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PETITIONER: STONECRAFT ENTERPRISES

       Vs.

RESPONDENT: COMMISSIONER OF INCOME TAX

DATE OF JUDGMENT:       18/03/1999

BENCH: R.C.Lahoti, S.P.Bharucha

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  it,  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 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 : 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

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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.

     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 Halsbury 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  Dass  Chadha  & Bros.  Vs.   Lt.   Governor,  Delhi 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. Again,  the  word  minerals  is  often  used  to  indicate substances obtained from underneath the surface of the earth by digging or quarrying.

     It  is  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 :

     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 must draw colour therefrom;  that is to say, it must read as

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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.