TaxTMI 
TaxTMI 
2004 (11) TMI 13
X X X X Extracts X X X X
X X X X Extracts X X X X
....hall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of the profits derived by the assessee from the export of such goods or merchandise. (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 receivable by the assessee in convertible foreign exchange. (b) This section does not apply to the following goods or merchandise, namely: - (i) mineral oil; and (ii) minerals and ores." Thus an exporter of minerals could not avail of the benefit of section 80HHC. According to the appellant although granite is a mineral, there was a distinction between granite in its raw form and granite in its finished form or granite which has been subjected to the process of cutting and polishing. It is the appellant's case that when granite is so processed it ceases to be a mineral. It is also argued that the history of section 80HHC would indicate that the object of the introduction of section 80HHC was to develop foreign markets and to earn foreign exchange. With this object a distinction ha....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... this interpretation sought for by the appellant was a possible one which did no violence to the language of the statute. Therefore, in keeping with the object of the section, processed granite should not be included within the exclusion of sub-section (2)(b) of section 80HHC (as it stood prior to 1991) by holding it to be a "mineral". It is also argued that this court in Stonecraft Enterprises v. CIT [1999] 237 ITR 131; [1999] 3 SCC 343 had recognised the possibility of such an interpretation but had, on the facts, found against the assessee inasmuch as the assessee in that case had been unable to prove that the granite exported had been cut and polished. Learned counsel appearing on behalf of the Department has submitted that the 1994 and 1995 circulars did not apply to the assessment years prior to the 1991 amendment of section 80HHC. As far as the 1984 circular is concerned, it is submitted that the same only dealt with diamonds and not with granite. It is argued that had the intention of Parliament been to give retrospective effect to the 1991 amendment, this would have expressly been provided for. It is submitted that there is no reason for giving a restrictive interpretatio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t of minerals and ores from the benefit of section 80HHC was itself subjected to an exception as quoted earlier. The primary question therefore is whether this 1991 amendment was merely clarificatory of the law as it always stood or whether it introduced a benefit in respect of cut and polished granite for the first time in 1991. The answer to this question would lie in the interpretation of sub-section (2)(b) of section 80HHC as it stood prior to its amendment and as it stands after 1991. That the word "mineral" as used in sub-section (2)(b) to section 80HHC is to be widely construed has been decided by this court in Stonecraft Enterprises [1999] 237 ITR 131 where it was held: "The word 'minerals' in sub-section (2)(b) of section 80HHC must be read in the context of 'mineral oil' and 'ores' with which it is associated. It seems to us that these words taken together are intended to encompass all that may be extracted from the earth. All minerals extracted from the earth, granite included must, therefore, be held to be covered by the provisions of sub-section (2)(b) of section 80HHC, und the exporter thereof, is therefore, disentitled to the benefit of that section." There are no ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ication made to have retrospective operation. There is nothing in the wording of the 1991 amendment to suggest that it was to operate retrospectively. Apart from the lack of any express words indicating such intention, there is nothing in the statute from which we can infer on any principle of interpretation that the intention of Parliament was to give the amendment retrospective effect. An argument founded on what is claimed to be the intention of Parliament may have appeal but a court of law has to gather the object of the statute from the language used. What one may believe or think to be the intention of Parliament cannot prevail if the language of the statute does not support that view. It may be that the object of the introduction of section 80HHC was to encourage export and as an incentive to exporters to increase exports for the purpose of earning foreign exchange to bolster up the country's exports. But the object can be given effect to only if the statutory expression is ambiguous. There was no ambiguity in section 80HHC(2)(b) prior to its amendment. It does not in any event appear that the Government had sought to grant blanket incentive to all exports. There is in the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... Detailed procedure in this regard is explained in the Import-Export Policy. 3. In view of the position brought by the above features, the export of cut and polished diamonds and gem stones will not amount to export of 'minerals and ores' and hence will qualify for relief under section 80HHC of the Income-tax Act, 1961." [Source: Circular letter F.No. 178/206/83-IT (AI), dated May 22,1984]. It is clear from the language used that the CBDT gave its understanding of sub-section (2)(b) of section 80HHC as it stood prior to the 1991 amendment with regard to diamonds and gem stones alone having regard to the peculiar facts and features relating to the export and import of diamonds. Apart from the fact that the circular contains no reference to granite at all, we are not prepared to extend the understanding of the Board with regard to exclusion of cut and polished gems from the word "minerals" to granite in the absence of the special features mentioned in the 1984 circular, more so when the statute itself has not drawn any such distinction. The 1994 and 1995 notifications both relate to the interpretation of item No. (x) in the Twelfth Schedule read with section 80HHC as amended in 1....