TMI Blog2001 (2) TMI 305X X X X Extracts X X X X X X X X Extracts X X X X ..... erused the material on record. The undisputed findings of the CIT(A) are that the assessee is engaged in further processing like sizing and polishing, etc. All these activities clearly constituted manufacture of article or thing within the meaning of s. 32A of the Act. As regards the contention that the items of assets are not plant and machinery but are only in the nature of road transport vehicles, the same is concluded against the Department by the decision of the Tribunal in the assessee s own case for the asst. yr. 1983-84. Following our own reasons given in that order, we uphold the assessee s claim and decline to interfere." Thus, we find that this issue is squarely covered by the decisions of this Tribunal in the assessee s own case, in favour of the assessee. Therefore, the order of the learned CIT (A) is confirmed on this point. 5. The next issue relates to the deduction allowed by the learned CIT(A) under s. 80HHC for the assessment years under consideration. The assessee is a closely held company carrying on business in quarrying of granite stones, cutting them into requisite sizes, turning them into shape, dressing them and exporting them to foreign countries to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e opinions given by geologists also show that granites will fall in the category of rocks and not minerals or ores. In the amendment made by the Finance (No. 2) Act,1991 wherein a new XII Schedule has been added to the statute item (x) reads as under: "Cut and polished minerals and rocks including cut and polished granites." From the very fact that cut and polished granites are considered as rocks and not minerals, it will be obvious that the legislative intention is that granites are not of the same genus as minerals. This is also quite in conformity with the decision of the Tribunal, in the case cited supra of Hyderabad Bench and also the opinion of geologists. The amendment also was intended to extend the benefit from the asst. yr. 1991-92 to prohibited items like processed minerals and ores and not to deny the benefit in respect of items like granites which were entitled to the benefit even without reference to the amendment. In the light of the aforesaid discussion, therefore, the appellant is entitled to the benefit of relief under s. 80HHC of the IT Act in respect of granites quarried from own quarries as well as purchased from outsiders and processed by cutting them int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l for the assessee relied on the order of this Tribunal in the case of Asstt. CIT vs. M/s Enterprising Exporters (P) Ltd., in ITA No. 1630/Mad/l992 dt. 14th Oct., 1999. He also relied on the decision of the Karnataka High Court in the case of God Granites vs. Dy. CIT (1999) 156 CTR (Kar) 327 : (1999) 240 ITR 343 (Kar). 8. We have heard rival submissions and perused the records. In the order of this Tribunal dt. 14th Oct., 1999, cited supra, reliance has been placed on the order of this Tribunal in ITA Nos.1040 and 1041/Mad/1986 and in ITA Nos.822 and 823/Mad/1990. For better appreciation of the facts and the legal position, we may import the circular issued by the CBDT, namely Circular No. 729, dt. 1st Nov., 1995, wherein in para 3 it is mentioned as below: "The Board is, therefore, of the view that while granite can alone be considered as mineral, any process applied to granite would deprive the quality of rough mineral from the dimensional blocks of granite, which is a value added marketable commodity. When rough granite is cut to dimensional blocks of uniform colour and size, it not only undergoes mechanical process of cutting, but also, a certain amount of dressing and poli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of granite dimensional blocks would be eligible for deduction under s. 80HHC. There was nothing on record to indicate that what the assessee exported was such value added granite so that, even assuming that the said circular was explanatory and could, therefore, relate back to the year in question, the assessee could not derive any assistance therefrom. The assessee was not entitled to special deduction under s. 80HHC in respect of granite exported from India, for the asst. yrs. 1985-86,1987-88 and 1988-89." In the case before the apex Court there was nothing on record to indicate that what the assessee exported was value added granite. Therefore, the case relied on by the learned Departmental Representative is factually distinguishable. However, at the same time the observation of the apex Court extracted above would certainly indicate that circular dt. 1st Nov., 1995 is explanatory. 11. Further, it is to be seen that the circular issued by the CBDT is binding on the authorities and other persons employed in executing the IT Act. In the decision of the Karnataka High Court in the case of God Granite reference has been made in respect of the decisions in Stone Craft Enterpris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porters which necessitated the CBDT to issue the subsequent circular. The procedure reamins the same. The CBDT being of the view that earlier it had taken a wrong view about the nature of export of granite blocks, on full appraisal of facts expressed the correct factual view in its later circular. Clarificatory amendments in law are always retrospective unless the statute provides otherwise. Hence, the subsequent circular would be applicable to assessment years preceding the issuance of this circular as well." Their Lordships in this decision while considering the earlier decision of the Karnataka High Court made the following observations: "After the conclusion of the arguments and reserving the order, the judgment of the Supreme Court in Stonecraft Enterprises vs. CIT (1999) 153 CTR (SC) 86 : (1999) 237 ITR 131 (SC), came to our notice by which the view taken by this Court in Stonecraft Enterprises vs. CIT (1993) 114 CTR (Kar) 361 : (1993) 204 ITR 550 (Kar), was affirmed. We heard counsel for the parties afresh regarding the applicability of this judgment to the facts of this case. In our view, this judgment would not affect the merits of the present case as it is relatable t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e years in question: "Incidentally, the Supreme Court in Stone Craft Enterprises case (1999) 153 CTR (SC) 86 : (1999) 237 ITR 131 (SC), has observed that the circular is explanatory, and, therefore, can relate back to the year in question. The view taken by us is also in conformity with the observations made by the Supreme Court in the said case. This lends support to the view that the subsequent circular would be applicable to the assessment years previous to the issuance of this circular as well." Thus, our view is fully fortified by the decision of the Division Bench of the Karnataka High Court reported in (1999) 156 CTR (Kar) 327 : (1999) 240 ITR 343 (Kar). 12. It is also relevant to note that certain explanations/clarifications were issued to s. 43B of the Act. Amendment by way of inserting the first proviso to s. 43B w.e.f. 1st April, 1988, stood for consideration before the apex Court in the case of Allied Motors (P) Ltd. vs. CIT (1997) 139 CTR (SC) 364 : (1997) 91 Taxman 205 : (1997) 224 ITR 677 (SC). This was considered to be curative in nature and has to be read into s. 43B from its inception, therefore, even prior to insertion of first proviso sales-tax collected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r such goods pending inspection. This method of valuation has been consistently followed by the appellant and has also been accepted till the asst. yr. 1988-89. On principle also, it cannot be found fault with. The Madras High Court in the above cited case has approved this method of valuation. Besides, the learned representative submitted there will be only detriment to the Revenue as a result of the addition made by the Asstt. CIT during the asst. yr. 1989-90. In the light of the above-said discussion, the addition made is deleted. (Rs. 2,35,500)." Further, it is brought to our notice that such valuation of closing stock has been accepted by the Hon ble Madras High Court in the case of K. Mohammad Adam Sahib vs. CIT (1965) 56 ITR 360 (Mad). 15. We have considered the facts narrated above. After going through the observations and findings of the first appellate authority and also considering the facts available on record and the submissions made, we do not find any infirmity in the order of the learned CIT(A) on this point. The assessee has been exporting the granite stones cut and processed to the foreign countries. There was no instance of sale of goods within India whether ..... X X X X Extracts X X X X X X X X Extracts X X X X
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