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2019 (7) TMI 1577 - AT - Income TaxDeduction u/s 37 - acquisition cost of participation interest in oil blocks - depreciation on acquisition cost of participating interest @ 25% holding them as intangible assets and the total depreciation claim - HELD THAT:- We find the Tribunal in assessee’s own case for assessment year 2002-03 [2009 (10) TMI 76 - ITAT DELHI-F] has held that commercial rights of exploration of mineral oils and licences acquired by the assessee, being in the nature of intangible assets are eligible for depreciation @ 25%. Since the CIT(A) has followed the order of the Tribunal in assessee’s own case for assessment year 2002-03 and the Tribunal has allowed the claim of depreciation in assessment year 2003-04 to assessment year 2005-06 and the appeal filed by the Revenue against order of the Tribunal for A.Y. 2002-03 has been dismissed by the Hon'ble Delhi High Court, therefore, in absence of any contrary material or distinguishing features, the order of the CIT(A) is upheld and the grounds raised by the Revenue are dismissed. Disallowance in respect expenditure incurred on Sudan pipeline - CIT (A) rejected the claim being the claim received from EPC contractor for additional expenditure incurred in respect of laying of Sudan pipeline on the ground that neither the liability has arisen in the hands of the assessee company nor revenue has accrued - HELD THAT:- We find merit in the findings given by the ld. CIT (A) that the additional expenses of ₹ 1026.08 million provided as expenditure by the assessee calls for disallowance as no liability has arisen in the hands of the assessee and since the revenue did not accrue or arise in the hands of the assessee, therefore, the addition of ₹ 1493.10 million made by the Assessing Officer cannot be justified. We accordingly dismiss the ground of appeal No.2 raised by the assessee and the ground Nos.6,7 and 8 by the Revenue. The various decisions relied on by the ld. counsel for the assessee are distinguishable and not applicable to the facts of the present case. In our opinion, the approach of the assessee should be consistent both for the revenue as well as expenditure. The assessee cannot take one stand for claiming the expenditure as an allowable deduction and, at the same time, do not recognize the revenue. In the instant case, since the claim has not been accepted by the EPC contractor, therefore, the addition made by the Assessing Officer is not justified. At the same time, although the assessee has provided in its Profit & Loss Account regarding the additional claim made by the EPC contractor, however, the assessee has challenged the same before the arbitrator and no payment having been made and the same is also under litigation and, therefore, following matching principle the claim of additional expenditure made by the assessee in its books of account has to be disallowed. We accordingly uphold the order of the CIT(A) on this issue Deduction u/s 42 or 37 - expense on purchase of seismic data / submission of tenders or bids etc. for evaluation of oil blocks proposed to be acquired by the assessee - HELD THAT:- We find the ld. CIT(A), in the instant case, following the order of the Tribunal in assessee’s own case for the three preceding years, has deleted the addition on the ground that the expenses incurred on submission of bids/tenders, consultancy fee paid to consultants and purchase and evaluation of seismic data etc., are normal business expenditure of the assessee and allowable under section 37 of the Act and provisions of Section 42 of the Act are not applicable. The ld. DR could not controvert by bringing any distinguishable features so as to take a different view than the vie taken by the Tribunal which has been followed by the CIT(A) while deleting the addition. In view of the above, we uphold the order of the CIT(A) and the ground raised by the Revenue is dismissed.
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