1993 (7) TMI 71 - HC - Income Tax

Summary

Issues Involved:
1. Whether granite is a "mineral" within the meaning of section 80HHC(b)(ii) of the Income-tax Act, 1961.
2. Whether the assessee is entitled to the allowance claimed u/s 80HHC in respect of the granite exported from India.

Summary:

Issue 1: Definition of Granite as a "Mineral"
The Tribunal held that "granite" is a mineral, thus excluding it from the benefits of section 80HHC. The Tribunal did not accept the opinion of geological experts who classified granite as a rock, not a mineral. The Tribunal adopted a broad meaning of "mineral" to include granite.

Issue 2: Entitlement to Allowance u/s 80HHC
The assessee argued that section 80HHC is a beneficial provision aimed at encouraging exports and earning foreign exchange. They contended that the term "mineral" should be narrowly construed, using the rule of noscitur a sociis, to mean only those minerals similar to ores. The court, however, emphasized the broader context and purpose behind excluding "minerals and ores" from the benefits of section 80HHC(1), which is to prevent the export of natural wealth obtained directly from the earth.

Legal Principles and Precedents:
- The court referred to various Supreme Court rulings on the rule of noscitur a sociis, emphasizing that it should be applied only when the legislative intent is unclear.
- In fiscal legislation, terms are generally understood in their popular sense unless specified otherwise.
- Beneficial provisions in fiscal statutes should be liberally construed to advance their purpose, but not at the expense of other statutory provisions serving a public purpose.

Conclusion:
The court concluded that the term "mineral" in section 80HHC(2)(b) should be given its broad meaning, including granite. The exclusion of "minerals and ores" from the benefits of section 80HHC(1) is intended to preserve the country's natural wealth. Therefore, the assessee is not entitled to the allowance claimed u/s 80HHC for the export of granite. Both questions were answered in the affirmative, against the assessee and in favor of the Revenue.