TMI Blog2004 (11) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... ereinafter referred as "the Act"), in respect of profits from its export business. The assessment year in question is 1987-1988. Section 80HHC as it then stood read as follows: "80HHC. Deduction in respect of profits retained for export business. - (1) Where an assessee, being an Indian company or a person (other than a company) resident in India, is engaged in the business of export out of India of any goods or merchandise to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of the profits derived by the assessee from the export of such goods or merchandise. (2) (a) This section applies to all goods or merchandise, other than those specified in clause (b), if the sale proceeds of such goods or merchandise exported out of India are receivable by the assessee in convertible foreign exchange. (b) This section does not apply to the following goods or merchandise, namely: - (i) mineral oil; and (ii) minerals and ores." Thus an exporter of minerals could not avail of the benefit of section 80HHC. According to the appellant although granite is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. That a liberal interpretation is to be given to such statutory provision has been held by this court in CIT v. Strawboard Manufacturing Co. Ltd. [1989] 177 ITR 431 at 433 and in Bajaj Tempo Ltd. v. CIT [1992] 196 ITR 188 (SC) at 193. Reliance has also been placed on Chapters in the Customs Tariff Act as well as the Central Excise Tariff Act in which a distinction has been drawn between minerals per se and articles manufactured out of minerals. Finally, it is submitted that this interpretation sought for by the appellant was a possible one which did no violence to the language of the statute. Therefore, in keeping with the object of the section, processed granite should not be included within the exclusion of sub-section (2)(b) of section 80HHC (as it stood prior to 1991) by holding it to be a "mineral". It is also argued that this court in Stonecraft Enterprises v. CIT [1999] 237 ITR 131; [1999] 3 SCC 343 had recognised the possibility of such an interpretation but had, on the facts, found against the assessee inasmuch as the assessee in that case had been unable to prove that the granite exported had been cut and polished. Learned counsel appearing on behalf of the Departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evant factor." It is not the appellant's case that the Central Government had in fact specified granite or articles of granite for the purpose of granting benefit under that section. Section 89A was subsequently re-enacted by the Finance Act, 1983, as section 80HHC of the Act. Except for a change of percentage of the rates of deduction permissible on the export turnover, the substantive provision as quoted earlier continued up to 1991. In 1991 the general exclusion relating to export of minerals and ores from the benefit of section 80HHC was itself subjected to an exception as quoted earlier. The primary question therefore is whether this 1991 amendment was merely clarificatory of the law as it always stood or whether it introduced a benefit in respect of cut and polished granite for the first time in 1991. The answer to this question would lie in the interpretation of sub-section (2)(b) of section 80HHC as it stood prior to its amendment and as it stands after 1991. That the word "mineral" as used in sub-section (2)(b) to section 80HHC is to be widely construed has been decided by this court in Stonecraft Enterprises [1999] 237 ITR 131 where it was held: "The word 'mineral ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arlier. The benefit of section 80HHC has been extended by the amendment to a specific kind of mineral and was introduced for the first time in 1991. If we were to hold that the word "minerals" in sub-section (2)(b) never included processed minerals then the 1991 amendment excepting processed minerals from the exclusionary effect of the sub-section would be rendered meaningless and an exercise in futility. Every statute is prima facie prospective unless it is expressly or by necessary implication made to have retrospective operation. There is nothing in the wording of the 1991 amendment to suggest that it was to operate retrospectively. Apart from the lack of any express words indicating such intention, there is nothing in the statute from which we can infer on any principle of interpretation that the intention of Parliament was to give the amendment retrospective effect. An argument founded on what is claimed to be the intention of Parliament may have appeal but a court of law has to gather the object of the statute from the language used. What one may believe or think to be the intention of Parliament cannot prevail if the language of the statute does not support that view. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Import of rough diamonds is allowed as replenishment on the basis of licences issued by the Joint Chief Controller of Imports and Exports, on the basis of the requisite documents produced by the exporters. Rough diamonds are also allowed to be imported on the basis of import licence issued by the licensing authorities for which the importer has to execute a bond with the Government of India for re-export after cutting and polishing within a prescribed time for a value worked out on a given formula. Detailed procedure in this regard is explained in the Import-Export Policy. 3. In view of the position brought by the above features, the export of cut and polished diamonds and gem stones will not amount to export of 'minerals and ores' and hence will qualify for relief under section 80HHC of the Income-tax Act, 1961." [Source: Circular letter F.No. 178/206/83-IT (AI), dated May 22,1984]. It is clear from the language used that the CBDT gave its understanding of sub-section (2)(b) of section 80HHC as it stood prior to the 1991 amendment with regard to diamonds and gem stones alone having regard to the peculiar facts and features relating to the export and import of diamonds. Apar ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
