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TMI Blog2002 (11) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... the light of the Tribunal's decision in the case of Deputy CIT v. India Cine Agencies [1995] 54 ITD 257 (Mad), whether the Appellate Tribunal was right in law in holding that the assessee is entitled for relief under section 32A of the Income-tax Act? 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the assessee is entitled for relief under section 80HHC for the assessment year under consideration in terms of Circular No. 729 dated November 1, 1995, which is applicable only from the assessment year 1991-92 onwards?" The relevant assessment year is 1988-89. The facts as stated in the statement of case are as follows: The assessee is a company doing business of mining and quarrying of granite stones and exporting them as finished goods to various countries. Before exporting these granite stones, as per the specification of the customers, the stone underwent various types of manual and machinery processes such as removal of over burden of the quarry by manual, process, location and drilling of the boulders, eschewing of waste, drilling of holes, lifting these granite logs either manually or with the help of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in quarrying and mining granite blocks as a manufacturing activity as such entitled to the investment allowance under section 32A of the Income-tax Act and also confirmed the finding of the Commissioner (Appeals) with regard to deduction under section 80HHC though not on the ground on which it has been granted by the Commissioner of Income-tax but on the ground that the assessee exported the granite stones by adding value to the blocks by cutting off rough edges, polishing it, processing at various stages, etc. Such processing of value addition of the quarried granite block would definitely amount to manufacturing. The Tribunal for coming to the conclusion also took into consideration Circular No. 729, of the Central Board of Direct Taxes, dated November 1, 1995. Thus, the Tribunal 1 granted both the reliefs as claimed by the assessee. Hence, at the instance of the Revenue, the above reference is made. As far as the first question is concerned, the counsel on either side accepted that the same has to be decided against the assessee and in favour of the Revenue in view of the judgments of this court in the case of CIT v. Gomatesh Granites [2000] 246 ITR 737 and in the case of CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of the relief granted to the assessee under section 80HHC. She relied on the decision of the Supreme Court in the case of Stonecraft Enterprises v. CIT [1999] 237 ITR 131. On the other hand, Mr. Philip George, learned counsel appearing for the assessee, has contended that section 80HHC is a beneficial provision to exporters like the assessee. Though by sub-section (2)(b)(ii) of section 80HHC the benefit was originally denied to the export of granites, by means of the amendment introduced under the Finance (No. 2) Act of 1991 from April 1, 1991, onwards such benefit was extended to the export of granite also. Such benefit should be given by construing that the amendment would be applicable retrospectively. Such a construction would only advance the intention of Parliament. When Parliament intended to give the benefit under section 80HHC to the export of granite, which earns valuable foreign exchange for our country, it should not be restricted to the date from which the amendment was introduced. That would defeat the Parliamentary intent. He also placed reliance on the circular of the Central Board of Direct Taxes in Circular No. 729, dated November 1, 1995, and also the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e statute and provisions therein. If the provision is introduced with a view to confer a benefit, which had not been conferred before such introduction, even though the provision to which, the amendment was incorporated is a beneficial provision that does not necessarily imply that the amendment is to be given retrospective effect even without a declaration to that effect from the Legislature. Every case of removal of hardship by the Legislature does not indicate a Parliamentary intention to remove the hardship from an anterior date unless the scheme of the Act, the context in which the amendment was made and the language of the amendment warrant such a view. When the benefit of section 80HHC is specifically excluded in respect of goods or merchandise like mineral oils and minerals and mineral ores originally and by means of subsequent amendment certain exception has been carved out from and out of the excluded goods or merchandise for the purpose of giving the benefit, such exclusion cannot be regarded as indicative of an intention on the part of the Legislature to have treated what is subsequently included as having been included at the inception of the provision. It would not al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s inserted with effect from April 1, 1984, to discourage taxpayers who had not discharged their statutory liability of payment of excise duty, etc., for long periods of time, but claimed deduction in that regard from their income on the ground that the liability to pay these amounts had been incurred by them in the relevant previous year. Even after the insertion of section 43B, the mischief sought to be remedied has not been achieved. To obviate the same the first proviso was added to section 43B by the Finance Act, 1987. The proviso made it clear that the section will not apply in relation to any sum which is actually paid by the assessee in the next accounting year, if it is paid on or before the due date for furnishing the return of income in respect of the previous year, in which the liability to, pay such sum was incurred. However, the expression "any sum payable" employed in clause (a) of section 43B was open to the interpretation that the amount payable in a particular year, should also be statutorily payable under the relevant statute in the same year. An Explanation was therefore added by the Finance Act, 1989, with retrospective effect from, April 1, 1984, for the purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laws and become a value added marketable commodity and accordingly be eligible for deduction under section 80HHC of the Act. This circular and the earlier circular dated November 17, 1994, were issued to clarify the goods which are included for the benefit under section 80HHC by means of the amendment from April 1, 1991, onwards. When we concluded that the amended provision itself is not available for the assessment year under consideration, the clarification issued by the Central Board of Direct Taxes through the above circular would not any way further the case of the assessee. Further there is absolutely no material on record to indicate as to how the rough granite blocks become value added granite, which were exported by the assessee. In the statements of case, it is stated that the assessee does the business of quarrying and mining of granite and exporting them as finished goods. In the assessment order it is stated that the business of the assessee is export of raw granite blocks and no processing and manufacturing activities are involved. The Commissioner of Income-tax (Appeals) has stated that the assessee has given a long note as to how the work of the assessee involved ..... X X X X Extracts X X X X X X X X Extracts X X X X
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