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TMI Blog1999 (10) TMI 734X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of that amount treating the export to that extent on account of minerals on which Export promotion deduction is not permissible. 2. The learned counsel for the assessee, during the course of hearing of the appeal before us, explained that out of the rough diamonds imported, some diamonds are found not fit for cutting and polishing and accordingly these are exported as such. The Assessing Officer considered the export of rough diamonds as the export of minerals not falling under the Twelfth Schedule in respect of which deduction under section 80HHC was not permissible. The assessee had relied upon the CBDT Circular being F.No. 178/206/83-IT(A1) dated 22-5-1984 in support of its claim that diamonds after cutting and polishing a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presentative that rough diamonds are other than cut and polished minerals and therefore deduction under section 80HHC is not permissible in respect of such exports. The decision of the CIT(A), it was stated, is thus not in order. 5. The learned counsel for the assessee on the other hand pointed out that in the past the Department has accepted the decision of the CIT(A) on similar issue and there is no change in facts and circumstances of the case and therefore the decision of the CIT(A) may be upheld. The learned counsel further invited our attention to the Explanation to the Twelfth Schedule which clarifies that for the purposes of the Schedule XII, processed in relation to any mineral or ore would include washing and levigation. Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of rough diamonds out of the imported diamonds not found feasible for cutting and polishing have been sold in the open market outside India, such type of transactions falls within the ambit of exports out of India. The issue that arises is as to whether the assessee is entitled to deduction under section 80HHC in respect of export of such rough diamonds. Section 80HHC provides a deduction in respect of export of goods and merchandise but sub-section (2)(a) prohibits deduction in respect of the export of mineral oil and minerals and ores other than processed minerals and ores specified in the Twelfth Schedule. The Circular of the CBDT relied upon by the assessee before the Assessing Officer, bearing F. No. 178/206/83-IT(A1) dated 22-5- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to processing of the minerals and ores and therefore if the rough diamonds have been washed the assessee would be entitled to deduction needs consideration. But we are afraid that the contention advanced on behalf of the assessee may not be well founded. The said Explanation clarifies the meaning of the word processed . There are several items in the Twelfth Schedule using the word processed . For example item Nos. (ii) and (iii) specifically uses the word processed and the Explanation clarifies as to what is meant by the word processed . The Twelfth Schedule does not say that every mineral or ore, which is processed, is excluded from the operation of clause 2(a)(b). If it were so then the contention on behalf of the assessee would be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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