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TMI Blog2001 (1) TMI 917X X X X Extracts X X X X X X X X Extracts X X X X ..... the deduction under section 80HHC the amended provision of which came into effect from April 1, 1991, only." The assessee is a company. The Assessing Officer stated that the assessee was exporter of mica (mineral). The Assessing Officer did not accept the contention of the assessee that the assessee was engaged in processed mica and fabricated mica, which was not mica minerals in the original sense but it was an industrial product different from the raw mica ore minerals. The Assessing Officer denied the claim of the assessee of deduction under section 80HHC of the Act in respect of its entire export profit in view of section 80HHC(2)(b)(ii) of the Act as was applicable prior to the assessment year 1991-92 on the ground that the profit by export of minerals and ores were not entitled to deduction under section 80HHC(1) of the Act. The assessee filed an appeal before the first appellate authority. The assessee contended that it was engaged in export of "processed mica" and "fabricated mica" which was manufactured after application of several manufacturing process through different machines. The assessee stated that the export of mica in mineral form was prohibited and banned by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufactured products as well as photographs submitted before me and considering the facts that export of mica as mineral was banned, and considering the various certificates and details filed before me as enumerated earlier, I am fully satisfied that the mica products exported by the appellant company in different forms as manufactured from mica mineral were completely different that mica mineral and as such, the goods exported by the appellant cannot be classified as export of mineral hence, is not hit by section 80HHC(2)(b) of the Income-tax Act. The contention of the Assessing Officer that the amendment of section 80HHC with effect from the assessment year 1991-92 only entitles the appellant for deduction under section 80HHC is also not correct for the simple reason that, as already stated above, the goods exported by the appellant company cannot be classified either as mineral or as ore and moreover, in my opinion, the amendment brought in with effect from the assessment year 1991-92 does not affect such benefit under section 80HHC during the earlier assessment orders because, as already discussed above, the appellant company did not export mineral or ore but, processed and fabr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tral Board of Direct Taxes, and stated that it was clarified that the processed mica and products derived from processing of mica minerals and mica ores would not amount to export of minerals and ores and hence will qualify for relief under section 80HHC of the Act. The learned Authorised Representative of the assessee also referred the copies of the certificates placed in the paper book (page No. not given) the reference of which are also given by the learned Commissioner of Income-tax (Appeals) at page 3 of the impugned order. The learned Authorised Representative of the assessee also referred an earlier order of the Tribunal dated December 30, 1997, in I.T.A. Nos. 2738, 2739 and 2740/Cal of 1991, for the assessment years 1983-84, 1984-85 and 1987-88 in the case of Inderchand Rajgarhia and Sons Pvt. Ltd. v. Asst. CIT and submitted that the Tribunal held that the processed mica and products derived from processing of mica minerals and mica ore would not amount to export of "minerals and ores" and as such the assessee was entitled to claim benefit of section 80HHC of the Act in the assessment years 1983-84, 1984-85 and 198788. We have carefully considered the orders of the authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort of cut and polished diamonds and gem stones will not amount to export of minerals and ores and will thus qualify for relief under section 80HHC of the Act. In arriving at the said conclusion the Board considered the following features : (i) Raw diamonds are not permitted to be exported under the import and export regulations ; (ii) Export from India consists only of cut and polished diamonds ; and (iii) Rough and raw diamonds are imported and cut and polished diamonds are exported. Further, the Ministry of Finance, Central Board of Direct Taxes, by its clarification dated July 27, 1994, also while considering the question about the deduction under section 80HHC in respect of the processed mica applies the features of the instructions contained in 1562, dated May 25, 1984, referred to hereinabove and stated that the processed mica and products derived from processing of mica minerals and mica ore will not amount to export of minerals and ores and hence will qualify for relief under section 80HHC of the Act. In view of the above, we are of the view that the processed mica which is subject to processing, fabrication and/or manufacturing operations to adapt to a particular ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lised bank. On the other hand, the learned Authorised Representative of the assessee justified the order of the first appellate authority and made his submissions on the lines of the submissions made before the first appellate authority that the interest free loan was advanced out of business expediency having long term benefits and as such the action of the Assessing Officer was not in order. We have considered the orders of the authorities below and the submissions of the learned representatives of the parties. During the course of hearing of the appeal, the learned Authorised Representative of the assessee had not disputed that interest bearing loan was advanced free of interest to the third party which later on became a subsidiary company of the assessee. It is not the case of the assessee that when it used the factory premises as well as the land of the said loanee company to whom it advanced interest free loan, was pursuant to any agreement between the parties. We are of the view that it is immaterial that the said loanee company later on became a subsidiary company of the assessee-company and as such it should be considered that the interest free advance was for business exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... below in disallowing the motor car expenses of Rs. 5,681 on account of personal use of the cars by the director is deleted. Similarly, we agree with the order of the learned Commissioner of Income-tax (Appeals) in allowing one-fifth of the depreciation on the car which were disallowed by the Assessing Officer. Accordingly, ground No. 3 of the appeal filed by the Department is rejected. Whereas the cross-objection No. 1 of the assessee is allowed. In cross-objection No. 2, the assessee has also disputed the order of the learned Commissioner of Income-tax (Appeals) on the ground that the learned Commissioner of Income-tax (Appeals) was unjustified in confirming the disallowance to the extent of Rs. 20,000 out of the disallowance of Rs. 25,000 made by the Assessing Officer on estimate on account of profit on sale of scrap. We have heard the learned representatives of the parties and have perused the orders of the authorities below. The Assessing Officer stated that the assessee incurred a sum of Rs. 40,837 as scrap expenses Rs. 7,483 for railway freight to transport the scraps and Rs. 746 to transport the scrap by lorries but had not shown any yield on account of sale of the said s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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