TaxTMI 
TaxTMI 
2001 (2) TMI 267
X X X X Extracts X X X X
X X X X Extracts X X X X
.... these appeals is whether the assessee is entitled to deduction under s. 80HHC. According to the Department the assessee is exporting granite and granite being a mineral, the deduction under s. 80HHC is not admissible. However, according to the assessee, the assessee is dealing in export of polished granite and article made of granite termed by the learned counsel for the assessee, Shri Venkatesan as "graniteware". 3. The assessment orders for the years 1988-89 and 1989-90 indicate that the assessments originally does for these years were set aside by the CIT, K-I, under s. 263, with a direction to redo the assessment for re-examining the issue relating to certain deductions allowed in the original assessment and the assessment has been ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....inal file was also produced before us for verification. 6. After considering the rival submissions including the ratio of the decisions cited and the evidence on record, we admit the additional ground of appeal relating to reopening of assessment as it goes to the root of the matter. But at the same time, we do not find any infirmity in the reassessment proceedings initiated by the AO as he has complied with the provisions of law by recording reasons for reopening and by issuing notice to the assessee in the proper manner. Hence, we uphold the action of the AO in initiating reassessment proceedings for the asst. yr. 1990-91. 7. Now, we proceed to dispose of the common issue raised in all these appeals with regard to the question wheth....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 1991, as a result of which the section was revised as under: 80HHC(2)(b) "This section does not apply to the following goods or merchandise viz. (i) mineral oil; and (ii) minerals and ores other than processed minerals and ores specified in the Twelfth Schedule." Consequently, the Twelfth Schedule was also amended by the Finance (No. 2) Act, 1991, w.e.f. 1st April, 1991 and this Schedule which is entitled "Processed Minerals and Ores" contains a list of ten items, the last two of which reads as under: "(x) Cut and polished minerals and rocks including cut and polished granite". Hence, it is clear that w.e.f. asst. yr. 1991-92 onwards cut and polished granite is eligible for deduction under s. 80HHC. Whether processed g....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Act. Item (x) of the Schedule mentions 'cut and polished minerals and rocks including cut and polished granite". 2. Some organisations and individual taxpayers have raised doubts whether the deduction under s. 80HHC is available in respect of export of granite or other rocks that are cut and exported as raw blocks after being washed and cleaned. 3. The entry in the Twelfth Schedule is very clear and unambiguous and uses the term 'cut and polished'. Therefore, for availing of the benefit under s. 80HHC, it is necessary that the rock is not only cut into blocks, but also polished before it is exported. This is in line with Government's policy to encourage export of polished granite and other rocks where value addition before export is ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ity of the circulars even prior to the amendment by the Finance Act, 1991 was brought to the attention of the Court and the Hon'ble Court deemed it fit that this should be examined by a Larger Bench and, therefore, there Lordships considered it necessary to place the matter before the Hon'ble Chief Justice for constituting a Larger Bench. The learned counsel clarified before us that the matter is still pending before the Hon'ble Chief Justice of the Karnataka High Court. 13. In the light of the above discussion, it is clear that as far as cut and polished granite or granite subject to processing before export is concerned, the assessee is entitled to deduction under s. 80HHC for the asst. yrs. 1991-92 onwards. However, there is an elemen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....that the assessee is exporting different items of granite, cut and polished granite, articles made of granite or other items which have been made after rough granite has been subjected to a process of cutting or polishing. In the light of our discussion in the preceding paragraphs it is clear that the assessee is entitled to deduction under s. 80HHC insofar as value added granite is concerned for the asst. yrs. 1991-92, 1992-93 and 1993-94. However, in order to quantify the exact amount of deduction available to the assessee, the matter requires re-examination by the AO with reference to the export bills and the nature of the goods and merchandise actually exported. This is because of the fact that the AO in the first instance did not exami....