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TMI Blog2011 (8) TMI 422X X X X Extracts X X X X X X X X Extracts X X X X ..... fit case for invoking the jurisdiction under Section 263 of the Act. - Decidedagainst the assessee X X X X Extracts X X X X X X X X Extracts X X X X ..... m the mines. k) The Commissioner of Income-tax, however, by an order dated January 31, 1995 held that processed mica was not covered by Section 80HHC prior to the Assessment Year 1991-92 and directed the Assessing Officer to withdraw the deduction granted under the said section. l) Being dissatisfied, the appellant preferred an appeal before the Income-tax Appellate Tribunal, where there was a difference of opinion between the members who heard the appellant's appeal. The Accountant Member was of the view that the appellant was entitled to deduction under Section 80HHC as valued products exported by the appellant were not mineral as such. The learned Judicial Member, however, was of the view that by virtue of amendment made by Finance Act, 1991, the appellant's products were not covered by Section 80HHC during the Assessment Year 1990-91. As a result, the matter was referred to a Third Member who by an order dated March 31, 2003 agreed with the view taken by the Judicial Member and subsequently, by an order dated April 7, 2003 the Division Bench of the Tribunal dismissed the appeal filed by the appellant in view of the majority view. Being dissatisfied, the assessee has come ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his appeal, has strenuously contended before us that the assessee being a manufacturer and exporter of fabricated minerals which are distinct from minerals taken from mines, is entitled to the benefit of Section 80HHC of the Act. Mr. Khaitan contends that the goods exported by his client did not come within the purview of the word "minerals and ores" within the meaning of Section 80HHC (2)(b)(ii) of the Act and thus, the learned Tribunal below committed substantial error in law in affirming the order passed under Section 263 of the Act. Mr. Khaitan further contends that at least there was no scope of invoking Section 263 of the Act when the points involved in this appeal is not free from doubt in view of conflicting decisions of the Supreme Court in the case of Gem Granites vs. Commissioner of Income-tax, reported in 271 ITR Page 322 and Stonecraft Enterprises Vs. Commissioner of Income-tax, reported in 1999 237 ITR page 131. Mr. Khaitan, therefore, prays for setting aside the order under Section 263 of the Act. Mr. Nizamuddin, the learned Advocate appearing on behalf of the Revenue, has, on the other hand, opposed the aforesaid contention of Mr. Khaitan and has contended that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he sale of goods or merchandise to the Export House or Trading House in respect of which the certificate has been issued by the Export House or Trading House. (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 received in, or brought into, India by the assessee (other than the supporting manufacturer) in convertible foreign exchange (within a period of six months from the end of the previous year or, where the Chief Commissioner or Commissioner is satisfied (for reasons to be recorded in writing) that the assessee is, for reasons beyond his control, unable to do so within the said period of six months, within such further period as the Chief Commissioner or Commissioner may allow in this behalf. (b) This section does not apply to the following goods or merchandise namely:- (i) mineral oil; and (ii) minerals and ores (other than processed minerals and specified in the Twelfth Schedule). (words in bracket added with effect from April 1, 1992) The following Explanations shall be inserted by the Finance (No.2) Act, 1991 w.e.f. 1-4-1992: Explanation 1: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of such goods bears to the adjusted total turnover of the business carried on by the assessee; and (ii) in respect of trading goods, be the export turnover in respect of such trading goods as reduced by the direct and indirect costs attributable to export of such trading goods: Provided that the profits computed clause (a) or clause (b) or clause (c) of this sub-section shall be further increased by the amount which bears to ninety per cent of any sum referred to in clause (iiia) (not being profits on sale of a licence acquired from any other person), and clause (iiib) and (iiic), of section 28, the same proportion as the export turnover bears to the total turnover of the business carried on by the assessee. Explanation: For the purposes of this sub-section,- (a) "adjusted export turnover" means the export turnover as reduced by the export turnover in respect of trading goods; (b) "adjusted profits of the business" means the profits of the business as reduced by the profits derived from the business of export out of India of trading goods as computed in the manner provided in clause (b) of sub-section (3); (c) "adjusted total turnover" means the total turnov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified by the auditors auditing the accounts of the Export House or Trading House under the provisions of this Act or under any other law. Explanation: For the purposes of this section,- (a) "convertible foreign exchange" means foreign exchange which is for the time being treated by the Reserve Bank of India as convertible foreign exchange for the purposes of the Foreign Exchange Regulation Act, 19j73 (46 of 1973), and any rules made thereunder; (aa) "export out of India" shall not include any transaction by way of sale or otherwise, in a shop, emporium or any other establishment situate in India, not involving clearance at any customs station as defined in the Customs Act, 1962 (52 of 1962); (b) "export turnover" means the sale proceeds, received in, or brought into, India by the assessee in convertible foreign exchange in accordance with clause (a) of sub-section (2) of any goods or merchandise to which this section applies and which are exported out of India, but does not include freight or insurance attributable to the transport of the goods or merchandise beyond the customs station as defined in the Customs Act, 1962 (52 of 1962); (ba) "total turnover" shall not include ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the business of the assessee in the manner laid down in sub-section (4): Provided that a hotel or, as the case may be, a tour operator approved by the prescribed authority an or after the 30th day of November, 1989 and before the 1st day of October, 1991, shall be deemed to have been approved by the prescribed authority for the purposes of this section in relation to the assessment year commencing on the1st day of April, 1989 or the 1st day of 1990 or, as the case may be, the 1st day of April, 1991 if the assessee was engaged in the business of such hotel or as such tour operator during the previous year relevant to any of the said assessment years. Explanation: The expression "office machines and apparatus" includes all machines and apparatus used in offices, shops, factories, workshops, educational institutions, railway stations, hotels and restaurants for doing office work and for data processing (not being computers within the meaning of section 32AB). 23. Steel furniture, whether made party or wholly of steel. 24. Safes, strong boxes, cash and deed boxes and strong room doors. 25. Latex foam sponge and polyurethane foam. 26. *** 27. Crown corks, or other fittings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not get the benefit of Section 80HHC of the Act whereas from very next assessment year, if the exported goods and merchandise are found to be of the nature of the processed minerals as indicated in Twelfth Schedule of the Amended Act, those should get the benefit of deduction. The aforesaid amended provision has been given effect to not retrospectively but prospectively from the next assessment year. Thus, from the next assessment year, the appellant would get the benefit of the said section for exporting the similar item of goods and merchandise. We are unable to accept the contention of Mr. Khaitan that simply because the goods and merchandise exported by his client were made by converting mica into pieces of specific sizes, the same lost its character as goods and merchandise of the category of "minerals and ores". In the sub-section 2(b) for the relevant assessment year what was excluded from the benefit of the section 80HHC was not simply the export of "minerals or ores" but also "goods and merchandise, namely, minerals or ores" and thus, any articles for sale if made of minerals or ores came within the purview of such expression although from the next assessment year, p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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