Ashok Bhan, J.

1. The Revenue has filed this appeal against the order passed by the Income Tax Appellate Tribunal, Bangalore (for short "the Tribunal"), in I.T.A No. 2262/Bang of 1991, dated March 24, 1999, under Section 260A of the Income Tax Act, 1961 (for short, "the Act"), raising the following two questions of law stated to be substantial questions of law arising from the order of the Tribunal :

"(i) Whether the activity carried on by the assessee for the purpose of extraction of granite by quarrying and cutting the same into various sizes and polishing them would amount to manufacture or production of an article or thing entitling the assessee for investment allowance under section 32A of the Income Tax Act

(ii) Whether, the Tribunal was correct in holding that the assessee is entitled to relief under Section 80HHC of the Income Tax Act on the entire exports of granite including finished products like slabs, monuments, tiles, etc. "

2. The respondent-assesses (for short, "the assessee"), is involved in the activity of mining mineral ore/granite and export of ore/granite. For the assessment year 1989-90, the assessee had filed its return of income on April 23, 1990. The Assessing Officer held that the assessee was not entitled to the investment allowance of Rs. 10,35,918 claimed by the assessee under Section 32A of the Act. The Assessing Officer also held that the assessee was not entitled to deduction under Section 80HHC of the Act on the exports made by it.

3. The assessee being aggrieved against the order of the assessment, preferred an appeal before the Commissioner of Income Tax (Appeals-Ill). The Appellate Commissioner accepted the appeal and allowed the claim of the assessee. It was held by the Appellate Commissioner that the assessee was entitled to the investment allowance under Section 32A as well as to the deductions under Section 80HHC of the Act in respect of the exports of cut and polished granites. Aggrieved against the order passed by the Appellate Commissioner, the Revenue filed an appeal before the Tribunal which was dismissed by the impugned order.

4. Counsel for the parties have been heard.

5. So far as question No. (i) is concerned, the same stands concluded by a Division Bench judgment of this court in the case of CIT v. Mysore Minerals Ltd. : [2001]250ITR725(KAR) (I. T. R. C. No. 22 of 1995, dated 9-9-1999). The question has been answered against the Revenue and in favour of the assessee. Following the aforesaid judgment of this court, we answer ques- question No. (i) in the affirmative, i.e., against the Revenue and in favour of the assessee.

6. Question No. (ii) has not been properly framed. An impression is given as if the Tribunal has allowed deductions under Section 80HHC on the entire exports of granites both raw/unfinished granites as well as the finished granites like slabs, monuments, tiles etc. In the present case, the assessee had claimed deduction on the export of finished products of granites only. Question No. (ii) has to be refrained as :

"Whether the Tribunal was right in law in holding that the assessee is entitled to the relief under Section 80HHC of the Income Tax Act on the export of finished items of granites like stabs, monuments, tiles, etc. "

7. We proceed to answer the refrained question as follows :

The assessee had claimed deduction under Section 80HHC on the processed articles of granite like slabs, monuments, tiles, etc., only. The finished products are clearly distinguishable from the raw materials. In the Board circular dated May 22, 1984, it has been held that the export of cut and polished granites would be qualified for the relief of deductions under Section 80HHC of the Act. The Commissioner of Income Tax (Appeals) directed the Assessing Officer to classify the exports into exports of cut and polished items and to allow the relief under Section 80HHC of the Act, accordingly. The assessee had been denied deduction on the export of raw granites. The circular of the Board is binding on the authorities under the Act and they cannot take a plea contrary to the circular issued by the Board.

8. The refrained question is answered in the affirmative, i.e., against the Revenue and in favour of the assessee.

9. Questions answered accordingly.