9911796707
TMI Blog2015 (12) TMI 374X X X X Extracts X X X X X X X X Extracts X X X X ..... cts and in law. 3. That the appellant craves leave to add, alter, amend or forego any grounds of appeal raised above at the time of hearing." 3. Facts of the case in brief are that the assessee company is engaged in the business of oil & gas exploration and production. The assessee filed the return of income on 08.10.2010 declaring Nil income which was processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter referred to as the Act). Later on, the case was selected for scrutiny. In response to the notices, the ld. AR of the assessee attended the proceedings from time to time and furnished written replies to the questionnaire and produced requisitioned documents including books of accounts, bills and vouchers, bank statements which w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of the appellant could be said to have been set up. As per the assessing officer, the appellant's business could be said to have been set up only on commencement of production of oil from oil wells, whereas, the appellant had submitted that production from oil wells are not relevant and the business of the appellant was set up when the appellant started bidding. I find considerable force in the argument of the appellant that in such a business carried on by the appellant, exploration is an essential activity which precedes the stage of drilling and production. The exploration activities are undertaken first in point of time which may result in actual production. There may be no actual production if the well being explore turned out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd stage relates to the commercial production. The first in point of time lays the foundation for the second activity and the second activity when completed lays the foundation for the third activity. It is to be noted that the appellant is in the business of exploration, production and dealing in minerals, oils, gas and other related by-products of oil and gas in India or elsewhere. It is also to be noted that the three activities combined together constituted the business of the assessee. Each one of the activities was as much essential for the purpose of carrying out business of the assessee. Each one of the activity constitutes an integral part of the business of the assessee. The business consisted of a continuous process of these thre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere granted to the assessee by the Govt. of India for different blocks. Hence, the expenditure incurred after commencement of business should be allowed as business expenditure irrespective of the fact that the actual commercial production has not been commenced. Considering the nature, duration and cost of the business of the appellant, the ld CIT(A) has rightly made a finding that the assessee have commenced its business, when the appellant has carried the first activity being assignment of the right to explore the block awarded in the New Exploration and Licensing Policy (NELP) and commencement of exploration activities thereafter incurred an expense of more than Rs. 258 crores. Thus the ld CIT(A) reasons that the expenditure incurred fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal. 6. I have heard rival submissions of the parties and have gone through the entire material placed on record. I find that the issue in question is squarely covered in favour of the assessee by the earlier decision of the ITAT dated 14.01.2014 in assessee's own case for assessment year 2008-09 in ITA No. 3224/Del/2011. The said order of the ITAT was subject matter of appeal before the Hon'ble Delhi High Court and the Hon'ble High Court has affirmed the decision of the ITAT vide its decision dated 24.11.2014 rendered in ITA No. 694/2014 and a cost of Rs. 10,000/- was levied on the CIT, Delhi-II for filing the appeal which was considered by the Hon'ble High Court misconceived and should have not been filed. The order of the CIT(A) on the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
