TaxTMI 
TaxTMI 
2026 (9) TMI 591
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.... ITA NO. 131/DDN/2026. 3. Brief facts of the case are that the original return of income was filed by the assessee on 30.11.2011 declaring total income of Rs.890,50,35,760/-. The case was selected for scrutiny and draft assessment order was passed u/s 143(3)/144C(1) on 28.03.2016 at an income of Rs.1382,37,41,840/-. The assessee filed objection against the said order before the DRP. In compliance to the directions given by the ld. DRP, the AO vide order dated 23.12.2016, computed the total income at Rs.1382,81,29,790/. Against the said order, assessee preferred an appeal before the Tribunal who in ITA No.1478/Del/2017 vide order dated 18.07.2018 has allowed major relief to the assessee and deleted the additions relating to the corporate issues however, the issues related to the Transfer price adjustments of international transactions with its AE's of Intra Group Services of Rs. 183,94,39,318/- is remanded back to the file of ld. DRP by making following observation in para 14 & 15 of the order as under: 14. We find, following the above decision the Tribunal vide ITA No.6791/Del/2017 order dated 17.07.2018 has restored the issue to the file of the DRP with a direction to ....
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....5.78% for the loan of USD 500 Milliion as against 6.18% paid by the assessee. 7. Thereafter the AO passed the final assessment order in compliance to the order of the Tribunal wherein vide order dated 27.05.2021 total income was computed at Rs.1078,38,14,800/-. 8. Against the said order, the assessee filed an appeal before the Ld. CIT(A) who decided the appeals of the assessee in terms of the order passed dated 21.03.2024 for the assessment years 2011-12 and 2012-13 in favour of the assessee. Against the said order, revenue preferred appeals before the Tribunal wherein the Co-ordinate Bench of Dehradun Tribunal in terms of its order in appeal Nos.107 & 105/DDN/2024 for AYs 2011-12 and 2012-13 respectively dated 15.10.2026 has allowed the appeal of the revenue by holding that the assessment orders passed by the AO dated 27.05.2021 were in pursuance to the directions of the DRP in remand proceedings and, therefore, the ld. CIT(A) has no jurisdiction to decide the appeal which is not appealable before him and an opportunity was allowed to the assessee to file fresh appeals before the Tribunal against the final orders passed u/s 143(3)/144C(3)(a)/254 of the Act dt. 27.05.2021 for....
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...., 2013-14 to 2018-19 which stood deleted by the coordinate bench of Tribunal by following its order for AY 2009-10 and 2010-11 in assessee's own case. It is further submitted that the DRP has not followed the order of the Tribunal solely for the reason that an appeal is preferred before the Hon'ble High Court against the orders of Tribunal for AY 2009-10 and 2010-11. The Ld. AR thus submits that the adjustments challenged in the present appeal being identical in nature and there is no change in the circumstances, therefore, as a principal of consistency, same deserves to be deleted. 11. On the other hand, the Ld. DR vehemently supported the orders of the lower authorities and submits that the Revenue has preferred an appeal before the Hon'ble High Court against the orders of the Tribunal for AY 2009-10 and AY 2010-11 and since the matter has not yet attained finality therefore, the orders of the lower authorities should be uphold. He prayed accordingly. 12. Heard the rival submissions and perused the materials available on record. It is observed that in AY 2010-11 identical issue was came up for consideration before the Co-ordinate Bench of Tribunal wherein vide para 72 of it....
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....ding of the Ld. dispute resolution panel holding that transactions of intragroup services are interlinked, therefore, they should be benchmarked together by adopting TNMM as the most appropriate method, hence, directing the Ld. transfer pricing officer to delete the adjustment proposed of Rs.3329766244/-. In the result ground No. 1 to 3 of the appeal of the revenue are dismissed." 13. Before us, the Revenue has failed to controvert the findings given by the Tribunal in assessee's own case for AY 2010-11 and simply reiterated the same arguments as were made earlier. It is also a matter of fact that the DRP has not followed the order of the Tribunal for the sole reason that the Revenue has not accepted the aforesaid order of the Tribunal in AY 2010-11. Considering the overall facts and circumstances and also keeping in view that there was no change in the facts wherein preceding year as well succeeding year similar type of services were received by the assessee and the TP adjustments made were deleted by the Tribunal vide various orders for respective assessment years which are placed before us in the paper book filed. Thus, by respectfully following the view taken by the Tribunal....
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....1 is general in nature and is not adjudicated. 20. In the result, the appeal of the assessee for AY 2011-12 is partly allowed in view of the discussion made herein above. 21. Now coming to the appeal of the assessee for AY 2012-13 in ITA No.132/DDN/2026 for AY 2012-13. 22. The effective grounds of appeal are Nos. 2 to 5 wherein the assessee has challenged the TP adjustments of Rs. 261,94,86,354/- made towards international transactions of Intra Group Services received by the assessee from its AE's. 23. The facts related to this issue are identical to the facts as were existed in AY 2011-12 which fact was fairly admitted by both the parties before us. We have already deleted the adjustment made in AY 2011-12 on this issue while deciding grounds of appeal Nos. 2 to 5 of the assessee which observations are mutatis mutandis followed in the present appeal. This being so, the TP adjustment of Rs. 261,94,86,354/- made by the AP/TPO is hereby deleted. The grounds of appeal Nos. 2 to 5 raised by the assessee are allowed. 24. Grounds of appeal No.6 to 10 are with respect to the TP adjustments made by the AO determining the ALP interest rate on the external commercial borrowing....
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....come at Rs. 417,34,47,667/-. The assessee is a non-resident company incorporated with limited liability in the Cayman Islands and is engaged in the business of prospecting, exploration and production of crude oil and natural gas. The assessee is part of Royal Dutch Shell Plc ("Shell Group) and established a project office with the approval of the Reserve Bank of India ('RBI') for carrying out petroleum operations pursuant to the PSCs for Panna-Mukta and Mid and South Tapti Fields. The assessee has also carried out transactions with its Associate Enterprises ('AEs), therefore, a reference was made to the TPO for determination of ALP of the international transactions carried out by the assessee with the AEs. The TPO in terms of the order dated 29.01.2025 has made total adjustments of 1,68,68,62,758/- towards intra group services received from its AE's such as general administrative, short expenses, information technologies and other charges, nature of Management Services Unit Charges and external expenses by benchmarking the transactions following the CUP method as against TNMM taken by the assessee. 30. The assessee filed objections before the Ld. DRP who in terms of the order da....
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....made of Rs. 261,94,86,354/- is hereby deleted. Accordingly, Grounds of appeal No.1 to 11 of the assessee are allowed. 36. Grounds of appeal No.13 of the assessee is with respect to the disallowance of Site Restoration Expenses of Rs.21,58,42,106/-. 37. Before us, the Ld. AR submits that the appellant was under contractual obligation to undertake the decommissioning activity and though it had denied the requirement of Site Restoration Expenses for Panna-Mukta Fields and Mid and South-Tapi Fields, thereafter, the matter went to arbitration. The AO observed that the impact of the same is not ascertainable by the assessee and the Site Restoration Expenses were not proved by the assessee. The assessee submits that the expenses related to Site Restoration Expenses has been proved by the Joint Venture partners i.e., BGEPIL, the RIL and ONGC vide a resolution dated 10th April, 2019. The said expenses were incurred wholly and exclusively for the purposes of business and as a part of regular business operations, therefore, the same to be allowed as regular business expenses u/s 37(1) of the Act. The Ld. AR submits that the AO has never doubted the ingredients of the expenditure and mer....
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....aforesaid site restoration expenses was duly approved by the JV partners, and the relevant details were furnished during the course of the assessment proceedings vide submission dated 24 March 2025: e) The expenditure has been duly recorded in the books of account through utilization of the provision for decommissioning. ize.. by debiting the provision instead of the profit and loss account. This is an accepted accounting treatment and no adverse observations have been made by the statutory auditors in this regard: f) No specific query was raised during the assessment proceedings requiring substantiation of the nature of the expenditure as revenue or capital in nature; g) The Appellant hereby states that the said expense in no manner, brings into existence any new asset and / or do not increase the capacity or efficiency of any existing asset, or provide any enduring benefit to the business of the Appellant. Accordingly, it is humbly submitted that the said expenses are revenue in nature and not capital in nature h) Further, no invoices relating to legal expenses were submitted during the assessment proceedings. Instead, sample invoice copies rel....
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....d as an allowable expenditure under the provisions of the Act. The claim of the assessee was disallowed by the AO which was upheld by the Madras Bench of the Tribunal on the reasoning that the provision created by the assessee represented a contingent liability and was not an allowable expenditure under the provisions of section 37 of the Act. [Refer CLPB PPB Pg no. 570-610]. 38. Therefore, it is humbly prayed that the Site Restoration Expenses should be allowed u/s 37(1) of the Act. 39. On the other hand, the Ld. CIT-DR vehemently supported the order of the AO and stated that the AO has discussed this issue in detail and such order was sustained by Ld. DRP. The claim of the assessee that the expenses were incurred for the purposes of business, however, the said expenses were not routed through Profit and Loss Account and, therefore, the AO has rightly made the disallowance and he has requested for the confirmation of the same. 40. Heard both the parties and perused the materials available on record. The claim of the Revenue that the expenses have not been routed through Profit and Loss account is appears to be incorrect. Looking to the facts that the assessee has debited ....
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....ing of a provision by an assessee is a matter of good business or commercial prudence and there is no time frame or limitation prescribed for the said provisions to be actually spent. Merely because in the context like the one involved in this case, the contract period was long where the actual work of site restoration may happen after 35 years depending upon the actual exploration of oil reserves and the Site resteration would be undertaken only if there is no longer some oil to be explored or drawn out and, therefore, it cannot be said that the provision made for the relevant Assessment Years at the beginning of the Contract period was irrational or an disallowable expenditure * The words 'wholly and exclusively for the purpose of business employed under section 37 of the Act provide a sufficient safeguard & check and balance for the Revenue Authorities to test and verify the creation of provisions for meeting a liability in future and its connectivity with the business of the assessee. * Where such provision is not actually spent in future or not wholly spent in future, nothing prevents the Revenue Authorities and the assessee to offer the same to tax in su....