THE ELEVENTH SCHEDULE
[See sections 32(2) 44(8), 314(161) and 318(2)(s)(i)]
COMPUTATION OF PROFITS OF THE BUSINESS OF MINERAL OIL OR NATURAL GAS
1. The profits of the business of mineral oil or natural gas shall be the gross income from the business carried on by the assessee at any time during the financial year as reduced by the amount of business expenditure incurred by the assessee, wholly and exclusively, for the purposes of the business during the year.
2. The gross income referred to in paragraph 1 shall be the aggregate of,
(a) the accruals or receipts derived by the assessee from,
(i) the business of mineral oil or natural gas;
(ii) the leasing or transfer of whole of, or part of, or any interest in, any
(A) mineral oil or natural gas rights; and
(B) asset used in the business of mineral oil or natural gas; and
(iii) the demolition, destruction, discarding or transferring of any business capital asset (other than land, goodwill or financial instrument) in respect of which deduction has been allowed, or allowable, under paragraph 3 in any financial year; and
(b) the amounts referred to in sub-section (2) of section 33.
3. The amount of business expenditure referred to in paragraph 1 shall be the aggregate of the amount of,
(a) operating expenditure referred to in section 35, incurred by the assessee;
(b) finance charges referred to in section 36, incurred by the assessee;
(c) expenditure on any license charges, rental fees or other charges, if actually paid;
(d) capital expenditure incurred by the assessee;
(e) expenditure on infructuous or abortive exploration of any area;
(f) expenditure referred to in clauses (a) to (e) incurred before the commencement of the business.
(g) payment to Site Restoration Accomulate maintained in State Bank of India in accordance with the Schemes may be prescribed.
4. The profits computed under paragraph 1 shall be presumed to have been computed,
(a) after giving full effect to every loss, allowance or deduction referred to in sub-sections 35 to 40 (both inclusive);
(b) after giving full effect to any deduction allowable under Sub-Chapter-IV of Chapter III in relation to the profits of the business of mineral oil or natural gas.
5. The written down value of any business asset used in the business of mineral oil or natural gas shall be computed as if the assessee has claimed and has been actually allowed the deduction in respect of depreciation under section 38, initial depreciation under section 39 and terminal allowance under section 40.
6. The amount of common costs including depreciation attributable to the business of mineral oil or natural gas and any other business shall be determined in such manner as may be prescribed.
7. The provisions of this Schedule shall apply to the business referred to in paragraph 1, which fulfils the following conditions, namely:
(a) it is not set-up by splitting up, or the reconstruction, of a business already in existence;
(b) it is not set up by the transfer to the business of machinery or plant previously used for any purpose.
8. In this Schedule, unless the context otherwise requires,
(a) "business of mineral oil or natural gas" means any business consisting of the prospecting for or extraction or production of mineral oil or natural gas;
(b) "mineral oil" means crude oil, being petroleum in its natural state before it is refined or otherwise treated but from which water and foreign substances have been extracted;
(c) "natural gas" means any sub-soil combustible gaseous fossil fuel;
(d) "oil and gas right" means any reconnaissance permit, technical cooperation permit, exploration right, or production right assigned under the Oilfields (Regulation and Development) Act, 1948, or any right or interest therein;
(e) any machinery or plant which was used outside India by any person other than the assessee shall not be regarded as machinery or plant previously used for any purpose, if
(i) the machinery or plant was not, at any time prior to the date of the installation by the assessee, used in India;
(ii) the machinery or plant is imported into India from any country outside India; and
(iii) no deduction on account of depreciation in respect of the machinery or plant has been allowed or is allowable under the provisions of this Code, or the Income-tax Act, 1961 as it is stood before the commencement of this Code, in computing the total income of any person for any period prior to the date of the installation of the machinery or plant by the assessee;
(f) the condition specified in clause (b) of paragraph 7 shall be deemed to have been complied with if the total value of the machinery or plant or any part thereof, previously used for any purpose and transferred to the business referred to in paragraph 1, does not exceed twenty per cent. of the total value of the machinery or plant used in the business;
(g) the capital expenditure referred to in clause (d) of paragraph 3 shall not include any expenditure incurred on the acquisition of any land including long-term lease, goodwill or financial instrument.
