Bhaskar Bhattacharya, J. - (1.) THIS appeal under Section 260A of the Income-tax Act, 1961 ("Act") is at the instance of an assessee and is directed against an order dated April 7, 2003 passed by the Income-tax Appellate Tribunal, "B" Bench, Kolkata in ITA No.698/Cal/1995 for the Assessment Year 1990-91 and thereby dismissing the appeal filed by the appellant.
(2.) BEING dissatisfied, the assessee has come up with the present appeal. The facts giving rise to filing of the present appeal may be summarized thus: a) The appellant is a private liability company within the meaning of the Companies Act, 1956 and is regularly assessed to tax under the Income-tax Act, 1961 and the present appeal arises out of the assessment of the appellant for the Assessment Year 1990-91 for which the relevant previous year was the financial year ending on March 31, 1990. b) The appellant carries on business of manufacturing various Mica products from raw mica obtained from mines. c) Mica obtained from the mines is subjected to several operations, such as, disintegration, washing, drying and removal of the alien and scissors to obtain specific sizes. Further process is undertaken to differentiate between different qualities and to obtain different thickness. d) The fabricated mica parts, depending upon the requirement of the buyers, are coated with silver paste by the process of screen printing. The printing machine is also filled with a small furnace for the purpose of drying the Silvered Mica parts. Such silvered mica parts are subjected to further drying in a bigger furnace at high temperature. e) The appellant also manufactures Mica flakes by pulverizing selected mica pieces. Flakes are manufactured in different mesh specifications depending upon the buyers" requirements and are used in the manufacture of pearlescent pigment. f) According to the appellant, the fabricated Mica parts, silvered mica parts, micanite sheets and mica flakes manufactured out of processed mica are treated as distinct commercial commodities different from the raw mica obtained from the mines. g) During the material period, the appellant exported fabricated mica electronic components pursuant to the orders received from foreign customers. The appellant was registered with the Engineering Export Promotion Council as a manufacturer and exporter of fabricated mica parts. h) In respect of the fabricated mica electronic components exported by it, the appellant claimed deduction under Section 80HHC of the Act and in the assessment made under Section 143(3) of the Act for the Assessment Year 1990-91, the Assessing Officer allowed the claim of the appellant under Section 80HHC in respect of the fabricated mica electronic components exported to other countries. i) The Commissioner of Income-tax, however, issued a notice dated December 21, 1994 proposing to revise the said assessment by directing the Assessing Officer to withdraw the deduction allowed under Section 80HHC, since according to him, the processed minerals endorse were excluded from the purview of Section 80HHC for the Assessment Year 1990-91. j) The appellant filed detailed reply along with various enclosures thereby contending that the appellant exported mica products which were held as distinct commercial commodities different from the mineral mica obtained from the mines. k) The Commissioner of Income-tax, however, by an order dated January 31, 1995 held that processed mica was not covered by Section 80HHC prior to the Assessment Year 1991-92 and directed the Assessing Officer to withdraw the deduction granted under the said section. l) BEING dissatisfied, the appellant preferred an appeal before the Income-tax Appellate Tribunal, where there was a difference of opinion between the members who heard the appellant"s appeal. The Accountant Member was of the view that the appellant was entitled to deduction under Section 80HHC as valued products exported by the appellant were not mineral as such. The learned Judicial Member, however, was of the view that by virtue of amendment made by Finance Act, 1991, the appellant"s products were not covered by Section 80HHC during the Assessment Year 1990-91. As a result, the matter was referred to a Third Member who by an order dated March 31, 2003 agreed with the view taken by the Judicial Member and subsequently, by an order dated April 7, 2003 the Division Bench of the Tribunal dismissed the appeal filed by the appellant in view of the majority view. Being dissatisfied, the assessee has come up with the present appeal. A Division Bench of this Court, at the time of admission of this appeal formulated the following substantial questions of law: "1) Whether on a true and proper interpretation of Clause (b) of Sub Section (2) of Section 80HHC of the IT Act, 1961 prior to its amendment with effect from April 01, 1991, the export of fabricated mica products, namely, fabricated mica electronic components was not eligible for deduction under Section 80HHC and the Tribunal was justified in upholding the order passed by the Commissioner of Income Tax under Section 263 withdrawing the deduction allowed in the assessment? "2) Whether the Tribunal was justified in law in holding that the goods exported by the appellant were not manufactured products of mica or new and distinct commercial commodities different from the mineral mica obtained form the mines but only different varieties/qualities/forms/kinds of mica and its purported findings in this behalf are wholly arbitrary, unreasonable and perverse having been arrived at by ignoring the provisions of the exports [Control] Order 1988, the Commercial names/identity of the products and the material contents of the certificates issued by the engineering Export Promotion Council, details of process undertaken by the appellant, authoritative literature, sales literature, orders of the foreign customers and the invoices raised by the appellant on the foregoing customers? "3) Whether and in any event the circular dated July 27, 1994 issued by the Central Board of Direct Taxes was applicable for the assessment year 1990-91 and the Tribunal was justified in law in not holding that commissioner is bound by the said circular incompetent to proceed under Section 263? "4) Whether and in any event and assuming though denying that two views were possible in the matter, the Tribunal was justified in law in upholding the order passed by the Commissioner under Section 263 when the Assessing Officer had taken a view which was not unsustainable in law? "5) Whether and in any event the Tribunal was justified in law in seeking to uphold the order under Section 263 on a new ground neither taken in the notice issued by the Commissioner or the order passed by him namely, alleged lack of enquiry/verification in making the assessment?" Mr. Khaitan, the learned Counsel appearing on behalf of the appellant, in support of this appeal, has strenuously contended before us that the assessee being a manufacturer and exporter of fabricated minerals which are distinct from minerals taken from mines, is entitled to the benefit of Section 80HHC of the Act. Mr. Khaitan contends that the goods exported by his client did not come within the purview of the word "minerals and ores" within the meaning of Section 80HHC (2)(b)(ii) of the Act and thus, the learned Tribunal below committed substantial error in law in affirming the order passed under Section 263 of the Act.
(3.) MR. Khaitan further contends that at least there was no scope of invoking Section 263 of the Act when the points involved in this appeal is not free from doubt in view of conflicting decisions of the Supreme Court in the case of Gem Granites vs. Commissioner of Income-tax, reported in 271 ITR Page 322 and Stonecraft Enterprises Vs. Commissioner of Income-tax, reported in 1999 237 ITR page 131. MR. Khaitan, therefore, prays for setting aside the order under Section 263 of the Act. Mr. Nizamuddin, the learned Advocate appearing on behalf of the Revenue, has, on the other hand, opposed the aforesaid contention of Mr. Khaitan and has contended that in view of the decision of the Supreme Court in the case of Gem Granites Vs. Commissioner of Income-tax (Supra), the Tribunal below rightly dismissed the appeal.;