Full Judgment Text
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PETITIONER:
STONECRAFT ENTERPRISES
Vs.
RESPONDENT:
COMMISSIONER OF INCOME TAX
DATE OF JUDGMENT: 18/03/1999
BENCH:
S.P. Bharucha, R.C. Lahoti.
JUDGMENT:
Bharucha. J.
We are 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 :
"1. 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?
2. 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 il, the
assessee is in appeal.
There is no material in the finding of the Tribunal
other than the indication that the assessee exports granite.
The assessee 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 I" 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 tlus^seclion applies", the deduction in the
computation of its total income of an amount not exceeding
50^o of "the profits derived by the assessee from the export
of such goods or merchandise". Sub-section (2)(b) states :
"This section does not apply to the following goods or
merchandise, namely: (i) mineral oil; and (ii) minerals
and ores".
It is 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
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circular, issued by the Central Board of Direct Taxes, is
dated 1st November. 1995 and records the Board’s 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.
It is 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.
Swamy Satyanand Saraswati (dead) by his Lrs. [AIR 1971 SC
1569] has held that granite is a mineral. The Court quoted
Habbury Laws of England, thus:
’"The 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."
No material was laid by the assessee before the
Tribunal to suggest that in the export world granite was
treated as anything but a mineral.
Reference was made to the judgment of this Court in
Banarsi Pass Chadha &. Bros. Vs. Lt. Governor. Delhi
Administration & Ors. [1979 (1) SCR 271). It was there
held that the word ’mineral’ ia 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. Again,
the word ’minerals’ is oUten used to indicate substances
obtained from underneath the surface of the earth by digging
or quanying.
It is at this stage appropriate to refer to the
argument of learned counsel for theasscssec based upon the
doctrine ofnoscitur a sociis. which, as he submitted, has
been explained by this Court in Pardeep Aggarbatti.
Ludhiana vis. State of Punjab & Ors. (1997 (8) SCC 511]
thus :
Entries 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.
This is the principle of noscitur a sociis."
It was 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
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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 granite.
We agree 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.
There is no merit in the appeals and they are
dismissed with costs.