Enterprises Vs. Commissioner of Income Tax  INSC 82 (18 March 1999)
S.P.Bharucha Bharucha, J.
concerned in these appeals with the Assessment Years 1985-86, 1987-88 and
1988-89. Two questions are before us but it is apparent that the question
really to be answered is the first one. The questions read thus :
Whether, on the facts and in the circumstances of the case, the Tribunal was
not correct in holding that granite is a mineral within the meaning of the term
found in Section 80 HHC(b)(ii), Income Tax Act?
Whether on the facts and in the circumstances of the case, the Tribunal was
right in holding that the assessee is not entitled to the allowance claimed
under Section 80 HHC in respect of the granite exported from India? The questions having been answered
against it, the assessee is in appeal.
is no material in the finding of the Tribunal other than the indication that
the assessee exports granite.
claimed for the granite which it exported the deduction available under Section
80 HHC of the Income Tax Act, 1961 as inserted by the Finance Act, 1983 with
effect from 1st April,
1983. The relevant
provision permits, 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, the
deduction in the computation of its total income of an amount not exceeding 50%
of the profits derived by the assessee from the export of such goods or
merchandise. Sub-section (2)(b) states :
section does not apply to the following goods or merchandise, namely: (i)
mineral oil; and (ii) minerals and ores.
the contention of learned counsel for the assessee that while granite is a
mineral in the general sense, it is not a mineral for purposes of Section 80
HHC and that, therefore, the deduction provided for therein is available to the
assessee. Our attention has been drawn to the provision as it read before the
appropriate year and thereafter. Our attention has also been drawn to a
circular issued in the context of the later provision. This circular, issued by
the Central Board of Direct Taxes, is dated 1st November, 1995 and records the
Boards opinion that while granite alone can be considered as a mineral, any
process applied to granite would deprive the quality of rough minerals from the
dimensional blocks of granite, which was a value added marketable commodity;
therefore, profits derived from export of granite dimensional blocks would be
eligible for deduction under Section 80 HHC of the Act. As we have already
noted, there is nothing on record to indicate that what the assessee exports is
such value added granite so that, even assuming that the said circular is
explanatory and can, therefore, relate back to the year in question, the assessee
cannot derive any assistance therefrom.
necessary immediately to note that the Mines and Minerals (Regulation and
Development) Act covers granite as a minor mineral. This Court in The State of Mysore vs.
Saraswati (dead) by his Lrs. [AIR 1971 SC 1569] has held that granite is a
mineral. The Court quoted Halsbury Laws of England, thus :
test of what is a mineral is what, at the date of instrument in question, the
word meant in the vernacular of the mining world, the commercial world, and
among land owners, and in case of conflict this meaning must prevail over the
purely scientific meaning.
material was laid by the assessee before the Tribunal to suggest that in the
export world granite was treated as anything but a mineral.
was made to the judgment of this Court in Administration & Ors. [1979 (1)
SCR 271]. It was there held that the word mineral is a word of common parlance,
capable of a multiplicity of meanings depending upon the context. For example,
the word is occasionally used in a very wide sense to denote any substance that
is neither animal or vegetable. Sometimes it is used in a narrow sense to mean
no more than precious metals like gold and silver.
the word minerals is often used to indicate substances obtained from underneath
the surface of the earth by digging or quarrying.
at this stage appropriate to refer to the argument of learned counsel for the assessee
based upon the doctrine of noscitur a sociis, which, as he submitted, has been
explained by this Court in Pardeep Aggarbatti, Ludhiana vs. State of Punjab & Ors. [1997 (8) SCC 511] thus :
in the Schedules of sales tax and excise statutes list some articles separately
and some articles are grouped together. When they are grouped together, each
word in the entry draws colour from the other words therein.
is the principle of noscitur a sociis.
submitted, based upon this doctrine, that the word minerals in Section 80 HHC
should be read in the context of the word ores with which it was associated and
must draw colour therefrom; that is to say, it must read as referring only to
such minerals as are extracted from ores and not others, thus excluding
that the said doctrine is applicable. The word minerals in sub- section (2)(b)
of Section 80 HHC must be read in the context of mineral oil and ores with
which it is associated. It seems to us that these three words taken together
are intended to encompass all that may be extracted from the earth. All
minerals extracted from the earth, granite included, must, therefore, be held
to be covered by the provisions of sub-section (b) of Section 80 HHC, and the
exporter thereof is, therefore, disentitled to the benefit of that section.
is no merit in the appeals and they are dismissed with costs.