Law:

Section:

Section 80HHC of the Income-tax Act, 1961 - Deductions - Exporters - Assessment years 1992-93 and 1993-94- Whether when Tribunal recorded a firm finding of fact that assessee was exporting 'cut and polished' granite blocks (although not finally cut and precisely polished) and as assessee processed rough mineral by cutting and processing which added value to marketable commodity, it was entitled to deduction under section 80HHC - Held, yes - Whether Circular No. 729, dated 1-11-1995 could be applied by Tribunal for benefit of assessee - Held, yes Circulars and clarifications - Circular No. 693, dated 17-11-1994 and Circular No. 729, dated 1-11-1995 FACTS The assessee engaged in the business of export of granite blocks extracted from quarries claimed exemption under section 80HHC, which was rejected by the Assessing Officer while making assessment under section 143(1)(a) on the ground that since the assessee was exporting rough quarries, it was not entitled to deduction under section 80HHC in view of prohibition contained in sub-clause (ii) of clause (b) of section 80HHC(2), read with item (x) of the Twelfth Schedule to the Act. It was also stated by him that in the adjustment note accompanying the intimation under section 143(1)(a), the matter had been clarified by the Circular No. 693 of the CBDT, dated 17-11-1984. On writ petition, the Single Judge of the High Court upheld the validity of the aforesaid Circular, but held the adjustment made in the intimation as illegal and beyond the scope of prima facie adjustments as envisaged under section 143(1)(a). The Assessing Officer, on the direction of the Single Judge, reconsidered the matter afresh, but reiterated his view. On second appeal, the Tribunal, however, accepted the assessee's claim in view of the CBDT's subsequent Circular No. 729, dated 1-11-1995 and observed that it was the 'cut and polished' granite blocks (although may not be finally cut and precisely polished) which were being exported. Against the observation, no question of law was raised by the revenue, but the question of allowing…

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