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Vedanta Ltd. (Erstwhile Cairn India Ltd.) Versus Income Tax Appellate Tribunal & 1

Deduction under section 80IB(9) - eligible undertaking - effect of the Explanation contained in sub section (9) of section 80IB - Held that:- Both sides agreed that the applicability of the explanation below sub-section (9) of section 80IB of the Act is not involved in the tax appeals pending before the Tribunal. However, both sides also agreed that the implication of the clause (iv) of sub-section (9) is one of the important issues involved in large number of such appeals. We have, therefore, p .....

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urces Ltd. (2015 (3) TMI 986 - GUJARAT HIGH COURT). Such issue could be one of implication of the Explanation to subsection (9) of section 80IB or of the interpretation of clause (iv) thereof. In either case, it would not be open for the High Court to proceed further and finalize the issue till the Supreme Court decides the appeal. Effectively therefore, the Supreme Court not only stayed the operation of the judgement of the High Court but has stayed judgement itself. - We are conscious that .....

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s of the effect of clause (iv) of newly substituted subsection (9) of section 80IB of the Act and consequently, the ratio laid down by the High Court in case of Niko Resources Ltd. (supra), the Tribunal cannot be faulted for deciding not to proceed further with the bunch of appeals till the Supreme Court finally cleared the issues. We see no impropriety or legal error in the Tribunal choosing this option. - SPECIAL CIVIL APPLICATION NO. 11027 of 2017 - Dated:- 1-8-2017 - MR. AKIL KURESHI AND MR. .....

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ne die. 2. Brief facts are as under: Petitioner is a company registered under the Companies Act and is engaged in the business of surveying, prospecting, drilling and exploring for, acquiring, developing, producing, maintaining, refining, storing, trading, supplying, transporting, marketing and distributing, importing, exporting and generally dealing in minerals, oils, petroleum, gas and related byproducts. As part of the company's ongoing activities, oil explorations and mining has been goi .....

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ioner is that the Tribunal has granted conditional stay against the orders of the Commissioner (Appeals) to the extent they are adverse to the assessee upon depositing certain percentage of the disputed tax dues. The assessee therefore has been urging the Tribunal to finally dispose of such appeals. The assessee is otherwise in financial crunch and needs the deposited amounts back. 3. Sub section (9) of section 80IB of the Act grants deduction to an undertaking which begins commercial production .....

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f Niko Resources Ltd. vs. Union of India and anr reported in 374 ITR 369. The case of the petitioners-assessees before the High Court was that some of the changes in the new sub section (9) were clarificatory in nature and in any case, would not disturb the rights of the assessees concerning the period prior to the introduction of the amendment. The Division Bench allowed the writ petition and granted certain reliefs to the petitioners. We would advert to this decision of the High Court at some .....

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the Tribunal in the said bunch of 32 appeals of the assessee and the department, are those, on which, the decision of the High Court in case of Niko Resources Ltd. (supra) was rendered, filed an application before the Tribunal on 17.01.2017 and submitted as under: The above appeals are listed for hearing before your honours on 17.01.2017. 2. In all the above appeals, the major issue involved is deduction under section 80IB(9) of the Income Tax Act, 1961. 3. In this connection, your kind attenti .....

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y retrospective insertion of explanation to section 80IB(9) by the Finance Act, 2009 was ultravires to the Constitution. 3. The Department filed SLP and the Hon'ble Apex Court, vide admitting SLP in (CC) No. 18370 of 2015, arising out of order passed by High Court of Gujarat dated 26.03.2015 in SCA No. 10903 of 2009, vide order dated 20.11.2015 has ruled out as under:- As we are entertaining the matter, the High Court (s) where the appeals are pending shall not finalise the same till the mat .....

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bove, it is requested that the above appeals may be adjourned sine die. 5. It is mentioned that in view of direction of Hon'ble Supreme Court as mentioned above, the Hon'ble Gujarat High Court vide order dated 03.10.2016 in Tax Appeals No. 781, 1240, 1246, 1247, 1248, 1249 and 1859 of 2008 in DIT (International Taxation) vs. Niko Resources Ltd. where identical issue is involved, has adjourned the matter sine die (copy enclosed). I shall be obliged. 6. On this application, the Tribunal pa .....

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uld lead to further litigation at the instance of either party. This would merely shift the litigation from Tribunal to High Court. Primarily on such grounds, the Tribunal granted the request of the Revenue and, as noted earlier, adjourned the hearing of the appeals sine die. 7. This order of the Tribunal the assessee has challenged in the present petition. Counsel for the petitioner submitted that the main issue decided by the High Court in case of Niko Resources Ltd (supra) was with respect to .....

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x dues. Counsel further submitted that the applications filed by the Revenue before the Tribunal proceeded on erroneous footing that the effect of the Explanation contained in sub section (9) of section 80IB of the Act was involved in the Tax appeals. The Tribunal therefore proceeded on erroneous premise. The assessee would, therefore, expect the Tribunal to decide the appeals expeditiously. Counsel lastly contended that in as many as nine appeals out of the said group of 32 appeals, the deducti .....

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Court in its interim order dated 20.11.2015 has clearly directed that no High Court shall finalize the appeals pending before itself which involve issues similar to those decided by the High Court in case of Niko Resoruces Ltd. The Tribunal, therefore, correctly desisted from proceeding further in the appeals. The issue involved before the Tribunal is one of applicability of clause (iv) of sub-section (9) of section 80IB of the Act which was also considered by the High Court in case of Niko Reso .....

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tain conditions to be fulfilled as laid down in the further proviso. This sub-section (9) of section 80IB was substituted by Finance (No. 2) Act of 2009 but w.e.f. 01.04.2000. While retaining the benefit of hundred percent deduction on the profit of an undertaking for seven consecutive assessment years including the initial year certain significant changes were made. The conditions to be fulfilled by such eligible undertaking were laid down in clauses (i) to (v). Clause (iv) thereof which was no .....

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Exploration Licencing Policy announced by the Government of India vide Resolution No. O-19018/22/95- ONG.DO.VL, dated 10th February, 1999 and begins commercial production of natural gas on or after the 1st day of April, 2009. 10.An explanation was introduced at the end of sub-section (9) which was not there earlier and which reads as under: Explanation.-For the purposes of claiming deduction under this sub-section, all blocks licensed under a single contract, which has been awarded under the New .....

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production of natural gas. By virtue of the explanation, according to the Revenue for the purposes of claiming deduction all blocks licensed under similar contract, would be treated as a single undertaking. One of the oil exploration company Niko Resources Ltd. therefore approached the Gujarat High Court by filing a writ petition and challenged such stand of the Revenue. According to the petitioner therein, the Explanation below sub-section (9) of section 80IB could not have been given retrospe .....

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etrospective effect from 1.4.2000 explaining the meaning of the term "undertaking" is unconstitutional and ultra vires to Article 14 of the Constitution of India? (ii) Whether the insertion of sub clause (iv) in Section 80- IB(9) of the Income Tax Act, 1961, by Finance (No.2) Act, 2009 conferring the benefit of the deduction under this Section to undertakings engaged in commercial production of natural gas in blocks licensed under VIIIth round of bidding provided such commercial produc .....

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14 of the Constitution of India? (iii) Whether the Petitioner has any accrued or vested right? 12. With respect to the first question, the Division Bench held as under: 63. Therefore, for the reasons given above, we are of the considered opinion that the Explanation added to Section 80- IB(9) by amendment is substantive law and could not apply retrospectively. The Explanation added to Section 80-IB(9) breaches the rule of law and is arbitrary being violative of Article 14 of the Constitution of .....

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the term "mineral oil" as used in Section 80-IB does not include natural gas and cannot result in denial of the benefit of deduction under Section 80-IB(9) to undertakings engaged in commercial production of natural gas under contracts entered into prior to VIIIth round of bidding. In view of the decision of the Constitutional Bench of the Apex Court, the term "mineral oil" includes and has always included "natural gas . 14.Both sides agreed that the applicability of th .....

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uch appeals are pending, would not finalize the same till the matter is dealt with by the Supreme Court. The intention of the Supreme Court is thus, amply clear and it precludes any High Court from deciding the issues which are presented in the appeal against the judgement of the High Court in case of Niko Resources Ltd. (supra). Such issue could be one of implication of the Explanation to subsection (9) of section 80IB or of the interpretation of clause (iv) thereof. In either case, it would no .....

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