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17. The main case of the assessee is that the proviso which was introduced by the Finance Act 1987 is retrospective in nature. The proviso was a declaratory provision and, therefore, it was retrospective or at least retro-active. Although this provision was effective from 1-4-1988, it would cover all pending assessments. Further it is also their case that Explanation 2 will not operate to nullify the benefit or concession given by the proviso. It was also argued that the fields of operation of the proviso and the Explanation are separate. There may be some overlapping in some cases as conceded by Shri Sharma, but he had stated that the Explanation would cover that part of the period after the expiry of the period mentioned in the proviso. Shri Vaish's submission is slightly different. Accordingly to him, in some cases, where the sum payable has not yet fallen due on the last day of the accounting year, the assessee might be entitled to the deduction even though the entire demand is disputed. It is to cover such instances that the Explanation would be made operative.

22. It will be clear, therefore, that the intention of the legislature was clearly not as per the decision of the Andhra Pradesh High Court. So the Explanation was introduced with the intention of getting over this decision.

23. Therefore, it would be clear that, on the basis of the two High Court decisions and the Andhra Pradesh High Court decision read with the 1989 amendment, the assessee cannot get a deduction unless he has paid the tax.

24. The next stage comes after the introduction of the proviso by the Finance Act 1987. This is effective only from 1-4-1988 as per the statute itself. Tax payers have tried to give retrospective effect for pending assessments on the ground that it is declaratory statute and all declaratory statutes are fetrospective or at least retro-active. So the question is, whether this is a declaratory statute. Even if it is declaratory, whether the intention of the legislature was that the benefit should be given to assessments prior to 1988-89 also. A number of decisions have been cited to show how declaratory statutes are always retrospective. It is a settled position in law that no statute shall be construed to have restiospective operation unless such a construction appears very clearly at the time of the passing of the Act or arises by necessary and distinct implication. There is nothing mentioned in the proviso that it would be retrospective. On the other hand, the legislature had taken care to see that it applies only from 1-4-1988. Against the very specific mention of the date of its operation, it is very difficult to say that it was intended to apply retrospectively either by construction or by necessary implication. It is in this connection that we must consider the submission that the Act being declaratory has to be retrospective. First of all, it must be proved that the Act is declaratory. We do not find any material to say that the proviso is declaratory. The requirements to consider an amendment or a statute as declaratory, as laid down by the Supreme Court in the case of Channan Singh v. Smt. Jai Kaur AIR 1970 SC 349 'it is well settled that if a statute is curative or merely declares the previous law, the retroactive operation would be more rightly ascribed to it than the legislation which may prejudicially effect past rights and transactions'. Now, in order to apply this ratio, we have to give a finding that the previous law was defective or that it was wrongly understood either by the taxpayer, department or thejudiciary. It is very difficult for us to say that the law, as it existed, was defective or wrongly understood. The words of Section 43B as stated at the time, were very plain. There was no ambiguity about it. The only ambiguity was, whether the words 'payable' would refer to the relevant statute under which the liability arose. The difficulty was overcome by retrospective amendment later. It is, therefore, clear that the legislature had given a concession knowingly and that concession is to be operative only from 1-4-1988.