K. Raviraja Pandian, J.:— The following two questions are referred to this court for its opinion:
“1. Whether, on the facts and in the circumstances of the case, in the light of the Tribunal's decision in the case of Deputy CIT v. India Cine Agencies, [1995] 54 ITD 257 (Mad), whether the Appellate Tribunal was right in law in holding that the assessee is entitled for relief under section 32A of the Income-tax Act?
2. 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 under section 80HHC for the assessment year under consideration in terms of Circular No. 729 dated November 1, 1995 (see [1995] 216 ITR (St.) 141), which is applicable only from the assessment year 1991-92 onwards?”
2. The relevant assessment year is 1988-89. The facts as stated in the statement of case are as follows:
The assessee is a company doing business of mining and quarrying of granite stones and exporting them as finished goods to various countries. Before exporting these granite stones as per the specification of the customers, the stone underwent various types of manual and machinery processes such as removal of over burden of the quarry by manual process, location and drilling of the boulders, eschewing of waste, drilling of holes, lifting these granite logs either manually or with the help of cranes, dressing shaping, sizing, colouring and giving uniform grains to these stones, etc., and the process also involved removing of certain natural flaws such as air-pores, veins, cracks, etc., in order to ensure quality of the product. Certain chemical impurities are also required to be removed in special manufacturing process, which requires special machines/equipments, etc., like jet burners, block cutters, vertical and horizontal drilling machines, etc.
3. During the course of assessment proceedings, the Assessing Officer negatived the assessee's claim for investment allowance in a sum of Rs. 71,070 on the ground that the assessee's business is that of exporting raw granite blocks. As no processing or manufacturing activity was involved in the process of mining and exporting granite blocks, the investment allowance is not admissible. The Assessing Officer also negatived the assessee's claim of deduction under section 80HHC on the ground that the product which the assessee exported is granite. Granite is a kind of mineral, which does not qualify for deduction under section 80HHC.
4. The assessee carried the matter in appeal to the Commissioner of Income-tax (Appeals), who by his order dated March 27, 1990, following the order of the Income-tax Appellate Tribunal., Madras, in Gomatesh Granites v. ITO, Circle 11(3) I.T.A No. 1040/1041.Md. of 1986, dated May 19, 1988, accepting the case of the assessee that the activities of the assessee in extracting the granite stones, cutting off the rough edges and exporting them is a manufacturing b activity, directed the Assessing Officer to grant investment allowance to the assessee. In respect of deduction under section 80HHC, the Commissioner of Income-tax (Appeals) taking into consideration the letter produced by the assessee from the Director General, Geological Survey of India, Calcutta, addressed to the Secretary, All India Granites and Stone Association, Banga-lore, to the effect that the granites are not minerals but a combination of one or more minerals and as such fall in the category of rocks, allowed the claim of the assessee for deduction under section 80HHC.
5. The Revenue in its turn carried the matter on appeal to the Income-tax Appellate Tribunal, Madras (Bench B). The Tribunal by its order dated Sep-tember 3, 1997, confirmed the findings of the Commissioner (Appeals) as to the activities of the petitioner in quarrying and mining granite blocks as a manufacturing activity as such entitled to the investment allowance under section 32A of the Income-tax Act and also confirmed the finding of the Commissioner (Appeals) with regard to deduction under section 80HHC though not on the ground on which it has been granted by the Commissioner of Income-tax but on the ground that the assessee exported the granite stones by adding value to the blocks by cutting off rough edges, polishing it, processing at various stages, etc. Such processing of value addition of the quarried granite block would definitely amount to manufacturing. The Tribunal for coming to the conclusion also took into consideration Circular No. 729 (see [1995] 216 ITR (St.) 141), of the Central Board of Direct Taxes, dated November 1, 1995. Thus, the Tribunal granted both the reliefs as claimed by the assessee. Hence, at the instance of the Revenue, the above reference is made.
6. As far as the first question is concerned, the counsel on either side accepted that the same has to be decided against the assessee and in favour of the Revenue in view of the judgments of this court in the case of Commissioner Of Income-Tax v. Gomatesh Granites, [2000] 246 ITR 737 and in the case of Commissioner Of Income-Tax v. Bishal Enterprises, [2001] 247 ITR 484. Hence, the first question is answered in the negative against the assessee and in favour of the Revenue.
7. In respect of the second question, learned counsel for the Revenue sub-mitted that the view taken by the Commissioner of Income-tax (Appeals) and confirmed by the Tribunal that the assessee is entitled to the benefit under section 80HHC is unsustainable in law when the very provision itself excluded any benefit in respect of export of mineral oils, minerals and mineral ores at the relevant assessment years. Insertion made to sub-clause (ii) of clause (b) of sub-section (2) of section 80HHC has been done by the Finance (No. 2) Act of 1991 with effect from April 1, 1991, whereby the processed minerals and ores specified in the Twelfth Schedule to the Act have been excluded from the exclusion clause contained in section 80HHC(2)(b)(ii). The expression processed minerals and ores has been specified in the Twelfth Schedule. Item X of the Twelfth Schedule is one among the several items, which explained the expression processed minerals as cut and polished minerals and rocks including cut and polished granite. The Explanation to the Schedule further explains the expression “processed” in relation to the mineral or ore is dressing through mechanical means to obtain concentrates after removal of gangue and unwanted deleterious substances or through other means without altering the mineralogical identity. Even assuming without admitting what was exported by the assessee was only cut and polished granite, such benefit would be available to the assessee only on and after the period from April 1, 1991. The insertion made by the Finance (No. 2) Act, 1991, cannot by any stretch of imagination be considered as retrospective in nature in the absence of any express provision to conclude as such.
8. The departmental circular in Circular No. 729, dated November 1, 1995 (see [1995] 216 ITR (St.) 141), referred to and relied on by the Tribunal for granting relief to the assessee also cannot be said to make the assessee eligible for deduction under section 80HHC. Inasmuch as the said circular and also the earlier Circular No. 693 dated November 17, 1994 (see [1995] 211 ITR (St.) 25), are only clarifying the difficulties encountered in giving effect to the inserted portion of sub-section (2)(b)(ii) by the Finance (No. 2) Act of 1991. Thus she contended to set aside the finding of the Tribunal in respect of the relief granted to the assessee under section 80HHC. She relied on the decision of the Supreme Court in the case of Stonecraft Enterprises v. Commissioner Of Income Tax, [1999] 237 ITR 131.
9. On the other hand, Mr. Philip George, learned counsel appearing for the assessee, has contended that section 80HHC is a beneficial provision to exporters like the assessee. Though by sub-section (2)(b)(ii) of section 80HHC the benefit was originally denied to the export of granites, by means of the amendment introduced under the Finance (No. 2) Act of 1991 from April 1, 1991, onwards such benefit was extended to the export of granite also. Such benefit should be given by construing that the amendment would be applicable retrospectively. Such a construction would only advance the intention of Parliament. When Parliament intended to give the benefit under section 80HHC to the export of granite, which earns valuable foreign exchange for our country, it should not be restricted to the date from which the amendment was introduced. That would defeat the Parliamentary intent.
10. He also placed reliance on the circular of the Central Board of Direct Taxes in Circular No. 729, dated November 1, 1995 (see [1995] 216 ITR (St.) 141), and also the earlier circular in Circular No. 693, dated November 17, 1994 (see [1995] 211 ITR (St.) 25) and contended that in the case of CIT v. God Granites, [1999] 240 ITR 343, the Karnataka High Court construed these two circulars and has taken a view that the circulars are clarificatory and relate back to the years prior to the amendment also.
11. We heard the arguments of learned counsel appearing on either side.
12. In order to resolve the question, it is appropriate to refer the relevant provisions of the statute, i.e, section 80HHC of the Income-tax Act. Section 80HHC provides that where an assessee, being an Indian company or a person (other than a company) resident in India, is engaged in the business of export out of India of any goods or merchandise to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction equal to the aggregate of four per cent, of the net foreign exchange realisation and 50 per cent, of so much of the profits derived by the assessee from the export of such goods or merchandise as exceed 4% of the net foreign exchange realised. Sub-section (2)(b) of section 80HHC provides that this section does not apply to the following goods or merchandise namely:
(i) mineral oil; and
(ii) minerals and ores.
13. Hence, it is clear that by virtue of the expression “the export of any goods or merchandise to which this section applies” employed in section 80HHC and by virtue of sub-section 2(b)(ii), which specifically denied the benefit of the section to export of granite (mineral) the benefit under section 80HHC is not available to the assessee for the relevant assessment year under consideration.
14. The contention of learned counsel that the amendment inserted by the Finance (No. 2) Act of 1991, with effect from April 1, 1991, should be made applicable even to the years prior to the amendment cannot be accepted for the simple reason that the amendment has not been introduced with retrospective effect and it is amply clear from the amended provision that the amendment is only prospective in nature and not retrospective.
15. It is a well settled principle of construction of a provision that when the Legislature enacts law, the law must be understood with reference to the language used in the provisions and construed in the light of the scheme of the Act and object of the statute and provisions therein. If the provision is introduced with a view to confer a benefit, which had not been conferred before such introduction, even though the provision to which the amendment was incorporated is a beneficial provision that does not necessarily imply that the amendment is to be given retrospective effect even without a declaration to that effect from the Legislature. Every case of removal of hardship by the Legislature does not indicate a Parliamentary intention to remove the hardship from an anterior date unless the scheme of the Act, the context in which the amendment was made and the language of the amendment warrant such a view. When the benefit of section 80HHC is specifically excluded in respect of goods or merchandise like mineral oils and minerals and mineral ores originally and by means of subsequent amendment certain exception has been carved out from and out of the excluded goods or merchandise for the purpose of giving the benefit, such exclusion cannot be regarded as indicative of an intention on the part of the Legislature to have treated what is subsequently included as having been included at the inception of the provision. It would not also be permissible for the court to supplement words of its own to the words employed by the Legislature in the name of giving effect to the supposed intention of the Legislature in bringing about the amendment. The object of the provision has to be gathered on a reasonable interpretation of the language employed by the Legislature. For the above proposition we draw the support of the Division Bench judgment of this court in the case of CWT v. Varadharaja Theatres P. Ltd., [2001] 250 ITR 523 and also from the case of CIT v. N.C Budharaja and Co., [1993] 204 ITR 412 (SC).
16. It is the elementary principle of interpretation that every statute is an edict of the Legislature. In interpreting any word, while considering a statute, is to gather the mens or sententia legis of the Legislature. Where the words are clear and there is no obscurity and there is no ambiguity and the intention of the Legislature is clearly conveyed, there is no scope for the court to take upon itself the task of amending or altering the statutory provisions. Wherever the language is clear, the intention of the Legislature is to be gathered from the language used. While doing so, what has been said in the statute as also what has not been said has to be noted. The construction which requires for its support, addition or substitution of words or which results in rejection of words has to be avoided. The abovesaid principle of construction of a provision is reaffirmed in the recent judgment of the Supreme Court in the case of Grasim Industries Ltd. v. Collector Of Customs, Bombay., (2002) 4 SCC 297 : AIR 2002 SC 1706; [2002] 3 JT 555.
17. The court cannot add or mend and by construction make up deficiencies which are left there. In the case of an ordinary word, there should be no attempt to substitute or paraphrase the general application. Attention should be confined to what is necessary for deciding the particular case, (vide Crawford v. Spooner, [1846] 6 Moore 1 (PC)). The court is only a jus dicere and not jus dare, which means the court is to pronounce the judgment and not to make law. (vide CST v. Parson Tools and Plants, [1975] 35 STC 413 (SC)).
18. The reliance made in the case of Allied Motors (P) Ltd. v. Commissioner Of Income Tax, Delhi, [1997] 224 ITR 677 (SC) is not in our view any way advancing the case of the assessee as to the contention that the amendment brought about to sub-section (2)(b)(ii) by the Finance (No. 2) Act of 1991 with effect from April 1, 1991, would relate back to the previous year also. In that case section 43B of the Income-tax Act was inserted with effect from April 1, 1984, to discourage taxpayers who had not discharged their statutory liability of payment of excise duty, etc., for long periods of time, but claimed deduction in that regard from their income on the ground that the liability to pay these amounts had been incurred by them in the relevant previous year. Even after the insertion of section 43B, the mischief sought to be remedied has not been achieved. To obviate the same the first proviso was added to section 43B by the Finance Act, 1987. The proviso made it clear that the section will not apply in relation to any sum which is actually paid by the assessee in the next accounting year, if it is paid on or before the due date for furnishing the return of income in respect of the previous year, in which the liability to pay such sum was incurred. However, the expression “any sum payable” employed in clause (a) of section 43B was open to the interpretation that the amount payable in a particular year should also be statutorily payable under the relevant statute in the same year. An Explanation was therefore added by the Finance Act, 1989, with retrospective effect from April 1, 1984, for the purpose of removing any ambiguity about the term “any sum payable” under clause (a) of section 43B. While construing the Explanation, which has been inserted with retrospective effect in order to give effect to the section as a whole including the proviso it was held by the apex court that the proviso which was inserted to remedy unintended consequences and to make the provision workable by supplying an obvious omission in the section is required to be read into the section to give the section a reasonable interpretation and required to be treated as retrospective in operation, so that a reasonable interpretation cam be given to the section as a whole.
19. That is not the case here. As already submitted, by the amendment Act 2 of 1991, an exception has been carved out to the specific provision which excluded rather denied the benefit conferred under section 80HHC to export of minerals (granite). Even without the amendment made to section 80HHC by the Finance (No. 2) Act of 1991, the said provision was and is a workable provision. Even the whole lot of the goods or merchandise referred to in subsection (2)(b) have not been deleted and only certain category of the goods are carved out of the denial clause and benefit granted to them. Hence, we are of the considered view, the amendment brought by the Finance (No. 2) Act of 1991 to section 80HHC is only prospective and effective from April 1, 1991, and for the assessment year 1988-89 under consideration, the statutory provision is very clear in the sense that section 80HHC is not applicable to the export of granite.
20. Mr. George, learned counsel put forth yet another contention that granite blocks exported by the assessee are not mineral for the purpose of section 80HHC, though in common parlance granite may be considered as mineral, by drawing support from the Circular No. 729, dated November 1, 1995 (see [1995] 216 ITR (St.) 141). In the circular in para. 3, the Central Board of Direct Taxes recorded its opinion to the effect that while granite alone can be consi-dered as mineral, any process applied to granite would deprive the quality of rough mineral from the dimensional blocks of granite, which is a value added marketable commodity. When rough granite is cut to dimensional blocks of uniform colour and size, it not only undergoes mechanical process of cutting, but also, a certain amount of dressing and polishing is involved to remove various natural flaws and become a value added marketable commodity and accordingly be eligible for deduction under section 80HHC of the Act. This circular and the earlier circular dated November 17, 1994 (see [1995] 211 ITR (St.) 25), were issued to clarify the goods which are included for the benefit under section 80HHC by means of the amendment from April 1, 1991, onwards. When we concluded that the amended provision itself is not available for the assessment year under consideration, the clarification issued by the Central Board of Direct Taxes through the above circular would not any way further the case of the assessee.
21. Further there is absolutely no material on record to indicate as to how the rough granite blocks become value added granite, which were exported by the assessee. In the statement of case, it is stated that the assessee does the business of quarrying and mining of granite and exporting them as finished goods. In the assessment order it is stated that the business of the assessee is export of raw granite blocks and no processing and manufacturing activities are involved. The Commissioner of Income-tax (Appeals) has stated that the assessee has given a long note as to how the work of the assessee involved manufacture. But thoroughly failed to discuss any of the processes as given in the note. The Tribunal in its turn simply jumped to the conclusion on the premise that cutting the rough edges processing in different sizes, shapes colour would amount to manufacture, without discussing the processes involved. In the absence of any particulars on record to construe that the exported granites are value added, even assuming that the circular is explanatory and as such the benefit under section 80HHC is available for the assessment year under consideration, the benefit in our view cannot be granted to the assessee. We draw support from the decision of the Supreme Court in the case of Stonecraft Enterprises v. Commissioner Of Income Tax, [1999] 237 ITR 131 for our conclusion.
22. In God Granites’ case, [1999] 240 ITR 343 (Karn), on which heavy reliance was placed by Mr. George, not only was there clear finding recorded by the Tribunal to the effect that the assessee therein was cutting and polishing the granite blocks to some extent, before export. The Tribunal also took note of the finding given by the Karnataka High Court in an earlier writ proceeding in respect of the same assessment year to the effect that the assessee exported cut and polished granite. Hence, in God Granites’ case, [1999] 240 ITR 343, there were materials to show the exported granites were value added granites. Apart from that the assessment years under consideration in that case was 1991-92 to 1993-94 subsequent to the amendment brought by the Finance (No. 2) Act of 1991 to sub-section (2)(b)(ii) of section 80HHC. But in the case on hand the relevant assessment year is 1988-89, i.e, prior to the date of amendment. Hence, the said case also does not advance the case of the assessee any further. The other decision relied on by Mr. George is the one in the case of CIT v. Mysore Minerals Ltd. (No. 2), [2001] 250 ITR 728 (Karn). In that case one of the questions which is relevant to the case on hand as referred by the Tribunal was as follows (page 729):
“(ii) Whether, the Tribunal was correct in holding that the assessee is entitled to relief under section 80HHC of the Income-tax Act on the entire exports of granite including finished products like slabs, monuments, tiles, etc.?”
23. However, the Karnataka High Court reframed the question as follows (page 730):
“Whether the Tribunal was right in law in holding that the assessee is entitled to the relief under section 80HHC of the Income-tax Act on the export of finished items of granites like slabs, monuments, tiles, etc.?”
24. The Karnataka High Court by observing that the assessee has been denied deduction on the export of raw granites that the circular of the Board is binding on the authorities under the Act and they cannot take a contrary plea granted the relief. The assessment year in that case was 1989-90. With respect, having regard to the view taken by us in respect of the first contention as to the applicability of the amendment only after April 1, 1991, we are unable to concur with the said view of the judgment.
25. Hence, the second question is also answered in the negative against the assessee and in favour of the Revenue.