Deprecation on acquisition cost of participating interests in various blocks - whether the payment made for acquisition cost of participating interests in various blocks would qualify for intangible assets? - whether the expression "licences" used in section 32(1)(ii) of the Act applies to licences that are relatable to intellectual properties only and not relatable to all type of licences? - HELD THAT:- We find that the issue is squarely covered in favour of the assessee by a series of decisions of ITAT in assessee’s own case and the matter has already been travelled to Hon’ble High Court and Revenue’s appeal has been dismissed. Ld. DR’s plea that ITAT’s order is suffering from infirmity is not at all tenable. We are bound by the coordinate Bench decision which has also been upheld by Hon’ble High Court. In this view of the matter, we do not find any infirmity in the order of the ld. CIT (A) and we uphold the same. Accordingly, grounds no.1, 2 & 3 are decided against the Revenue.
Disallowance to depreciation on support equipment under section 32 (1)(ii) - HELD THAT:- We find that depreciation on these support equipment has already been allowed in earlier year. There is no change in facts or law in this year. Hence, there is no reason why Revenue should change its stand and disallowed depreciation. The case laws referred by ld. CIT (A) as well as the ld. counsel of assessee are germane and support the case of assessee. Hence, the order of ld.CIT (A) is upheld.
Disallowance of claim of expenses pending settlement of EPC contract - HELD THAT:- We find that the ITAT has already decided this issue in AY 2006-07 [2019 (7) TMI 1577 - ITAT DELHI] wherein the claim of expenditure was disallowed as well as the addition of income was also deleted. For the present year, ld. CIT (A) has given a finding that these do not pertain to this year. However, Revenue’s ground is on merits. We are of the considered opinion that this aspect has already been dealt with by ITAT and same ratio should follow. Accordingly, the AO is directed to consider the issue afresh in the light of the ITAT order as referred above.
Pre-acquisition of expenses - AO held that the claim of pre-acquisition expenses u/s 37(1) is not proper as the same is eligible u/s 42 as per the terms of the agreement - HELD THAT:- Since the issue is covered by Hon’ble Delhi High Court in assessee’s own case, reference to case laws of M/s. Enron Oil and Gas India Ltd. [2008 (9) TMI 3 - SUPREME COURT] by ld. DR is not applicable on the facts here. Hence, the order of ld. CIT (A) is upheld on this issue.
Excess depreciation claimed on UPS @ 60% u/s 32(1)(ii) - HELD THAT:- Pursuant to the AO’s disallowance in this regard, ld. CIT (A) has decide the issue in favour of the assessee by placing reliance on the decision of Hon’ble Delhi High Court in case of BSES Yamuna Powers Ltd. [2010 (8) TMI 58 - DELHI HIGH COURT] wherein it has been held that depreciation on UPS shall be allowed @ 30%.
Allowability of expenses incurred on exploration activities u/s 37 of the Act carried out in Farsi block, Iran under a service contract - CIT-A allowed the claim - HELD THAT:- CIT (A) has taken a correct view of the matter. It is certainly settled law that allowability of expenses is not contingent upon earning of income. It has been duly incurred and no doubt has been expressed about the veracity of the expenditure. When no income has accrued in this regard, the expenditure cannot be disallowed on the plank that since income has not been earned expenditure is to be disallowed. In our considered opinion, the order of ld. CIT (A) and the case laws referred by him are germane and duly support the case of the assessee. Hence, we uphold the order of the ld. CIT(A) on this issue. The mere reference to section 42 and the decision of the Hon’ble Supreme Court by the Ld. DR does not fructify the case of the Revenue in absence of details submitted as to how they are affecting the issue here.
Addition on account of disallowance of prior period income - CIT-A deleted the addition - HELD THAT:- We find that ld. DR is not disputing the findings of the ld. CIT (A) on this issue but only wants the matter to be remitted to AO for verification. We find that the matter has already been examined by ld. CIT(A) and has passed a cogent order. No infirmity therein has been pointed out to persuade us to remit the matter to AO, hence we uphold the order of ld. CIT (A).
Revision of opening and closing stock - CIT (A) has dealt with the assessee’s request that since the value of closing stock has been increased in AY 2008-09, in AY 2009-10 the value of opening stock should also increase - HELD THAT:- We find that ld. DR has not disputed the CIT (A)’s finding and he is only submitting that this is a factual issue and may be remitted to AO. We find that this is exactly what ld. CIT (A) has done. The CIT (A) has noted the assessee’s submissions and held that AO may consider the same. Hence, Revenue’s ground in this regard is misplaced and hence dismissed.
Contribution to abandonment account - claim was an expense which was to be allowed in future years and was a claim which was not acceptable in view of the decision of M/s. Goetze India [2006 (3) TMI 75 - SUPREME COURT] - HELD THAT:- We find that ld. CIT (A) has duly examined the additional evidences and given a proper finding that the expenditure is allowable u/s 57. The ld. CIT (A)’s order is well reasoned. The ld. CIT (A) has already found that the assessee cannot get back any amount from the fund. Hence, Revenue’s plea that ld. CIT (A) has not decided whether the amount paid is provisional or not is not at all sustainable. Hence, we uphold the order of the ld. CIT (A).
TP adjustment - appellant had advanced foreign currency loan from its own funds to its indirect subsidiary ONGC Caspian carrying a rate of interest of 2.5% - bridge loan was advanced by the Appellant to ONGC and short term loan for less than 6 months and was borrowed to bridge the short term gap between the requirement of funds and inflow of funds - HELD THAT:- We agree with the ld. CIT (A) that the TPO has applied erroneous and non-comparable search to benchmark the loan transaction. Further assessee has also submitted additional benchmarking analysis using the loan connector database which also compared well with the rate of interest arrived by the assessee. The TPO has used the data regarding loans which pertains to earlier years where the loan was for a period of 3 years. As the loan given by the assessee was a bridge loan for less than 6 months and has been repaid during the financial year itself, we find that the adjustment made by the TPO has rightly been set aside by the ld. CIT (A). Accordingly, we uphold the order of ld. CIT (A) on this issue.
TP adjustment on loan provided to Jarpeno - Jarpeno acquired Imperial Energy Corporation Plc., UK ("Imperial") in January 2009, for which consideration was advanced by the Appellant to Jarpeno - HELD THAT:- We find that identical issues were decided by the ld. CIT(A) in assessee’s own case for earlier AYs i.e. 2010-11 & 2012-13 wherein addition on similar basis by adopting SBI rates was rejected relying upon the decision of Hon’ble Cotton Naturals (I) Pvt. Ltd. [2015 (3) TMI 1031 - DELHI HIGH COURT] We find that ld. CIT (A) has analysed the issue in proper perspective and taken a correct view of the matter, hence we uphold the same.
TP adjustment qua interest on these loans to AE - HELD THAT:- We find that Ld. CIT(A) has passed a reasonable order stating that on the basis of facts available on record, the AO/TPO is directed to benchmark the loan transaction of the appellant with ONGC Nile Ganga at 6 months LIBOR + 4%. The AO/TPO is also directed to verify the value of LIBOR after taking the contention of the appellant into consideration. In view of the order of the CIT(A) in AYs 2012-13 and 2013-14, the AO/TPO is also directed to apply 6 months LIBOR rate for benchmarking receipt of interest from ONGC Nile Ganga.
Appeal of revenue dismissed.