TMI Blog2007 (3) TMI 180X X X X Extracts X X X X X X X X Extracts X X X X ..... ubstantial questions of law raised seeking admission in respect of T.C.No.251 of 2007: (i) Whether on the facts and in the circumstances of the case, the Tribunal is right in law in confirming the disallowance of Rs.88,05,226/- relating to the exploration expenses in respect of the following: (a) Cambay offshore exploration permit Rs.69,94,968 (b) Krishna Godavari Offshore exploration permit 12,29,632 India General Evaluation 5,80,626 88,05,226 (ii) Whether on the facts and in the circumstances of the case, the Tribunal is right in law in confirming the disallowance of pre-effective cost of Rs.2,72,93,866/-? (iii) Whether, on the facts and in the circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the exploration and production activities under a multi-partite agreement between the assessee company, other joint venture partners and the Government of India under Production Sharing Contracts in various contract areas. In respect of the assessment year 1996-97, the assessee filed a loss return. The assessment was completed under Section 143(3), assessing the loss at Rs.40,21,92,229/-. It is stated that during the assessment year under consideration, the assessee was engaged in exploration and production activities in the contracted area identified as "Ravva Oil and Gas Field". The Assessing Officer disallowed claim of expenditure claimed to a sum of Rs.88,05,226/- relating to the exploration cost of three projects, namely, Cambay O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r hearing both sides, on perusing the records produced by the assessee, the Tribunal came to the conclusion that the finding of the authorities below that the expenditure in question related to earlier years could not be assailed by the assessee. The Tribunal confirmed the view that the audit report showed that the expenditure related to the prior period. Thus, the expenditure incurred in respect of Ravva Oil Fields was rejected as totally unsupported by any material to connect it as relevant to and related to the year under consideration. On the question of pre-effective cost, the assessee contended that the same were allowable as per the provisions of Section 35-D over a period of ten years, subject to certain limits and restrictions. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al. 8. Aggrieved of the view taken by the Tribunal in allowing the appeal by the Revenue, the assessee has preferred appeals against the orders passed in its appeal as well as the one which went in favour of the Revenue. 9. Learned senior counsel appearing for the assessee submitted that the Tribunal ought to have seen that the expenditure relating to the exploration ought to have been adjudged business-wise with each operation constituting a single integrated business. Consequently, the Tribunal erred in disallowing the claim relating to the exploration expenses that it related to the earlier years. Learned senior counsel also questioned the view of the Tribunal on the claim of the expenditure post-incorporation. He pointed ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion only during the year under consideration and that they also related to two other projects for which the Production Sharing Contract was yet to be entered into. Considering the fact that as regards India General Evaluation, the company was exploring the country regarding the possible area for further exploration of oil, the Assessing Authority disallowed the same. While considering the same, the Assessing Authority pointed out that the assessee admittedly stated that this expenditure related to earlier years and hence, considering the facts therein, the claim was rejected by the appellate authority also. Thus, the Commissioner of Income Tax (Appeals) concurred with the reasons given by the Assessing Officer. 12. In the appeal pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not refuted and assailed by the assessee without any clinching evidence. In these circumstances, the claim that the expenses related to post-incorporation was rejected. Thus, the Tribunal confirmed the findings of the authorities below. 15. Learned senior counsel appearing for the assessee/appellant could not get over this finding of fact by the Tribunal. In the circumstances, we do not find any ground to interfere with the order of the Tribunal. In the light of the view that we have taken confirming the findings, we reject all the grounds as pure questions of fact. Consequently, T.C.No.251 of 2007 stands rejected. 16. As regards T.C.No.252 of 2007, learned senior counsel appearing for the assessee submitted that the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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