2004 Supreme(SC) 1460

2005(2) Supreme 693
Supreme Court of India
(From Madras High Court)
Mrs. Ruma Pal, Arijit Pasayat & C.K. Thakker, JJ.
M/s. Gem Granites —Appellant
versus
Commissioner of Income Tax, Tamil Nadu —Respondent
Civil Appeal No. 319 of 2004
With
Civil Appeal Nos. 3962 of 2003, 7574 and 7573 of 2004
All decided on 23-11-2004
Counsel for the Parties :
For the Appearing Parties : Harish Chandra, Joseph Vellappally, K. Parasaran and G. Sarangan, Sr. Advocates, B.V. Balaram Das, K.K. Mani, K.B. Sandeep, A.A. Kulkarni, Mohit Chaudhary, Dhruv Mehta, Mrs. Prabha Swami, Arijit Prasad, Sanjay Kunur, Ramesh Keswani and N.N. Keshwani, Advocates.

Important point
Benefit of Section 80HHC of the Income Tax Act was available to cut and polished granite only with effect from 1.4.1991 by virtue of insertion of item (x) of the Twelfth Schedule to the Act as for the unamended Section 80-HHC(2)(b) cut and polished ­granite would also be a mineral.

Headnote:Income Tax Act, 1961—Section 80-HHC—Deduction in respect of profits retained for export business—Claim of exporter of minerals—Maintain­ability—Assessment year 1987-1988—Appellant exports granite after cutting and polishing it—Appellant claims deduction under Section 80-HHC in respect of profits from its export business—Whether appellant was entitled to relief under Section 80-HHC in respect of assessment year 1987-88—(No)—Whether 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—Benefit of Section 80HHC was available to cut and polished granite only with effect­ from 1.4.1991.

       Held : The answer to this question would lie in the interpretation of sub section 2(b) of Sec. 80-HHB 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 Sec. 80-HHC is to be widely construed has been decided by this Court. (Para 11)

       There are no words of restriction which qualify the word “minerals” and it would 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. whether subjected to any process or not as long as it continued to retain the characteristics of the mineral. To hold that the word `minerals’ never included processed minerals would require our reading words of limitation into an otherwise clear and unambiguous statutory provision. There is no dispute that granite is covered by the word `minerals’ in the exclusionary clause (b) of sub sec. (2) of Sec. 80-HHC. It would follow that for the unamended Sec. 80-HHC(2)(b) cut and polished granite would also be a mineral. The introduction of the phrase “other than” in clause (b) of sub-section 2 of Section 80 HHC in 1991 in our opinion, indicates the carving out of a specific class from the generic class of “minerals and ores”. This means that were it not for the exception, the specified processed minerals and ores would have been covered by the words `minerals and ores’. It also indicates that only the minerals and ores subjected to the process of cutting and polishing­ would be entitled to the benefit of Section 80 HHC meaning thereby that all other species of processed minerals and ores would continue to be covered by the general exclusion applicable to the generic class. The 1991 Amendment to Sec. 80-HHC thus conclusively demonstrates that the words “minerals and ores” must be construed widely and in an unrestricted manner. (Paras 12 and 13)

       The benefit of Section 80 HHC has been extended by the amendment to a specific kind of mineral and was introduced for the first time in 1991. If we were to hold that the word “minerals” in sub section 2(b) never included processed minerals then the 1991 Amendment excepting processed minerals from the exclusionary effect of the sub section would be rendered meaningless and an exercise in futility. (Para 13)

       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. (Para 14)

       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 80 HHC as amended in 1991. They are confined to an exposition of the phrase of “cut and polished” used in Item No. (x) and do not seek to interpret the word `minerals’ in general. The 1994 circular clarified that the phrase `cut and polished’ minerals meant exactly that and could not be extended to any other process. The 1995 circular modified the rigour of the 1994 circular to the extent that it recognized some other processes as falling within the phrase `cut and polished’. Both circulars clearly state that benefit of Section 80 HHC was available to cut and polished granite only with effect from 1.4.91 by virtue of insertion of item (x) in the Twelfth Schedule to the Act. (Paras 17 and 18)

       Consequently, even if the concession of the appellant before the High Court is ignored, the benefit of Section 80 HHC cannot be granted to the appellant for the Assessment Year in question. (Para 20)