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TMI Blog2014 (7) TMI 563X X X X Extracts X X X X X X X X Extracts X X X X ..... er the Tribunal was right in holding that for the purpose of working out deduction u/s. 80HHC, clause (a) of section 80HHC becomes applicable instead of clause (b) as the assessee was engaged in the business of cutting and polishing of rough diamonds which are imported from abroad and then selling out cut and polished diamonds in trading of polished diamonds and the percentage of trading of polished diamonds is more than 50% of the total export sales – Held that:- The decision in Gem Granites v. Commissioner of Income-Tax [2004 (11) TMI 13 - SUPREME Court] followed - in view of the aforesaid 1984 Circular, cut and polished diamonds shall qualify for deduction under sec. 80HHC of the Income-tax Act - polished and processed granite did not fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We have heard Mr. Sudhir Mehta learned advocate appearing on behalf of the appellant-revenue. 3. Mr. Mehta learned advocate appearing on behalf of the appellant-revenue has vehemently submitted that so far as question no. 1, i.e., whether ITAT was justified in law in holding that 8% premium on the licences purchased by it from outside parties for sale or import would be liable to be treated as cash assistance u/s. 28(iiib) against its export eligible for deduction under sec. 80HHC and not income from other source is concerned, it is submitted that the learned Tribunal has not considered the Fifth proviso which was inserted by the Taxation Law (Amendment) Act, 2005 with retrospective effect from April 1, 1992, which reads as under: P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the matter to the learned ITAT for its fresh consideration of the aforesaid question. 5. Having heard Mr. Mehta learned advocate appearing on behalf of the appellant-Revenue on the aforesaid issue, and considering the judgment and order passed by the learned Tribunal on the aforesaid issue, it is a case that the judgment delivered by ITAT does not indicate that the Fifth proviso inserted by Taxation Law (Amendment) Act, 2005, with retrospective effect from April 1, 1992 was noticed by it. From the judgment and order, it appears that the learned Tribunal has heavily relied upon its earlier decision in the case of P. Navinkumar Co. (supra). However, the very issue in the case of P. Navinkumar Co., was referred to this Court and by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, the Hon ble Supreme Court referred to and considered 1984 Circular, which reads as under: Export of cut and polished diamonds and gem stones whether eligible for deduction under section 80HHC.-Section 80HHC has been inserted in the Incometax Act, 1961, by the Finance Act, 1983, and the deduction under this provision is admissible in relation to assessment year 1983-84 and subsequent years. The tax concession is, however, not admissible in relation to export of, inter alia, minerals and ores. 2. The Board has received a large number of references on whether the export of cut and polished diamonds and gem stones will qualify for deduction under section 80HHC. The Board are advised of the following features in the export of cut and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, in view of the aforesaid 1984 Circular, cut and polished diamonds shall qualify for deduction under sec. 80HHC of the Income-tax Act. 9. In view of the above, so far as question no. 2 referred to this Court is answered against the appellant-revenue and in favour of the assessee. Consequently, the present reference is disposed off by remitting the matter back to the learned ITAT so far as question no. 1 is concerned, for its fresh consideration in light of the Fifth proviso referred to above as also the amendment made under the Taxation Law (Amendment) Act, 2005. The aforesaid exercise shall be completed within a period of six months from today along with the case of P. Navinkumar Co. (supra) which was referred by the Divisi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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