The Commissioner of Income Tax vs Tamilnadu Minerals Limited

P.D. Dinakaran, J.—This appeal has been admitted on the following substantial question of law for consideration:

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

u/s 80HHC for the assessment year under consideration in terms of circular No.729, dated 1.11.1995 which is applicable only from the

assessment year 1991-1992 onwards?

2.1. The assessment year involved is 1990-1991. The assessee claims the benefit of Section 80HHC of the Income Tax Act (for brevity ""the

Act""), namely, the deduction in respect of the profits retained for export business, as conferred u/s 80HHC(1) of the Act.

2.2. Section 80HHC(2)(b) of the Act omits the benefit conferred u/s 80HHC(1) to the following goods or merchandise, namely: (i) mineral oil; and

(ii) minerals and ores (other than processed minerals and ores specified in the Twelfth Schedule). In other words, the minerals and ores which are

processed, as specified in the Twelfth Schedule, are entitled for the deduction conferred u/s 80HHC(1) of the Act.

2.3. Section 80HHC(2)(b)(ii) of the Act was inserted by the Finance (No.2) Act, 1991, with effect from 1.4.1991. In the same Finance (No.2)

Act, 1991, the Twelfth Schedule was also inserted with effect from 1.4.1991. Even though the Twelfth schedule was earlier inserted by the

Finance Act, 1982, with effect from 1.4.1983, the same was omitted by the Finance Act, 1986, with effect from 1.4.1987. Clause (x) of Twelfth

Schedule includes cut and polished minerals and rocks as well as cut and polished granite in the list of processed minerals and ores. These details

as to the omission of Section 80HHC(1) of the Act by virtue of Section 80HHC(2)(b)(ii) of the Act with reference to Twelfth Schedule are not

disputed at all. The fact that the assessee claims the deduction only on the ground that the goods exported by them are cut and polished minerals is

also not in dispute.

The short question that arises for our consideration is whether the respondent/assessee is entitled for the benefit of deduction u/s 80HHC(1) of

the Act by virtue of the amendment vide the Finance (No.2) Act, 1991, whereunder processed minerals and ores specified under Twelfth schedule

are entitled for deduction.

It is nowhere the case of the respondent/assessee that, but for the Finance (No.2) Act, 1991, which came into effect from 1.4.1991, they are

entitled for the deduction u/s 80HHC(1) of the Act. If that be so, what was not conferred in law u/s 80HHC(1) of the Act on the

respondent/assessee during the assessment year 1990-1991 cannot be extended to them particularly when Section 80HHC(2)(b) of sasi