A. R. DAVE, M. S. SHAH, D. A. MEHTA, J. ( 1 ) HAVING gone through the judgment of my learned Brother Justice M. S. Shah, in view of the reasons which follow hereinafter we record our opinion. ( 2 ) THE assessee is a Public Limited Company. The Company manufactures Fertilizers and Caprolactum. The assessment years are : 1977-78, 1978-79 and 1979-80, the respective accounting periods being calendar year 1976, 1977 and 1978. ( 3 ) THE assessee entered into a contract for supply of plant and machinery equipments with M/s. Hitachi Zosen of Japan on deferred credit basis. Accordingly, the assessee was required to make payment in instalments over a period of time. The liability for the years under consideration has increased by reason of fluctuation in exchange rate. The assessee claimed the following amounts for each of the years under consideration as allowable business expenditure. (1) Rs. 9,21,658. 00, (2) Rs. 26,49,336. 00, (3) rs. 57,77,322/ -. The claim of the assessee was negatived and it was held that the expenditure in question was capital in nature. ( 4 ) THE assessee preferred an alternative claim that the aforesaid expenditure went to increase the actual cost of the plant and machinery and hence the assessee should be granted investment allowance under section 32a of the Income-tax Act,1961 (The Act ). The Income Tax Officer rejected the claim of the assessee stating that conditions for applicability of section 32a were not satisfied. The Commissioner of Income Tax (Appeals), before whom the assessee went in appeal held that the order of the Income Tax Officer was correct because the years under consideration are not the years when the assets were either installed or first put to use, and this was the basic requirement for applicability of Section 32a of the Act. The Income Tax Appellate Tribunal, in the Second Appeal preferred before it upheld the claim of the assessee on the basis of the reasons stated in earlier orders wherein development rebate had been granted to the assessee in the same set of facts and circumstances. The Income Tax Appellate Tribunal, in the Second Appeal preferred before it upheld the claim of the assessee on the basis of the reasons stated in earlier orders wherein development rebate had been granted to the assessee in the same set of facts and circumstances. ( 5 ) THE Tribunal has raised the following question of law at the instance of the Commissioner of Income Tax for the opinion of this Court :"whether, the Tribunal has been right in law and on facts in holding that the assessee is entitled to investment allowance on account of additional expenditure in the cost of plant and machinery on account of realignment of currency ?" ( 6 ) WHEN the matter came up before the Division Bench, revenue placed reliance upon the decision of this Court in the case of C. I. T. Vs. Windsor Foods Ltd. ,235 ITR 249 (Guj. ). On behalf of the assessee reliance was placed on various provisions of the Act as well as the decisions of other High Courts which have taken a contrary view. The Division Bench was of the prima facie opinion that the view expressed by this Court in the case of Windsor Foods Ltd. (supra) did not appear to be correct as the aspect of Section 43a of The Act commencing with non obstante clause and hence overriding other provisions of the Act, was not taken into consideration. Accordingly, the matter is placed before the Larger Bench for deciding the Reference. ( 7 ) THE Division Bench of this Court in the case of Windsor Foods Ltd. (supra) was called upon to decide the following question :"1. Whether, on the facts and in the circumstances of the case and in law the Tribunal was right in coming to the conclusion that the assessee was entitled to investment allowance on the amount of Rs. 80,414. 00 being the additional liability arising due to fluctuation in foreign exchange rate in respect of the payment of outstanding instalments of machinery ?"thus, as the question itself indicates the additional liability arose due to exchange fluctuation in respect of payment of outstanding instalments. This is what was held in the said case :-"the extent of addition (or reduction as the case may be), to the actual cost of the asset is directly connected with the liability outstanding immediately prior to the date of fluctuation in the exchange rate. This is what was held in the said case :-"the extent of addition (or reduction as the case may be), to the actual cost of the asset is directly connected with the liability outstanding immediately prior to the date of fluctuation in the exchange rate. Thus, if on such date only a part of the cost of the acquired asset is outstanding for payment, the exchange rate fluctuation will be worked out in the context of only that part of the outstanding payment and the addition to the actual cost will be made accordingly in that previous year in which the change has taken place. There is therefore, no scope for revising the cost actually met prior to the date of the fluctuation in the exchange rate. It is only after the date of such fluctuation that the question can arise of revising the actual cost in the manner provided in section 43a (1) during the previous year in which the fluctuation takes place. The actual cost so revised in the previous year will have relevance to the deductions which may be allowable in respect of that previous year and cannot relate back to the earlier previous year so as to retrospectively change the actual cost that prevailed in that year and could not have been altered by forseeing any change in the exchange rate. In other words, the change in exchange rate cannot project back to the period prior to the date on which such change took effect. The deduction of investment allowance can be allowed in respect of the previous year in which the machinery was installed or first put to use. If the deduction becomes allowable in that relevant previous year, the full investment allowance is to be worked out on the basis of the actual cost of the machinery or plant to the assessee at that relevant time. That quantification of the amount at 25 per cent. of the actual cost to be allowed by way of deduction as investment allowance got crystallised on the basis of the actual cost and no change can be made therein for that previous year on the basis of any fluctuation that takes place in the exchange rate in the subsequent years which will have impact only on the liability to pay as it stands immediately prior to the date of fluctuation in such subsequent year. The fact that the investment allowance is carried forward under sub-section (3) or that the reserve can be created in any subseqquent assessment year due to insufficiency of profits in the earlier years will not alter this situation. In our view, therefore, no question of revising the full amount of the investment allowance which was already worked out in the relevant previous year can ever arise by virtue of any subsequent fluctuation in the exchange rate which brings about a change in the liability that existed immediately before the date on which the change in the rate of exchange takes effect. The additional liability is to be added to the actual cost only in that previous year in which it arises and the actual cost so revised will be operative in respect of the benefits which are required to be calculated in that previous year. Since the investment allowance was already worked out on the basis of the actual cost and the quantified allowance cannot be varied by giving a back effect to such subsequent alteration in the exchange rate, there can arise no question of working out any additional investment allowance in such subsequent year in which the fluctuation takes place. . . " ( 8 ) MR. AKIL Qureshi, learned Standing Counsel appearing on behalf of the applicant-revenue after referring to various provisions of the Act submitted that investment allowance under Section 32a of the Act is to be allowed either in the year of acquisition/installation of the plant and machinery or when the plant and machinery is first put to use in the immediately succeeding year. That the said deduction is not to be allowed beyond one year and sub-section (3) of Section 32a of the Act merely permits carryforward of unabsorbed investment allowance which stands quantified. That investment allowance is permitted to be deducted on fulfillment of various conditions prescribed in the section. Section 43 (1) of the Act only defines as to what is actual cost but it does not state as to what would be the effect when the said actual cost would undergo change by virtue of operation of Section 43a of the Act. That Section 43 (1) does not deal with allowability in relation to deduction which has already been granted on the basis of actual cost worked out and thereafter there is no further scope for granting any further deduction. That Section 43 (1) does not deal with allowability in relation to deduction which has already been granted on the basis of actual cost worked out and thereafter there is no further scope for granting any further deduction. Referring to provision of Section 43a of the Act, it was submitted that it does not permit reopening of accounts nor does it provide for any relating back, which would be necessary if the contentions of the assessee were to be accepted. It was further submitted that the phrase "during the previous year" used in Section 43a of the Act should be read to mean only that previous year in which deduction under Section 32a would otherwise be available and it cannot be read to mean that investment allowance which has already been granted has to be changed. He further contended that Section 43 opens with the phrase "unless context otherwise requires" and on harmonious reading of Section 43 (1), Section 32a and Section 43a of the Act, legislative intention should be inferred as held in case of CIT vs. Windor Foods Ltd. (Supra ). That by operation of non obstante clause in Section 43a of the Act as suggested by assessee the restrictive conditions in Section 32a would stand negatived. Apart from heavy reliance on decision of Division Bench of this Court in case of C. I. T. vs. Windsor Foods Ltd. (supra) Mr. Qureshi also referred to various decisions dealing with various principles of interpretation to contend that interpretation should be purposive, contextual and ratio decidendi of a decision had to be applied. ( 9 ) MR. J. P. SHAH, learned Counsel appearing on behalf of the respondent-assessee stated that the decision of the Apex Court in the case of C. I. T. vs. Arvind Mills, 193 I. T. R. 255 was a complete reply to the submissions of the revenue and a benevolent provision brought on statute book for establishment and growth of industry should be construed with a benevolence oriented approach. It was submitted that Section 43a of the Act opened with the phrase "not withstanding anything contained in any other provision of this Act" and Section 32a did not open with the phrase not withstanding anything contained in Section 43a of the Act, hence the latter i. e. Sec. 32a of the Act had to yield to Section 43a of the Act. It was further contended that Section 43a (1) of the Act referred to various other provisions which deal with one time allowance in the capital field like Section 35 (1) (iv) of the Act or Section 35 (2) (ia) or Section 32 (1) (iia) or Section 32 (1) (vi) of the Act. Therefore, according to him Section 43a (1) of the Act was not meant to be operative only in relation to provisions which deal with recurring deductions. Mr. Shah referred to various decisions of the Apex Court in support of the proposition that where an incentive is granted the provision should be construed liberally so as to advance object and interpretation which would nullify the object of the provision should be avoided. ( 10 ) THE controversy - whether the provisions of Section 32a of the Act prevail over those of Section 43a of the Act as canvassed by Revenue or , Section 43a of the Act overrides other provisions including Section 32a of the Act as contended by assessee - shall have to be resolved in light of well established principles of interpretation. The approach has to be therefore as stated by the Supreme Court :"8. While interpreting a statute the Court should try to sustain its validity and give such meaning to the provisions which advance the object sought to be achieved by the enactment. The Court cannot approach the enactment with a view to pick holes or to search for defects of drafting which make its working impossible. It is a cardinal principle of construction of a statute that effort should be made in construing the different provisions so that each provision will have its play and in the event of any conflict a harmonious construction should be given. The wellknown principle of harmonious construction is that effect shall be given to all the provisions and for that any provision of the statute should be construed with reference to the other provisions so as to make it workable. A particular provision cannot be picked up and interpreted to defeat another provision made in that behalf under the statute. It is the duty of the Court to make such construction of a statute which shall suppress the mischief and advance the remedy. While interpreting a statute the Courts are required to keep in mind the consequences which are likely to flow upon the intended interpretation. It is the duty of the Court to make such construction of a statute which shall suppress the mischief and advance the remedy. While interpreting a statute the Courts are required to keep in mind the consequences which are likely to flow upon the intended interpretation. "[british Airways PLC vs. Union of India and others, (2002) 2 SCC 95 ]. ( 11 ) SECTION 32a of the Act which deals with investment allowance was inserted by Finance Act,1976 with effect from 1/4/1976. Sub-section (1) of the said section provides that in respect of a ship or an aircraft or machinery or plant specified in sub-section (2), which is owned by the assessee and is wholly used for the purpose of business carried on by the assessee deduction would be allowable in the previous year of acquisition or installation, as the case may be, or in the immediately succeeding previous year, if the said asset is first put to use then in that previous year. The amount of allowance would be equal to twenty-five per cent of the actual cost of asset. Sub-section (2) of Section 32a of the Act specifies the asset which would be eligible for investment allowance. Sub-section (3) of Section 32a provides that the deduction of investment allowance shall be to the extent so as to reduce the income to nil` and in case any sum remains unabsorbed the same shall be carried forward and the outer limit for carrying forward is eight assessment years immediately succeeding assessment year relevant to previous year in which asset was acquired/installed or immediately succeeding previous year in which the asset was first put to use. Sub-section 4 of Section 32a stipulates certain conditions on fulfillment of which the deduction under sub-section (1) shall be allowed and one of the important conditions pertains to creation of investment allowance reserve to the extent of 75% of the investment allowance to be actually allowed being debited to the profit and loss account of any previous year in respect of which deduction is to be allowed under sub-section (3) or any other previous year (but not being earlier than the year of acquisition/installation or when the asset was first put to use ). Explanation under sub-section (4) provides that in the eventuality of the assessing officer computing the figure higher than the one on the basis of which the assessee had claimed deduction, an opportunity shall be granted to the assessee to make good the short fall in the Investment Allowance Reserve Account and specifies that such additional reserve can be created in previous year in which the assessing officer serves a notice on the assessee or immediately preceding previous year if the accounts for that year have not been made up. ( 12 ) SECTION 43 deals with definition of certain terms relevant to income from profits and gains of business or profession and opens by stating "in sections 28 to 41 and in this section, unless the context otherwise requires ". Sub-section (1) defines "actual cost" to mean the actual cost of the assets to the assessee. For the present it is not necessary to deal with the Proviso or Explanation under the said sub-section. ( 13 ) SECTION 43a of the Act was inserted by the Finance (No. 2) Act,1967 with effect from 1/4/1967. The said section pertains to special provisions consequential to change in the rate of exchange of currency. Sub-section (1) of Section 43a lays down that notwithstanding anything contained in any other provision of the Act, where an assessee has acquired any asset from a country outside India for the purpose of his business and, in consequence of a change in the rate of exchange at any time after the acquisition of such asset, there is an increase or reduction in the liability of the assessee in Indian currency for making payment towards the whole or a part of the cost of the asset, the amount by which the liability aforesaid is so increased or reduced shall be added to or reduced from the actual cost of the asset as defined in section 43 (1) and the amount arrived at after such addition/reduction shall be taken to be the actual cost of the asset. Therefore, it is apparent that: (A) the provision overrides any other provision of the Act; (B) the provision operates on an event which happens after the date of acquisition of an asset; (C) the provision envisages increase/reduction in the liability for making payment towards the whole or part of the cost of the asset; (D) the amount by which the liability is increased/reduced should go to add to or reduce from the actual cost of the asset under section 43 (1) of the Act; (E) such changed figure shall be taken to be the actual cost of the asset; (F) such increase/reduction in the liability shall be added to or reduced from the cost of the asset during the previous year in which the exchange fluctuation took place. ( 14 ) ON a plain reading of Section 43a of the Act, one thing is certain and that is, the increase or reduction in the liability has to take place only in the year of fluctuation and it does not relate back to the year of acquisition/installation/first user. One will therefore have to proceed on the footing that actual cost figure which was quantified earlier than the previous year in which the fluctuation took place, shall have to be modified in the year of fluctuation. It is well settled that when the asset was purchased at a price,liability to pay the said price arose simultaneously. Merely because the said liability was to be discharged in instalments, it cannot be stated that the liability did not exist or accrue till the instalments became due and payable. It is this liability which changes on account of fluctuation in the rate of exchange. There is one more aspect. The price of the asset had already been arrived at on the day when the contract of purchase had been entered into; now due to fluctuation in the rate of exchange, in terms of Indian currency the cost in hands of an assessee shall stand modified. The contention of the revenue therefore that the figure of actual cost stood quantified once and for all for the purpose of investment allowance in the year of acquisition/installation/first user will therefore have to be tested in this context. ( 15 ) THE question is as regards allowability or otherwise of investment allowance on the additional amount which goes to enhance the actual cost of the asset in question. ( 15 ) THE question is as regards allowability or otherwise of investment allowance on the additional amount which goes to enhance the actual cost of the asset in question. There is no dispute that the actual cost gets enhanced for all other purposes like depreciation etc. Therefore, the contention raised on behalf of the revenue by giving various illustrations would not throw any further light as regards the controversy at hand. The apprehension to the effect that provisions relating to carryforward of unabsorbed investment allowance and creation of investment allowance reserve and utilisation of the said reserve within the specified time limits would become unworkable if the assesses claim is upheld is unfounded. ( 16 ) THE approach advocated by revenue goes against the well settled cannons of construction. It cannot be permitted to pick up sub-sections (3) and (4) of Section 32a of the Act to defeat operation of Section 43a of the Act. Moreover, the question before the Court is whether investment allowance is available on enhanced actual cost. The submission on behalf of revenue that even if such enhanced actual cost is considered for grant of investment allowance, the actual allowance should adhere to the statutory limitation laid down in sub-sections (3) and (4) of Section 32a requires to be stated to be rejected. There is no such restriction prescribed in Section 43a of the Act : it merely states "notwithstanding anything contained in any other provision of this Act. . . . . . ": (emphasis supplied ). ( 17 ) TAKING into consideration the object of the provision, viz. Section 32a of the Act, the claim would become workable once provisions of Section 43a (1) of the Act are allowed to have full play. In other words when a provision stipulates that it shall override any other provision of the Act it is something akin to a provision which enacts a fiction. It is well established that a fiction has to be permitted to operate to its logical end and one cannot permit the mind to be boggled at any intermediate stage. That in case of conflict between two provisions, overriding effect has to be given to the provision which opens with a non obstante clause. To put it differently, the non obstante clause is a legislative device adopted to modify or override the ambit of the provisions mentioned in the non obstante clause. That in case of conflict between two provisions, overriding effect has to be given to the provision which opens with a non obstante clause. To put it differently, the non obstante clause is a legislative device adopted to modify or override the ambit of the provisions mentioned in the non obstante clause. In this case all the provisions of the Act. The scope of a non-obstante clause has been explained by the Supreme Court in the case of Vishin N. Khanchandani and Another Vs. Vidya Lachmandas Khamchandani and Another, AIR 2000 SC 2447 thus :"11. xxx xxx There is no doubt that by non obstante clause the Legislature devices means which are usually applied to give overriding effect to certain provisions over some contrary provisions that may be found either in the same enactment or some other statute. In other words, such a clause is used to avoid the operation and effect of all contrary provisions. The phrase is equivalent to showing that the Act shall be impediment to measure intended. To attract the applicability of the phrase, the whole of the section, the scheme of the Act and the objects and reasons for which such an enactment is made has to be kept in mind". As stated by the Apex Court in the case of Arvind Mills (supra) once the non obstante clause operates, even if the position had been different otherwise, it cannot prevail after the introduction of this Section i. e. Section 43a (1) of the Act. ( 18 ) IN light of this position of law, once Section 43a of the Act provides that the figure of actual cost of an asset to the assessee stands modified in the previous year in which the exchange rate fluctuation took place all other consequences would flow by adopting the said year and the said figure of actual cost as the starting point. In other words, an assessee claiming investment allowance on such modified figure of actual cost will be required to fulfill the requisite condition like creation of reserve to the specified extent in the year of such change in the figure of actual cost. The period of carryforward for the purpose of eight years shall have to be computed from the said year and similarly the period of utilisation of the investment allowance reserve shall have to be computed from the said year. The period of carryforward for the purpose of eight years shall have to be computed from the said year and similarly the period of utilisation of the investment allowance reserve shall have to be computed from the said year. This would ofcourse be only in relation to the enhanced cost of the asset i. e. the deduction would be available to the extent of 25% of the enhanced cost, reserve will have to be created to the extent of 75% of the enhanced cost. ( 19 ) PROVISION of Section 32a of the Act nowhere provides that investment allowance cannot be allowed beyond the year of acquisition/installation/first put to use where the actual cost stands modified due to application of Section 43a of the Act. To the contrary there are inherent indications in the Scheme of Section 32a of the Act which go to show that an assessee can claim deduction of higher amount of investment allowance on fulfillment of statutory condition prescribed. The creation of reserve and allowance have been linked with availability of sufficient profits. Sub-section (4) provides for creation of Investment Allowance Reserve Account and specifically stipulates that the same could be created not only in previous year in respect of which a deduction is to be allowed under sub-section (3) but it could be any earlier previous year but the cutoff point would be the previous year in which an asset was acquired or installed or first put to use. In other words, in any of the years subsequent to such year an assessee would be permitted to pass necessary entries by debiting profit and loss account and crediting the reserve account and what is more material is such entries are relatable to profits and gains of the previous year which would be a subsequent year. Similarly Explanation to sub-section (4) also gives an indication that an assessing officer may permit an assessee to credit further amount to Investment Allowance Reserve Account out of the profits and gains of the previous year in which the assessing officer serves the assessee with the notice to do so. Similarly Explanation to sub-section (4) also gives an indication that an assessing officer may permit an assessee to credit further amount to Investment Allowance Reserve Account out of the profits and gains of the previous year in which the assessing officer serves the assessee with the notice to do so. ( 20 ) THUS, on an overall consideration of the scheme of Section 32a of the Act, it is abundantly clear that the legislature did not envisage any relating back to the year of acquisition/installation/first user but has provided for creation of reserve and allowance in a subsequent year being aware of the settled legal position that reopening of accounts is unknown to income tax. This position is clear from the decision in case of Arvind Mills (supra) wherein at page 262 of the reports the Apex Court has referred to two of its earlier decisions in case of C. I. T. vs. A. Gajapathy Naidu, 53 ITR 114 and C. I. T. vs. Swadeshi Cotton and Flour Mills Pvt. Ltd. 53 ITR 134. In fact, the Court has also taken note of the fact that the said principle has subsequently been recognised by the Amendment to the Companies Act,1956. . ( 21 ) IN relation to Section 43a of the Act, the Apex Court has stated thus :"it lays down, firstly, that the increase or decreasein liability should be taken into account to modify the figure of actual cost and secondly that such adjustment should be made in the year in which the increase or decrease in liability arises on account of the fluctuation in the rate of exchange". xxx xxx xxx xxx"as we have discussed above, the provisions of sub-section (1) apply to the present case and the increased liability should be taken us actual cost within the meaning of Section 43a (1 ). All allowances including development rebate or depreciation allowance or the other types of deduction referred to in the sub-section would therefore have to be based on such adjusted actual cost. But then sub-section (2) intercedes to put in a caveat. It says that the provisions of sub-section (1) should not be applied for purposes of development rebate. The effect is that the adjusted actual cost is to be taken as the actual cost for all purposes other than for grant of development rebate. " (emphasis supplied ). But then sub-section (2) intercedes to put in a caveat. It says that the provisions of sub-section (1) should not be applied for purposes of development rebate. The effect is that the adjusted actual cost is to be taken as the actual cost for all purposes other than for grant of development rebate. " (emphasis supplied ). ( 22 ) HENCE, once sub-section (1) of Section 43a of the Act comes into play and the increase in liability is taken as the actual cost within the meaning of Section 43 (1) of the Act, the effect is that such adjusted actual cost has to be taken as the actual cost for all purposes other than development rebate and all allowances would have to be based on such adjusted actual cost. Therefore, the assessee would be entitled to investment allowance on the figure of enhanced actual cost. ( 23 ) THE decision of the Division Bench in case of Windsor Food Mills Ltd. (supra) is therefore overruled and held to be not laying down correct law as regards allowability of investment allowance on enhanced cost. ( 24 ) IN so far as the aspect of interest payable, on the borrowing or deferred credit which is payable in instalments, forming part of the instalment is concerned, it is not necessary for us to deal with the said aspect as such interest component will be governed by Provisions of Section 36 (1) (iii) or Explanation 8 under Section 43 (1) of the Act. We are making this observation only with a view to ensure that if this aspect is arising in the case of any of the interveners who are represented by Mr. J. P. Shah, the said aspect can be urged and agitated before the Appropriate Forum as the facts warrant. ( 25 ) THE reference shall now go before the Division Bench for being answered in light of the opinion given by us. .