Punjab-Haryana High Court
Commissioner Of Income-Tax vs Haryana Minerals Ltd. on 12 January, 2005
Equivalent citations: [2005]276ITR399(P&H)
Author: Jasbir Singh
Bench: Jasbir Singh
JUDGMENT G.S. Singhvi, J.
1. The Income-tax Appellate Tribunal (Delhi Bench "D" Delhi) (for short, "the Tribunal"), has, in compliance with the direction given by this court in I. T. C. No. 40 of 1997, referred the following questions of law for its opinion :
"1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in allowing deduction under Section 80HHC of the Income-tax Act, 1961, taking into consideration the amendment made by the Finance (No. 2) Act of 1991, which was to come into effect from April 1, 1991 ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the question of deduction under Section 80HHC of the Income-tax Act, 1961, was a debatable issue and could not be rectified under Section 154 of the Act ?" The assessee is a Government company engaged in the business of mining and extraction of minerals from the lands taken on lease from the State Government. For the assessment year 1984-85, the assessee filed a return declaring a loss of Rs. 4,76,960. Later on, it filed the revised return showing an income of Rs. 11,690. The assessment was completed under Section 143(3) of the Income-tax Act, 1961 (for short, "the Act"), at a total income of Rs. 3,56,819. While doing so, the Assessing Officer allowed deduction of Rs. 27,275 under Section 80HHC of the Act on the export turnover of Rs. 37,96,486 by assuming that the provision of that section was applicable to the assessee. Subsequently, the assessee filed an application under Section 154 of the Act claiming deduction of Rs. 41,674 under Section 80HHC of the Act. The Assessing Officer accepted the claim of the assessee and allowed the deduction of Rs. 41,674. However, vide order dated March 23, 1990, the Assessing Officer withdrew the deduction in its entirety. On appeal, the Commissioner of Income-tax (Appeals) (hereinafter described as "the CIT (Appeals)), set aside the order of the Assessing Officer and deleted the addition of Rs. 41,674. The Tribunal confirmed the order of the Commissioner of Income-tax (Appeals) and dismissed the appeal filed by the Revenue. Reference application filed by the Revenue under Section 256(1) of the Act was also dismissed by the Tribunal.
2. We have heard Shri Rajesh Bindal, learned counsel for the Revenue, and perused the record. In our opinion, question No. 1, referred by the Tribunal deserves to be answered in favour of the Revenue in view of the judgment of the Supreme Court in Gem Granites v. CIT [2004] 271 ITR 322 ; [2005] 26 IT Rep 1. In that case, their Lordships interpreted Section 80HHC (unamended) along with the amendment made by the Finance (No. 2) Act of 1991, and held as under :
"The 'minerals and ores' are expressly excluded under Sub-section (2)(b) thereof which exception covered granite whether raw or polished--There are no words of restriction which qualify the word minerals and it will be reasonable to assume that in the absence of any such limitation, the word must be read to include all kinds of minerals in all its forms, i.e., subjected to any process or not as long as it retained the characteristics of the minerals--Doubtless, the Customs Tariff Act and the Central Excise Tariff Act both draw a distinction between minerals and processed minerals--For example in Chapter 27 of the Customs Tariff, a distinction has been drawn between mineral fuels, mineral oils and mineral products--However a classification which is relevant for the purpose of determination of rate of duty cannot be imported into the Income-tax Act which makes no such distinction. (para. 19).
The appellant in this case is an exporter of cut and processed granite and wanted the benefit of Section 80HHC claiming that the processed granite is not mineral excluded from the benefit of Section 80HHC--Having failed to impress the departmental authorities, its plea did not find favour at the High Court also--On further appeal the apex court also dismissed the appeal that up to April 1, 1991, the provision of Section 80HHC restricted the benefit to goods other than minerals and ores and this benefit was prospectively made available to cut and polished minerals with effect from April 1, 1991, due to the amendment of the section in that year."
3. By applying the ratio of the aforementioned judgment to the facts of this case, we hold that the benefit of the amendment made in Section 80HHC by the Finance (No. 2) Act of 1991, could not have been extended to the assessee in relation to the assessment year 1984-85.
4. As regards question No. 2, it is sufficient to mention that the Commissioner of Income-tax (Appeals) as well as the Tribunal have treated the provisions of the amended Section 80HHC of the Act applicable to the case of the assessee as if the amendment made by the Finance (No. 2) Act of 1991 was retrospective. This has to be treated as legally unsustainable in view of the law laid down by the Supreme Court in Gem Granites v. CIT [2004] 271 ITR 322. As a corollary to this, it must be held that the order passed by the Assessing Officer to rectify the mistake committed earlier by allowing deduction to the assessee on the basis of the amended Section 80HHC does not suffer from any legal infirmity.
5. For the reasons stated above, both the questions are answered in favour of the Revenue and against the assessee.