TaxTMI 
TaxTMI 
1998 (8) TMI 602
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....red into a contract with the Central Government of India, in September, 1994, for exploration and development of oil and gas fields at various places. The project involves, inter alia, drilling, completion and testing of development of oil wells, the drilling and completion of wells for gas or water injection, and laying of gathering lines. The contention of the applicant is that these activities come within the scope of section 42 of the Income-tax Act. Its total income can only be computed, after taking into consideration the special provisions of section 42. Therefore, section 115JA cannot be made applicable to the applicant. The following questions for the opinion of this authority have been raised : "1. Whether the applicant is enti....
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.... for the business of oil prospecting. Our attention was drawn to section 293A by which the Central Government has been empowered to make special exemptions in relation to the companies in the business of prospecting for or extraction or production of mineral oil, etc. In fact, several notifications have been issued by the Government in exercise of its power under section 293A to give relief to the assessees engaged in the business of exploration and extraction of oil. It was argued that the importance of the oil industry was recognised by the Government and these two special provisions were made in view of the high expenditure involved in the business of oil exploration. Section 115JA cannot override these special provisions applicable to ....
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....l year under the Companies Act, 1956 (1 of 1956), which is different from the previous year under the Act, the method and rates for calculation of depreciation shall correspond to the method and rates which have been adopted for calculating the depreciation for such financial year or part of such financial year falling within the relevant previous year. Explanation.-For the purposes of this section, "book profit" means the net profit as shown in the profit and loss account for the relevant previous year prepared under sub-section (2), as increased by- (a) the amount of income-tax paid or payable, and the provision therefor ; or (b) the amounts carried to any reserves by whatever name called; or (c) the amount or amounts set aside to....
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.... total income. Section 115JA does not seek to levy tax on the business income of an assessee, but on his total income. Section 42 which starts with the words ''For the purpose of computing the profits or gains of any business consisting of the prospecting for or extraction or production of mineral oils . . .'' Section 42 will be applicable only when computation of profit and loss of the business of prospecting for or extraction or production of mineral oil is taken up. Section 293A also does not advance the case of the assessee in any way. The section is as under : ''293A. Power to make exemption, etc., in relation to participation in the business of prospecting for, extraction, etc., of mineral oils.-(1) If the Central Government is sa....
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.... (3) Every notification issued under this section shall be laid before each House of Parliament. Explanation.-for the purposes of this section,- (a) 'mineral oil' includes petroleum and natural gas ; (b) 'status' means the category under which the assessee is assessed as 'individual', 'Hindu undivided family' and so on.'' Section 293A has nothing to do with computation of total income. It lays down that the Central Government may by notification grant exemption or reduction in rate of tax or other modifications in respect of income-tax in favour of certain classes of assessees. We were referred to two notifications issued under section 293A dated March 31, 1983, and July 6, 1987. Both the notifications pertain to rates of tax ....
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....f the Act at this stage. The section is to apply ''notwithstanding anything contained in any other provisions of this Act''. Book profit has been defined and explained in section 115JA. This provision became necessary because a large number of companies were not paying any tax in spite of making huge profits by taking advantage of the various provisions for deduction and allowances contained in the Act. The total income thus computed was way below the taxable limit. To circumvent this, section 115JA was introduced in the statute. Thirty per cent. of the book profit of a company will have to be treated as its total income in a case where the total income as computed in accordance with the other provisions of the Act was found to be less than....