TaxTMI 
TaxTMI 
2025 (11) TMI 1616
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....facts case, and the Income Tax Appellate Tribunal was right in law in not allowing the appellant deduction of Rs. 4,89,22,831/- u/s 42 of the Act? (ii) Whether, in the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in law in not allowing the appellant to raise the additional issue for challenging the re-opening of assessment for the A.Y. 1997-98?" 4. The appellant is a Government company engaged in exploration and drilling of mineral oil and natural gas. 5. The appellant assessee filed return of income on 30.11.1997 declaring total loss of Rs. 1,00,85,620/-. Case of the assessee was selected for scrutiny and assessment order under section 143(3) of the Act dated 21.03.2000 was passed accepting the returned loss. The Assessing Officer took the book profit as per Profit and Loss Account at Rs. 3,25,85,894/- and 30% thereof being Rs. 97,75,768/- was worked out as Book Profit under section 115JA of the Act. 6. The appellant assessee also claimed deduction under section 42 of the Act of Rs. 4,89,22,831/-. The Assessing Officer disallowed the claim of Rs. 4,87,90,561/- in view of provisions of section 42(1) of the Act which provides tha....
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.... said concern and denied the appellant to raise additional issue for challenging reopening for the year under consideration. It was therefore, submitted that the impugned order may be quashed and set aside and the matter may be remanded to the Tribunal for considering the additional issue of reopening. 14. Learned advocate Mr. Soparkar also referred to and relied upon the paper book to show that the Assessing Officer after considering the reply filed by the petitioner has discussed in detail the applicability of section 42 of the Act while invoking the provisions of section 115JA for applying Minimum Alternate Tax (MAT) on the Book Profit. 15. Learned advocate Mr. Soparkar also referred to the decision of CIT(Appeals) wherein also it was recorded that the Assessing Officer vide letter dated 20.12.1999 issued a show cause notice as to why deduction under section 42 of the Act should be not allowed while working out book profit as per provisions of section 115JA of the Act because no such deduction has been provided by debiting Profit and Loss Account. It was therefore, submitted that issue of deduction under section 42 of the Act was already considered during the original asse....
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.... deduction under section 42 of the Act has held as under: "35. From the reading of the writ petition filed in the High Court, the impugned judgment rendered by the High Court thereupon, and also having regard to the arguments advanced before us which have already been taken note of, it is apparent that the fulcrum of the issue, which has to be focused and to be answered, pertains to the benefit of the deductions permissible under Section 42 of the Act. In fact, as is clear from the prayers made by the appellant in the writ petition, the very first direction which the appellant sought was to declare that the appellant is entitled to such deductions in terms of the two PSCs dated 20-02-1995. Incidental issues, while deciding the aforesaid primary issue, which arises relate to the construction of the terms of the said PSCs and also the nature of the contracts which the parties intended to. Another issue relates to the jurisdiction of the High Court under Article 226 of the Constitution to pass Mandamus for amending the PSCs. All these issues are formulated in the precise form hereunder: (i) Whether in terms of the provisions contained in two Production Sharing Contra....
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....nces pertaining to the depletion of mineral oil in the mining area. In order to be eligible to the deductions, certain conditions are stipulated in this very section which have to be satisfied by the assessees. As is clear from the reading of this Section, these conditions are as under: (a) it grants such special allowances to those assessees who carry on business in association with the Central Government or with any person authorized by it; (b) business should relate to prospecting for, extracting or producing mineral oils, petroleum or natural gas; (c) there has to be an agreement in writing between the Central Government and the assessees in this behalf; (d) it is also a requirement that such an agreement has been laid on the Table of each House of Parliament; (e) the allowances which are claimed are to be necessarily specified in the agreement entered into between the two contracting parties; and (f) allowances are to be computed and made in the manner specified in the agreement. 38. From the nature of allowances specified in this provision, it is clear that such allowances are otherwise inadmissible on general pri....
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.... be engaged in exploration, development and production of oil ion small sized oil and gas fields under the proposed Production Sharing Contract", thus, drawing no distinction between fields to be explored and those already discovered and also making specific reference to the MPSC. Taking sustenance from the aforesaid material, a passionate plea was made by Mr. Ganesh to read the provisions of Section 42 contained in MPSC, as opined by the Ministry of Law, into the PSCs which were ultimately signed between the parties. 43. In order to appreciate this argument, we shall have to traverse through the PSCs dated 20-02-1995 which were ultimately signed between the Government and the appellant. We would like to mention here that when this argument was being advanced by the learned senior counsel for the appellant the Court asked him to produce the copy of PSCs, which were otherwise not brought on the record as the Court wanted to find out as to whether there was any such intention expressed in the agreement, namely, to incorporate the provisions of MPSC or the correspondence exchanged between the parties earlier to the signing of this agreement: "(5) The Government has a....
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....ipulations contained in the PSCs while making the assessment and had to exclusively remain within the provisions of the Agreement. On that touchstone, the Assessing Officer had no option but to deny the benefit of deductions/allowances claimed by the appellant in its income tax returns filed for the Assessment Year 2005-06. This bring us to the next question. 45. Answer to question no. (iii) - We have already noted that Article 32.2 categorically provides that this Contract shall not be amended, modified, varied or supplemented in any respect except by an instrument in writing signed by all the parties, which shall state the date upon which the amendment or modification shall become effective. In continuation to what has been observed by us while answering point no.(ii) above, it becomes apparent that the question of any intention to the contrary between the parties does not arise. It is because of the reason that Article 32 of the Agreement specifically supersedes any understanding between the parties prior to the effective date of this contract." 19. In view of above dictum of law which is squarely applicable to the facts of the case regarding deduction under section ....