COMMISSIONER OF INCOME TAX Vs. HARYANA MINERALS LTD.

JUDGEMENT

(1.) THE Income -tax Appellate Tribunal (Delhi Bench "D", Delhi) (for short, "the Tribunal"), has, in compliance with the direction given by this Court in IT Case No. 40 of 1997, referred the following questions of law for its opinion :

(2.) THE assessee is a Government company engaged in the business of mining and extraction of minerals from the lands taken on lease from the State Government. For the asst. yr. 1984 -85, the assessee filed a return declaring a loss of Rs. 4,76,960. Later on, it filed the revised return showing an income of Rs. 11,690. The assessment was completed under s. 143(3) of the IT Act, 1961 (for short, "the Act"), at a total income of Rs. 3,56,819. While doing so, the AO allowed deduction of Rs. 27,275 under s. 80HHC of the Act on the export turnover of Rs. 37,96,486 by assuming that the provision of that section was applicable to the assessee. Subsequently, the assessee filed an application under s. 154 of the Act claiming deduction of Rs. 41,674 under s. 80HHC of the Act. The AO accepted the claim of the assessee and entirety. On appeal, the Commissioner of Income -tax (Appeals) [hereinafter described as "the CIT(A)"], set aside the order of the AO and deleted the addition of Rs. 41,674. The Tribunal confirmed the order of the CIT(A) and dismissed the appeal filed by the Revenue. Reference application filed by the Revenue under s. 256(1) of the Act was also dismissed by the Tribunal.

(3.) WE have heard Shri Rajesh Bindal, learned counsel for the Revenue, and perused the record. In our opinion, question No. 1, referred by the Tribunal deserves to be answered in favour of the Revenue in view of the judgment of the Supreme Court in Gem Granites vs. CIT (2004) 192 CTR (SC) 481 : (2004) 271 ITR 322 (SC) : (2005) 26 IT Rep 1. In that case, their Lordships interpreted s. 80HHC (unamended) along with the amendment made by the Finance (No. 2) Act of 1991, and held as under : "The 'minerals and ores' are expressly excluded under sub -s. (2)(b) thereof which exception covered granite whether raw or polished - -There are no words of restriction which qualify the word minerals and it will be reasonable to assume that in the absence of any such limitation, the word must be read to include all kinds of minerals in all its forms, i.e., subjected to any process or not as long as it retained the characteristics of the minerals - -Doubtless, the Customs Tariff Act and the Central Excise Tariff Act both draw a distinction between minerals and processed minerals - -For example in Chapter 27 of the Customs Tariff, a distinction has been drawn between mineral fuels, mineral oils and mineral products - -However a classification which is relevant for the purpose of determination of rate of duty cannot be imported into the IT Act which makes no such distinction. The appellant in this case is an exporter of cut and processed granite and wanted the benefit of s. 80HHC claiming that the processed granite is not mineral excluded from the benefit of s. 80HHC - -Having failed to impress the Departmental authorities, its plea did not find favour at the High Court also - -On further appeal, the apex Court also dismissed the amendment of the section in that year."