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- Entitlement to deduction under section 80HHC - Validity of reassessment proceedings for the assessment year 1990-91 Entitlement to Deduction under Section 80HHC: The main issue in the appeals was whether the assessee was entitled to deduction under section 80HHC. The Department contended that since the assessee was exporting granite, which is considered a mineral, the deduction under section 80HHC was not admissible. However, the assessee argued that they were dealing in the export of polished granite and articles made of granite, referred to as "graniteware." The judgments of the Supreme Court and the Karnataka High Court established that granite is considered a mineral. The Supreme Court and the High Court decisions clarified that prior to the amendment in 1991, granite being a mineral meant the assessee exporting granite was not eligible for the deduction under section 80HHC. However, post the 1991 amendment, cut and polished granite became eligible for the deduction under section 80HHC. Validity of Reassessment Proceedings for the Assessment Year 1990-91: The additional ground of appeal raised by the assessee objected to the reassessment proceedings for the assessment year 1990-91. The Departmental Representative vigorously opposed the admission of this ground, asserting that the reassessment had been done in accordance with the law. The Tribunal admitted the additional ground but upheld the validity of the reassessment proceedings, stating that the Assessing Officer had followed the legal procedures in reopening the assessment. The Tribunal found no infirmity in the reassessment proceedings initiated by the Assessing Officer for the assessment year 1990-91. Conclusion: The Tribunal found that the assessee was entitled to deduction under section 80HHC for the years 1991-92 onwards for cut and polished granite or granite subject to processing before export. The matter was referred back to the Assessing Officer for re-examination to determine the exact amount of deduction based on the nature of goods exported. For the years prior to 1991-92, the Tribunal directed a fresh examination by the Assessing Officer in light of the latest legal decisions and circulars. The orders of the authorities below were set aside, and the appeals were treated as partly allowed for statistical purposes, emphasizing the need for a detailed reconsideration of the claims by the Assessing Officer.
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