIT (A) had not been called upon to adjudicate on the issue whether the assessee is entitled to a higher rate of depreciation in respect of the written down value of the plant and machinery added to its block in the earlier years. What was subject matter of appeal before the CIT (A) was only whether the assessee is entitled to higher rate of depreciation in respect of the items of plant and machinery added during the course of the year and not in respect of the w. d. v. of the machineries installed in the earlier years. Clause (C) of the Explanation to sec. 263, introduced by Finance Act, 1988 and later amended by Finance Act, 1989 runs as follow : "Explanation : For the removal of doubts, it is hereby declared that, for the purposes of this sub-section, - ** ** ** (c) where any order referred to in this sub-sec. and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the Commissioner under this sub-section shall extend and shall be deemed always to have been extended to such matters as had not been considered and decided in such appeal." The Explanation clearly states that it was enacted for removal of doubts. It also declare the position of law that should be deemed to have existed at all times. It also declare the position of law that should be deemed to have existed at all times. When a statutory provision for removal of doubts declares that the powers of the CIT under section 263 shall be deeded always to have extended to such matters as are not considered and decided in an appeal, such legislation, in our opinion, will have retrospective effect and the Commissioner, when he has decided the issue in the present case shall be deemed to have had the powers to revise the order of the Income-tax Officer in respect of the matter which he had chosen to revise. 5. Reliance sought to be placed by the learned counsel of the assessee on the decision of the Supreme Court and the Allahabad High Court in the case of S. Sundaram Pillai (supra) and Nitro Phosphetic Fertilizer (supra) in our opinion, is misplaced. In the decision of the Supreme Court referred to above, the objects of an Explanation to a statutory provision are explained, as follow : "(a) to explain the meaning and intendment of the Act itself, (b) where there is any obscurity or vagueness in the main enactment, to clarify the same so as to make it consistent with the dominant object which it seems to subserve, (c) to provide an additional support to the dominant object to the Act in order to make meaningful and purposeful, (d) an Explanation cannot in any way interfere with or change the enactment or any part thereof but where some gap is left which is relevant for the purpose of the Explanation, in order to suppress the mischief and advance the object of the Act it can help or assist the Court in interpreting the true purport and intendment of the enactment, and (e) it cannot, however, take away a statutory right with which any person under a statute has been clothed or set at naught the working of an Act by becoming a hindrance in the interpretation of the same." 6. It may be noticed from the above decision of the Supreme Court that the object of the Explanation to a statutory provision is to explain the meaning and intendment of the Act itself, to clarify the same so as to make it consistent with the dominant object which it seems to subserve, where there is any obscurity or vagueness in the main enactment, to provide an additional support to the dominant object of the Act in order to make it meaningful and purposeful and to help or assist the Court in interpreting the true purport and intendment of the enactment. It cannot, however, take away a statutory right provided to the assessee in sec. 263, which is sought to be taken away by the Explanation. While interpreting the powers of the Commissioner to revise an assessment, certain Courts have taken a view that the powers of the Commissioner to revise an order of assessment will not extend to such orders which have been made subject matter of an appeal before the appellate authority, on the ground that the entire order of the lower authority, merged with that authority. Other Courts have taken the view that only that portion of the order of the Assessing Officer which has become subject matter of appeal and decision by the appellate authority will merge and not other portions. It is to clarify these obscurities or vagueness of the main enactment and to provide an additional support to the dominant object of the Act, on order to make it meaningful and purposeful and to assist the Court in interpreting the true purpose and intendment of the enactment that the Explanation in the present form has been enacted. This is made clear from the amendment made by the Finance Act, 1989. After the amendment in 1989 the Commissioners powers shall be deemed to have extended and shall always be taken to have extended to such matters as have not been considered and decided in the appeal, though such appeal might have been filed on or before or after the 1st day of June, 1988. After the amendment in 1989 the Commissioners powers shall be deemed to have extended and shall always be taken to have extended to such matters as have not been considered and decided in the appeal, though such appeal might have been filed on or before or after the 1st day of June, 1988. So even if an appeal has been filed and an order was passed on such appeal long before the Explanation has been enacted, in view of the specific and express wording of the Explanation of the Commissioner should be deemed to have always had the powers to revise the assessment in respect of such matters as have not been considered and decided by the CIT (Appeals). As explained by the Supreme Court in CIT v. Shahzada Nand & Sons [1966] 60 ITR 392, in order to arrive at the real meaning of a provision one has to consider (a) the position of law before the Act was passed, (b) what was the mischief or defect for which the law had not provided, (c) what remedy Parliament has appointed, and (d) the reason of the remedy. The reason for the amendment is amply made clear in the Memorandum explaining provisions in Finance Bill, 1989 (176 ITR St. 127) which runs as follow : "Under the existing provisions of sec. 263 of the Act and corresponding provisions of the Wealth-tax and Gift-tax Act, the Commissioner of Income-tax is empowered to call for and examine the record of any proceeding and if he considers that the order passed by the Assessing Officer is erroneous insofar as it is prejudicial to the interest of Revenue, he may pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the same or directing a fresh assessment. By the Finance Act, 1988, an Explanation was substituted with effect from 1st June, 1988, to the relevant Sections of the Act, to clarify that the term record would include all records relating to any proceeding available at the time of examination by the Commissioner. Further, it was also clarified that the Commissioner is competent to revise an order of Commissioner passed by an Assessing Officer on all matters except those which have been considered and decided in an appeal. Further, it was also clarified that the Commissioner is competent to revise an order of Commissioner passed by an Assessing Officer on all matters except those which have been considered and decided in an appeal. The above Explanation was incorporated in the Finance Act, 1988 to clarify this legal position to have always been in existence. Some Appellate Authorities have, however, decided that the Explanation will apply only prospectively, i. e., only to those orders which are passed by the Commissioner after 1-6-1988. Such an interpretation is against the legislative intent and it is, therefore, proposed to amend sec. 263 of the Income-tax Act, so as to clarify that the provisions of Explanation shall be deemed to have always been in existence. Amendments on the above lines have been proposed in sec. 25 of the Wealth-tax Act and sec. 24 of the Gift-tax Act also." 7. Thus it is clear from the above that the insertion of the Explanation and the amendment made thereto are to clarify the correct legal position and to clear the doubts created by some judgments of the appellate authorities, in which it was held that the Explanation must be interpreted according to its own tenor. If the words used in the Explanation clearly indicate that the intention of the Legislature is to make it retrospective in its operation and their intention is clearly spelt out in it, such a provision should be taken as retrospective. According to Maxwell (see the Interpretation of Statutes, Twelfth Edition, page 216) if the language or the dominant intention of the enactment to demands, the Act must be construed so as to have retrospective operation, for the rule against the retrospective effect of statutes is not a rigid or inflexible rule but is one to be applied always in the light of the language of the statute and the subject-matter with which the statutes is dealing. The mere fact that the footnote says that the Explanation has effect from 1-6-1988, does not take away the effect of the words used in the Explanation declaring the law that should be taken as having existed from the very beginning. It only means that any authority interpreting the provisions on or after 1-6-1988 has to take note of the Explanation also, while interpreting the section. 8. It only means that any authority interpreting the provisions on or after 1-6-1988 has to take note of the Explanation also, while interpreting the section. 8. The Calcutta High Court had an occasion to consider a similar situation arising out of an amendment made to sec. 34 of the Income-tax Act, 1922 with effect from 30th March, 1948. On a writ filed by the assessee, Bose J., the learned Single Judge of Calcutta High Court held that the amendment is expressly made retrospective from 30th March, 1948 and so it had not further retrospective operation. On an appeal filed by the Department, the Division Bench held that while the section itself came into operation on 30th March, 48, in deciding in what manner it would operate, it is pertinent to enquire from what the section itself says. The effect of sec. 8 of the Amending Act was that it placed the section on the Statute Book as on 8th March, 1948 and made it part of the I. T. Act from that date. But what was the effect of such introduction of the new sec. 34 to the I. T. Act itself has to be found out by examining the words of the section itself. Though the decision of the Division Bench was ultimately upset by the Supreme Court in Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191, on some other point, the above view expressed by the Division Bench of the Calcutta High Court was approved by the Supreme Court in S. C. Prashar v. Vasantsen Dwarkadas [1963] 49 ITR 1 at page 16. Thus, though the Explanation itself was brought into the Statute Book from 1-6-1988, to find out the effect of the Explanation, the express words used by the legislation have to be examined. Looked at from that angle, in our opinion, the wording of the Explanation makes it very clear that its effect will be not only in respect of the orders passed by the Commissioner after 1-6-1988 but also in respect of order passed before that date. 9. The Madhya Pradesh High Court in the case of Vithal Textile (supra), while examining the retrospective effect of the Explanation held that the declaratory Act may be defined as an Act to remove doubts existing as to the common law, or the meaning or effect of any statute. 9. The Madhya Pradesh High Court in the case of Vithal Textile (supra), while examining the retrospective effect of the Explanation held that the declaratory Act may be defined as an Act to remove doubts existing as to the common law, or the meaning or effect of any statute. Such Acts are usually held to be retrospective. In that case the Court was considering Cl. (a) of Explanation to sec. 263 which is also enacted for removal of doubts. Though the Explanation came into force from 1-10-1984, it was held that the amending Act, being declaratory, must be held to be retrospective. 10. From the above discussion, it will be clear that after the enactment of the Explanation and its subsequent amendment in 1989, it will not be possible to hold that the Commissioner had no powers to revise that portion of the order of the ITO which had not been subject matter of appeal before the CIT (A) and on which he had not rendered any decision. In the result we reject the assessees contention in this regard. 11. On merits, we find that similar issue had come up for consideration before the Tribunal in the case of T. I. Diamond Chain Ltd. (supra). In that case the dispute was regarding the rate of depreciation allowable in respect of the w. d. v. of the various additions made in the earlier years. The CIT (A) in that case accepted the assessees plea regarding the practical difficulties involved in reclassifying the machinery as machine tools and other machinery in respect of the old times and held that such an exercise was unnecessary. He was of the view that if the depreciation rate is to be disturbed in respect of the old machinery, a reclassification will have to be made right from the very beginning and for each year the depreciation and the w. d. v. will have to be reworked. If the lower rate is to be applied, it ought to be on much higher w. d. v., arrived at on the basis of lower rate with the result that the net revenue effect is negligible. If the lower rate is to be applied, it ought to be on much higher w. d. v., arrived at on the basis of lower rate with the result that the net revenue effect is negligible. He held that in view of the practical difficulties involved in this process and its doubtful benefit to the Revenue in the case of a company, the application of the lower rate on the written down value of the old plant and machinery would be unnecessary and unjustified. The Tribunal in that case upheld the action of the CIT (A) and held that the view taken by him on practical considerations of the case was reasonable and did not require any interference. 12. In this case also, in our opinion, the laborious exercise involved in the matter in finding out the nature of the machineries added in all the earlier years in uncalled for in view of the practical difficulties and doubtful revenue effect. If ultimately a few items of machinery are found to be entitled for lower rate of depreciation, the w. d. v. to be carried forward from year to year will necessarily be higher and higher amount of depreciation will have to be allowed because of the higher w. d. v. Taking into account the practical difficulties involved and of its doubtful benefit to the Revenue, as the assessee is a company, we are of the opinion that the exercise directed by the Commissioner is unjust and uncalled for. We, therefore, hold that the assessee should be allowed depreciation at 15% in respect of the w. d. v. of the machineries added in the earlier years in the same manner as it was done in the earlier years. To this extent the appeal of the assessee will be treated partly allowed.