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TMI Blog1993 (7) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... stion. Hence, we proceed on the basis that we are required to consider only the above two questions which are in substance the same question worded differently. A detailed reference to the facts is unnecessary. Admittedly, the assessee has been exporting granites. The question is whether the income earned from the export of granites is covered by section 80HHC of the Act. There is also no dispute that granite is covered by the terms goods or merchandise and, there fore, the business of the assessee in exporting granite would normally be covered by the beneficial provisions of section 80HHC of the Act. The Revenue has relied on sub-section (2)(b) of section 80HHC to contend that granite is a mineral and, therefore, the main provision of the said section is not attracted. As per clause (b) of sub-section (2), the main section is not applicable to minerals and ores . We are concerned here with the assessment years 1985-86, 1987-88 and 1988-89. The Appellate Tribunal relied upon its order made in I.T.A. Nos. 326 and 327 of 1990, wherein the Tribunal had held that granite is a mineral and, therefore, the main provisions of section 80HHC are not attracted. The opinion of geologic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxation are to be normally understood in their popular sense unless the law itself indicates a different approach. Scientific and technical meanings are to be attributed to those words only when the context requires such meanings to be given. The normal rule is to give that meaning which the persons engaged in dealing with that subject-matter, attribute to that term, describing the subject. It is also true that a beneficial provision in a fiscal statute should be liberally construed to advance the purpose behind the legislation. But, in many of the cases, the problem is to find out the real purpose behind a particular provision. The contention has mainly two aspects-(i) the scope of the rule of noscitur a sociis (ii) to what extent the relevant provisions of section 80HHC are beneficial. As to the rule of noscitur a sociis, the Supreme Court in State of Bombay v. Hospital Mazdoor Sabha [1959-60] 17 FJR 423 ; AIR 1960 SC 610 observed, at page 614 (at page 428 of 17 FJR) : It must be borne in mind that noscitur a sociis is merely a rule of construction and it cannot prevail in cases where it is clear that the wider words have been deliberately used in order to make the sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ows (at page 62) The entire expression 'water supply and sanitary fittings' is one single expression and the words 'water supply ... fittings' must receive colour from the immediately following words 'sanitary fittings'. We are, therefore, of the view that the expression 'water supply . . . fittings' in the context in which it occurs means such pipes or materials as are meant for use for supply of water to or in lavatories, urinals or bath-rooms of private houses or public buildings and they do not include heavy pipes which are laid underground as mains for carrying water supply from one area or place to another. The Supreme Court took into consideration the context in which the terms were used, to arrive at the true scope of the relevant words and, having regard to the context, it was held that the words used in the expression received colour from the companion words. In Akbar Badruddin Jiwani of Bombay v. Collector of Customs, AIR 1990 SC 1579, the question was whether the word calcareous monumental stone or building stones of more than 2.5 specific gravity I, as mentioned in tariff item No, 25.15 comes within the purview of restricted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot to be mechanically applied ; they are of assistance only in so far as they furnish guidance by compendiously summing up principles based on rules of common sense and logic. Noscitur a sociis , as Crawford puts it, is like other principles of construction, to be used only as an instrumentality for determining the intent of the Legislature where it is in doubt. Nowhere the principle of construction states that the mere fact that two words are used as associated words, this rule should be applied to cut down the meaning of general word, especially where the association created by the Legislature may be for more than one reason and there may be several common characteristics in the two subjects described by the two words ; in such a case, a search has to be made to find out the real reason for the association created by the Legislature before applying the rule of noscitur sociis. Crawford's Statutory Construction (1940 Edition) at page 325 (para 190) reads: In order to ascertain the meaning of any word or phrase that is ambiguous or susceptible to more than one meaning, the court may properly resort to the other words with which the ambiguous word is associated in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xing statute should be broadly construed. The Supreme Court was construing section 15C of the Indian Income- tax Act, 1922. Since it was a provision directed towards encouraging industrialisation, the provision was liberally construed. Learned counsel relied on the observations found at page 193 to the following effect : The limited question is whether the assessee which has been found by the Tribunal to be a new company could be denied the benefit as visualised in section 15C(1) because of the operation of clause (i) of sub section (2). It is a restrictive clause. It denies the benefit which is other wise available in sub-section (1). A provision in a taxing statute granting incentives for promoting growth and development should be construed liberally. In Broach District Co-operative Cotton Sales, Ginning and Pressing Society Ltd. v. CIT [1989] 177 ITR 418 (SC), the assessee, a co-operative society, claimed that the receipt from ginning and pressing activities was exempt under section 81 of the Income-tax Act. The question for interpretation was whether the co-operative society which carried on the business of ginning and pressing was a society engaged in 'marketing' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inery' used in section 32A of the Act. However, it should be noted that, earlier, the Bench also pointed out that the meaning attributable to a term will have to be understood with reference to the context and the purpose for which a particular provision is enacted. In CIT v. Strawboard Manufacturing Co. Ltd. [1989] 177 ITR 431 (SC) the term paper and pulp was held as inclusive of strawboard. The Supreme Court held that the Schedule in the Act which refers to paper and pulp intended to refer to the paper and pulp industry and, therefore, the term has to be broadly construed and, in this regard, the Supreme Court referred to the Industries (Development and Regulation) Act, wherein the expression paper and pulp included paperboard and strawboard. In the instant case, the purpose behind section 80HHC is to confer certain benefits to those who are engaged in the business of export of any goods or merchandise to which the said section applies. Certainly, the object seems to be to confer a benefit on those who earn income by exporting goods or merchandise. This benefit is not made available to those who deal in-(i) mineral oil and (ii) minerals and ores. Earlier, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aracteristic of being natural inorganic substances forming part of the soil ; these excluded goods indicate that they form the natural wealth of the country ; these goods are not the product of any productive activity, but are extracted or obtained from mother earth . Therefore, the question is whether the broad meaning available to the term mineral should be ignored in preference to a narrower meaning, if any. Contextually, there is nothing to indicate that Parliament intended to confine the term mineral to a limited class of goods ; in fact, the present scheme of sub-section (2)(b) indicates that the goods which are directly obtained from the earth and which are considered as the natural wealth of the country are not eligible for the beneficial treatment under sub-section (1) of section 80HHC. If this is the proper approach, then, even the doctrine of noscitur a sociis is satisfied and it is unnecessary to narrow down the scope of the term mineral . Reference to section 35E is not helpful to the assessee. Deduction of expenditure incurred to obtain any mineral is given under section 35E to some extent. To avail of this benefit, the mineral has to fall within the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he particular provision. A few more decisions cited at the Bar would show that, normally, the meaning of the term mineral has a wider connotation though, in the context of its user in a particular legislation, it may have a narrower meaning. In Kumardhubi Fire Clay and Silica Works Ltd. v. Assistant Director, Tax Credit (Exports) [1980] 123 ITR 899, the Calcutta High Court was considering the meaning of the terms mineral and ores . There is also a term mineral ore . The Encyclopaedia of Chemistry is referred at page 902 which is relevant for our purpose, it reads Ores : With some exceptions, metals are obtained from bodies of material occurring in the earth called ores. An ore is always a source of metal ; the term is not applied to non-metallic substances such as clay, limestone, coal, etc. Ore is defined as a mixture of minerals which may be mined and treated as a source of metal with commercial profit. A mineral is a chemical compound occurring in nature and having a definite chemical composition and properties. An ore is distinguished from a mineral in that it is an aggregate of minerals and does not have a definite chemical composition ; further, in order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... page 363): I regret my inability to agree. It appears to me too late in the day to abandon the wider and comprehensive connotation which has always been attributed to the word 'mineral' in favour of a narrow and constricted meaning therefor. This is first so because admittedly the word 'mineral' is not a term of art of either chemistry, geology or mineralogy. It is a common English word which has always been judicially construed in a wide amplitude. I find no warrant for reducing its larger import to the limited confines of a chemical formula. We had repeatedly invited the counsel for the petitioners to cite any authority wherein the word 'mineral' has been circumscribed by a precise scientific definition which he had canvassed. Learned counsel had to fairly concede that in no precedent such a definition or limitation has even been attempted. In fact the unanimous view of authoritative pronouncement on the point would show the large and the unconfined sense in which the word 'mineral' has always been accepted and used. I would hence advert briefly to the leading English and American cases on the point in their chronological sequence. As early a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and Development) Act, we have no doubt that the word 'mineral' is of sufficient amplitude to include 'brick-earth'. As already observed by us, if the expression 'minor mineral' as defined in the Act includes 'ordinary clay' and 'ordinary sand', there is no earthly reason why 'brick-earth' should not be held to be 'any other mineral' which may be declared as a 'minor mineral'. The aforesaid Full Bench decision of the Punjab and Haryana High Court was approved. The contextual interpretation was earlier pointed out by the Supreme Court in Bhagwan Dass v. State of U. P., AIR 1976 SC 1393. However, at page 1397, the Supreme Court pointed out that : It is in the first place wrong to assume that mines and minerals must always be sub-soil and that there can be no minerals on the surface of the earth. Such an assumption is contrary to informed experience. In any case, the definition of mining operations and minor minerals in section 3(d) and (e) of the Act of 1957 and rule 2(5) and (7) of the Rules of 1963 shows that minerals need not be subterranean and that mining operations cover every operation undertaken for th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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