TaxTMI 
TaxTMI 
2025 (12) TMI 978
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....) in pursuance of the order of Dispute Resolution Panel us 144C, is erroneous and requires to be modified it is submitted that it be so held now. 2. The learned AO erred in disallowing claim of deduction u/s. 80IB(9) 11,7187,247/- without taking proper cognizance of the order of the Gujarat High Court and not following the same on the ground that Department has filed appeal to the Supreme Court is submitted it be so held now. 2.1 The learned AO has erred in stating that amended Explanation to 80IB(9) can be applied prospectively from FY 2009-10 without appreciating that Gujarat High Court has struck down the Explanation in appellant's own case. It is submitted it be so held now. 2.2 The learned AO ought to have granted benefit u/s 80IB(9) in respect of oil wells considering them as separate undertaking as claimed by the appellant as it fulfills all the requirements of that section to be eligible to get such deduction, it is submitted that it be so held now. 2.3 The learned AO ought to grant deductions 80IB(9) without set off of brought forward loss since those losses are already absorbed against the profits of company in earlier years, it is ....
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....so held now. 4.2 Without prejudice to the above in the assessment order, the AO erred in granting depreciation of Rs 1,50,58,654/- instead of correct depreciation of Rs. 15,78,62,118/- 5. The AO has erred in not granting additional depreciation on the addition to oil well and oil field equipment on ground of maintaining consistency with earlier years, it is submitted it be so held now. 6. The learned AO erred in law and facts in disallowing claim of weighted deduction of Rs. 70,00,000/- relying on CBDT advisory for claim of bogus donations, it be so held now. 6.1 The learned AO has erred in law and in facts in not appreciating that the donation was given by the appellant based on the notarized approval of registration u/s 35(1(ii) of the Act given by the trust and appellant had no reason to disbelieve the operation of approval and notification of the trust it be so held now. 6.2 Without prejudice to the above, the appellant ought to be granted deduction of amount paid to the trust of Rs 40,00,000 as business loss u/s 28 of the Act. It is submitted it be so held now. 7. The Ld. AO/TPO erred in law and on facts, in making an upwar....
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....ld now. 8. The learned AO has erred in fact and in law in not allowing set off of brought forward MAT credit u/s. 115JAA of the Act as per return as claimed by the appellant, it is submitted that it be so held now. 8.1. The learned AO erred in not appreciating that the assessment orders for Ay 2016-17, to which MAT credit pertains, is in appeal and the disputed issues have not reached finality. It is submitted that it be so held now. 9. The learned AO has erred in granting short credit of tax deducted at source of Rs. 56,56,881/- in the assessment order. It is submitted it be so held now. 10. The learned AO has erred in charging excess interest u/s 234B of the Act. Your appellant prays for leave to add to alter and/or to amend any of the grounds before the final hearing of the appeal." ITA No. 81/Ahd/2022 A.Y. 2018-19 "Your Appellant being dissatisfied with the order passed by the Assistant Commissioner of Income Tax, Circle Intl Taxn 1), Ahmedabad (hereinafter referred to as "AO"), u/s 143(3) rws 144C(13) of the Income Tax Act ("the Act presents this appeal against the same on the following amongst other grounds of app....
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....articipating interest in Joint Venture (termed as 'goodwill) which is business or commercial right of similar nature as envisaged u/s 32 of the Act, to keep the issue alive since the department is in appeal before ITAT. It is submitted it be so held now. 3.1. The learned AO erred in not appreciating the fact that payment was made during the year nor any right acquired during the year and therefore the principle the depreciation should be allowed on Opening Written Down Value of the block of Asset as claimed by the appellant. It is submitted it be so held now. 4. The learned AO erred in not allowing depreciation on oil well field and equipment at higher rate of applicable for mineral oil concerns as per Appendix I to the Income Tax Rules, 1962. It is submitted it be so held now. 4.1 The learned AO has erred in not taking proper cognizance of the decision of Ahmedabad ITAT in appellant's own case and decision of the Gujarat High Court in case of Niku Resources on the ground that Department has not accepted said decisions. The learned AO ought to have appreciated that Tribunal's decision in own case is accepted by the Department and Department....
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.... 2.1 The learned AO has erred in stating that amended Explanation to 80IB(9) can be applied prospectively from FY 2009-10 without appreciating that Gujarat High Court has struck down the Explanation in appellant's own case. It is submitted it be so held now. 2.2 The learned AO ought to have granted benefit u/s 80IB(9) in respect of oil wells considering them as separate undertaking as claimed by the appellant as it fulfills all the requirements of that section to be eligible to get such deduction. It is submitted that it be so held now. 2.3 The learned AO ought to have grant deduction u/s. 80IB(9) without set off of brought forward loss since those losses are already absorbed against the profits of company in earlier years. It is submitted that it be so held now. 2.4 The learned AO erred in holding that the commencement of commercial production for each well was not certified by any regulatory agency without calling for data & appreciating that there is no such legal requirement. It is submitted it be so held now. 2.5 The learned AO erred in referring to provisions of section 80IA(8) and 80IA(10) even though the same are not applicable. It i....
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....O erred in deciding eligibility and concluded that appellant is not eligible for deduction u/s 42 of the Act. It is submitted it be so held now. 6.3 The learned AO erred in relying on Supreme Court decision in appellant's own case for rejecting the claim u/s 42 disregarding the fact that the said decision is not applicable for year under reference as the Hon'ble DRP has dealt with the same and concluded that the applicant is eligible for deduction u/s 42. 7. The learned AO has erred in charging excess interest u/s 234B of the Act. Your appellant prays for leave to add to alter and/or to amend any of the grounds before the final hearing of the appeal." 3. We are taking up facts of assessment year 2017-18 being ITA No. 80/Ahd/2022. The assessee is involved in the business of oil exploration and production and heavy oil storage reservoirs. A tripartite Production Sharing Agreement was entered into between the Government of India, JTI USA & Larsen & Toubro Ltd. for exploration of oil. Subsequently in the year 2004, JTI USA acquired the stake of L&T in the PSC. The government awarded two oil fields (Dholka and Wavel) in the state of Gujarat for expl....
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....er, the Assessing Officer did not appreciate that Section 80IB of the Act does not mandate that for claiming deduction separate books of account should be maintained. The Ld. AR relied upon the decision of the Hon'ble Madras High Court in case of Cairn India Ltd. vs. DIT (2018) 300 CTR 366 (Madras) and decision of the Tribunal in case of ACIT vs. Oil India Ltd. (2019) 179 ITD 455 (Gauhati -Tri.). Moreover, the Assessing Officer has also not considered the submissions of the assessee during the assessment and merely denied deduction under Section 80IB(9) of the Act relying on reasoning provided in previous assessment order. The Ld. AR relied upon the decision of the Hon'ble Gujarat High Court in assessee's own case (Special Civil Application No. 1171 of 2010) which followed the case of Niko Resources Ltd. vs. UOI (2015) 374 ITR 369 (Gujarat HC). The Hon'ble High Court denied retrospective applicability of explanation to Section 80IB(9) of the Act stating that all blocks licensed under a single contract cannot be treated as a single undertaking. The Ld. AR further submitted that the Assessing Officer did not follow the decision of the Tribunal in assessee's own case for A.Y. 2005-06 ....
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....eligible for deduction under Section 80IB(9) of the Income Tax Act, 1961. Further the Hon'ble Gujarat High court in assessee's own case categorically discarded the retrospective applicability of explanation to Section 80IB(9) of the Act stating that all blocks licensed under a single contract cannot be treated as a single undertaking. These factual aspects were not disputed by the Ld. DR in the present Assessment Years as well. Thus, Ground No. 2, 2.1 to 2.6 are allowed. 9. As regards to Ground No. 3 and 3.1 relating to disallowance on depreciation of goodwill under Section 32 of the Act, the Ld. AR submitted that participating interest of L&T in JV were transferred to assessee vide agreement dated 02.04.2002. The amount so paid in excess of consideration over the net identifiable fixed assets to acquire commercial right was recognized as "Goodwill" and depreciation on goodwill was claimed and allowed in previous years. In the present Assessment Year, the assessee has claimed depreciation on goodwill at the rate of 25% i.e. Rs. 80,739/-. The Ld. AR relied upon the following decisions: i) CIT vs. Smifs Securities Ltd. (2012) 348 ITR 302 (SC) ii) ITAT order dated....
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....e's own case for A.Y. 2001-02, 2002-03 and 2005-06 (ITA No. 904 & 905/Ahd/2009 and 3988/Ahd/2008 para 18.1 to 24) iv) ITAT order dated 19.05.2023 in assessee's own case for A.Y. 2007-08 (ITA No. 3456/Ahd/2010 para 8-9) v) ITAT order dated 19.05.2023 in assessee's own case for A.Y. 2008-09 (ITA No. 3195/Ahd/2011 para 43) vi) ITAT order dated 27.10.2023 in assessee's own case for A.Y. 2009-10 (ITA No. 766/Ahd/2014 para 7-9 and MA order dated 24.01.2025 para 8-10) vii) ITAT order dated 27.10.2023 in assessee's own case for A.Y. 2010-11 (ITA No. 767/Ahd/2014 para 45) viii) ITAT order dated 27.10.2023 in assessee's own case for A.Y. 2011-12 (ITA No. 242/Ahd/2015 para 65) Therefore, the Ld. AR submitted that this position has been settled in assessee's favour by the Hon'ble Supreme Court and High Court and thus, not disputed by the Assessing Officer in subsequent years such as A.Y. 2022-23. 13. The Ld. DR relied upon the Assessment order and the order of the CIT(A). But could not dispute that the facts of these three assessment years present before the Tribunal are identical to that of the earlier assessment years wherein the Tribunal ha....
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....e parties and perused all the relevant material on the record. It is pertinent to note that the facts of the A.Y. 2017-18, 2018-19 and 2019-20 for this issue is identical to that of earlier Assessment Years 2006-07 to 2011-12. It is categorically mentioned in these decisions that since extraction of mineral oil is similar to manufacture or production of article or thing, hence, the assessee is entitled to claim additional depreciation under Section 32(1)(iia) of the Act. These factual aspects were not disputed by the Ld. DR in the present Assessment Years as well. Thus, Ground No. 5 is allowed. 19. As regards to Ground Nos. 6 and 6.1, disallowance of weighted deduction under Section 35 (1)(ii) of the Act, the Ld. AR submitted that the assessee made contribution of Rs. 40,00,000/- to Shri Arvindo Institute of applied Scientific Research (trust) during the assessment years 2017-18 and 2018-19. The payment receipt provided by trust demonstrated amount paid by account payee cheque, PAN of trust, trust registration number, main/registered office of trust, project for which donation to be applied and trust's eligibility under Section 35(1)(ii) of the Act. The assessee claimed deductio....
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....the assessee should be allowed to claim loss of the amount actually expended by the assessee as a business loss under Section 28 of the Act. The Ld. AR relied upon the following decisions wherein it has been held that when an amount is held to be not deductible in view of non-compliance of condition provided under any other section, same could be considered as an allowable business loss: i. Badridas Daga vs. CIT (1958) 34 ITR 10 (SC) ii. Harshad J. Choksi vs. CIT (2012) 349 ITR 250 (Bom) iii. CIT vs. R. B. Rungta & Co. (1963) 50 ITR 233 (Bom) 23. The Ld. DR relied upon the order of the DRP/AO and submitted that the payment to non-recognized trust is not business loss. 24. We have heard both the parties and perused all the relevant material on the record. At one point the assessee states that the amount paid is to the non-registered/non-approved trust, and then take alternate plea that it is expenditure incurred on business. But the fact remained that the expenditure was not incurred in respect of business and the amount paid is to the non-approved trust. The case laws referred by the Ld. AR does not apply in the facts of the present assessee's case ....
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....penses were not allocated to the assessee under 'HO expenses'. The nature of these expenses are overhead charges as per PSC includes financial, legal, charges for manuals, journals, periodicals, relating to the oil industry and employee relation services. Therefore, these expenses were not covered within the ambit of 'HO expenses' under Section 44C of the Act. The said expenses incurred amounting to Rs. 35,19,439/- (i.e. 1% of total contract costs as per para 2.6 of Section 2 of Appendix C to the PSC). Thus, in light of the above, the Ld. AR submitted that it is clear that even though amount of Rs. 5.55 Crore was reported in the TP Study/Form 3CEB as international transaction, no occasion arises with the TPO to determine ALP on the notional expenses amounting to Rs. 35.19 lakhs claimed as deduction under Section 37 of the Act. Thus, expenditure amounting to Rs. 35.19 lakhs has been incurred by HO being part and parcel of PSC which are not cross charged to the assessee. Therefore, 1% of the contract amount claimed as overhead expenses does not amount to double reimbursement to HO. The Ld. AR relied upon the decision of the Hon'ble Supreme Court in case of CIT vs. Enron Oil & Gas ....
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....fying price of comparable uncontrolled transactions is unwarranted and ought to be rejected. Thus, the TPO/AO have not proceeded in consonance with the provisions of Section 92C of the Act, thereby making the adjustment on this account is completely devoid of merit. The Ld. AR relied upon the following decisions wherein it has been held that adjustment made against the mandate of Section 92C of the Act cannot be sustained: i) Frigoglass India (P) Ltd. vs. DCIT (2016) 68 taxmann.com 370 (Del. Tri.) upheld by the Hon'ble Delhi High Court vide ITA No. 123/2017. SLP filed by the Revenue authorities has been dismissed by the Hon'ble Supreme Court vide SLP (civil) No. 41702/2017 ii) CIT vs. Lever India Exports Ltd. (2017) 292 CTR 393 (Bombay) iii) CIT vs. Johnson & Johnson Limited (2017) 247 Taxman 136 (Bombay) iv) Emerson Climate Technologies (India) Ltd. vs. DCIT (2018) 90 taxmann.com 125 (Pune Tri.) Accordingly, the Ld. AR prayed to direct the Assessing Officer to allow expenses claimed as annual overhead charge of Rs. 35,19,439/- as deduction under the Act. 26. The Ld. DR submitted that the Assessing Officer/TPO held that the amount of 1% of ....
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....1/- instead of Rs. 12,87,64,272/- claimed in return of income. 31. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the assessee has filed appeal before the CIT(A) for A.Y. 2016-17 and the same is pending. If the MAT credit arise due to relief in A.Y. 2016-17, then the Assessing Officer is directed to grant the same in this year as well after due verification. Thus, Ground No. 8 and 8.1 for A.Y. 2017-18 is partly allowed. 32. As regards to Ground No. 9 of A.Y. 2017-18 relating to short grant of tax credit amounting to Rs. 56,56,881/-, the Ld. AR submitted that the assessee claimed credit of tax deducted at source of Rs. 12,87,64,272/- in the return of income, which is also reflected in Form 26AS for the year under consideration, but the same was not fully granted. Thus, the Ld. AR prayed that adequate TDS credit should be granted as reflecting in Form 26AS. 33. The Ld. DR relied upon the assessment order. 34. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that credit of TDS which was reflected in Form 26AS has to be granted fully by th....